Term
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Definition
Traditional and Contingent Pay (CP) Plans
Reasons for Introducing CP Plans
Possible Problems Associated with CP
Selecting a CP Plan
Putting Pay in Context
Pay Structures |
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Term
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Definition
Salary and salary increases are based on
Position
Seniority |
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Term
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Definition
Salary and salary increases are based on:
Job performance
Also called: Pay for Performance
If not added to base pay, called:
Variable pay |
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Term
| Reasons for Introducing CP (1) |
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Definition
Performance management is more effective when rewards are tied to results.
CP Plans force organizations to:
Clearly define effective performance
Determine what factors are necessary |
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Term
| Reasons for Introducing CP (2) |
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Definition
Supervisors and employees are better able to understand what really matters.
CP plans enhance employee motivation to accomplish goals that match organizational needs. |
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Term
| Reasons for Introducing CP (3) |
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Definition
CP plans help to recruit and retain top performers.
CP plans projects good corporate image. |
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Term
| CP Plans Help Improve Motivation When: |
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Definition
Employees see clear link between their efforts and resulting performance. (Expectancy)
Employees see clear link between their performance level and rewards received. (Instrumentality)
Employees value the rewards available. (Valence)
motivation =
expectancy x instrumentality x valence |
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Term
| Possible Problems Associated with CP |
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Definition
Poor performance management system
Rewarding counterproductive behavior
(Rewarding A while hoping for B)
Rewards are not considered significant
Managers are not accountable
(The reward becomes the driver)
Extrinsic vs. intrinsic motivation
Disproportionately large rewards for executives |
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Term
| Selecting a CP Plan: Issues to Consider |
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Definition
Culture of organization
Strategic direction of organization |
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Term
| Culture of Organization: Types of Organizations |
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Definition
Traditional
Top-down decision making
Vertical communication
Jobs that are clearly defined
Involvement
Shared decision making
Lateral communications
Loosely defined roles |
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Term
| CP Systems for Different Organizational Cultures |
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Definition
Traditional organizations
Piece rate
Sales commissions
Group incentives
Involvement organizations
Profit sharing
Skill-based pay |
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Term
| CP Plans to Enhance Strategic Directions |
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Definition
Employee development
Skill-based pay
Customer service
Competency-based pay
Gainsharing
Overall profit
Executive pay
Profit or stock sharing |
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Term
| CP Plans to Enhance Strategic Directions (1) |
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Definition
Productivity
Individual
Piece rate
Sales commissions
Group
Gainsharing
Group incentives |
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Term
| CP Plans to Enhance Strategic Directions (2) |
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Definition
Teamwork
Team sales commissions
Gainsharing
Competency-based pay |
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Term
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Definition
A reward increases the chance that:
Specific behaviors and results will be repeated, or
Employee will engage in new behavior and produce better results. |
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Term
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Definition
Pay
Recognition
Public
Private
Status
Time
Sabbaticals
Trust and Respect
Challenge
Responsibility
Freedom
Relationships |
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Term
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Definition
Define and measure performance first and then allocate rewards.
Only use rewards that are available.
Make sure all employees are eligible.
Rewards should be both
Financial
Nonfinancial |
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Term
| How to Make Rewards Work (Continued) |
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Definition
Rewards should be:
Visible
Contingent
Timely
Reversible |
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Term
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Definition
Job Evaluation
Broad-banding |
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Term
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Definition
An organization’s pay structure
Classifies jobs
Into categories
Based on their relative worth
Is designed by job evaluation methods |
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Term
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Definition
Method of data collection
Determine the worth of various jobs
Create a pay structure
Consideration of
KSAs required for each job
Value of job for organization
How much other organizations pay |
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Term
| Types of Job Evaluation Methods |
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Definition
Ranking
Classification
Point |
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Term
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Definition
Create job descriptions
Compare job descriptions
Rank jobs |
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Term
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Definition
Create job descriptions
Compare job descriptions
Rank jobs |
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Term
| Advantages of Using Ranking Method |
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Definition
Requires little time
Minimal effort needed for administration |
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Term
| Disadvantages of Using Ranking Method |
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Definition
Criteria for ranking may not be clear.
Distances between each rank may not be equal. |
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Term
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Definition
A series of classes or grades are created.
