Chapter 10 - Managing Human Resource Systems Flashcards

1
Q

Human resource management (HRM)

A

the process of finding, developing, and keeping the right people to form a qualified workforce

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2
Q

The Canadian Charter of Rights and Freedoms was enacted under the government of ________

A

The Canadian Charter of Rights and Freedoms was enacted under the government of Pierre Trudeau in 1982

It is part of Canada’s constitution, and it covers several fundamental freedoms that affect the workplace.

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3
Q

Section 15a of the Charter prohibits _____________

A

Section 15a of the Charter prohibits discrimination along race, creed, colour, religion, gender, sexual orientation, etc.

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4
Q

bona fide occupational qualification (BFOQ)

A

an exception in employment law that permits sex, age, religion, and the like to be used when making employment decisions, but only if they are “reasonably necessary to the normal operation of that particular business.”

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5
Q

BFOQ - example information

A

For example, if Victoria’s Secret hires models for its lingerie, it probably won’t be taken to task for hiring women, as being female would be seen as a BFOQ for being a women’s lingerie model. But what about being female and being a firefighter? Throughout Canada there are ongoing investigations into gender discrimination against female firefighters (note that we don’t use the term fireman anymore).

Testing women and men against an aerobic standard resulted in many of the female firefighters not qualifying for the job they were already doing. British Columbia’s Supreme Court determined that an aerobic standard for firefighters was not a BFOQ because it was not related to an individual’s performance on the job; the same court ruled that there had been systemic discrimination on a prohibited ground.

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6
Q

Human rights commissions in each _____________ have been established under and are responsible for enforcing the Canadian Human Rights Act.

A

Human rights commissions in each province and territory have been established under and are responsible for enforcing the Canadian Human Rights Act.

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7
Q

Some Major Federal and Provincial Employment Laws

A

The general effect of these laws, which are still evolving through court decisions, is that employers may not discriminate in employment decisions on the basis of gender, sexual orientation, age, religion, colour, national origin, race, or disability.

The intent is to make these factors irrelevant in employment decisions. Stated another way, employment decisions should be based on factors that are “job related,” “reasonably necessary,” or a “business necessity” for successful job performance.

The only time that gender, age, religion, and the like can be used to make employment decisions is when they are considered bona fide occupational qualifications.

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8
Q

WHMIS

A

Workplace Hazardous Materials Information System

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9
Q

Employment Discrimination

A

Discrimination generally falls under one of the general headings in the Charter of Rights and Freedoms and typically leads to an investigation by a provincial or territorial human rights commission.

Discrimination may be intentional or unintentional, but generally, discrimination based on race, religion, ethnic origin, and so forth is easy to see. Unintentional discrimination is harder to identify. Minimum height and weight requirements, which used to be common for police forces, can screen out females or Canadians of Asian origin, who tend to be smaller. Also, some job evaluation systems may include culturally (non–job-related) biased questions; and some job situations may discriminate against some cultures.

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10
Q

Workplace Harassment

A

Workplace harassment is prohibited by several laws, both federal and provincial.

Workplace harassment does not have to be sexual in nature, although it commonly is.

Harassment can also mean that someone is bullying you about your work or tormenting you simply because you are a man or a woman.

Bullying is strictly prohibited under Bill 14 of the Workers Compensation Act of British Columbia (it is also covered in other provinces).

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11
Q

Sexual harassment

A

a form of discrimination in which unwelcome sexual advances, requests for sexual favours, or other verbal or physical conduct of a sexual nature occur while performing one’s job; another form of sexual harassment is when employment outcomes, such as hiring, promotion, or simply keeping one’s job, depend on whether an individual submits to sexual harassment

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12
Q

Harassment is….

A

Harassment is when people make comments or actions that are unwelcome, even though they should know that what they say or do is not welcome.

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13
Q

hostile work environment

A

a form of harassment in which unwelcome and demeaning behaviour creates an intimidating and offensive work environment

There may be no economic injury—that is, harassment isn’t tied to economic outcomes—however, it can lead to psychological injury from a stressful work environment.

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14
Q

What should companies do to make sure that harassment laws are not violated?

A

First, they should respond immediately when harassment is reported. Furthermore, a quick and fair investigation may serve as a deterrent to future harassment.

