comm 211 midterm 2 Flashcards
Reliability
The extent to which a measurement is free from random error
Validity
The extent to which performance on a measure (such as a test score) is related to what the measure is designed to assess (such as job performance)
Criterion-Related Validity
A measure of validity based on showing a substantial correlation between test scores and job performance scores
Predictive Validation
Research that uses the test scores of all applicants and looks for a relationship between the scores and future performance of the applicants who were hired
Concurrent Validation
Research that consists of administering a test to people who currently hold a job, then comparing their scores to existing measure of job performance
Content Validity
Consistency between the test items or problems and the kinds of situations or problems that occur on the job
Construct Validity
a measurement validity that determines how well a test or study measures the concept it was designed to evaluate
Generalizable
Valid in other contexts beyond the context in which the selection method was developed
Utility
The extent to which something provides economic value greater than its cost
Aptitude Tests
Tests that asses how well a person can learn or acquire skills and abilities
Achievement Tests
Tests that measure a person’s existing knowledge and skills
Cognitive Ability Tests
Tests designed to measure such mental abilities as verbal skills, quantitative skills, and reasoning ability
Assessment Center
A wide variety of specific selection programs that use multiple selection methods to rate applicants or job incumbents on their management potential
Nondirective Interview
A selection interview in which the interviewer has great discretion in choosing questions to ask each candidate
Structured Interview
A selection interview that consists of a predetermined set of questions for the interviewer to ask
Situational Interview
A structured interview in which the interviewer describes a situation likely to arise on the job, then asks the candidate what he or she would do in that situation
Multiple-Hurdle Model
Process of arriving at a selection decision by eliminating some candidates at each stage of the selection process
Compensatory Model
Process of arriving at a selection decision in which a very high score on one type of assessment can make up for a low score on another
Training
An organization’s planned efforts to help employees acquire job-related knowledge, skills, abilities, and behaviors, with the goal of applying these on the job
Instructional Design
A process of systematically developing training to meet specified needs
Learning Management System (LMS)
A computer application that automates the administration, development, and delivery of training programs
Needs Assessment
The process of evaluating the organization, individual employees, and employees’ tasks to determine what kinds of training, if any, are necessary
Task Analysis
The process of identifying and analyzing tasks to be trained for
Readiness for Training
A combination of employee characteristics and positive work environment that permit training
On-the-Job Training (OJT)
Training methods in which a person with job experience and skill guides trainees in practicing job skills at the workplace
Apprenticeship
A work-study training method that teaches job skills through a combination of on-the-jog training and classroom training
Simulation
A training method that represents a real-life situation, with trainees making decisions resulting in outcomes that mirror what would happen on the job
Experiential Programs
Training programs in which participants learn concepts and apply them by simulating behaviors involved and analyzing the activity, connecting it with real-life situations
Transfer of Training
On-the-job use of knowledge, skills, and behaviors learned in training
Employee Development
The combination of formal education, job experiences, relationships, and assessment of personality and abilities to help employees prepare for the future of their careers
Assessment
Collecting information and providing feedback to employees about their behavior, communication style, or skills
Myers-Briggs Type Indicator (MBTI)
Psychological test that identifies individuals’ preferences for source of energy, means of information gathering, way of decision making, and lifestyle, providing information for team building and leadership development
Leaderless Group Discussion
An assessment center exercise in which a team of five to seven employees is assigned a problem and must work together to solve it within a certain time period
Succession Planning
The process of identifying and tracking high-potential employees who will be able to fill top management positions when they become vacant
Benchmark
A measurement tool that gathers ratings of a manager’s use of skills associated with success in managing.
Employee Engagement
The degree to which employees are fully involved in their work and the strength of their job and company commitment
HRM Audit
A formal review of the outcomes of HRM functions, based on identifying key HRM functions and measures of business performance
HR dashboard
A display of a series of HR measures, showing human resource goals and objectives and progress toward meeting them.
