Assignment 8 Flashcards
What are the 3 general factors upon which an employee behavior depends?
1) Motivation
2) Abilty
3) Envrionmental Obstacle
Employee behaviors= f(M,A,E)
4 questions an organization should ask themselves regarding the compensation of their employees?
1) How do we attract good employee prospects to join our company?
2) How do we reatin these good employees once they join?
3) How do we get employees to develop skills for current and future jobs?
4) How do we get employees to perform well on their current jobs?
Motivation involves 3 elements:
1) What is important to a person
2) Offering it in exchange for
3) Some desired behavior
Cafeteria Style
Flexible compensation. Develops the idea that only the individual employee knows what package of rewards would best suit his or her personal needs.
Theories that focus on Content:
1) Maslow’s
2) Herzberg’s
People have certain needs, such as physiological, security and self-esteem, that influence behavior.
Theories that focus on the nature of the exchange
1) Expectancy
2) Equity
3) Agency
Evaluate jobs using a common set of compensable factors in part to let employees know that an explicit set of rules governs the evaluation process.
Theories that focus on motivation
Desired Behavior.
There is a positive impact of goal setting on performance. Worker’s assigned “hard” goals consistently do better than workers told to “do their best”
Components of a total rewards system
1) Compensation
2) Benefits
3) Social Interaction
4) Security
5) Status/Recognition
6) Work Variety
7) Workload
8) Work Importance
9) Authority/Control/Autonomy
10) Advancement
11) Feedback
12) Work Conditions
13) Development Opportunity
Empowerment
Part of a total rewards system. Authority to make decisions, control over factors that influence outcomes and autonomy to carry out decisions without overregulation of upper management are important to consider in designing reward systems.
Good Social Environment
Part of a totla rewards system. Some companies promote a business culture of fun that encourages employees to find ways to make their jobs more interesting and relevant to them personally.
Security
part of a total rewards system. The trend today is toward less stable and secure compensation packages. The very design of compensation systems today contributes to employee instability and insecurity.
Base pay
the guaranteed portion of an employee’s wage package.
Across-the-board increase
Wage increases granted to all employees, regardless of performance. Size related to some subjective assessment of employer ability to pay. Typically an add-on to base pay in subsequent years.
Cost of living increase
SAme as across the board increase except the magnitude based on change in cost of living ( ie as measured by the CPI)
Merit Pay
Wage increase granted to employee as a function of some assessment of employee performance. Adds on to base pay in subsequent years.
Individual Incentive
Sometimes this variable pay is an add-on to a fixed base pay. The incentive component ties increments in compensation directly to extra individual production ( ie commission systems, piece rate). While measures of performance are typically subjective with merit and lump-sum components, this form of variable pay differs because measures of performance are objective.
Sucess sharing
A generic category of pay add-on ( variable pay) which is tied to some measure of group performance, not indvidual performance. Not added into base pay. Distinguished from risk-sharing plans because employees share in any sucess - performance above the standard- but are not penalized for performance below standard.
Gain Sharing
Differs from profit sharing in that goal to exceed is not fianancial performance of organization, but some cost index ( i.e. labor cost is most common)
Profit Sharing
Add on lined to group performance relative to exceeding some fiancial goal
Risk-Sharing Plans
Generic category of pay add-on (variable pay) that differs from success sharing in that employee shares not only in the successes, but is penalized during poor performance years.
Pay is a ____________ in the whole recruitment process.
visible reward
Job offers spell out
the level of compensation and may even include discussions about what kinds of pay such as bonuses and profit sharing participation.
Job canidates look for organizations with reward systems that fit their
personalites
There is clear evidence that poor performers are more likely
to leave an organization than good performers.
Equity theory suggests that workers who feel unfairly treated in pay
react by leaving the firm for better situations
Turnover is higher for poor performers when pay is based on
individual performance
Pay that employees find reasonanle can help reduce
turnover
SKill-based pay is intended to
pay employees for learning new skills.
New skills help employees
perform better on current jobs and adjust more rapidly to demands on future jobs
Linking pay to behaviors of employees results in
better individual and organizational performance.
Managers and workers believe pay should be tied to
performance
Unionized workers perfer that pay is based on
seniority. Stems from a distrust of subjective performance measurement systems
In a pay model attention should be paid to
efficiency, equity, and compliance
Efficiency involves 3 general areas of concern
1) Strategy
2) Structure
3) Standards
2 types of fairness in pay model
1) Distributive justice- Does an employee view the amount of compensation received as fair?
2) Procedural Justice- Organizations that use fair procedures and supervisors who are viewed as fair in the means they use to allocate rewards are perceived as more trustworthy and command higher levels of committment.
A key element in fairness is
communication
Employees want to know
what is expected of them
Employees want the opportunity to provide
input into standards or expecations
A reward system needs to
maintain and enhance the repuation of the firm and be compliant.
