Day 14- Compensation

Question 1

Compensation

Answer 1

-Cash and non-cash rewards employees receive in exchange for their work

Question 2

Effective compensation management

Answer 2

Employees are more likely to be satisfied, motivated, and contribute to objectives

Question 3

Compensation perceived inappropriate

Answer 3

• Performance, motivation, and satisfaction may decline dramatically
• Turnover may occur
• Dissatisfaction with absolute or relative pay

Question 4

3 Main goals of Compensation

Answer 4

3 Main Goals of Compensation:
Attraction
Retention
Reward behavior

Question 5

Objectives of Compensation

Answer 5

Acquire personnel
Retain Employees
Ensure Equality
Reward Behaviour
Control Behavior
Legal Compliance
Aministrative Efficiency

Question 6

The Pay Triangle

Answer 6

Performance:

• Individual
• Group
• Organization

Job Size/Complexity

Market

Question 7

Motivating Employees through Compensation

Equity Theory

Answer 7

• 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?

Equality = everyone is paid the same

Equity = perception that you are being paid fairly based on what you bring to the table.

Question 8

Pay dispersion in the Major Leagues

Answer 8

MLB most pay dispersion, NHL lowest pay dispersion.

People can accept a certain amount of pay dispersion, as soon as it becomes extreme they don’t like it.

Question 9

Organizational Justice Perceptions

Answer 9

Distributive Justice
Procedural Justice
Interactional Justice

Question 10

Organizational Justice Perceptions

Distributive Justice

Answer 10

What ppl are concerned about is not the absolute level of outcomes per se, but whether those outcomes are fair (EQUITY)

Question 11

Organizational Justice Perceptions

Procedural Justice

Answer 11

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 the stakeholders taken into account

Question 12

Organizational Justice Perceptions

Interactional Justice

Answer 12

“The quality of interpersonal treatment ppl receive when procedures are implemented” (from supervisor or boss, treats everyone fairly, and respectfully)

Question 13

Expectancy Theory and Pay

Answer 13

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.

” If I increase my effort, I will increase my performance, which will lead to an increase in my pay”

Question 14

Expectancy Theory Elements

Answer 14

Motivating Potential = Expectancy x Instrumentality x Valence

Expectancy = If I increase my effort, I will increase my performance

Instrumentality - If I improve me performance, it will be recognized and valued (link b/t expectancy (performance) and valence (reward)

Valence - If my performance is recognized, I will receive a valuable reward

Question 15

Temporal Motivation Theory (Expectancy Theory Updated)

Answer 15

Motivation = 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? (how far away is the reward)