Quiz 4 Flashcards
Explain forms of cash compensation.
- Base wage (eg. $40/hour for instructors)
- Reflects the value of the work/skills
- Ignores performance differences of individual employees - Merit pay (eg. 10% increase = $44/hour for instructors)
- Permanent additions to the base pay that recognizes employees’ past job performance - Incentives ($1,000 for best instructor)
- One-time payment based on job performance
- Not increments of the base pay
Explain mutual gains and conflicting outcomes perspectives.
1) Mutual Gains
- Enhancing the relationship between management and employees results in better individual and organizational outcomes
- Emphasizing the investment that companies make on their employees by enhancing their knowledge, skills, and abilities (KSAs)
- When employees perceive that they are valued by the companies, they will perform better and are happier
2) Conflicting Outcomes
- Conflict between EEs and ER arises regarding usage of labour power between EEs and ERs
- EEs ⟶ wish to use as little labour power for same compensation
- ERs ⟶ wish to exploit labour power to maximize profits + minimize resistance
What are the four main roles of the state in industrial relations?
1) As an Employer
2) Regulator of Labour Market
- Establishes labour standards (eg. working hours, minimum wages, working conditions)
3) Establisher of the Welfare System
- Providing social insurance against risks like illness, unemployment, and poverty
- Protects individual employment rights by establishing laws covering all rights within employment relations
4) Third Party Regulator of Employment Relations
- Promoting a legal framework that establishes general ground rules in the procedures for collective bargaining
Involvement
What are compensable factors? What is the relationship between compensable factors
and job specifications?
- Characteristics of the job that are valued by the organization and differentiate jobs from one another
- 1 of the factors (skill) must be based on the job specifications (the experience, education, and abilities required)
What are the differences between merit pay and incentives?
- Merit pay = permanent increments of the base pay, and becomes a part of it
- Incentives = one-time payments, not permanent increases of base pay
Explain the point method of job evaluation with examples.
- Determine compensable factors
- For example, effort, working conditions, responsibility, or skill - After the compensable factors have been selected, degrees are established for each factor
- Gradations in the extent to which a certain factor is present in a particular job being rated
- Degree 2 must be a higher level than degree 1
- Eg. Education: high school (1); college (2); university degree (3); Masters degree (4); PhD (5) - The compensable factors are weighted according to its importance to the firm
- Eg. “Education” may be most important for car designers, but not salespeople
Why do we conduct a wage/salary survey?
- Survey is aimed to determine prevailing wage rates in the market
- Ensures that pay is similar to employees with same jobs in different companies
Explain the job-based pay structure.
- What is valued = compensable factors
- Quantify the value = factor degree weights
- Procedures = job analysis
- Pay structure = based on job performance/market
- Pay increases = promotion
- Managers’ focus = link employees to work, promotions and placement
- Employees focus = seek promotions to earn more pay
- Advantages = clear expectations, pay based on value of work performed
- Limitations = potential bureaucracy + inflexibility
Explain “Equal Pay for Equal Work by Men and Women.”
All jurisdictions require that men and women who are doing similar work be paid equally
What are some of the universal reasons that gender-based pay gap is so hard to eradicate?
- Differences in occupations, qualifications, and experience
- Women tend to hold jobs in lower positions (nursing, sales, teaching) instsead of higher-paid positions (managing)
- Women tend to choose majors in low-paying jobs (art, social sciences)
- Women are more likely to leave science/engineering professions than males - Differences in firms
- Female employment is concentrated in smaller firms
• The larger the firm, the greater the average rate of pay
• Men are more likely to be in private practice, which is higher-paid than state-owned services - Difference in bargaining power
- Women don’t tend to negotiate for higher salaries
• Organizational cultures penalize women who ask - Presence of discrimination
- Less-qualified men are often chosen for promotions over women
- Motherhood penalty: working mothers encounter systematic disadvantages in pay, perceived competence, and benefits due to the perception that mothers are less committed
How can the state help to solve this gender wage gap?
- Government-supported child care for families
- Pay Transparency Act ⟶ establishes pay transparency obligations for employers in Ontario
• Salary rates must be stated in all publicly advertised job postings
• Promotes the elimination of biases in hiring and pay practices
• Aims to “name and shame” companies into action
What are intrinsic and extrinsic motivation?
- Intrinsic
- The interest/enjoyment in the task itself
• Enjoyment-based
• Community-based - Extrinsic
- The outcome that will result by doing the task
• Immediate payoffs
• Delayed payoffs
Explain enjoyment-based motivation.
- Skill Variety
- Usage of diversity of skills that are needed for solving a specific task and fit with the skill set of the worker
- The higher the variety of fitting skills, the greater the motivation
- Eg. worker picks a translation task because they like using their skills in their favourite foreign language - Task Autonomy
- Degree of freedom that is allowed to the worker during task execution
- If more own decisions and creativity are permitted, the worker’s motivation will be better
- Eg. A worker is motivated by designing a creative logo - Task Identity
- Refers to the extent a worker perceives the completeness of the task he has to do
- The more tangible/observable the result of his work is, the higher will be his motivation
- Eg. A worker writing a product description for a website - Pasttime
- Covers acting just to avoid boredom
- Eg. a worker does tasks because they have nothing better to do
What is the main argument of Herzberg’s two-factor theory? Is it still valid?
