Managing Human Resources - Exam 3

Voluntary Turnover

Turnover initiated by employees; often when the organization would prefer to keep them (i.e. employee retires or moves on to new opportunity)

Involuntary Turnover

Turnover initiated by employer; often when employees would prefer to stay (i.e. job termination)

Employment-at-Will Doctrine

Unless otherwise specified in contract, employer and employee may end employment relationship at any time; implied contracts; discharge cannot violate law or public policy

Discipline and Discharge

Organizations must have a standardized and systematic approach to separation:

• should not be left solely to discretion of individual managers

• should be based on principles of justice and law

• should allow for various ways to intervene

Outcome Fairness

Consistent outcomes, knowledge of outcomes, outcomes in proportion to behaviors

Procedural Justice

Consistent procedures, avoidance of bias, accurate information, ways to correct mistakes, representation of all interests, ethical standards

Interactional Justice

Explanation of decision, respectful treatment, consideration, empathy

Wrongful Discharge

May not violate implied agreement:

• employer promised job security

• action inconsistent with company rules

May not violate public policy:

• terminating employee for refusing to do something illegal or unsafe

Discrimination

Discipline decisions must be made without regard to age, sex, race, or other protected status; Carefully documented discipline can avoid claims of discrimination

Employees’ Privacy

Information gathered and used for discipline must be relevant; Privacy issues arise when employers wish to monitor or search employees; Employers must be prudent in who sees the information

Measures for Protecting Employees’ Privacy

1. ensure that information is relevant

2. publicize information-gathering policies and consequences

3. request consent before gathering information

4. treat employees consistently

5. conduct searches discreetly

6. share information only with those who need it

Progressive Disciplinr

Formal discipline process; consequences more severe with each repeat offense

Workers’ Adjustment Retraining and Notification Act (WARN)

Employers required to give 60 days notice before any closing or layoff if:

• employer has 100+ employees

• 50+ employees to be affected

• only penalty is back pay

Open-Door Policy

Organization’s policy of making managers available to hear about complaints and conflict; Works to degree that employees trust management to act

Peer Review

Process for resolving conflict; Panel listens to case and works to help parties agree to settlement; Panel made of representatives from organization at same level as people in dispute

Mediation

Nonbinding process, neutral party from outside organization hears case, helps parties arrive at settlement

Arbitration

Binding process, professional (lawyer or judge) hears case and resolves it by making a decision

Employee Engagement

Degree to which employees are fully involved in work and strength of commitment to job and company, results in:

• higher productivity

• better customer service

• lower turnover

Job Withdrawal

Set of behaviors with which employees try to avoid the work situation physically, mentally, and emotionally

Negative affectivity

Low level of satisfaction with all aspects of life

Role ambiguity

Lack of clarity on expectations

Role conflict

Conflict between work and other roles; conflicting directives at work

Role overload

Too many responsibilities

Behavior Change

• Confrontation and conflict

• Some employees may whistle-blow or file lawsuits

Physical Job Withdrawal

• Tardiness or absenteeism

• Resignation

Psychological Withdrawal

• Decrease in job involvement → acceptance of poor work

• Decrease in organizational commitment → lower motivation

Job Satisfaction

Pleasant feeling resulting from perception that job fulfills or allow fulfillment of one’s important job values

Job Structure

Relative pay for different jobs within organization

Pay Structure

Pay policy resulting from job structure and pay level decisions

Pay Level

Average amount the organization pays for a particular job

Minimum Wage

Lowest amount employers may pay under federal or state laws; States as an amount of pay per hour

Fair Labor Standards Act (FLSA)

Federal law that establishes minimum wage and requirements for overtime pay and child labor

Exempt employees

Managers, outside salespeople, and other employees not covered by the FLSA requirement

Nonexempt employees

Emploees covered by FLSA requirement for overtime pay

Child Labor

Children under 14 may not be employed; Children aged 14 and 15 may work only outside school hours, in nonhazardous jobs, and for limited time periods; Children aged 16 and 17 may not be employed in hazardous jobs