Next, take the time to write a clear, understandable harassment policy that is strongly worded, gives specific examples of what constitutes workplace harassment, and spells outs sanctions and punishments, and disseminate it throughout the company. This lets potential harassers and victims know what will not be tolerated and how the firm will deal with harassment should it occur.

Next, establish clear reporting procedures that indicate how, where, and to whom incidents of harassment can be reported. The best procedures ensure that a complaint will receive a quick response, that impartial parties will handle the complaint, and that the privacy of the accused and accuser will be protected.

Finally, managers should be aware that most provinces and many municipalities have their own employment-related laws and enforcement agencies. So compliance with federal law is often not enough. So compliance with federal law is often not enough. In fact, organizations can be in full compliance with federal law and at the same time be in violation of provincial or municipal harassment laws. These laws are constantly being updated, through jurisprudence established in court cases as well as through legislative authority established by the provinces.

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15
Q

Human resources planning

A

an umbrella term that encompasses overarching philosophies, policies, and practices that are in line with the organization’s strategy

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16
Q

Recruiting

A

the process of developing a pool of qualified job applicants

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17
Q

Job analysis

A

a purposeful, systematic process for collecting information on the important work-related aspects of a job in line with the organization’s strategic direction

The information derived from job analysis is absolutely vital to effective HR planning.

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18
Q

Typically, a job analysis collects four kinds of information:

A

work activities, such as what workers do and how, when, and why they do it;

the tools and equipment used to do the job;

the context in which the job is performed, such as the actual working conditions or schedule; and

the personnel requirements for performing the job, meaning the knowledge, skills, and abilities needed to do a job well.

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19
Q

job description

A

a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job to help the organization realize its strategy

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20
Q

Job specifications

A

a written summary of the qualifications needed to successfully perform a particular job to enable the organization to reach its organizational objectives

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21
Q

Job analysis, job descriptions, and job specifications comprise the foundation on which all critical human resource activities are built. They are used during recruiting and selection to match applicant qualifications with the requirements of the job. So it is critically important that job descriptions be _________.

A

Job analysis, job descriptions, and job specifications comprise the foundation on which all critical human resource activities are built. They are used during recruiting and selection to match applicant qualifications with the requirements of the job. So it is critically important that job descriptions be accurate.

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22
Q

Turnover is a real problem and a large reason for turnover is because ____________

A

Turnover is a real problem and a large reason for turnover is because job descriptions are not up to date.

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23
Q

Job analyses, job descriptions, and job specifications also help companies meet the ____________ that their human resource decisions be job-related.

A

Job analyses, job descriptions, and job specifications also help companies meet the legal requirement that their human resource decisions be job-related.

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24
Q

Internal recruiting

A

the process of developing a pool of qualified job applicants from people who already work in the company

Internal recruiting improves employee commitment, morale, and motivation.

It also reduces recruitment startup time and costs, and because employees are already familiar with the company’s culture and procedures, they are more likely to succeed in their new jobs.

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25
Q

Job posting

A

involves advertising job openings within the company to existing employees.

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26
Q

career path

A

a planned sequence of jobs through which employees may advance within an organization.

For example, a person who starts as a sales representative may move up to sales manager and then to district or regional sales manager.

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27
Q

succession planning

A

deals with evaluating the needs that are required in future years in terms of staffing to replace people who retire, or who may leave, and to provide personnel for needed strategic growth requirements

Succession planning is critical as employees in an organization must develop the correct strategic attributes and skills if they are to move ahead in the organization.

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28
Q

External recruiting

A

the process of developing a pool of qualified job applicants from outside the company

External recruitment methods include placing advertisements (newspapers, magazines, direct mail, radio, or television), generating employee referrals (asking current employees to recommend possible job applicants), encouraging walk-ins (people who apply on their own), approaching outside organizations (universities, technical/trade schools, professional societies), using employment services (provincial, federal, or private employment agencies, temporary help agencies, professional search firms), holding special events (career conferences, job fairs), and developing Internet job sites.

