Mgmt 373 Wendy Boswell TAMU FINAL/Exam 3

Involuntary Turnover

When an employee is forced to leave a job due to termination firing injury death or organizational downsizing/closure rather than personal choice

Progressive Discipline

programs where the severity of the punishment increases overtime or across the problem (verbal warning -> written warning -> suspension -> termination)

Voluntary Turnover

When an employee chooses to leave a job on their own due to reasons like dissatisfaction relocation family needs or better opportunities

Progression of withdrawal

psychological to behavioral to physical

Voluntary Turnover Predictors

job satisfaction, organizational commitment, intent to quit, role clarity, general stress, pay/fairness, supervisor relationship, opportunities for promotion

Union

An organized group of workers who come together to advocate for better working conditions, pay, and benefits

Psychological Stage of Turnover

The internal phase where an employee experiences job dissatisfaction, begins thinking about quitting, and starts considering alternative employment options

Behavioral Stage of Turnover

The phase where dissatisfaction becomes visible through actions such as decreased performance, filing grievances, reduced effort, and actively searching for other jobs

Physical Stage of Turnover

The final stage where the employee actually leaves the organization by quitting

Turnover Process Duration

The idea that turnover can either be a gradual progression through stages or happen quickly without much visible warning

Extroversion and Turnover

Evidence suggests that individuals with more extroverted personalities are more likely to leave jobs compared to those who are more agreeable

Job Embeddedness

The extent to which employees feel tied to their job due to factors like community connections, family considerations, or benefits like pensions that make leaving difficult

Behavioral Warning Signs of Turnover

Observable changes such as declining performance new or increased complaint, discussing other job opportunities or referencing the job market (key is to see CHANGE)

Withdrawal Behaviors

Actions indicating disengagement such as increased absences, lateness, longer breaks, skipping meetings, or reduced participation

Measurement of Turnover

important to ascertain record and track reasons why employees leave

Employee Satisfaction Surveys

surveys of current employees to discover sources of dissatisfaction and reason for leaving

Exit interviews

formal and planned interviews with departing employees (gives employees time and space to think about their dissatisfaction which may encourage openness but is less proactive and often less effective for retention)

Post-exit Surveys

sent after their last day to survey reasons of leaving

Burnout Indicators

Signs of emotional and physical exhaustion that may include employees verbally expressing stress, fatigue, or dissatisfaction with their workload

Managerial Focus on Change

Managers should prioritize noticing changes in employee behavior rather than isolated actions, as changes are key indicators of potential turnover

Compensation

The total financial returns and tangible services and benefits employees receive for their work including wages salary bonuses benefits and incentives

Paid Time Off (PTO)

Employer-provided paid leave that includes benefits such as vacation days

Salary

Fixed regular compensation paid to an employee, typically expressed annually and not based on hours worked

Wages (Hourly Pay)

Compensation based on the number of hours worked, with employees paid a set rate per hour

Bonuses

Additional compensation given for performance, signing, retention, or referrals, often used as short-term incentives

Commission Pay

Compensation based on a percentage of sales generated by the employee, commonly used in sales roles

Stock Options

Compensation that gives employees the right to purchase company stock at a set price, aligning employee interests with company performance

Merit Increase

A permanent raise in base pay based on individual performance evaluations

Benefits

Non-wage compensation such as health insurance, car allowances, and retirement contributions provided to employees

Compensation Objectives

The goals of a pay system, including attracting employees motivating performance and retaining talent

Expectancy Theory

Expectancy X Instrumentality X Valence = Motivation

Expectancy

perceived probability of successful performance (If i put in the effort, will I be successful?)

Instrumentality

perceived probability that successful performance will lead to rewards (Do I trust that I’ll get the rewards if I perform successfully?)

Valence

subjective value of offered rewards (do I value the rewards?)

Equity Theory

In assessing the fairness of pay, most employees will compare the pay they receive with others (when outcomes/input ratios are out of balance they will be motivated to bring it to balance)

Pay-for-Performance

A compensation strategy where employee pay is directly tied to their performance or productivity

External Equity

Comparing an organization’s pay to what employees earn in similar jobs at other organizations

Internal Equity

Comparing pay across different jobs within the same organization to ensure fairness in job value

Individual Equity

Comparing pay among employees performing the same job within the same organization

Importance of Equity

job behavior (motivation/performance and unionization) as well as employee attraction and retention

Job Structure

the relative value of each job (hierarchy and what they are worth)

Market Pay Level Strategies

Approaches to compensation where companies choose to lead, match

Lead the Market Strategy

Paying employees above the market rate to attract and retain top talent

Match the Market Strategy

Setting pay at the same level as competitors to remain competitive

Lag the Market Strategy

Paying below market rates

Wage Surveys

used to carefully and systematically collect info on going rates of pay (addressing external equity)