Pay Ratio Reporting

Must report ratio of CEO pay to pay of median employee; Intended to increase transparency and make social responsibility a more vital part of pay policies

Product Markets

Organizations that offer similar goods and services; Organizations compete on quality, service, and price; Cost of labor a significant part of organization’s costs

Labor Markets

Organizations must compete to obtain human resources; Competition establishes minimum pay to hire an employee for a job

External equity

Fairness of one’s pay relative to what employees in other organizations earn doing the same job

Internal equity

Fairness of one’s pay relative to pay of co-workers

Job evaluation

Measures relative internal worth of organization’s jobs; Committee identifies each job’s compensable factors; Jobs rated for each factor

Compensable Factors

1. Experience

2. Education

3. Complexity

4. Working conditions

5. Responsibility

Pay Rates

Rates of key jobs can be based on market research; Nonkey jobs often have no survey data available professional must base rate off job evaluation by plotting data on graph

Pay Ranges

Set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job or a job within a particular pay grade; Flexibility helps organization balance conflicting information from job evaluations and market surveys; Usually pay ranges overlap somewhat

Pay Grades

Sets of jobs having similar worth or content grouped together to establish rates of pay; May not match market rate

Pay Differentials

Adjustment to pay rate to reflect differences in working conditions or labor markets; Differentials often offered in U.S. by geographic location

Compa-Ratio

Ratio of average pay to the midpoint of pay range; Ensure that pay policies and practices match

Incentive Pay

Forms of pay designed to energize, direct, or control employees’ behavior; Often linked to employees’ performance as an individual, group member, or organization member (i.e., commission or bonus)

Piecework Rate

Wage based on the amount an employee produces

Straight Piecework Plan

Employer pays same rate per piece no matter how much worker produces

Differential Piece Rates

Piece rate is higher when a greater amount is produced

Standard Hour Plan

Pays workers extra for work done in less than a preset “standard time”; Encourages employees to work as fast as possible; Employees often neglect quality or customer service

Merit Pay

Pay increases linked to ratings on performance appraisals; Uses a merit increase grid

• performance rating

• compa-ratio

Bonus system

One time payout for performance rating, or achieving performance objectives

Performance Bonuses

• not rolled into base pay

• employee must re-earn bonus during each period

• may be a one-time reward

• may be linked to objective performance measures

Sales commissions

• incentive pay calculated as a percentage of sales

• some earn commission in addition to base salary

• some work on straight commission plan with no salary

• some earn no commissions at all

Gainsharing

Measures improvements in productivity and effectiveness and distributes portion of each gain to employees; Addresses challenge of identifying appropriate performance measures for complex jobs; Employees determine how to improve own and group’s performance

Group Bonuses

Used in smaller work groups; Reward members of group for attaining a specific goal; Usually measured in terms of physical output

Team Awards

Similar to group bonuses; Likely to use a broad range of performance measures:

• cost savings

• completion of project

• meeting deadlines

Profit Sharing

Payments are a percentage of organization’s profits and are not part of employees’ base salary; May encourage employees to think like owners; Evidence not clear whether profit sharing is effective in improving performance

Stock Options

Rights to buy certain number of shares of stock at specified price; Traditionally have been granted to executives

Employee Stock Ownership Plan (ESOP)

Organization distributes shares of stock to all its employees by placing them in a trust; Most common form of ownership

Balanced scorecard

Method of evaluation that includes a variety of performance measures and can include comparative information; provides feedback on multiple performance areas; can prevent employees from focusing on only a few key metrics

Participation in Incentives

Employee participation can be part of general move to employee empowerment; Employees have hands-on knowledge of behaviors that are effective

Communication

Demonstrates that the pay plan is fair; When employees understand the plan, it is more likely to influence their behavior as desired; Important when changing pay plan

Short-Term Incentives

Bonuses based on ROI, year’s profits, or other measures related to goals; Actual payment of bonus can be delayed to gain tax advantages

