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taking an integrated, goal-oriented approach to assigning, training, assessing, and rewarding employee's performance.
for enabling employees to better understand and develop their career
skills and interests, and to use these skills and interests more
of a period that may occur at the initial career entry when the new employee’s
high job expectations confront the reality of a boring, unchallenging job.
when there is only a small difference in pay between employees regardless of skill or experience
a fundamental, compensable element of a job,
such as skills, effort, responsibility, and working conditions.
the relationship between the value of the job and the average wage paid for
concept by which women who are usually paid less than men can claim that men in
comparable rather than in strictly equal jobs are paid more.
system of pay based on the number of items processed by each individual worker
in a unit of time, such as items per hour or items per day.
incentive plan that engages employees in a common effort to achieve
productivity objectives and share the gains.
payment companies make in connection with a change in ownership or control of a
salary grades and ranges into just a few wide levels or “bands,” each of which
contains a relatively wide range of jobs and salary levels.
employee is given a benefits fund budget to spend on the benefits he or she
prefers. The fund limits the total cost for each benefits package.
Why is it important
to appraise performance?
- 1. employers base pay, promotion, and retention on PAs
- 2. play a central role in performance mgmt
- 3. plan to correct prob. & praise good
- 4. facilitate career planning
- 5. identifies employee training & devlpment needs
- Specific –
- clearly state the desired results
- Measurable –
- answer the questions “how much?”
- Relevant –
- clearly derived from what the manager and company want to achieve
- Timely –
- reflect deadlines and milestones
What roles does HR
play in the performance appraisal process
- -policy making and advising
- provide advice and appraisal tool
- must train supervisors on how to improve appraisal skills
- monitor appraisal system's effectiveness
scale that lists a number of traits and a range of performance for each. The
employee is then rated by identifying the score that best describes his or her
level of performance for each trait.
Graphic Rating scale
employees from best to worst on a particular trait, choosing highest, then lowest,
until all are ranked.
Alternative ranking method
employees by making a chart of all possible pairs of the employees for each
trait and indicating which is the better employee of the pair.
Paired comparison method
to grading on a curve; predetermined percentages of rates are placed in various
Forced distribution method
a record of uncommonly good or undesirable examples of an employee’s
work-related behavior and reviewing it with the employee at predetermined
Critical incident method
appraisal method that aims at combing the benefits of narrative critical
incidents and quantified ratings by anchoring a quantified scale with specific
narrative examples of good and poor performance.
Behaviorally anchored rating scale (BARS)
supervisors electronically monitor the amount of computerized data an employee
is processing per day, and thereby his or her performance.
Electronic performance monitoring (EPM)
What are the steps in
creating a BARS?
- 1. write critical incidents
- 2. develop performance dimensions
- 3. reallocate incidents
- 4. scale the incidents
- 5. develop a final instrument
- 1. more accurate gauge
- 2. clearer standards
- 3. feedback
- 4. independent dimensions
- 5. consistency
appraisal that is too open to interpretation
performance appraisal, the problem that occurs when a supervisor’s rating
of a subordinate on one trait biases the rating of that person on other
a tendency to
rate all employees the same way, such as rating them all average
the problem that occurs when a supervisor has
a tendency to rate all subordinates either high or low.
employment life-cycle and the stages employees go through
- Growth stage
- crisis substage
- Decline Stage
Pay in the form of wages, salaries,
incentives, commissions, and bonuses.
Direct financial payments
Pay in the form of financial benefits such
Indirect financial payments
law that sets wage rates for laborers employed by contractors working for the
law that requires minimum wage and working conditions for employees working on
any government contract amounting to more than $10,000.
Walsh-Healey Public Contract Act
this act makes it unlawful for employers to
discriminate against any individual with respect to hiring, compensation,
terms, conditions, or privileges of employment because of race, color,
religion, sex, or national origin.
Title VII of the 1964 Civil Rights Act
act provides for minimum wages, maximum hours, overtime pay, and child labor
protection. The law, amended many times, covers most employees.
Fair Labor Standards Act
amendment to the Fair Standards Act designed to require equal pay for women
doing the same work as men.
Equal Pay Act
law that provides government protection of pensions for all employees with
company pension plans. It also regulates vesting rights (employees who leave
before retirement may claim compensation from the pension plan).
Employee Retirement Income Security Act (ERISA)
age discrimination against employees who are 40 years of age and older in all
aspects of employment, including compensation.
The Age Discrimination in Employment Act
discrimination against qualified persons with disabilities in all aspects of
employment, including compensation.
The Americans with Disabilities Act
eligible employees, both men and women, to take up to 12 weeks of unpaid,
job-protected leave for the birth of a child or for the care of a child,
spouse, or parent.
The Family and Medical Leave Act
that if a person perceives an inequity, the person will be motivated to reduce
or eliminate the tension and perceived inequity.
The equity theory of motivation
to how a job’s pay rate in one company compares to the job’s pay rate in other
to how fair the job’s pay rate is when compared to other jobs within the same
company (for instance, is the sales manager’s pay fair, when compared to what
the production manager is earning?)
to the fairness of an individual’s pay as compared to with his or her coworkers
are earning for the same or very similar jobs within the company, based on each
to the “perceived fairness of the processes and procedures used to make
decisions regarding the allocation of pay.”
Address Equity Issues
To monitor and maintain external equity.