HR analytics
Type of assessment of HRM effectiveness that involves determining the impact of, or the financial cost and benefits of, a program or practice
Yield Ratio
a ratio that expresses the percentage of applicants who successfully move from one stage of the recruitment and selection process to the next
External recruitment
the process of seeking new employees from outside the firm
National Occupational Classification (NOC)
Tool created by the federal government to provide a standardized source of information about jobs in Canada’s labour market
Applicant Screening
Reducing a large pool of applicants to a manageable selection for serious consideration. Filters—for example, a certain educational level—eliminate inadequate applications rapidly.
Selection Testing
used to measure qualities that are directly or indirectly related to doing well on the job
Validity
the extent to which a test measures or predicts what it is supposed to
Reliablility
The consistency of test scores across repeated assessments. For example, test-retest reliability examines the extent to which scores change over time.
GATB (General Aptitude Test Battery)
Developed by U.S. Employment Service to measure multiple aptitudes
Types of Tests Used in Selection
Cognitive tests, motor, physical/personality/achievement tests/assessment centers/micro-assesments
Selection Interview
A procedure designed to predict future job performance on the basis of applicants’ oral responses to oral inquiries.
Types of Interviews/degree
structured, semi-structured, unstructured
Interview Content
situational question/behavioral question
administering the interview
one on one/panel/sequentially or face-to-face/technology enabled
Situational Questions
What would you do if…
behavioral questions
Question designed to determine if an applicant has the necessary traits for a job. Tell me about a time.
Common Interviewing Mistakes
-poor planning
-snap judgments
-negative emphasis
-halo effect
-poor job knowledge
-contrast error
-influence of nonverbal behaviour
-leading
-too much/too little talking
-similar-to-me bias
halo effect
tendency of an interviewer to allow positive characteristics of a client to influence the assessments of the client’s behavior and statements
when the positive traits of an interviewee shadow negative traits.
contrast error
Error that occurs when an employee’s rating is based on how his or her performance compares to that of another employee rather than objective standards.
Reference Checking
The process of following up with references provided on an application to check the credibility of a job candidate.
Internal recruitment
the process of seeking employees who are currently within the firm to fill open positions
learning organization
An organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.
orientation
a course introducing a new situation or environment
professional development
The sum of activities a person performs to meet goals and/or to further his or her career.
organizational culture
the values, beliefs, and attitudes shared by organizational members
Organization enviroment
the shared perceptions organizational members have about their organization and work environment
Evaluation of Training
Approaches include measuring relevant job performance criteria before and after the training to determine the effect of training.
Training Needs Analysis
a three-step process of organizational, task, and person analysis; required to develop a systematic understanding of where training is needed, what needs to be taught or trained, and who will be trained
task analysis
the process of identifying and analyzing tasks to be trained for
performance analysis
Performance is evaluated relative to performance goals that were set earlier. Low performance issues, competition,
Instructional Design
a process of systematically developing training to meet specified needs
programmed learning
a systematic method for teaching job skills, involving presenting questions or facts, allowing the person to respond, and giving the learner immediate feedback on the accuracy of his or her answers
Validation
the process of determining how well a selection test or procedure predicts future job performance; the better or more accurate prediction of future job performance, the more valid a test is said to be
Implementaion
putting plans into action
Evaluate Training
systematically collecting the information necessary to make effective decisions about adopting, improving, valuing, and continuing an instructional activity or set of activities
Performance Management
the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals
forced distribution method
involves grouping employees into predefined frequencies of performance ratings
critical incident method
A job analysis method by which important job tasks are identified for job success
BARS (behaviorally anchored rating scale)
Popular approach that combines elements from critical incident and graphic rating scale; evaluator uses a rating scale, but items are examples of actual job behaviors
Sample BARS Approach
Team Management Bank of Ontario
Outstanding Performance 7 Can be expected to praise publicly for tasks completed well, and constructively criticizes in private those individuals who have produced less than adequate results.
Very Good Performance 6 Can be expected to show great confidence in subordinates, and openly displays this with the result that they develop to meet expectations.
Good Performance 5 Can be expected to ensure that employee HR records are kept right up to date, that reports are written on time, and that salary reviews are not overlooked.
Acceptable Performance 4 Can be expected to admit a personal mistake, thus showing that he or she is human too.
Marginally Acceptable Performance 3 Can be expected to make “surprise” performance appraisals of subordinates.