Job Evaluation

The process of determining the relative worth of jobs within an organization based on factors like skill, responsibility, and complexity

Compensable Factors

Characteristics used to evaluate jobs such as education required, supervision responsibility, customer interaction, and job complexity

Pay Policy Line

The relationship between job evaluation points and pay rates used to structure compensation

Pay Rates

use survey data to find going rates for jobs

Pay Grades

Groupings of jobs with similar value or worth within an organization

Pay Range

The set of possible pay rates (minimum, midpoint, maximum) for a job or pay grade

Merit Pay System

A commonly used system where pay increases are based on individual performance (annually) though often limited by subjectivity and small differences in rewards

Merit Pay Limitations

Issues such as small pay differences and questionable performance evaluations and inability to reflect short-term performance changes

Bonus

based on a performance that is usually measured as some measurable output (annual or weekly and not rolled into base pay)

Bonus Limitations

focused on individual performance, inadequate goals, may be deficient, only focus on the thing that gets you the bonus not other responsibilities

Piece-Rate Pay

A system where employees are paid based on output produced often used in measurable production jobs

Piece-Rate Limitations

Issues such as reduced quality and lack of control over performance factors and “rate busting” where standards are raised after high performance

Rate Busting

When one employee exceeds expectations significantly leading the organization to increase performance standards for everyone

Commission Pay Risks

Problems such as income instability and focus on short-term sales and external factors affecting performance

Profit Sharing

A compensation system where employees receive a portion of company profits typically deposited into retirement accounts

Employee Ownership

Giving employees ownership in the company to align their interests with organizational success

Limitations to Employee Ownership

Issues such as weak connection to individual performance and influence of external market forces and delayed rewards

Gainsharing

the sharing of productivity gains with employees (more common in manufacturing settings) (usually group or plant level performance is measured and rewarded)

Group or Team Bonuses

hit a goal as a team and you all get a bonus

Group Incentives Limitations

Problems like free riders, unclear individual contribution, weaker motivation for high performers

Pay Compression

When there is little difference in pay between employees of different experience or performance levels

Pay Compression Effects

Outcomes such as resentment, dissatisfaction, increased turnover among high-performing or senior employees

EEO regulation prohibits differences in pay based on

protected characteristics

In general there is an earning differential between ___ and ___ and ___ and ____ even after correcting for education and experience

men, women, whites, blacks

Exempt Employees

Workers not eligible for overtime pay typically based on job duties and salary level

Non-Exempt Employees

Workers eligible for overtime pay usually paid hourly and covered by wage-hour laws

Exempt vs Non-Exempt Classification

Determined by job duties rather than job title and a major source of legal disputes when misclassified

Fair Labor Standards Act (FLSA)

Overtime pay and exempt vs non exempt

Salary Threshold

The minimum salary level required for an employee to qualify as exempt from overtime

Overtime Pay

Compensation at 1.5 times the regular hourly rate for working beyond 40 hours in a week

Equal Pay Act of 1963

amendment to FLSA that prohibits sex-based discrimination in pay for same/similar jobs

Employee Benefits

Part of total compensation, 30-40% on top of payroll

Social Security

Retirement, disability, and Medicare benefits

Social Security Credits

Need 40 credits (10 years of work) for eligibility

Social Security Age

Full retirement benefits at age 67

Unemployment Insurance

For involuntary termination, does not include misconduct or quitting

Unemployment Pay

Approx 50% of pay for 26 weeks, taxable income

Experience Rating

Employer tax rate based on number of former employees collecting benefits

Workers Compensation

Protects income and expenses from job-related injury or death, disability income, medical care, death benefits, and rehabilitation services

Workers Comp Pay

Usually 2/3 of income, tax-free

Medical Insurance Mandate

Required for companies with 50 or more employees, typically covers hospital, surgery and physician visits

HMO managed care

Must use a doctor on the list, emphasizes prevention

PPO

It allows you to see specialists without referrals and offers partial coverage for out-of-network providers, typically in exchange for higher monthly premiums

COBRA

IF medical insurance is offered, Extends group rates for 36 months after a qualified event

Retirement Defined Benefit

Guaranteed benefit level based on years, age, and earnings

Defined Benefit Risk

Employer carries the risk, must fund and estimate life spans

Defined Contribution

401k/403b, employees, and often employers, contribute a fixed amount or percentage of pay (e.g., to a 401(k) or 403(b)). The final retirement benefit is based on contributions

Defined Contribution Risk

Employee carries risk, depends on market/stock performance

Vesting

Non-forfeitable right to your retirement

Paid Time Off (PTO)

Combined total of allowed days off

Other Services

Perquisites, wellness programs, employee assistance plans, special facilities, financial services, charitable matching, relocation services

Employee Assistance Plans

Outsourced counseling for issues like alcoholism

Family Friendly Benefits

family/parental leave, child care and elder care to reduce worker stress