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29
Q

Realistic job previews

A

a tool used to explain to potential new employees both the positive and negative aspects of a new job

They provide information about pay and hours of work, but they also discuss aspects of the job such as promotion rates, job progression, amount of flexibility, autonomy, stress, interaction with customers, amount of travel, and the corporate culture.

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30
Q

When recruiting managers, organizations tend to rely most heavily on ________________

A

When recruiting managers, organizations tend to rely most heavily on newspaper ads, employee referrals, and search firms

Most students will find themselves relying more and more on web searches, utilizing sites such as Monster, Workopolis, Facebook, LinkedIn, and VancouverJobShop.

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31
Q

Internet job listings generate _____ times as many résumés as one ad in the Sunday newspaper.

A

Internet job listings generate nine times as many résumés as one ad in the Sunday newspaper.

And because these sites attract so many applicants and offer so many services, companies can find qualified applicants without resorting to recruitment firms, which typically charge 25 percent or more of a new hire’s salary.

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32
Q

Selection

A

the process of gathering information about job applicants to decide who should be offered a job

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33
Q

Validation

A

the process of determining how well a selection test or procedure predicts future job performance; the better or more accurate the prediction of future job performance, the more valid a test is said to be

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34
Q

human resource information system (HRIS)

A

a computerized system for gathering, analyzing, storing, and disseminating information related to the HRM process

Applicants invited to Facebook’s campus for onsite interviews must solve more difficult coding problems, including a take-home “hack.” Facebook engineer Carlos Bueno says, “If it says ‘expert in X’ (on your résumé), we will try to schedule you with a proven expert in X, so be prepared. If you are not, leave it off your résumé.”

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35
Q

Résumés also pose problems for companies

A

Studies have found that as many as one-third of job applicants intentionally falsify some information on their résumés and that 80 percent of the information on résumés may be misleading.

Therefore, managers should verify the information collected via résumés and application forms by comparing it with additional information collected during interviews and other stages of the selection process, such as references and background checks

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36
Q

employment references

A

sources such as previous employers or coworkers who can provide job-related information about job candidates

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37
Q

Background checks

A

procedures used to verify the truthfulness and accuracy of information that applicants provide about themselves and to uncover negative, job-related background information not provided by applicants

Background checks are conducted by contacting “educational institutions, prior employers, court records, police and governmental agencies, and other informational sources either by telephone, mail, remote computer access, or through in-person investigations.”

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38
Q

A former employer should not impede a former employee’s job search - info

A

The Supreme Court of Canada ruled that employers have an obligation to act in good faith when an employee is terminated.

In Jack Wallace v. The United Grain Growers, the plaintiff was awarded 24 months’ salary when it was found that United Grain Growers neglected to provide a reference letter for him to secure a new job.

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39
Q

Don’t Ask (Topics to Avoid in an Interview)

A

Gender, gender identity, gender expression, marital status, or family status.

Source of income.

Previous names.

Next of kin. Asking for names of relatives or next of kin before hiring is not recommended. Such information can reveal the gender, marital status, place of origin, or ancestry of the applicant.

Dependants and child care. Avoid inquiries about an applicant’s spouse, number of children or dependants, child care arrangements, or plans to have children.

Age and date of birth.

Previous address.

Citizenship.

Physical or mental disability.

Sexual orientation.

Workers’ Compensation.

Language ability. It is appropriate to ask applicants if they have some proficiency in the languages that are specifically required for the job.

Educational institutions.

Religious beliefs.

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40
Q

Specific ability tests (aptitude tests)

A

tests that measure the extent to which an applicant possesses the particular kind of ability needed to do a job well

For example, clerical workers have to be good at accurately reading and scanning numbers.

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41
Q

Cognitive ability tests

A

tests that measure the extent to which applicants have abilities in perceptual speed, verbal comprehension, numerical aptitude, general reasoning, and spatial aptitude

Specific ability tests predict job performance in only particular types of jobs, whereas cognitive ability tests accurately predict job performance in almost all kinds of jobs. This is because people with strong cognitive or mental abilities are usually good at learning new things, processing complex information, solving problems, and making decisions—abilities that are important in almost all jobs. In fact, cognitive ability tests are almost always the best predictors of job performance.