Poor Performance 2 Can be expected not to support decisions made by a subordinate (makes exceptions to rules).
Very Poor Performance 1 Can be expected not to accept responsibility for errors and to pass blame to subordinates.
MBO (management by objectives)
A system of goal setting and implementation; it involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees.
setting objective goals and seeing how you did
example performance objectives are:
# of sales- objective 85, accomplished 89
recruitment process
- Identify the Vacancy
- Write the Job Description and the Person Specification
- Advertise
- Evaluate applicants + short list
- Interview applicants short listed
- Select candidate(s) + offer contract
- Give feedback to unsuccessful candidates
Five step training process
- Training Needs Analysis
- Instructional Design
- Validation
- Implementation
- Evaluation of Training
Performance Management Process
- define performance outcomes for company division and department
- develop employee goals, behavior and actions to achieve outcomes
- provide support and ongoing performance discussions
- evaluate performance
- identify needed improvements
- provide consequences for performance results
Management by Objectives (MBO)
a program that encompasses specific goals, participatively set, for an explicit time period, with feedback on goal progress
Selection Ratio
Selection Ratio=number of applicants hired/total number of applicants
Why do Reliability and Validity matter?
- Increase the probability of hiring a high performer—in terms of both task and contextual performance
- Selection systems are legally defensible
- Ethical reasons—selection decisions are high stakes; they have a profound impact on the lives of applicants and others who work with them (for them)
Methods of Estimating Reliability
- Test – retest
- Internal Consistency
- Inter-rater Reliability
Types of Validity Evidence
- Criterion-related validity
-Concurrent validation studies
-Predictive validation studies - Content validity
-Does assessment contain a representative sampling of the content domain of the job?
-Experts’ systematic judgment
-No statistical measure of content validity - Differential Validity
-Test validation aimed at discovering the validity of a test for various subgroups - Validity generalization
-The extent to which validity coefficients can be generalized across situations.
Steps in the Selection Process
Step 1: Preliminary Reception of Applicants
STEP 2 Applicant Screening
STEP 3: Administration of Employment Tests
STEP 4: Employment Interviews
STEP 5: Realistic Job Previews
STEP 6 Verification of References
STEP 7: Contingent Assessments
STEP 8: Hiring Decision
Step 1: Preliminary Reception of Applicants
- Initial contact with applicants
- Walk-ins may receive preliminary interview
- Write-ins often receive letter or email of acknowledgment
- This step has disappeared in many organizations with the increasing use of Internet recruitment
STEP 2
Applicant Screening
- Goal: Remove from consideration applicants who do not meet qualifications
- Weighted application blanks (WAB)
- Ensure application is useful and meets legal requirements
- Biographical information blanks (BIB)
STEP 3
Administration of Employment Tests
Types of Tests
Ø Personality Tests
Ø Ability Tests; Knowledge Tests
Ø Performance Tests
-Situational Judgment Tests
-Assessment Centres
Ø Integrity Tests
What to look for in top quality assessments
- Validity
- Reliability
- Normative data
- Measurement of bona fide job requirements
- Defensible (test bias)
- Ongoing research and refinements
- Credentials of the test developer(s)
- Qualifications of the assessors
Classification of Employment Tests
Screening
* Application blanks
* Reference checks
Ability / Aptitude
* Bennett Mechanical Comprehension Tests
* Minnesota Clerical Test
* Wonderlic Personnel Test
Personality / Motivation
* NEO Personality Inventory
* Hogan Personality Inventory
* HEXACO Personality Inventory
* Polygraph tests
* Integrity tests
Interests and Person-Job/Person-Organization Fit
* Strong Interest Inventory
* Counterpart Match
Interviews and other “Competency” Assessments
Personality Testing – The Big Five Traits
- Extraversion (sometimes called Surgency): The broad dimension of Extraversion encompasses such more specific traits as talkative, energetic, and assertive.
- Agreeableness: Includes traits like sympathetic, kind, and affectionate.
- Conscientiousness: Includes traits like organized, thorough, and planful.
- Neuroticism (sometimes reversed and called Emotional Stability): Includes traits like tense, moody, and anxious.
