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125 Cards in this Set

  • Front
  • Back
performance management
the process of creating a work environment in which people can perform to the best of their abilities
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
3 main purposes of performance appraisal:
1. Strategic (feedback systems)
2. Administrative (personnel decisions)
3. Developmental (feedback, communication)
reasons appraisal programs sometimes fail:
1. managerial issues
2. unclear performance standards
3. rater bias/errors
error of central tendency
rating error in which all employees are rated about average
leniency or strictness error
rating error in which the employer tends to give all employees unusually high or unusually low ratings
similar-to-me error
an error in which an appraiser inflates the evaluation of an employee because of a mutual personal connection
recency error
a rating error in which appraisal is based largely on an employees most recent behavior rather than behavior throughout the appraisal period
contrast error
a rating error in which an employees evaluation is either upward or downward because of comparison with another employee just previously evaluated
halo/horns effect
a ratings error in which an appraisal's evaluation of an employee's performance is biased/skewed because of the appraiser's overall impression of the employee as good(halo error) or bad (horns error)
Calibration
a process whereby managers meet to discuss the performance of individual employees to ensure their employee appraisals are in line with one another
Performance Standards Characteristics:
strategic relevance
criterion deficiency
criterion contamination
reliability(consistency)
strategic relevance
individual standards directly relate to strategic goals
criterion deficiency
occurs when standards don't capture all of an individual's contributions. Focus on minimizing this.
criterion contamination
occurs when performance capability is reduced by external factors. Focus on minimizing this.
reliability (consistency)
standards are quantifiable, measurable, and stable
manager/ supervisor appraisal
appraisal done by an employee's manager and reviewed by one level higher
self-appraisal
appraisal done by the employee being evaluated, generally on an appraisal form completed by the employee prior to the performance interview
subordinate appraisal
appraisal of a superior by an employee, which is more appropriate for developmental than for administrative purposes
peer appraisal
appraisal by fellow employees
team appraisal
based on TQM concepts; recognizes team accomplishment rather than indiv performance
customer appraisal
performance appraisal based on TQM concepts and seeks evaluation from both external and internal customers
performance appraisal methods
1. trait-based methods
2. behavior-based methods
3. results-based methods
graphic rating-scale method
trait-based approach to performance whereby each employee is rated according to a scale of individual characteristics
mixed-standard scale method
trait-based approach to performance appraisal similar to other scale methods but based on comparison with (better than, equal to, or worse than) a standard
Critical Incident Method
(critical incident)
critical incident- (behavior based) - an unusual event that denotes superior or inferior employee performance in some part of the job
behaviorally anchored rating scale (BARS)
consists of a series of vertical scales, one for each dimension of job performance; typically developed by a committee that includes both subordinates and managers
behavior observation scale (BOS)
a behavior based performance appraisal that measures the frequency of observed behavior (critical incidents)
*preferred
productivity measures
appraisals based on quantitative measures that directly link what employees accomplish to results beneficial to the organization
Management by Objectives (MBO)
a philosophy of management that rates performance on the basis of employee achievement of goals set by MUTUAL agreement of employee and manager
factors that affect an employee's performance:
1. motivation
2. environment
3. ability
Compensation
aka PAY. Pay is a statement of an employee's worth by an employer. Pay affects an employee's perception of worth.
compensation components
indirect, direct, and nonfinancial
common strategic compensation goals:
1. reward employees' past performance
2. remain competitive in labor market
3. maintain salary equity among employees
4. mesh employees' future performance with organizational goals
5. control the compensation budget
6. attract new employees
7. reduce unnecessary turnover
pay-for-performance standard
the standard by which managers tie compensation to employee effort and performance
ex: merit-based pay, bonuses, commisions
pay equity (Distributive Fairness/Justice)
an employee's perception that compensation received is equal to the value of the work performed

internal pay equity- fairness of your pay relative to others in the labor market
external pay equity- fairness of your pay relative to others in the labor market
Equity Theory
a motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve
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 their receiving the expected reward
pay secrecy
an organizational policy prohibiting employees from revealing their compensation info to anyone
- creates misperceptions
arguments against pay secrecy
-knowledge of base pay=strongest predictor of pay satisfaction
- knowledge of base pay is better predictor of pay satisfaction than the actual amount of pay received by employees
hourly work
work paid on an hourly basis
piecework
work paid according to the number of units produced
salary workers
employees whose compensation is computed on the basis of weekly, biweekly, or monthly pay periods
nonexempt employees
employees covered by the overtime provisions of the Fair Labor Standards Act