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42
Q

Biographical data (biodata)

A

extensive surveys that ask applicants questions about their personal backgrounds and life experiences

The basic idea behind biodata is that past behaviour is the best predictor of future behaviour. Biodata can be a very good predictor of future job performance, especially in an entry-level job.

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43
Q

Biodata - information

A

some of the information requested in biodata surveys is related to topics that employers should avoid in applications, interviews, or other parts of the selection process. This information can be requested in biodata questionnaires provided that the company can demonstrate that the information is job-related (i.e., valid) and does not have an adverse impact on protected groups of job applicants. Biodata surveys should be reviewed by HR professionals for legality, validated and tested for adverse impact, and thoroughly vetted by knowledgeable professionals before they are used to make selection decisions. For example, studies have found that married Canadian military recruits have a much higher attrition rate than single recruits, yet it is illegal in Canada to discriminate against anyone on the basis of marital status.

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44
Q

Work sample tests

A

tests that require applicants to perform tasks that are actually done on the job

or example, one computer-based work sample test in the real estate industry has applicants assume the role of a real estate agent who must decide how to interact with virtual clients in a game-like scenario. And, as in real life, the clients are variously frustrating, confused, demanding, or indecisive. In one situation, the wife loves the house but the husband hates it. The applicants, just like actual real estate agents, must demonstrate what they will do in these realistic situations.

45
Q

Assessment centres

A

a series of managerial simulations, graded by trained observers, that are used to determine applicants’ capability for managerial work

assessment centres are most often used to select applicants who have high potential to be good managers. Assessment centres often last two to five days and require participants to complete a number of tests and exercises that simulate managerial work.

46
Q

in-basket exercise

A

usually a computer-simulated test in which the applicant is given a manager’s in-basket containing emails, memos, phone messages, VoIP messages, organizational policies, and other communications normally received by and available to managers. Applicants have a limited time to read through the in-basket, prioritize the items, and decide how to deal with each item. Experienced managers then score the applicants’ decisions and recommendations.

47
Q

leaderless group discussion

A

a group of six applicants is given approximately two hours to solve a problem, but no one is put in charge (hence “leaderless”)

Trained observers watch and score each participant on the extent to which he or she facilitates discussion, listens, leads, persuades, and works well with others.

48
Q

interviews

A

a selection tool in which company representatives ask job applicants job-related questions to determine whether they are qualified for the job

Interviews are probably the most frequently used and heavily relied upon tools for selecting among job candidates.

49
Q

unstructured interviews

A

interviews in which interviewers are free to ask the applicants anything they want

unstructured interviews are about half as accurate as structured interviews at predicting which job applicants should be hired.

50
Q

structured interviews

A

interviews in which all applicants are asked the same set of standardized questions, usually including situational, behavioural, background, and job knowledge questions

This approach improves the accuracy, usefulness, and validity of the interview; in addition, it is less likely that interviewers will ask questions that violate employment laws

51
Q

The primary advantage of structured interviews is _________________

A

The primary advantage of structured interviews is that comparing applicants is much easier because they are all asked the same questions.

52
Q

Structured interviews typically contain four types of questions:

A

situational, behavioural, background, and job knowledge

53
Q

Situational questions ask applicants how they would respond in a __________________

A

Situational questions ask applicants how they would respond in a hypothetical situation (e.g., “What would you do if…”)

54
Q

Behavioural questions ask applicants what they did in ____________ that may be similar to what is required for the job for which they are applying

A

Behavioural questions ask applicants what they did in previous jobs that may be similar to what is required for the job for which they are applying (e.g., “In your previous jobs, tell me about…”)

55
Q

Background questions ask applicants about __________________

A

Background questions ask applicants about their work experience, education, and other qualifications (e.g., “Tell me about the training you received at…”)

56
Q

job knowledge questions ask applicants to __________________

A

job knowledge questions ask applicants to demonstrate their job knowledge (e.g., for nurses, “Give me an example of a time when one of your patients had a severe reaction to a medication. How did you handle it?”)

57
Q

Semistructured interviews

A

in between structured and unstructured interviews

A large part of the semistructured interview (perhaps as much as 80 percent) is based on structured questions, but some time is set aside for unstructured interviewing to allow the interviewer to probe into ambiguous or missing information uncovered during the structured portion of the interview.

