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92 Cards in this Set

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the sum of all performances in all jobs in the organization should equal what?
the strategic plan for the organization
performance management
series of activities designed to ensure that the organization gets the performance it needs from its employees
performance appraisal
process of determining how well employees do their job relative to a standard and communicating that information to the employee
job duties(criteria)
important elements in a given job
trait based information
subjective,, less useful, identifies a character trait of the employee-such as attitude, initiative or creativity
behavior based information
focuses on specific behaviors that lead to job success
results based information
considers employee accomplishments, objective, statistical results, more useful
performance criteria
deficiency- measures that leave out important job duties
contamination- including irrelevant criteria
overemphasis- exaggerates 1 or 2 criteria
performance standards
define the expected levels of performance. they are labeled benchmarks, or goals or targets
characteristics of a well defined standard
realistic, measurable, clearly understood, are they obtainable?
performance appraisal
the process of evaluating how well employees perform their jobs when compared to a set of standards, and then communicating the information to employees
conflicting uses for performance appraisal
administrative and development
administrative role provides a measure of performance for consideration in making pay or other administrative decisions about employees. developmental focuses more as a counselor and coach than as a judge
administrative appraisal
provides a measure of performance for consideration in making pay or other adminstrative decisions about employees. ex: compensation, promotion, disciplinary action, dismissal and downsizing
development appraisal
long term; emphasizes identifying current training and development needs, as well as planning employees' future opportunities and career directions. ex: identifying strenghts, identifying areas for change, training;development, coaching, and career planningss
performance appraisals can occur in two ways
informal and systematic
informal appraisals
day to day working relationships between a manger and an employee
systematic appraisals
used when the contact between a amanger and employee is formal, and a system is in place to report managerial impressiions and observations on employee performance
performance appraisals must be
job related, non discriminatory and documented
the HR unit responsibilites of performance appraisals
designs and maintains appraisal system, trains raters, tracks timely receipt of appraisals and reviews completed appraisals for consistency
the managers responsibilities of performance appraisals
typically rate performance of employees, prepare formal appraisal documents, review appraisals with employees and identify development areas
HR responsibility for performance appraisals
designs and maintains appraisal system
who mainly conducts appraisals?
most commonly it is supervisors who rate their subordinates
graphic rating scale
scale that allows the rater to mark an employee's performance on a continuum
Because of its simplicity, this method is used frequently. The raters may depend too heavily on the form to define performance. Also, graphic rating scales tend to emphasize the rating instrument itself and its limitations. Separate traits or factors are grouped together and the rater is given only one box to check. Another drawback is that the descriptive words sometimes used in scales may have different meanings to different raters
behavioral rating scale
used to assess an employees behavior instead of characteristics
Developing and maintaining behaviorally anchored rating scales require extensive time and effort also various appraisal forms are needed to accommodate different types of jobs in an organization
behaviorally anchored rating scale (BARS)
identify important job dimensions, which is most important performance factors in a job description. Short statements describe both desirable and undesirable behaviors. these are assigned to one of the job dimensions. each anchor is a assigned a number that represents how good or bad the behavior is, and the anchor is fitted to scale
performance appraisal method in which all employees are listed from highest to lowest in performance
the drawback of the raking method is that the sizes of the differences between individuals are not well defined. Ranking also means someone must be last, which ignores the possibility that the last-ranked individual in one group might be equal to the top-ranked employee in a different group. Further, the ranking task becomes unwieldy if the group to be ranked is large.
forced distribution
performance appraisal method in which ratings of employees' performance are distributed along a bell-shaped curve
advantage: Deals with "rater inflation". If employers do not require a forced distribution, performance appraisal ratings often do not approximate the normal distribution of the bell shaped curve. It makes managers identify high, average, and low performers. High performers can be rewarded and developed, while low performers can be "encouraged; to improve or leave. ensures that compensation increases truly are differentiated by performance rather than being spread somewhat equally among all employees
the supervisor may resist placing any individual in the lowest or highest group. the rater must explain to an employee why she or he was placed in one group and others were place in higher groups. With small groups, the assumption that a bell shaped or other distribution of performance occurs may be faulty.
management by objectives (MBO)
performance appraisal method that specifies the performance goals that an individual and manager mutually identify
Which is the most subjective information used to identify behavior? Trait based, results-based or behavior based?
trait based
Why should managers allow input from employees on performance standards?
Management by Objectives: specifying the performance goals that an individual and his or her manager agree the employee will try to attain within an appropriate length of time. Employee involvement creates higher levels of commitment and performance, encourages employees to work effectively toward achieving desired results and performance measure should be measurable and should define results.