- Job dissatisfaction is decreased by increasing hygiene factors
• Working conditions, coworker relations, policies/rules, supervisor quality, salary - Job satisfaction is increased by increasing motivator factors
• Achievement, recognition, responsibility, work, personal growth - Not valid
• Individual/cultural differences are not considered
• Job satisfaction does not necessarily imply a high level of motivation
• Job satisfaction and dissatisfaction are the same construct on a continuum
How do you define motivation based on expectancy theory?
Motivation = Expectancy * Instrumentality * Valence
- Expectancy: person’s perception about extend effort will lead to performance
- Instrumentality: person’s perception about extend performance results in outcomes
- Valence: how desirable the outcomes are
How can we apply the expectancy
theory to a performance-based pay system?
- Job tasks/responsibilities should be clearly defined
- The performance-outcome (pay) link is critical
• Employees must believe they can influence performance targets
• Employees choose their behaviours that lead to greatest reward - Organizations should train and provide resources to allow employees to perform at target levels
What is the main argument of equity theory?
- Employees are motivated when perceived outputs (eg. pay) are equal to perceived inputs (eg. hard work)
- If employees perceive that others paid more for the same effort, they will react negatively to correct the output-to-input ratio
According to the equity theory, what are the 4 forms of equity?
- External equity: how a job’s pay rate in one company compares to other companies
- Internal equity: how a job’s pay rate in one compary compared to other jobs in the same company
- Individual equity: how fair an individual’s pay is compared to their co-workers in similar jobs within the company
- Procedural equity: the perceived fairness of procedures used to make pay decisions
How can we apply equity theory to a performance-based pay system?
- Performance inputs/outputs should be clearly defined
• Employers should provide constructive and honest feedback on outcomes of decisions - Employees evaluate adequacy of their pay in comparison with other employees
• Employers should ensure fairness and consistency of pay
Compare and contrast the four types of incentive plans.
- Merit Pay
- May create feelings of pay inequity
- Bad/average performers are demotivated
- Weakened ethics - Profit Sharing
- Shares % of organization’s profit above a target level
- Simple + easy to understand
- Fosters team spirit
- But profit influenced by many factors beyond employee control (criterion contamination)
- Limited motivational impact (can’t see how their own work and actions impact the profitability of the company - Stock Ownership
- Award of stock shares or options
- Can be effective if properly communicated
- Employee feels a sense of ownership
- Good to retain/attract high quality employees
- But many factors outside individual influence affect stock prices - Team-Based Incentives
- Awards determined based on team/group performance goals or objectives
- Reinforces teamwork
- Effective in stimulating ideas and problem-solving
- But not all employees can be placed on a team
- Lack of control over compensation dependent on team-members’ performance
- Management may lose sight of individual performance
Explain the piecework plan. What are the pros and cons of this plan?
- Employees receive a certain rate for each unit produced
PROS:
- Less direct supervision is required to maintain reasonable output
CONS:
- Conflict between employees seeking the maximize output and managers concerned about quality
- Attempts to introduce new technology may be resisted by employees concerned about the impact on production standards
- Reduced willingness of employees to suggest new production methods for fear of subsequent increases in production standards
Why do you think there is such a discrepancy between the pay rates of CEOs and
employees?
- CEOs have higher KSAs and provide more human capital to organization
- Using the point method, CEOs contribute more compensable factors (eg. education, experience, skills)
- Using the classification method, CEOs would be classified as “S” class
- CEO compensation also tends to be higher as it puts more emphasis on performance incentives (variable pay) rather than base pay
- CEO is the face of the company; if they are compensated well, the company is financially competent
- Low supply of qualified candidates and high demand for CEOs = increasing prices
- External equity; matching CEO’s pay to the market average
What are the types of institutional isomorphism?
- Coercive
- Driven by government regulation / society - Mimetic
- Driven by successful responses to uncertainty
- Organizations tend to copy good practices from others - Normative
- Driven by professional education/training and professional network
- Particular groups with particular training will tend to adopt similar practices, even if these do not make the organization necessarily more efficient
What are the types of institutional isomorphism?
- Coercive
- Driven by government regulation / society - Mimetic
- Driven by successful responses to uncertainty
- Organizations tend to copy good practices from others - Normative
- Driven by professional education/training and professional network
- Particular groups with particular training will tend to adopt similar practices, even if these do not make the organization necessarily more efficient
What is an example of the piece-rate plan?
Piece rate standard (from time study) = 10 units / hour
Guaranteed minimum wage (if standard is not met) = $5 / hour
Incentive rate (for each unit over 10 units) = $0.5/unit
Therefore, 20 units = 20*0.5 = $10/hour