58
Q

Structured and unstructured interviews - information

A

Contrary to what you’ve probably heard, recent evidence indicates that even unstructured interviews do a fairly good job. When conducted properly, however, structured interviews can lead to much more accurate hiring decisions than unstructured ones. The validity of structured interviews can sometimes rival that of cognitive ability tests. But even more important, because interviews are especially good at assessing applicants’ interpersonal skills, they work particularly well with cognitive ability tests. The combination (i.e., smart people who work well in conjunction with others) leads to even better selection decisions than using either alone.

59
Q

Training

A

developing the skills, experience, and knowledge employees need to perform their jobs or improve their performance

Canadian companies spend more than $7 billion a year on training.

60
Q

Needs assessment

A

the process of identifying and prioritizing the learning needs of employees

Needs assessments can be conducted by identifying performance deficiencies, listening to customer complaints, surveying employees and managers, or formally testing employees’ skills and knowledge.

61
Q

________________ restricts employers from discriminating on the basis of age, gender, race, colour, religion, national origin, or disability when selecting training participants.

A

Employment law restricts employers from discriminating on the basis of age, gender, race, colour, religion, national origin, or disability when selecting training participants.

62
Q

if the training objective is to impart information or knowledge to trainees, then you should use ______________

A

if the training objective is to impart information or knowledge to trainees, then you should use films and videos, lectures, and planned readings.

63
Q

If the objective is to develop analytical and problem-solving skills, then use ______________

A

If the objective is to develop analytical and problem-solving skills, then use case studies, coaching and mentoring, and group discussions.

64
Q

If practising, learning, or changing job behaviours is the objective, then use __________________

A

If practising, learning, or changing job behaviours is the objective, then use on-the-job training, role playing, simulations and games, and vestibule training.

65
Q

If training is supposed to meet more than one of these objectives, then ________________

A

If training is supposed to meet more than one of these objectives, then your best choice may be to combine one of the previous methods with computer-based training.

66
Q

several disadvantages to elearning

A

First, despite its increasing popularity, it’s not always the appropriate training method. Elearning can be a good way to impart information, but it isn’t always as effective for changing job behaviours or for developing problem-solving and analytical skills.

Second, elearning requires a significant investment in computers and high-speed Internet and network connections for all employees.

Finally, although elearning can be faster, many employees find it so boring and unengaging that they may choose to do their jobs rather than complete elearning courses when sitting alone at their desks.

67
Q

Training can be evaluated in four ways:

A

on reactions (how satisfied trainees were with the program),

on learning (how much employees improved their knowledge or skills),

on behaviour (how much employees actually changed their on-the-job behaviour because of training),

on results (how much training improved job performance—for example, how much it increased sales or quality, or decreased costs).

68
Q

Performance appraisal

A

the process of assessing how well employees are doing their jobs

Most employees and managers intensely dislike performance appraisals. 70 percent of employees are dissatisfied with the performance appraisal process at their company. And according to the Society for Human Resource Management, 90 percent of human resource managers are dissatisfied with their company’s performance appraisal system.

69
Q

Workers often have strong doubts about the accuracy of their performance appraisals—and they may be right.

A

For example, it’s widely known that assessors are prone to errors when rating worker performance. One of the reasons managers make these errors is that they often don’t spend enough time gathering or reviewing performance data.

70
Q

To minimize rating errors and improve the accuracy of job performance measures, two general approaches have been taken:

A

improving performance appraisal measures themselves

training performance raters to be more accurate.

71
Q

One way for companies to improve performance appraisals is to use as many _____________ as possible.

A

One way for companies to improve performance appraisals is to use as many objective performance measures as possible.

72
Q

Objective performance measures

A

measures of job performance that are easily and directly counted or quantified

But when objective measures aren’t available—and frequently they aren’t—subjective measures have to be used instead.

73
Q

Subjective performance measures

A

require that someone judge or assess a worker’s performance.

The most common kind of subjective performance measure is the graphic rating scale (GRS)

see Exhibit 10.7.