- Openness to Experience (sometimes called Intellect or Intellect/Imagination): Includes traits like having wide interests, and being imaginative and insightful.
Socially Desirable Responding (Faking)
- Reducing Socially Desirable Responding:
- Bogus pipeline
- Social Desirability Scales:
Example: I never swear - Forced Choice Response Scales
STEP 4
Employment Interviews
- Employment Interviews
Ø Supervisors should have input into the final hiring decision
Ø Common (and expected) as part of the selection process; covered in more detail
Example of Behavioural Description Interviews (BDI) questions
- Tell me about a challenging assignment you had in the past year and how you handled this challenge.
- Describe a time when you had to deal with a very angry client.
- Describe a time when you had to decide what to do about a business situation where no guidelines existed or no precedents had been set.
Example Situational Question
- You recently started working as the assistant manager of a fast food restaurant located in one of the terminals of the Toronto-Pearson International Airport. At 5 p.m., unexpected freezing rain starts to paralyze all departing planes. You hear an announcement that all departing flights will be delayed until further notice. It is bad timing for you because one of your kitchen employees called in sick earlier that day, and you did not have time to check on the meat and produce that was delivered an hour ago. What do you do?
BDI Responses
* STAR technique
additional or follow-up questions used by the interviewer to help applicants provide elaborate descriptions of the situation they faced, tasks they were in charge of, actions they took, and the outcomes
Stages in a Typical Interview
- Interviewer Preparation
- Creation of Rapport
- Information Exchange
- Termination of Interview
- Evaluation of Candidate
Interviewer Errors
- Halo effect
- Leading questions - often have yes/no answers
- Stereotypes
- Interviewer domination
- Contrast errors
Interview Don’ts
- Don’t ask questions that can be answered yes or no.
- Don’t put words in the applicant’s mouth or telegraph a desired answer.
- Don’t interrogate the applicant as if the person is a criminal.
- Don’t over-interpret nonverbal cues.
- Don’t monopolize the interview, nor let the applicant dominate the interview so you can’t ask all the questions. (80/20 rule)
- Don’t try to assess too many KSAs in the interview (use other selection methods if necessary).
Interview Dos
- Do have a standardized, structured interview plan.
- Do base interview questions on job analysis.
- Do focus on assessing personal relations, good citizenship, and job knowledge in interviews.
- Do ask open-ended questions.
- Do listen to the candidate and asking probing questions to encourage him or her to express thoughts fully.
- Do draw out the applicant’s opinions, feelings, and thought patterns by repeating the last statement as a question or paraphrasing.
- Do ask for examples.
- Do take brief notes or record the interview (with candidates permission).
Are these questions legal?
Are these questions legal?
1.What is your maiden name?-
2.Would you include your birth certificate with your application?-
3.What is your mother tongue?-
4.Can you work during Christmas?-
5. Have you ever been convicted of an offence for which no pardon has been granted?-
6. Can you work every Friday from 7am to 3pm?-
no
no
no
yes
yes
yes
STEP 5
Realistic Job Previews
Realistic Job Previews
Ø Shows the candidate the type of work, equipment & working conditions
Ø Highlights positive & negative
Ø Tends to reduce employee turnover
Ø Don’t do this so late in the process!
STEP 6 Verification of References
Employment references
Ø Discuss applicant’s work history
Ø Former supervisors may not be candid, especially with negative information
Ø Reference letters
Ø Background checks
STEP 7
Contingent Assessments
Assessment of health, medical, and driving information
May be scheduled after the hiring decision
Drug tests are increasingly used but may be found to violate employee rights
STEP 8
Hiring Decision
Marks the end of the selection process
Ø Update HRIS
Ø Retain applications for future
Tradeoffs among predictors
Ø Subjective Approach
Ø Multiple Cutoff Approach
Ø Compensatory Approach
Socialization
- The continuing process by which an employee begins to understand and accept the values, norms, and beliefs held by others in the organization
- Involves turning outsiders into insiders
- May have taken place even before employees join organization
The Training System
- Employee benefits
- Skill improvement, self-development, self-confidence, sense of growth
- Organizational benefits
- Improved profitability, improved morale, lower costs, better corporate image
steps in the training system
- Conducting the Needs Assessment
* Organization Analysis
* An examination of the environment, strategies, and resources of the organization to determine where training emphasis should be placed.
