8.2: Identify the various factors that influence the setting of pay levels. Flashcards
What is the first step in an effective performance management system?
Clarifying the work to be done – define expected results and how they will be measured.
What must goals be linked to for the performance plan to be effective?
Overall business objectives.
Why is providing frequent coaching important?
It supports employee development, helps identify and correct issues, and reduces the need for termination.
What is the purpose of a formal performance review?
To assess accomplishments, development areas, and set new goals.
How can performance be improved if expectations aren’t met?
By creating an action plan with clear expectations, timelines, and available supports.
What are three categories of reasons for ineffective performance?
Organizational factors, job factors, and personal factors.
Give two examples of organizational factors that cause poor performance.
Poor selection decisions and lack of accountability.
What is the manager’s role in improving ineffective performance?
Understand root causes and implement supportive actions (e.g., counseling, feedback).
What are two common reasons why performance management systems fail?
1) They are too complex and unclear.
2) Managers lack training and understanding.
What is a major cultural factor for system success?
Organization-wide buy-in and support from top management.
What issue arises when the system focuses only on the annual review?
It ignores the importance of ongoing coaching and integrated development.
What are five main sources of performance information?
Manager, self, subordinates, peers, and customers.
What is a potential downside of peer reviews?
Bias, pressure, and confidentiality concerns.
What are customer reviews used for?
To evaluate service quality and ensure procedures are followed.
What is a 360-degree review?
A feedback system combining input from multiple sources (manager, peers, self, etc.).
What are trait methods of performance review?
Methods based on rating personal characteristics like dependability and enthusiasm.
What is a graphic rating scale?
A numerical rating system used in trait-based evaluation.
What is the behavioural checklist method?
A checklist where managers mark displayed behaviours.
What is BARS?
Behaviourally Anchored Rating Scale – combines behaviour descriptions with numerical ratings.
What is Management by Objectives (MBO)?
A results-based method where employee goals align with organizational goals.
What is the Balanced Scorecard?
A framework linking strategic goals to performance in areas like finance, customer service, and internal processes.
What are examples of internal compensation factors?
Compensation strategy, job worth, performance, ability to pay.
What are examples of external compensation factors?
Economy, cost of living, legal requirements, labor market.
What is pay-for-performance?
A system linking pay to employee or organizational results.
Name a benefit and a drawback of pay-for-performance systems.
Benefit – motivates performance. Drawback – may not link well to long-term goals.
What is a common reason organizations link motivation to pay?
To increase employee performance and align it with organizational success.
What do studies suggest about the relationship between compensation and motivation?
The answer is mixed—”yes,” “no,” or “it all depends” on factors like economic conditions and workforce expectations.
What percentage of employers have implemented a pay-for-performance system?
75%
What is a key challenge with pay-for-performance systems?
Metrics used may not always reflect true performance or corporate objectives, and correlation between pay and motivation can be overstated.
What non-monetary factor can also improve motivation?
Recognition of achievement.
What should be considered when designing pay-for-performance plans?
The plan should fit the organization, include performance thresholds, and ensure cost-effectiveness.
What can limit an employer’s ability to offer competitive pay in the public sector?
Government budgets and public perception.
How can pay freezes impact employees and public image?
They may lead to dissatisfaction and debates over fairness and employer reputation.
What are key external factors affecting wage rates?
Economy, labour-market conditions, wage rates in geographic areas, cost of living, collective bargaining, and legal requirements.
Why must Canadian businesses be sensitive to economic projections?
Because Canada is an export-driven economy.
What are some approaches companies use to manage economic challenges?
Variable pay, transparency, non-cash benefits, improved well-being, aligning rewards with business strategy.
What impact did COVID-19 have on wage increases in Canada?
36% of companies froze salaries in 2020 vs. a pre-COVID forecast of 2% growth.
What influences labour-market conditions?
Demand for and supply of qualified employees.
What challenge exists even during employee oversupply?
Employers may still be unable to offer lower wages due to union agreements or minimum wage laws.
Why do employers examine wage rates in specific geographic areas?
To remain competitive for similar jobs within those regions.
How do employers gather geographic wage data?
Through surveys from consulting firms, governments, local boards, or professional associations.
Why are wages adjusted for cost of living?
To maintain employee purchasing power amid inflation.
What tool is commonly used to adjust for cost of living?
Consumer Price Index (CPI).
What is a potential issue with CPI-based pay adjustments?
Can create inequity between employees earning different base wages.
What is a key focus of collective bargaining?
Compensation, especially securing real wage increases.
What are real wages?
Wage increases that outpace CPI growth, increasing actual purchasing power.
What does Canadian law generally require regarding minimum wage?
Employers must pay no less than the legislated minimum hourly rate.
What is pay equity legislation?
Requires equal pay for jobs of comparable value, even if performed mostly by different genders.
What system must be used under pay equity?
A gender-neutral system assessing skill, effort, responsibility, and job conditions.
Who sets and enforces minimum wage in Canada?
Each province and territory.
What factors influence changes to minimum wage?
Inflation, unemployment, and political decisions.
What was a controversial outcome of wage increases in Ontario?
Tim Hortons franchisees reduced employee benefits, leading to political backlash and public debate.
What percentage of Canadian workers earned minimum wage in 2019?
10%
Which groups are overrepresented in minimum wage jobs?
Youths aged 15–24 and women.