74
Q

behavioural observation scale (BOS)

A

a rating scale that indicates the frequency with which workers perform specific behaviours that are representative of the job dimensions critical to successful job performance

BOSs work well for rating critical dimensions of performance

Also, studies have found that managers strongly prefer BOSs when giving performance feedback; when differentiating between poor, average, and good workers; when identifying training needs; and when measuring performance.

see Exhibit 10.7.

75
Q

rater training

A

training performance appraisal raters in how to avoid rating errors and increase rating accuracy

76
Q

frame-of-reference training

A

Most effective in this regard is frame-of-reference training, in which a group of trainees learn how to conduct performance appraisals by watching a video of an employee at work. Next, they evaluate the performance of the person in the video. A trainer (i.e., subject matter expert) then shares his or her evaluations, and trainees’ evaluations are compared with the expert’s. The expert then explains his or her evaluations. This process is repeated until the differences in evaluations by trainees and evaluations by the expert are minimized. The logic behind frame-of-reference training is that by adopting the frame of reference used by an expert, trainees will be able to accurately observe, judge, and use the scale to evaluate performance of others.

77
Q

Sharing Performance Feedback With Employees - information

A

After gathering accurate performance data, the next step is to share performance feedback with employees. Unfortunately, even when performance appraisal ratings are accurate, the appraisal process often breaks down at the feedback stage. Employees become defensive and dislike hearing any negative assessments of their work, no matter how small. Managers become defensive, too, and dislike giving appraisal feedback as much as employees dislike receiving it.

78
Q

What can be done to overcome the inherent difficulties in performance appraisal feedback sessions? Since performance appraisal ratings have traditionally been the judgments of just one person, the boss, one possibility is to use _______________

A

What can be done to overcome the inherent difficulties in performance appraisal feedback sessions? Since performance appraisal ratings have traditionally been the judgments of just one person, the boss, one possibility is to use 360-degree feedback.

79
Q

360-degree feedback

A

a performance appraisal process in which feedback is obtained from the boss, subordinates, peers and coworkers, and the employees themselves.

The data, which are obtained anonymously (except for the feedback from the boss), are compiled into a feedback report that compares the employee’s self-ratings with those of the boss, subordinates, peers, and coworkers. Usually, a consultant or human resource specialist discusses the results with the employee. The advantage of 360-degree programs is that feedback such as “You don’t listen” is often more credible when it comes from several people.

80
Q

1

Managers can do three things to make performance reviews as comfortable and productive as possible.

A

First, they can separate developmental feedback, which is designed to improve future performance, from administrative feedback, which is used as a reward for past performance

When managers give developmental feedback, they’re acting as coaches, but when they give administrative feedback, they’re acting as judges.

81
Q

2

Managers can do three things to make performance reviews as comfortable and productive as possible.

A

Second, Meyer suggests that performance appraisal feedback sessions be based on self-appraisals, in which employees carefully assess their own strengths, weaknesses, successes, and failures in writing.

82
Q

3

Managers can do three things to make performance reviews as comfortable and productive as possible.

A

what people do with the performance feedback they receive really matters.

A study of 1,361 senior managers found that managers who reviewed their 360-degree feedback with an executive coach (hired by the company) were more likely to set specific goals for improvement, ask their bosses for ways to improve, and subsequently improve their performance.

83
Q

Why is discussing 360-degree feedback with subordinates so effective?

A

These discussions help managers better understand their weaknesses, force them to develop a plan to improve, and demonstrate to the subordinates the managers’ public commitment to improving.

In short, it helps to have people discuss their performance feedback with others, but it particularly helps to have them discuss their feedback with the people who provided it.

84
Q

Compensation

A

the financial and nonfinancial rewards that organizations give employees in exchange for their work

85
Q

Employee separation

A

the voluntary or involuntary loss of an employee

86
Q

Involuntary separation

A

occurs when employers decide to terminate or lay off employees

87
Q

Voluntary separation

A

occurs when employees decide to quit or retire.

88
Q

There are three basic kinds of compensation decisions:

A

pay level, pay variability, and pay structure

89
Q

Pay-level decisions

A

decisions about whether to pay workers at a level that is below, above, or at current market wages

Companies use job evaluation to set their pay structures

90
Q

Job evaluation

A

a process that determines the worth of each job in a company by establishing the market value of the knowledge, skills, and requirements needed to perform it

91
Q

Above-market wages

A

can attract a larger, more qualified pool of job applicants, increase the rate of job acceptance, decrease the time it takes to fill positions, and increase the time that employees stay.