* Task Analysis
* The process of determining what the content of a training program should be on the basis of a study of the tasks and duties involved in the job.
* Person Analysis
* A determination of the specific individuals who need training. - Training objectives:
Performance criteria
desired behavior
conditions - Learning objectives
= Learning principles: Participation, repitition, relevance, transference, feedback
= effective learning - program delivery
- evaluation
Virtual Reality/Augmented Reality
- In the system pictured here, trainees use their real weapons, modified with lasers, and can deploy supplemental equipment like TASERS® and mace. They’ll be asked to explain their choices after the simulation ends.
Developmental Strategies
- Cognitive
-Altering thoughts and ideas – increase knowledge and expertise
-Includes lectures, seminars, academic education - Behavioural
*Change behaviour (e.g., management style)
*Includes role-playing, behaviour modelling, team building, mentoring - Environmental
*Provide the setting for employees to develop
*Includes job rotation, temporary assignments, employee exchange programs, internal consulting, diversity & inclusion training
Evaluation of Training and Development
Criterion 1: Reaction
* Participant Reactions
* The simplest and most common approach to training evaluation is assessing trainees.
* Potential questions might include the following:
* What were your learning goals for this program?
* Did you achieve them?
* Did you like this program?
* Would you recommend it to others who have similar learning goals?
* What suggestions do you have for improving the program?
* Should the organization continue to offer it?
Criterion 2: Knowledge
* Checking to see whether they actually learned anything
* Testing knowledge and skills before beginning a training program gives a baseline standard on trainees that can be measured again after training to determine improvement.
Criterion 3: Behaviour
* Transfer of Training
* Effective application of principles learned to what is required on the job.
* Maximizing the Transfer of Training
* Feature identical elements
* Focus on general principles
* Establish a climate for transfer
* Give employees transfer strategies
Criterion 4: Results or Return on Investment (ROI)
* Utility of Training Programs
* Calculating the benefits derived from training:
* How much did quality improve because of the training program?
* How much has it contributed to profits?
* What reduction in turnover and wasted materials did the company get after training?
* How much has productivity increased and by how much have costs been reduced?
Performance Appraisal vs. Performance Management
+ Performance Appraisal
A process, typically performed annually by a supervisor for a subordinate, designed to help employees understand their roles, objectives, expectations, and performance success.
+ Performance Management
The process of creating a work environment in which people can perform to the best of their abilities.
Performance management process
Planning (Clarity of expectation) +
Managing(Monitoring and coaching for performance) +
Reviewing(Meausement and feedback on performance) =
Performing excellence
Uses of Performance Appraisal
-Job redesign
-Administrative decisions(pay raises, promotions)
-Feedback and performance improvement
-Employee development and career planning
-Criteria for test validation
-Training program objectives
Guidelines for Appraisals
+ Performance ratings must be job-related.
+ Employees must be given a written copy of their job standards in advance of appraisals.
+ Managers who conduct the appraisal must be able to observe the behaviour they are rating.
+ Supervisors must be trained to use the appraisal form correctly.
+ Appraisals should be discussed openly with employees and counseling or corrective guidance offered.
+ An appeals procedure should be established to enable employees to express disagreement with the appraisal.
Performance Management System Goals
+ Balanced Scorecard
Very popular approach
Combines the performance measures of the total organization—integrates financial goals with customer satisfaction, internal processes, organizational growth, learning, and innovation
Measuring Performance: Comparative Evaluation Methods
+ Comparative Evaluation Methods compare one employee’s performance with that of coworkers.