40+ hrs/week= time and a half
exempt employees
employees who are NOT COVERED in the overtime provisions of the Fair Labor Standards Act

ex: managers, supervisors, white collar jobs
internal factors affecting the pay mix
1. compensation strategy of organization
2. worth of job
3. employee's relative worth
4. employer's ability to pay
external factors affecting pay mix
1. conditions of labor market
2. area pay rates
3. cost of living
4. collective bargaining
5. legal requirements
worth of a job(internal)
establishing the internal wage relationship among jobs and skill levels
employee's relative worth
rewarding individual employee performance
employer's ability to pay
having the resources and profits to pay employees
labor market conditions(external)
availability and quality of potential employees is affected by economic conditions, government regulations and policies, and the presence of unions
area wage rates (external)
a firm's formal wage structure of rates is influenced by those being paid by other areas employers for comparable jobs
cost of living (external)
-inflation requires inc compensations
- Consumer Price Index (CPI) : a bureau of labor statistics measure the average change in prices overtime in a fixed "market basket" of goods and services
collective bargaining
escalator clauses in labor agreements provide for quarterly upward cost-of-living (COLA) wage adjustments for inflation to protect employee's purchasing power
Job Evaluation
the systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization
3 basic Job Evaluation Systems:
1. job ranking
2. job classification
3. point system
job ranking
oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth
job classification 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...etc
point system
a quantitative job evaluation procedure that determines the relative value of a job by the total point assigned to it
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
wage and salary survey
a survey of the wages paid to employees of other employers in the surveying organization's relevant labor market
labor market
the area from which employers obtain certain types of workers
problems with surveys
not always compatible with the user's jobs
user cannot specify what specific data to collect
wage-rate compression
compression of pay between new and experienced employees caused by the higher starting salaries of new employees; also the differential between hourly workers and their managers
compensation scorecard
collects and displays the results for all the measures that a company uses to monitor and compare compensation among internal departments or units
- scorecard creates a comparative tool
Davis-Bacon Act
required minimum wage, prevailing wage rates, 1 1/2 overtime premium payments by federal contractors
Walsh-Healy Act
required overtime payments after 8 daily or 40 regular work hours for workers on federal contracts
Fair Labor Standards Act (FLSA) 1938
interstate commerce clause used to cover workers except agricultural and exempted (managerial) employees, child labor(under 16) is prohibited
incentive plan purposes
encourage employees to assume "ownership" of their jobs, thereby improving effort and job performance
- motivate and support
straight piecework
an incentive plan under which employees receive a certain rate for each unit produced
differential piece rate
an incentive plan under which employees whose production exceeds the standard amount of output receive a higher rate for all of their work than the rate paid to those who do not exceed the standard amount
standard hour plan
an incentive plan that sets pay rates based on the completion of a job in a predetermined "standard time"
- standard time x hourly rate
bonus
incentive payment that is supplemental to the base wage for cost reduction, quality improvement, or other performance criteria
merit pay program (merit raise)
links and increase in base pay to how successfully an employee achieved some objective performance standard
3 sales incentives plans:
1. straight salary
2. straight commission
3. salary and commission combinations
straight salary plan
compensation plan the permits salespeople to be paid for performing various duties that are not reflected immediately in the sales volume
straight commission plan
compensation based upon a percentage of sales
Dis adv:
-stress high price
- neglected customer service
- earnings fluctuate
- price concessions
combined salary and commission plan
a compensation plan that includes a straight salary and a commission component ("leverage")
team incentive plans
compensation plans where all team members receive an incentive bonus payment when production or service standards are met or exceeding
Gainsharing Plans
programs under which both employees and the organization share the financial gains according to a predetermined formula that reflects improved productivity and profitability
increase in productivity is gained when:
- greater output is obtained with less or equal input
- equal production output with less input
2 Gainsharing incentive plans:
scanlon plan and Improshare
scanlon plan
rewards come from employee participation in improving productivity and reducing costs
Improshare
gainsharing based on increases in productivity of the standard hour output of work teams
profit sharing
any procedure by which an employer pays, or makes available to all regular employees, inaddition to their base pay, current or deferred sums based upon the profits of the enterprise
stock options
granting employees the right to purchase a specific # of shares of the company's stock at a guaranteed price (the option price) during a designated time period
Employee Stock Ownership Plans (ESOPs)
stock plans in which an organization contributes shares of its stock to an established trust for the purposes of stock purchases by its employees
ESOP advantages
retirement benefits
pride of ownership
deferred taxes
ESOP disadvantages
liquidity and value
single funding basis
not insured
The Executive Base Salary
- base salary
- short term incentives or bonuses
- long term incentives or stock plans
- benefits
- perquisites (perks)
business strategy
business plan to create value in a particular market
value creation
produce a product or provide a service such that the revenue generated exceeds costs
5 forces framework:
new entrants, customers, substitutes, suppliers, and rival firms
internal analysis, "three C's"
culture, capabilities, composition
resources characteristics for competitive advantage (VIRO)
Valuable
Inimitable
Rare
Organizational processes
physical capital
plant and equipment, location
ex:titles and banks
human capital
knowledge, skills, and abilities of the work force
organizational capital
firm structure, planning, coordinating systems, and other capabilities
core capabilities
integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers

ex: u of a employs cross-country
the HD/HR Architecture (Lepak & Snell 1999)
job families contribute differentially to competitive advantage in relation to job requirements and relation to core competencies
2 dimensions of the HC/HR Architecture
Value of human capital
Uniqueness of human capital
strategic knowledge workers
employees who have unique skills that are directly linked to the company's strategty
core employees
employees with skills to perform a predefined job that are quite valuable to a company, but not particularly unique or difficult to replace
ex: salespeople
supporting labor
employees whose skills are of less strategic value and generally available in the labor market
ex: clerical workers
alliance/complementary partners
individuals and groups with unique skills, but those skills are not directly related to a company's core strategy
ex: lawyers, consultants
strategic human resource management
the pattern of HR deployments and activities the enable an organization to achieve its strategic goals
to engage in high performance behavior individuals must possess:
Ability
Motivation
Opportunity
high performance work system (HWPS)
combo of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment, and flexibility
Control-Oriented Work System
a specific combination of HR practices, work structures, and processes that minimizes employee knowledge and skill requirements, and seeks to limit the variability of performance across people
selective staffing
using targeted recruiting efforts and valid selection devices
extensive training
providing extensive, continuous training aimed mostly at enhancing firm specific knowledge and skill
enhanced job security
providing employees greater formal job security
enhanced participation
engaging employees in participation systems and providing greater employee voice through a variety of mechanisms
performance based pay rates/raises
emphasizing performance by linking individual and/or firm performance with pay raises and bonuses
high pay
providing relatively high base pay
what is the labor force?
all civilian, non-institutionalized people over the age of 16 who are either working for pay or are actively seeking paid employment
labor force participation rate=
civilian labor force/total work-eligible population
unemployment
refers to the inability of labor force participants to find paid employment
unemployment rate is
the proportion of the labor force that is unemployed

= # of unemployed/ total labor force
4 types of unemployment:
1. Seasonal
2. Frictional
3. Structural
4. Cyclical
seasonal unemployment
the result of a decrease in the demand for labor due to the changing of the season
ex: agriculture jobs, construction jobs, and holiday/resort work
frictional unemployment
is the temporary unemployment that results from the search time that occurs when ppl are searching for suitable jobs and firms are looking for suitable workers
structural unemployment
related to a lack of job mobility; the result of major industrial or technological changes, it occurs when workers lack the necessary skills for jobs that are available or have particular skills that are no longer in demand
ex: when a company is in decline and lays off many workers

-concentrated among certain groups of workers
-long lasting
cyclical unemployment
this type of unemployment is the result to movement through the business cycle; during expansions, unemployment is low, while during recessions, unemployment is high
efficiency wage model
based on the belief that higher wages lead to greater productivity