Chapters 1-4 Flashcards
what are the 3 main components of the compensation system?
base pay: foundation pay components for most employees, usually based on some unit of time worked
performance pay: relates employee monetary rewards to some measure of individual, group, or organization performance
indirect pay: non cash items that satisfy a variety of specific employee needs, sometimes known as employee benefits
compensation system
plan for how the organization will mix and total amount of base pay, performance pay, and indirect pay to be paid to various categories of employees.
what are the 2 key aspects of a compensation strategy?
1) mix of 3 compensation components and how mix will vary for different employees, (how should compensation be paid) and 2) total amount of compensation to be provided (how much)
optimal reward system
will be the one that adds the most value to the organization, after considering all its costs
vertical fit
alignment of strategies at different levels
horizontal fit
alignment of strategies at the same level
organizational structure
- means through which an organization generates the behaviours necessary to execute its business strategy
An company’s human resource management functions, such as recruitment, training, and performance management, are all focused on helping its organizational objectives. What is this alignment of strategies called?
horizontal fit
What are the 6 structural variables
- Reward system
- Job design
- Coordination and departmentation
- Decision-making and leadership structure
- Communication and information structure
- Control structure
what are the 5 main contextual variables
technology
nature of the workforce
organization size
organization’s environment
business strategy
What are the 3 types of reward problems
- Failure to produce desired behaviour
- Production of desired behaviour and undesirable consequences
- Production of reward dissatisfaction
What are the 3 key employee behaviours
- Membership behaviour: occurs when employees decide to join and remain with a firm.
- Task behaviour: occurs when employees perform the specific tasks that have been assigned to them.
Organizational citizenship behaviour: occurs when employees voluntarily undertake special behaviours beneficial to the organization that go beyond simple membership.
what are the 3 key employee attitudes
- Job satisfaction
- Work motivation
- Organizational identification
Maeesha is well known for her willingness to help others and participate in employee welfare activities that are not part of her job duties. What type of behaviour is this?
b. Organizational citizenship behaviour
What are the 4 main causes of reward dissatisfaction
- Violation of the psychological contract
- Perceived inequity
- Relative deprivation
- Lack of organization justice
What does violations of the psychological contract mean
when the org. violated the employee’s Expectations about the rewards offered by a given job and the contributions necessary to perform the job
equity theory
Employees’ base perceptions of equity (fairness) on a comparison of their contributions/rewards ratio to the ratios of others perceived as being similar
What are the 2 main components of organization justice
- Distributive justice○ The perception that overall reward outcomes are fair
- Procedural justice
The perception that the process for reward determination is fair
What are the 6 conditions that must be met for procedural justice
consistent:
free of bias
flexible/able to appeal
accurate
ethical
representative
What are the 2 actions that will follow reward dissatisfaction?
attempt to increase rewards
attempt to reduce contributions
what are the 5 things someone will do to try increase rewards
find more rewarding job
acquire elicit rewards
demand higher pay/unionize
increase effort/performance
demand improved job duties
what are the 4 things someone will do to reduce contributions
demand reduced job duties
reduce effort/performance
increased absenteeism
find less demanding job
What is equity sensitivity
- A personality trait that entails a high predisposition toward perceiving personal inequity
what is organizational commitment
Strength of individual attachment to the organization
what are the 2 types of organizational commitment
○ Affective commitment, attachment to an organization based on positive feelings toward the organization
Continuance commitment, attachment to an organization based on perceived lack of better alternatives
Is there are relationship between continuance commitment and job satisfaction?
no
is there a relationship between affective commitment and job satisfaction
yes
What is the difference between content theories and process theories
Content theories:
* focus on understanding motivation by identifying underlying human needs
Process Theories:
* focus on understanding motivation by determining the process humans use to make choices about the specific actions they will take
In Maslow hierarchy, which managerial strategy matches each level
classical: physiological/safety needs
human relations: social needs
high involvement: self-esteem, self actualization
What are the 3 content theories
maslow’s, 2 factor theory, job characteristics model
What does the 2 factor theory of motivation state
job satisfaction is caused by extrinsic (hygiene) factors and intrinsic (motivator factors)
to have satisfied and motivated employees, organizations should prove both extrinsic and intrinsic rewards
Hygienes correspond to the lower-order needs and the motivators to the higher-order needs.