+ Ranking method: Employees ranked from best to worst
+ Forced distributions:
+ Employees sorted into categories
+ Usually a certain proportion must be put into each category
Measuring Performance: Noncomparative Evaluation Methods
Rating scale:
* Oldest and most widely used method
* Subjective (i.e. based on the rater’s opinion)
* Responses may be given numerical values
BARS & BOS:
* Descriptions of effective/ineffective performance—examples placed along a scale
* Job-related, practical, and standardized
Tests and observations:
* May include paper-and-pencil tests or an actual demonstration of skills
Management by objectives:
* Employee and supervisor jointly establish future performance goals
BOS Example
Sample Items from Behaviour Observation Scales
Instructions: Please consider the sales representative’s behaviour on the job in the past rating period. Read Each statement carefully. Then circle the number that indicate the extent to which the employee has demonstrated this effectiveness and ineffective behaviors.
Noncomparative: Productivity
+ Productivity Measures
Appraisals based on quantitative measures (e.g., sales volume) that directly link what employees accomplish to results beneficial to the organization.
+ Criterion contamination
+ Criterion deficiency
+ Focus on short-term results
Setting Performance Objectives
+ Performance objectives are targets for employee performance and they should be
Job-related
Practical
Based on performance standards
+ Performance standards
+ Performance standards are measurable benchmarks that may relate to:
Quality
Quantity
Time
Measuring Performance: Rater Training
+ Raters are trained on the purpose of the performance appraisal process, its alignment with the organization’s strategy, and the forms themselves (e.g., rater handbook)
+ Rater error training was commonly included:
Halo effect
Error of central tendency
Leniency and strictness biases
Personal prejudice
Recency effect
Contrast errors
Human Resource Function Feedback
+ The performance management process also provides insight into effectiveness of HRM
+ If poor performance is widespread, many employees are excluded from promotions and transfers
+ Unacceptably high numbers of poor performance may indicate errors in the HRM function
e.g., selection process may be screening candidates poorly; job analysis information may be inaccurate
Legal Aspects of Performance Appraisal
+ A performance appraisal form is a legal document
+ Raters must use only performance criteria that are relevant to the job
+ Avoid non-relevant criteria
+ A reasonable time must be set for performance improvement
+ Well-documented performance shortcomings and use of feedback interviews have been viewed favourably in court and with arbitrators
Compensation
- Cash and non-cash rewards employee receive in exchange for their work
- Effective compensation management
- Employees more likely to be satisfied, motivated, and contribute to objectives
- Compensation perceived inappropriate
- Performance, motivation, and satisfaction may decline dramatically
- Turnover may occur
- Dissatisfaction with absolute or relative pay
Total Compensation
- Total compensation includes base wages, variable pay, perks and on-site amenities, status/recognition, and benefits
- Not all have monetary value
- Total reward approaches lead to:
- Easier recruitment of high-quality staff
- Lower turnover
- Higher employee performance
- Enhanced employer reputation
Total Reward Model
Components of a Total Reward System
1. Compensation: Wages, commissions, and bonuses
2. Benefits: Vacations, health and dental insurance
3. Social interaction: Friendly workplace
4. Security: Stable, consistent position and rewards
5. Status/recognition: Respect, prominence
6. Work variety: Opportunity to experience different things
7. Workload: Right amount of work (not too much, not too little)
8. Work importance :Is work valued by society?
9. Authority/control: Ability to influence others; control own destiny
10. Advancement: Chance to get ahead
11. Feedback :Receive information to improve performance
12. Work conditions: Hazard free
13. Development :Formal and informal training
Objectives of Compensation
- Internal equity – pay related to relative worth of jobs
- External equity – paying workers relative to market
The pay triangle
top: Performance: individual, group, organization
Bottom left: Job size/ complexity
Bottom right: market
Motivating Employees through Compensation
*Equity Theory
* An employee’s perception that compensation received is equal to the value of the work performed.
* A motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve.
* Weaknesses: Who is the referent other? How do referent others change over time?
Organizational Justice Perceptions
- Distributive Justice
- “what people [are] concerned about [is] not the absolute level of outcomes per se but whether those outcomes [are] fair” (Colquitt et al., 2001, p. 426)
- Procedural Justice
- Procedures used to allocate rewards should be (a) applied consistently, (b) free from bias, (c) use accurate information, (d) have mechanism to correct flawed decisions, (e) ensure that opinions of all stakeholders taken into account (Colquitt et al., 2001)
Expectancy Theory and Pay
Expectancy Theory
A theory of motivation that holds that employees should exert greater work effort if they have reason to expect that it will result in a reward that they value.