- Job analysis and job evaluation
To maintain internal equity,
- Performance appraisal and incentive pay
To maintain individual equity.
- Communications, grievance mechanisms, and employees’
- To help ensure that employees view the pay
- process as transparent and fair. (Procedural equity).
simplest method of job evaluation that involves ranking each job relative to
all other jobs, usually based on overall difficulty.
method for categorizing jobs into groups.
Job classification method
job evaluation method in which a number of compensable factors are identified
and then the degree to which each of these factors is present on the job is
Abraham Maslow’s Hierarchy of Needs
- (food, water, sex)
- (a safe environment)
- (relationships with others)
- (a sense of personal worth)
- (becoming the desired self)
working conditions, salary, and incentive pay can cause dissatisfaction and
- 1. Hygienes (extrinsic
- job factors)
enrichment (challenging job, feedback and recognition) addresses higher-level
(achievement, self-actualization) needs.
- 1. Motivators
- (intrinsic job factors)
How can managers reinforce positive behavior
without using cash? What can they use on a day-to-day basis?
- Make sure the employee has a doable
- Recognizing an employee’s
- Social recognition
executive receives his or her shares only if he or she meets the preset
- restricted stock
firm usually awards rights to the shares without cost to the executive but the
employee is restricted from acquiring (and selling) the shares for, say , 5
years. The employer’s aim is to retain the employee’s service during that time.
option’s exercise price fluctuates with the performance, of, say, a market
index. Then, if the company’s stock does no better than the index, the manger’s
options are worthless.
exercise price is higher than the stock’s closing price on the date of the
grant, so the executive can’t profit from the options until the stock makes
receive not shares but “units” that are similar to shares of company stock.
Then at some future time, they receive value (usually in cash) equal to the
appreciation of the “phantom” stock they own.
shares of stock for achievement of predetermined financial targets, such as
profit or growth in earnings per share.
- achievement plan
created government-run, employer-financed
corporations to protect employees against the failure of their employers
pension plans. It regulates vesting rights, which is the ownership that an
employee builds up as they buy into the company (outback example from class)
and what to do with it if they leave before retirement. It also regulates
portability rights, which is the right to transfer benefits from one company to
another if you leave. Finally, it sets standards to help prevent dishonesty in
Employee Retirement Income Security Act (ERISA)
gives workers and their families who lose their
health benefits the right to choose to continue group health benefits provided
by their group health plan for limited periods of time under certain
circumstances such as voluntary or involuntary job loss, reduction in the hours
worked, transition between jobs, death, divorce, and other life events.
Qualified individuals may be required to pay the entire premium for coverage up
to 102 percent of the cost to the plan.
which protects the privacy of individually
identifiable health information; the HIPAA Security Rule, which sets national
standards for the security of electronic protected health information; and the
confidentiality provisions of the Patient Safety Rule, which protect
identifiable information being used to analyze patient safety events and
improve patient safety.
Health Insurance Portability Accountability Act
makes it so that both men and women can take up
to 12 weeks unpaid leave, job-protected leave for the birth of a child, taking
care of a child, spouse, or parent. You can actually 26 weeks if you are caring
for a recently returned soldier.
Family Medical Leave Act (FMLA)
was signed into law on September 26, 1996. MHPA
provides for parity in the application of aggregate lifetime and annual dollar
limits on mental health benefits with dollar limits on medical/surgical
benefits. MHPA's provisions are subject to concurrent jurisdiction by the
Departments of Labor, the Treasury, and Health and Human Services.
The Mental Health Parity Act (MHPA)
signed into law on October 21, 1998, includes
important protections for individuals who elect breast reconstruction in
connection with a mastectomy. WHCRA amended the Employee Retirement Income
Security Act of 1974 (ERISA) and the Public Health Service Act (PHS Act) and is
administered by the Departments of Labor and Health and Human Services.
The Women's Health and Cancer Rights Act (WHCRA)
is common to all states. States provide it when
an employee is unable to work through no
fault of their own. Not everyone that is dismissed is eligible for
unemployment insurance. So if you were fired for poor performance, quit, or are
always late, then sorry.
provides prompt income and medical benefits to
work-related victims or their relatives regardless
of fault. Every state has different laws. Neither State nor Federal
governments contribute money to worker’s compensation.
help reduce health care costs by negotiating
aggressively with health care providers. Usually they start tracking key health
look at prevention as a key way to lowering
costs. For example non-smokers usually get discounts on premiums.
means being proactive about seeking out
erroneous claims. So when you say you’re a non-smoker and you get caught
smoking by the company, you just got audited.
make sure that the employees don’t really have
expensive choices in health care.
is fairly straight forward. The employee
contributes money towards their retirement.
is again fairly straight forward. The
organization makes all contributions in this type of plan. They get tax credits
for doing this.
means that the pension program meets certain
qualifications through the IRS and thus gets certain tax credits through the
means that they don’t get the preferential
treatment for tax purposes
means that your benefit package is defined ahead
of time. It is usually a formula and you know from day one what you will get if
you work a certain period of time. These make up a minority of pension plans.
is the kind of combo plan of contributory. This
is where both the employee and the employer make contributions to the pension
plan. You only know what contributions you are making not what you’re actual
pension will be. You make money off of these plans because the company takes
your contribution and their contribution and invests it into other places.