Why should managers separate performance appraisals and pay discussions?
employees often focus more on the pay amount received than on the appraisal feedback that identifies what they have done well or need to improve. Also, managers sometimes manipulate performance appraisal ratings to justify the pay treatment they wish to give specific individuals. As a result of the second circumstance, many employees view the appraisal process as a "game," because compensation increases have already been determined before the appraisal decision.
Is a performance driven organization more likely to have higher profitability?
yes. studies have shown that firms with performance focused cultures had significantly higher growth in company revenue, employment, net income, and stock prices than did companies with different cultures.
What are some of the advantages of having managers rated by their employees?
There are three primary advantages. First, in critical manager/employee relationships, employee rating can be quite useful for identifying competent managers. Second, this type of rating program can help make a manger more responsive to employees. Finally, employee appraisals can contribute to career development efforts for managers by identifying areas for growth.
What type of compensation is linked to performance?
additional pay and rewards. Promotions and pay raises.
Who evaluates performance for compensation…HR or Managers?
managers. pay raises are given for performance accomplishments rather than based on length of service or granted automatically. historically managers and supervisors have evaluated the performance of individual employees and also made compensation recommendations for the same employees.
What is the difference between entitlement and performance and how do they relate to compensation?
entitlement assumes that individuals who have worked another year are entitled to pay increases, with little regard for performance differences. These automatic increases may be referred to as cost of living raises. Pay for performance requires that compensation changes reflect performance differences. organizations operating under this philosophy do not guarantee additional or increased compensation simply for completing another year of organization service. Instead, they structure pay and incentives to reflect performance differences among employees.
intrinsic rewards
may include praise for completing a project or meeting performance objectives. other psychological and social forms of compensation also reflect intrinsic type of rewards
extrinsic rewards
tangible and take both monetary and non monetary forms. one tangible component of a compensation program in direct compensation
direct compensation
the employer exchanges monetary rewards for work done and performance results achieved. base pay and variable pay are the most common forms of direct compensation.
indirect compensation
consists of employee benefits like health insurance that is provided for employees for being part of the organization
base pay
basic compensation that an employee receives, usually as a wage or a salary
payments directly calculated on the amount of time worked
consistent payments made each period regardless of the number of hours worked
variable pay
compensation linked directly to individual, team , or organization performance.
Name two types of compensation plans for expatriates and know their definitions.
the two primary approaches to international compensation for expatriates are the balance-sheet approach and the global market approach
balance sheet approach
compensation plan that equalizes cost differences between the international assignment and the same assignment in the home country
global market approach
compensation plan that attempts to be more comprehensive in providing base pay, incentives, benefits, and relocation expenses regardless of the country to which the employee is assigned. This approach to compensation requires significant flexibility, detailed analysis, and extensive administrative effort. Almost 60% of multinational firms use this approach.
tax equalization plan
compensation plan used to protect expatriates from negative tax consequences
total rewards
monetary and non monetary rewards provided to employees in order to attract, motivate, and retain them.
Quartile strategy-lag,meet,or lead….why would you use each of these?
the pay levels used can affect organizational performance. individual employee pay levels will vary around the quartile level.
quartile strategy
where some organizations establish specific policies about where they wish to be positioned in the labor market.
meet the market strategy
middle market strategy. employer positions pay scales so that 50% of other firms pay above and 50% pay below. choosing this level attempts to balance employer cost pressures and the need to attract and retain employees, by providing mid level compensation scales.
lag the market strategy
below market strategy. employer position pay scales so that 75% of other firms pay above and 25% pay below. an employer may be experiencing a shortage of funds and it can also be used to attract workers at a lesser cost
lead the market strategy
above market strategy. employer positions pay scales so that 25% of other firms pay above and 75% pay below. this enables a company to attract and retain sufficient workers with the required capabilities and to be more selective when hiring.
Which law broadly regulates compensation?
Fair Labor Standards Act (FLSA) which was originally passed in 1938
competency based pay
rewards individuals for the capabilities they demonstrate and acquire. KBP or skill based pay systems, employees start at a base level of pay and receive increases as they learn to do other jobs or gain additional skills and knowledge.
Know the differences between exempt and non-exempt employees
exempt employees hold positions for which employers are not required to pay overtime. non-exempt employees must be paid overtime
Know the difference between green circled and red circled employees.
a red circled employee is an incumbent who is paid above the range set for the job. A green circled employee is an individual whose pay is below the range.
Assumptions for variable pay include what?
some people perform better and are more productive than others. employees who perform better should receive more compensation. some of employees' total compensation should be tied directly to performance and results. some jobs contribute more to organizational success than others.
Why tie compensation to organizational objectives?
links strategic business goals and employee performance. enhance organizational results and reward employees financially for their contributions. reward employees and recognize different levels of employee performance. achieve HR objectives, such as increasing retention, reducing turnover, recognizing training, or rewarding safety.