What are 5 core dimension in the job characteristics model that intrinsically motivate people in their job
task significance: perceived importance or social value of a given task
autonomy: degree of freedom workers have in deciding how to perform their job
skill variety: variety of skills required for task completion
job feedback: extent to which the job itself provides feedback on worker performance
task identity: the extent to which a worker performs a complete cycle of job activities
What are the 3 process theories of motivation
reinforcement theory
expectancy theory
attribution theory
Explain reinforcement theory
- behaviour will be repeated if valued outcomes flow from that behaviour or if performing the behaviour reduces undesirable outcomes
What 3 questions will someone ask themselves in expectancy theory in order to exert effort to perform the behaviour
- Is the task worth doing—do the rewards exceed the costs? ( valence)
- Will I actually receive the rewards if I accomplish the task? (instrumentality)
Will I actually be able to accomplish the task if I exert the effort? (expectancy)
What does attribution theory state
Humans often act without understanding their motives for their behaviour and afterward attempt to attribute motives for their actions
What does economic theory state?
Assumes that people are motivated only by extrinsic (economic) rewards, and they will always seek to maximize these rewards while minimizing their contributions to the organization
what is agency theory
○ Agents (employees) will pursue their own self-interests rather than the interests of their principals (employers) unless they are closely monitored or their interests are aligned with the interests of their principals
What are the 5 main dimensions of organizational citizenship behaviour
○ Altruism
○ General compliance
○ Courtesy
○ Sportsmanship
Civic virtue
What are the 3 preconditions needed for development of citizenship behaviour
trust
employment security
org needs to care for employee needs
What are 2 key questions you have to answer when designing a compensation strategy
what role each of the 3 comp components should play in the mix and what total level of compensation should be provided
What is base pay and why is it used
wages and salary, easy to measure, stable, easy to price for employer
What are the advantages vs disadvantages of based pay
advantages: flexible, demonstrates commitment, simple, support particular managerial strategy
disadvantages: fixed employer commitment, does not directly motivate task behaviour or directly contribute to org. citizenship, not self-correcting
What is performance pay?
- any type of financial reward provided only when certain specified performance results occur
- results may be based on the performance of individual employees, a group or team of employees, or the entire organization
what are the 3 types of performance pay plans?
- Individual performance pay plans
- include piece rates, commissions, merit pay, and targeted incentives
- Group performance pay plans
- include productivity gain-sharing plans, goal-sharing plans, and other types of team-based pay
- Organizational performance pay plans
- include employee profit-sharing plans, employee stock plans, and other organizational pay plans
What are the advantages and disadvantages of performance pay
advantages: signal key behaviours, motivate employees, set performance standards, support specific managerial strategies
disadvantages: more complex, may focus on only rewarded behaviours, may cause unanticipated consequences
What is indirect pay?
any type of employer-provided reward (or “benefit”) that serves an employee need but is not part of base or performance pay
what are the 6 major categories of indirect pay
- Benefits mandated by law
(including employer contributions to the Canada/Quebec Pension Plan, Employment Insurance, and Workers’ Compensation benefits.) - Deferred income plans (known as retirement or pension plans).
- Life insurance; extended medical, dental, and disability insurance; and other types of health benefits.
- Pay for time not worked, such as paid holidays and leaves.
- Employee services (ranging from psychological counselling to food services).
6.Miscellaneous benefits, which may range from provision of company cars to purchase discounts on company products or services.
what are advantages and disadvantages of indirect pay
matches unionized firms, protect employees from adversity, can support managerial strategy
disadvantages: costly, rigid, difficult to eliminate once provided, admin cost, does not motivate task behaviour
what are the 3 base pay methods
- Market pricing
- Determining the average amount of pay other employers are offering for a given job
- Job evaluation
- Establishing base pay by ranking all jobs in the firm according to their value to that firm
- Pay-for-knowledge system (PKS)
- According to the total value of the skills and competencies an employee has acquired
what are the 2 types of pay for knowledge systems?
- Competency-based pay
- Based on the characteristics, rather than the performance, of individual employees; usually applied to managerial or professional employees
- Skill-based pay
- Based on the specific skills and capabilities of individual employees, rather than on the specific tasks they are carrying out; usually applied to operational-level employees
What are some issues in developing a skill based pay system
- Providing learning
opportunities
Certifying skill achievement
Deciding which employees groups to include
what are the 4 main issues with competency based pay systems?
- Identifying competencies that demonstrably affect performance
- Devising methods to measure achievement of each competency
- Compensating each competency
- Providing learning opportunities