92
Q

Pay variability decisions

A

concern the extent to which employees’ pay varies with individual and organizational performance

Linking pay to performance is intended to increase employee motivation, effort, and job performance. Piecework, sales commissions, profit sharing, employee stock ownership plans, and stock options are common pay variability options

93
Q

piecework

A

a compensation system in which employees are paid a set rate for each item they produce

94
Q

commission

A

a compensation system in which employees earn a percentage of each sale they make

95
Q

profit sharing

A

a compensation system in which a company pays a percentage of its profits to employees in addition to their regular compensation

The more profitable the company, the more profit is shared.

96
Q

employee stock ownership plan (ESOP)

A

a compensation system that awards employees shares of company stock in addition to their regular compensation

97
Q

stock options

A

a compensation system that gives employees the right to purchase shares of stock at a set price, even if the value of the stock increases above that price

98
Q

Pay structure decisions

A

concerned with internal pay distributions—that is, the extent to which people in the company receive very different levels of pay.

99
Q

hierarchical pay structures

A

there are big differences from one pay level to the next. The highest pay levels are for people near the top of the pay distribution. The basic idea behind hierarchical pay structures is that large differences in pay between jobs or organizational levels should motivate people to work harder to obtain those higher paying jobs.

100
Q

compressed pay structures

A

typically have fewer pay levels and smaller differences in pay between levels. Pay is less dispersed and more similar across jobs in the company.

The basic idea behind compressed pay structures is that similar pay levels should lead to higher levels of cooperation, feelings of fairness and common purpose, and better group and team performance.

101
Q

So, should a company choose a hierarchical pay structure or a compressed one?

A

Studies tend to indicate that there are significant problems with the hierarchical approach. The most damaging finding is that there appears to be little link between organizational performance and the pay of top managers.

Furthermore, studies of professional athletes indicate that hierarchical pay structures (e.g., paying superstars 40 to 50 times more than the lowest paid athlete on the team) hurt the performance of teams and individual players.

Likewise, managers are twice as likely to quit their jobs when their companies have strongly hierarchical pay structures (i.e., when they’re paid dramatically less than the people above them).

It seems that hierarchical pay structures work best for independent work, where it’s easy to determine the contributions of individual performers and little coordination with others is needed to get the job done. In other words, hierarchical pay structures work best when clear links can be drawn between individual performance and individual rewards. By contrast, compressed pay structures, in which everyone receives similar pay, seem to work best for work that requires employees to work together. Some companies are pursuing a middle ground, combining hierarchical and compressed pay structures by giving ordinary workers the chance to earn more through ESOPs, stock options, and profit sharing.

102
Q

Wrongful discharge

A

a legal doctrine that requires employers to have a job-related reason to terminate employees

103
Q

Downsizing

A

the planned elimination of jobs in a company

104
Q

outplacement services

A

employment-counselling services offered to employees who are losing their jobs because of downsizing

105
Q

Early retirement incentive programs (ERIPs)

A

programs that offer financial benefits to employees to encourage them to retire early

106
Q

phased retirement

A

employees transition to retirement by working reduced hours over a period of time before completely retiring

107
Q

Employee turnover

A

loss of employees who voluntarily choose to leave the company

In general, most companies try to keep the rate of employee turnover low to reduce recruiting, hiring, training, and replacement costs.

108
Q

functional turnover

A

loss of poorly performing employees who voluntarily choose to leave a company

Functional turnover gives the organization a chance to replace poor performers with better ones. One study found that simply replacing poorly performing leavers with average workers would increase the revenues produced by retail salespeople in an upscale department store by $112,000 per person per year

109
Q

dysfunctional turnover

A

loss of high-performing employees who voluntarily choose to leave a company

Employee turnover should be carefully analyzed to determine whether good or poor performers are choosing to leave the organization. If the company is losing too many high performers, managers should determine the reasons and find ways to reduce the loss of valuable employees. The company may have to raise salary levels, offer enhanced benefits, or improve working conditions to retain skilled workers.