What determines whether an organization compensates by individual or by team?
group/team incentives are gainsharing or goalsharing plans, inn which employee teams that meet certain goals share in the gains measured against performance targets.
straight piece rate system
pay system in which wages are determined by multiplying the number of units produced by the piece rate for one unit. a differential piece rate system pays employees one piece rate wage for units produced up to a standard output and a higher piece rate wage for units produced over the standard.
one time payment that does not become part of the employee's base pay
spot bonus
it can be awarded at any time. given for a multiple of reasons including extra time worked, extra efforts, or an especially demanding project
gain sharing
system of sharing with employees greater than expected gains in profits and/or productivity
Name some measures of sales effectiveness.
revenue growth, margin growth, new customer revenue, average sales revenue per saleperson, sales from new products, customer satisfaction, account retention, return on sales compensation, return on sales investment, increase in average sale and control of sales expenses.
If executive compensation plans are designed correctly, what should they be tied to?
long term growth and success of the organization
compensation committee
subgroup of the board of directors composed of directors who are not officers of the firm
What is the role of a Compensation Committee and can an officer of the firm be on this committee?
they make recommendations to the Board of Directors on overall pay policies, salaries for top officers, supplemental compensation such as stock options and bonuses, and additional perquisites for executives.
How does the US compare to other countries in executive compensation plans?
senior executives in the US earn the highest salaries and annual total cash of all countries. successful global companies are increasing use of long term incentives and bonuses, moving closer tot he model used in the US, in which variable pay is 95% of basic compensation.
What % of payroll usually goes to benefits?
benefits costs average 30-40% of payroll costs
What are the advantages of benefits over wages to an organization and employees?
competitive advantage, workforce attraction and retention, benefits management, and benefits communication
how the typical benefit dollar is spent
insurance payments are about 25% and payment for time not worked is about 25%
Which three benefits are mandated by federal legislation?
see chart page 427. FMLA provisions, military reserve time off, election and jury leaves, COBRA and HIPAA provisions, workers' compensation, unemployment compensation, social security and ADEA and OWBPA provisions
What does OWBPA stand for?
Older workers benefit protection act. amended the ADEA
workers compensation
security benefits provided to persons injured on the job
unemployment compensation
a federal/state payroll tax that funds state unemployment systems. involuntary unemployment and actively seeking work is required for persons to claim benefit
Age discrimination in employment act. prohibits mandatory retirement age provisions
What do HMO and PPO stand for?
Health maintenance organization. Plan that provides services for a fixed period on a pre-paid basis. Preferred provider organization. a health care provider that contracts with an employer or an employer group to supply health care services to employees at a competitive rate.
Regulated pension funds to assure their soundness. The purpose of this law is to regulate private pension plans so that employees who put money into them or depend on a pension for retirement funds actually receive the money when they retire.
Arizona governing committee v Norris
US supreme court decision requiring the use of "unisex" mortality tables
The retirement equity act
an amendment to ERISA and the internal revenue code-liberalized pension regulations affecting women, guaranteed access to benefits, prohibited pension related penalties due to absences from work, and lowered the vesting age
the right of employees to receive certain benefits from their pension plans
Consolidated Omnibus Budget Reconciliation Act Provisions
Former employees are eligible to purchase group insurance at no more than 102% of group insurance premium rate. former employees, their spouses and dependents are covered for 18 to 36 months. COBRA requirements incur additional paperwork and related costs for employers
flexible benefit plan
a plan (flex or cafeteria plan) that allows employees to select the benefits they prefer from groups of benefits established by the employer
problems with flexible plans
inappropriate benefits package choices
adverse selection and use of specific benefits by higher risk employees and higher administrative cost.
What is well-pay?
extra pay for not taking sick leave
What does OSHA do? How many employees does an organization have to have to be covered by OSHA regulations?
The Occupationa Safety and Health Administration regulates equipment and working environments.
Know and understand the FMLA and the year it was established
established in 1993 covers all federal, state, and private employers with 50 or more employees who live within 75 miles of the workplace. the law requires that employers allow eligible employees to take a total of 12 weeks leave during any 12 month period for certain situations. the family and medical leave act affects workers' compensation. pg 460
What types of abuses fall under the ADA?
Americans with disabilities act.
substance abuse with legal substances (alcohol and prescription drugs) are considered disabled
Workplace violence-Which is the number 1 source?
coworker or someone with a connection
Know the “General Duty Clause” of OSHA
the act requires that the employer has a general duty to provide safe and healthy working conditions, even in areas where OSHA standards have not been set. Employers who know or reasonably should know of unsafe or unhealthy conditions can be cited for violating the general duty clause