Each job is placed within a job class. |
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Term
| Advantages of Using Classification Method |
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Definition
Jobs can be quickly slotted into structure
Employees accept method because it seems valid. |
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Term
| Disadvantages of Using Classification Method |
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Definition
Requires extensive time and effort for administration
Differences between classification levels may not be equal |
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Term
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Definition
Identify compensable factors (job characteristics)
Scale factors (e.g. on a scale of 1 through 5)
Assign a weight to each factor so the sum of the weights for all factors = 100 percent |
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Term
| Advantages of Using Point Method |
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Definition
Establishes worth of each job relative to all other jobs within organization
Comprehensive measurement of relative worth of each job in organization
Easy to rank jobs when total points are known for each job |
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Term
| Disadvantages of Using Point Method |
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Definition
Requires extensive administrative
Time
Effort |
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Term
| Does Job Evaluation Method Matter? |
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Definition
Fairness
Evaluators
Impartial
Objective |
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Term
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Definition
Information on
Base pay
All other types of compensation
Conducted in-house or by consultants, such as:
www.salary.com or www.haypaynet.com |
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Term
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Definition
Most commonly used pay structure
Pay structure collapses job classes into fewer (less than five) categories |
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Term
| Advantages of Broad-Banding |
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Definition
Provides flexibility in rewarding people
Reflects changes in organization structure
Provides better base for rewarding growth in competence
Gives more responsibility for pay decisions to managers
Provides better basis for rewarding career progression |
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Term
|
Definition
Traditional and Contingent Pay (CP) Plans
Reasons for Introducing CP Plans
Possible Problems Associated with CP
Selecting a CP Plan
Putting Pay in Context
Pay Structures |
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Term
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Definition
Performance Management and the Law
Some Legal Principles Affecting PM
Laws Affecting PM |
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Term
| Performance Management and the Law |
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Definition
Performance management systems are usually legally sound if…
Procedures are standardized
Same procedures are used with all employees |
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Term
| Some Legal Principles Affecting PM: Overview |
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Definition
Employment-at-will
Negligence
Defamation
Misrepresentation
Adverse Impact
Illegal Discrimination |
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Term
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Definition
Employment relationship can be ended at any time by:
Employer
Employee
Exceptions:
Implied contract
Possible violation of legal rights |
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Term
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Definition
If organization documents describe a system
and
It is not implemented as described,
Employee can challenge evaluation, charging negligence. |
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Term
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Definition
Disclosure of performance information that is
Untrue and
Unfavorable |
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Term
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Definition
Disclosure of performance information that is
Untrue and
Favorable |
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Term
| Adverse Impact / Unintentional Discrimination |
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Definition
PM system has unintentional impact on a protected class.
Organization must demonstrate:
A specific KSA is a business requirement for the job
All affected employees are evaluated in the same way
Organization should review ongoing performance score data by protected class to implement corrective action as necessary. |
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Term
Raters assign different scores to employees based on factors that are NOT related to performance.
Employees receive different treatment as result of such ratings.
Employees can claim they were intentionally and illegally treated differently due to their status. |
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Definition
Raters assign different scores to employees based on factors that are NOT related to performance.
Employees receive different treatment as result of such ratings.
Employees can claim they were intentionally and illegally treated differently due to their status. |
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Term
| Employee Claim of Illegal Discrimination |
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Definition
Direct evidence of discrimination, or
Evidence regarding the following:
Membership in protected class
Adverse employment decision
Performance level deserved reward/different treatment
How others were treated (not in protected class) |
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Term
| Employer Response to Claim of Illegal Discrimination |
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Definition
Legitimate and nondiscriminatory reason for action
Related to performance
Note: Good performance management system and subsequent performance-related decision, used consistently with all employees, provide defense |
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Term
| Difference Between Legal and Illegal Discrimination |
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Definition
LEGAL discrimination discriminates among employees based on their level of performance.
ILLEGAL discrimination is based on variables that should not usually be related to performance. |
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Term
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Definition
During past few decades, several countries have passed laws prohibiting discrimination based on:
Race or Ethnicity
Sex
Religion
National Origin
Age
Disability status
Sexual orientation |
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Term
| Laws in the United Kingdom |
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Definition
Equal Pay Act of 1970
Race Relations Act of 1976
Sex Discrimination Act of 1975
Disability Discrimination Act of 1995
Employment Equality (Sexual Orientation) Regulations 2003
Employment Equality (Religion or Belief) Regulations 2003 |
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Term
| Laws in the United States of America |
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Definition
Equal Pay Act of 1963
Civil Rights Act of 1964
Age Discrimination in Employment Act of 1967 (as amended in 1986)
Americans with Disabilities Act of 1990 |
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Term
| Characteristics of Legally Sound PM Systems |
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Definition
Organization:
The system is formally explained and communicated to all employees.
The system includes a formal appeals process.
Procedures are standardized and uniform for all employees within a job group.
The system includes procedures to detect potentially discriminatory effects or biases and abuses in the system. |
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Term
| Characteristics of Legally Sound PM Systems |
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Definition
Management
Supervisors are provided with formal training and information on how to manage the performance of their employees.
Performance information is gathered from multiple, diverse, and unbiased raters.
The system includes thorough and consistent documentation including specific examples of performance based on first-hand knowledge. |
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Term
| Characteristics of Legally Sound PM Systems |
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Definition
Employees
Performance dimensions and standards are:
Clearly defined and explained to the employee,
Job-related, and
Within the control of the employee.
Employees are given
Timely information on performance deficiencies and
Opportunities to correct them.
Employees are given a voice in the review process and treated with courtesy and civility throughout the process |
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Term
|
Definition
Performance Management and the Law
Some Legal Principles Affecting PM
Laws Affecting PM |
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