HRM Final Flashcards
Total Compensation (Financial Returns)
- Direct: cash (e.g., base salary, merit pay, incentives, stock options)
- Indirect: Benefits and Services (e.g., insurance, retirement, paid time off)
Non-financial returns from work
- Flexible work arrangements
- Great co-workers / bosses
- Great location
- Learning opportunities – careers
- Challenging & Meaningful Work
pay fairness
- Based on different forms of pay—total rewards
- Both internal and external comparisons used
- Compare ratios of outcomes / inputs
- Negative consequences of perceived inequity
External Competitiveness Strategy
Firms make strategic decisions about whether to lead, lag, or meet the market rate for different jobs
In general, what are some potential advantages for leading the market?
- More applicants [select better quality employees]
- Improve motivation (increase effort / productivity)
- Less turnover
- Decrease monitoring and supervision
Costco vs Walmart example
- Lower turnover: 17%(Costco) vs. 44%(Sam’s)
- Higher productivity: Operating profit per employee $21,805 (Costco) vs $11,615 (Sam’s)
- Less “shrinkage” (combination of employee theft, shoplifting, vendor fraud, administrative error). Costco’s inventory shrinkage is lowest in industry (less than .20 percent of sales).
- Higher sales per square foot: $886 (Costco) vs $525 (Sam’s)
- Lower Selling, general, and admin expenses [SGA] 9.73% at Costco among lowest in industry
Internal Equity- Job Evaluation
- Measures relative internal worth of organization’s jobs
- Committee identifies each job’s compensable factors
- Characteristics organization values and is willing to pay for
Jobs rated for each factor
Internal Equity- Compensable Factors
Experience
Education
Complexity
Working conditions
Responsibility
compensable factors
- Position does not entail overseeing the work of other employees or facilitation/leading any team discussions
- Position requires leading team meetings or facilitating team discussions. Also may involve supervising the work of other employees when necessary
- Position requires overseeing and directing the work of at least 1 employee. Train and mentor employees when necessary
- Position is responsible for leading, directing and/or supervising employees within one team or department. Expected to train, mentor and ensure accountability of all members of the team
- Position is responsible for leading, directing and/or supervising employees across several departments. Looked upon to provide guidance to departments and senior management on complex issues
Pay Ranges
- Set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job or a job within a particular pay grade
- Flexibility helps organization balance conflicting information from job evaluations and market surveys
- Usually pay ranges overlap somewhat
equity theory
People compare inputs and outcomes for themselves and others—performance is important “input”
Expectancy theory
- Behavior a function of Expectancy X Instrumentality X Valance
- Expectancy: employees’ assessment of their ability to perform required job tasks. [If I try hard, can I perform job well?]
- Instrumentality: employees’ beliefs that the requisite job performance will be rewarded by the organization [If I perform well, will I be rewarded?]
- Valence: value employees attach to the organizational rewards [Is the reward worth it?]
Common problems with Incentive pay plans
-Not enough motivation: Not enough reward or reward not valued, Process / outcome seen as unfair, Employees can’t influence outcomes
- Motivate the wrong behaviors, Goal displacement, Measurement issues
Piecework
Wage based on amount (e.g.,number of units) employee produces
Individual bonuses
- Not rolled into base pay
- Employee must re-earn bonus during each period
- May be based on objective outcomes (e.g., meeting sales target)
merit pay
- Pay increases linked to ratings on performance appraisals (subjective): Some pros and cons based on quality of perf appraisals
- Added to base salary
Gainsharing
- Measures improvements in productivity and effectiveness and distributes portion of each gain to employees
- Addresses challenge of identifying appropriate performance measures for complex jobs
- Employees determine how to improve own and group’s performance
profit sharing
- Payments are a percentage of organization’s profits and are not part of employees’ base salary
- May encourage employees to think like owners
- Evidence not clear whether profit sharing is effective in improving performance
what is aaa balanced score card
- Combination of performance measures
- Directed toward company’s long- and short-term goals
- Used as the basis for awarding incentive pay
what are the 4 categories of a balanced score card
Financial
Customer
Internal
Learning and Growth
workers comp: Form of no-fault insurance
- Employer liable for providing benefits to employees that result from occupational illnesses or injuries, regardless of fault
- Injury/illness must be work related
workers comp: Covered by state, not federal, laws
- Employers pay premium to insurance company or state fund
- Cost varies by occupation, experience-rated
social security
- Provides a basic foundation of security for American workers and their families
- For tax purposes, system is split into two programs
SOCIAL SECURITY Benefits
Retirement income
Disability benefits
Dependent benefits
Survivor’s benefits
Lump-sum death benefits
6.2% of eligible earnings up to cap (about $143K)
Employee and employer funded
unemployment insurance
- Benefits financed by federal and state taxes levied on employers
- Each company’s rate depends on its prior experience
- Eligibility requirements and payments
- Have been employed (6+ months)
- Available and looking for work
Did not quit or fired for cause
Fair Labor Standards Act (F.L.S.A.)
- Minimum Wage: Lowest amount employers pay under federal & state laws, Local “living wage” laws—based on cost of living
- Mandatory overtime pay (for “non-exempt” workers), Employers required to pay 1.5x usual rate for over 40hrs. week
- Child labor (under 18 yrs), some exceptions (e.g., after-school work, work for parents)
retirement plans
- Defined benefit plans: Vesting (Time until fully eligible to receive pension, regardless whether you remain at org)
- Defined contribution plans: Example: 401k plans
Trends in Union Membership
- Peaked in 1950s reaching over one-third of employees
- Now at 10.7% overall; 6.5% of private-sector employment
- Decline in union membership due to many factors:
- Change in structure of economy
- Management efforts to control costs
- Human resource practices
Government regulation
National Labor Relations Act (NLRA)
- Protects the following activities [Section 7 Rights]: Union organizing, Joining a union, whether recognized by employer or not, Going out on strike, Refraining from activity on behalf of the union
- Most employees in private sector covered by NLRA: Not public sector or transportation workers [separate laws for these workers], Not independent contractors, Not supervisors
Unions in Government
- Membership among government workers is strong: About 1 in 3 government workers are union members
- Government regulations and laws support the right of government workers to organize: Similar to private sector laws
- Labor relations different with government workers: Strikes illegal for federal and state workers in most states, Almost all states prohibit strikes by police/firefighters at local level
NLRA Section 7: Rights of Employees
“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection…”