Long-Term Incentives

Stock options; Stock purchase plans; Rationale is that executives will want what is best for organization because that will cause the value of their stock to grow

Ethical Issues

Occur when company links pay to stock performance; Executives may be tempted to lie about company’s performance due to potential for large earnings; Insider trading gives unethical advantage

Employee Benefits

Compensations to employees in forms other than cash; Help attract, retain, and motivate employees

Social Security

Employers and employees share cost through payroll tax to provide the following benefits in the OASDHI

Unemployment Insurance

Federally mandated program administered by states; Minimizes unemployment hardship. To receive benefits, workers must meet four conditions:

• Can demonstrate they were employed

• Available for work

• Actively seeking work

• Were not discharged for cause, did ot quit voluntarily, and are not out of work because of a labor dispute

Worker's’ Compensation

State programs that provide benefits to workers who suffer work-related injuries/illness, or their survivors; Operate under principle of no-fault liability:

• employee does not need to show that employer was grossly negligent in order to receive compensation

• employer is protected from lawsuits

• generally two-thirds of workers’ earnings and tax free

Active duty provision

FMLA extended to 26 weeks to care for next of kin family members needing care as a result of injury received during active duty in the military

Paid leave

• Major categories: vacations, holidays, sick leave

• Average: 23 vacation days + 10 paid holidays

• personal days, floating holidays, and PTO options

Patient Protection and Affordable Care Act

Employers not required by law to provide health care; Small businesses can buy insurance from SHOP; Law is complex and changing, HR professionals must continue to educate themselves on the requirements

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Employers required to allow employees to extend health insurance coverage at group rates for up to 36 months after layoff, reduction in hours, or employee’s death (for dependents)

Life insurance

Employers may this insurance or offer the opportunity to buy coverage at low group rates; if employee dies during term of policy, beneficiaries receive a death benefit payment

Short-Term Disability Insurance

Percentage of employee’s salary paid as benefits for six months or less

Long-Term Disability Insurance

Percentage of employee’s salary paid as benefits after an initial period and potentially for rest of employee’s life; Employers can also offer long-term care insurance

Contributory plan

Funded by employer and employee

Noncontributory plan

Funded entirely by employer

Defined benefit plan

Guarantees specified level of retirement income

• meets requirements of Employee Retirement Income Security Act

• Aided by the Pension Benefit Guarantee Corporation

Defined-contribution plan

Employer sets up account for each employee; specifies size of contribution into account

Cash balance plan

Employer sets up account for each employee; contributes percentage of employee’s salary

Vesting Rights

When employees become participants in pension plans and work a specified number of years, they are guaranteed to received pension at retirement regardless of if they remained with the employer

Summary Plan Description

Report that describes pension plan’s funding, eligibility requirements, risks, and other details; Individual benefit statement describes employee’s vested and unvested benefits

Cafeteria-style plan

Employees can choose the types and amounts of benefits they want from a set of alternatives

Unions

Labor unions represent their members’ interests and resolve conflicts with employers

Labor Relations

Field emphasizing labor-management cooperation; Involves a labor relations strategy, negotiating contracts, and administering contracts

Craft union

Members have a particular skill or occupation

Industrial union

Members linked by their work in a particular industry

Union steward

Elected to represent union and ensures that terms of labor contract are enforced

Management Goals

• increase the organization’s profits

• keep labor costs low and increase output

• maintain flexible operations to meet competitive challenges and customer demands

Labor Union Goals

• obtain pay and working conditions that satisfy members

• give members a voice in decisions that affect them

• membership linked to better compensation and benefits

• regular flow of new members essential to survival; goals obtained through power in numbers

checkoff provision

contract provision under which employer, on behalf of the union, automatically deducts union dues from employees’ paychecks

National Labor Relations Act (NLRA)

Protects the following activities:

• union organizing

• joining a union, whether recognized by employer or not

• going out on strike

• refraining from activity on behalf of the union