Employees also must believe that good performance is valued by their
employer and will result in their receiving the expected reward
Motivating Potential =Expectancy x Instrumentality x Valence
Expectancy= If I increase my effort, I will improve my performance
Instrumentally= If I improve my performance, it will be recognized and valued
Valence= If my performance is recognized, I will receive a valuable reward
Temporal Motivation Theory
(Expectancy Theory updated)
Motivating Potential =E x I x V/Impulsiveness x Delay
Impulsiveness= Will I work to attain something I value, even though it might take a long time to receive the reward? Can I delay gratification?
Delay= How long do I have to wait to get the reward?
Determining Direct Compensation phases
Phase 1: Establishing the Compensation Philosophy
* Job Size
* Performance
* Market
* Lead
* Match
* Lag
Phase 2 Job Analysis
* Understand the job and skills needed
* Job analysis information
o Job descriptions
o Job specifications
o Performance standards
Phase 3: Pricing Jobs
* Determine relative worth or value of jobs
* Three approaches:
o Job evaluation
o Market-pricing
o Skill-based
- Phase 4: Matching Employees to Pay
- Establishing the pay level for each job
o Combines job evaluation rankings, survey wage rates, and other considerations (e.g. organization’s pay policy)
o Wage-trend line developed - Creating compensation structure
o Job classes and rate ranges
Pricing Jobs: Job Evaluation Methods
- Systematic procedures to determine the relative worth or value of jobs (internal equity)
- Job ranking
- Job grading
- Point System
Job Ranking
- Job ranking is the simplest job evaluation method
- Jobs are subjectively ranked by importance in comparison to other jobs with higher ranked jobs paid more
- E.g., In retail sales, the regional manager job may be ranked 1, store manager job as 2, and sales assistant job as 3
- Rankings do not differentiate the relative importance of jobs
Job Grading
- Job Classification or Grading System
- A system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades.
- Successive grades require increasing amounts of job responsibility, skill, knowledge, ability, or other factors selected to compare jobs.
Point System
- Point System
- A quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it.
- Permits jobs to be evaluated quantitatively on the basis of factors or elements—compensable factors—that constitute the job.
- The Point Manual
- A handbook that contains a description of the compensable factors and the degrees to which these factors may exist within the jobs
Point System
Know-how
o Depth and range of technical know-how
o Management breadth
o Human relations skills
+
Problem Solving
- Thinking environment
- Thinking challenge
+
Accountability
n Freedom to act
n Nature of impact
n Area of impact
=
Total Job size
Pricing Jobs: Market-Based Pay Structures
- Market-pricing focuses on external competitiveness
- How much should organizations pay for jobs based on what their competitors are paying
- Wage and salary surveys
- Same labour market comparable jobs
- Matching the market, market leader, market lag
Pricing Jobs: Skill-Based Pay
* Pay is based on depth (gaining greater expertise in existing skills), breadth (increases in the employee’s range of skills), and self-management (gaining higher level management-type skills, such as budgeting, training, planning, and so forth
The Wage Curve
- Wage Curve
- A curve in a scattergram representing the relationship between relative worth of jobs and wage rates.
- Pay Grades
- Groups of jobs within a particular class that are paid the same rate.
- Rate Ranges
- A range of rates for each pay grade that may be the same for each grade or proportionately greater for each successive grade.
- Red & Green Circle Rates
- Payment rates above the maximum (red circle) or below the minimum (green circle) of the pay range
Pay Equity
- Equal pay for equal work (Equal Pay)
- Part of Canada Labour Code since 1971
- Employers must pay men and women the same wage or salary when they do the same work
- Equal pay for work of equal value (Pay Equity)
- Jobs of comparable worth to the organization should be paid equally
- Part of Canadian Human Rights Act since 1978
Pay Equity - Most legislation has dictated the use of an evaluation system that evaluates:
1. Skill (Complexity, Knowledge, Education, Experience)
2. Effort (Physical and Mental Demands)
3. Responsibility (Accountability, Supervision, Budget)
4. Working Conditions (Physical Environment, Concentrationx, Stress)
