HR Exam 3

Define turnover

The total number of workers who leave a company over a certain time period.

2 Types of turnover

Involuntary & Voluntary

Why is turnover such a big deal?

-Money
-Lost employee=lost productivity

-Employment at will vs. Just-cause termination

Employment at will
-the employer or employee may sever he relationship at any time (no matter the cause, good, bad, or no reason at all)

Just cause
-Employer must have “just cause” – often used by Unions

Which one of these is fair by law, but, in reality, still scrutinized heavily by the courts?

Employment at Will - it's state-governed rule (SC is an "Employment at will" State), but if you fire someone for illegal or discriminatory reasons, the courts may still punish you.

Downsides to wrongful termination lawsuits (besides $$ lost)?

-Organization’s reputation damaged
-Employee sabotage efforts/behaviors
-Decreased employee morale

In terms of managing involuntary turnover, what are the three types of fairness (be able to identify whether each type of justice occurred in a given scenario).

-Distributive/Outcome Justice
-Procedural Fairness
-Interactional Fairness

Distributive/Outcome Justice

The outcome was appropriately “distributed” such that there is fairness in who was fired vs. who survived

Procedural Fairness

Fairness of the methods used to determine the outcomes received (e.g. based on Perf. Appraisal vs. “gut feeling”)

-Interactional Fairness

Fairness with respect to the Interpersonal nature of how the outcomes were communicated (e.g., how did your boss treat you when he told you “your fired”?)

Define Progressive Discipline

A system/process of disciplining EEs for unacceptable behavior or poor performance

What are the two key components of progressive discipline?

-Documentation
-Progressive punitive measures

What steps are typically taken to address poor performance and what happens at each step?

What is ADR and what are the steps in the ADR process

-A 4 stage process for resolving disputes
-Timely, constructive and cost-effective!

What is the difference between each step of ADR and at what stage is the decision locked in?

Step 1-Open Door Police
Step 2-Peer Review
Step 3-Mediation
Step 4-Arbitration

What are EAPs, who are they designed to help?

Helps employees understand what their goals and expectations are for the year, and how to develop their skills for career growth.

What are outplacement services?

Services offered to help displaced (laid off) employees transition into a new job

What types of specific services are provided with outplacement services and why do companies bother to pay for this for their laid-off employees?

-Job Search
-Counseling
-Self-assessments
-Opportunities for Networking and Public Speaking
-A Work Space

Why? - Reduces costs (benefits exhaustion, payroll taxes, litigation threats) after a layoff

Personal Disposition-Causes job dissatisfaction

-Negative instead of positive affectivity
-Low core self- evaluations

Work Tasks- causes job dissatisfaction

-Lack of complexity
-Physical strain or exertion (i.e., too demanding)
-EE sees no “value” in their work

Aspects of the Role(what are role ambiguity, role overload, role conflict)- cause job dissatisfaction

Roles are the expected behaviors associated with a position.

Supervisors & coworkers- causes job dissatisfaction

[Lack of] similar values, attitudes, and/or philosophy
[Lack of] social support

Pay and benefits- causes job dissatisfaction

Straight dollars and fringe benefits
In comparison to others and across time

What is job withdrawal?

A set of behaviors with which employees try to avoid the work situation physically, mentally, or emotionally

Behavioral Changes in withdrawal

Attempts to enact change the work conditions

Physical Withdrawal

Lateness & Absence

Psychological Withdrawal

-Lowered job involvement
-Lowered organizational commitment

Why is pay/compensation important from the Employee's and the Employer's point of view?

Employers-
-critical in attaining strategic goals
-has a major impact on employee attitudes and behaviors
Employees-
-affects their overall income and thus their standard of living.

Pay Level-

The average level of pay in the organization (includes salary + wages + bonuses)

Job Structure-

The relative worth of different jobs in the organization (relative rate of pay)

Equity theory and equity fairness and the implications for Employees

-Employee perception of pay matters
-Absolute level of pay matters, but relative level of pay also matters

What does equity theory say?

Theory of motivation that suggests that employee motivation at work is driven largely by their sense of fairness

How does the ratio comparison work and what happens when someone perceives unfairness has occurred in their pay for their performance relative to someone else's?

Definitions of pay structure

The pay policy resulting from job structure and pay level decisions

Definitions of pay level

The average amount(including wages, salaries, and bonuses) the organization pays for a particular job

Definitions of job structure

The relative pay for different for different jobs within the organization

know how to calculate pay level and job structure disparity

How do market surveys help sets the upper and lower bounds for org. pay level?

-Provides benchmarks (compares pay with competitors)
-Provides rate ranges: min and max pay at competitors

What is a job evaluation system

An administrative procedure for measuring the relative internal worth of the organization's jobs

What components does job evaluation have?

-Compensable factors
-Weighting System

Compensable factors - what are they?

important and valuable job characteristics that companies chose to pay for:
-Job complexity
-Education
-Experience

Point-factor system - how does this work?

Breaks down jobs into compensable factors identified during a job analysis.

Define market survey data

High emphasis on external comparisons (market survey), but can be adjusted by job evaluation data

Define pay grades

Group jobs into small pay classes

Define pay policy line

A graphed line showing the mathematical relationship between job evaluation points and pay rate

FLSA implications on exempt vs. non-exempt employees statistics and information

FLSA implications on overtime

Employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.

FLSA implications on minimum wage & training wage

nonexempt employees receive pay at one-and-one-half times their regular rate for all hours worked

What are the issues of executive pay?

If employees don’t perceive that equity they may find companies to work for in which CEO compensation is more fair.

How is a CEO's salary broken down?

base salary accounts for just 20 percent of a CEO's pay. The other 80 percent comes from performance-based pay.

Why is it important to give part of a CEO's pay in stock or stock options?

It gives the executive an incentive to increase value for shareholders.

What does USERRA do?

Requires employers to make jobs available to their workers when they return after fulfilling military duties for up to 5 years.

Exempt vs. non-exempt employees

The key difference between exempt and non-exempt employees is that non-exempt workers are entitled to certain protections under the Fair Labor Standards Act, a federal law that sets minimum wage and overtime requirements.

Skill based pay

Pay structures that set pay according to the employees levels of skill or knowledge and what they are capable of doing.

What does the theory say and how can you use it to better understand the link between pay and performance?

-Good pay, pay raises, and bonuses => enhanced job performance
-Pay cuts as punishment => decrease poor performance

Reinforcement theory

-Reinforcement increases behavior
-Punishment decreases behavior

Expectancy theory (all three components and what happens if the links are not made Effort->Performance->0utcome (PAY) ) What is valence of a reward??

-Expectancy: effort -> performance link
-Instrumentality: performance -> pay link
-Valence: some value placed on the outcome

Agency theory

Organizations are comprised of different stakeholders with different goals.

Merit pay

A system of linking pay increases to ratings on performance appraisals.

Individual incentives

Ex. pay for piecework, sales commission, performance bonuses

Skill-based pay

Pay based on number of skills and breadth of knowledge

Seniority system

Adv: employees stay with the firm for the ‘long haul’
Dis: no link between performance and pay outcomes

Team-based pay

Adv: common goal
Dis: slackers and freeloaders, holds individuals back, coordination costs

Profit Sharing & Gainsharing

-Part of employee pay is tied to organizational profit or departmental gains
-Payouts are typically yearly for profit sharing & quarterly for gain sharing

Stock Options and ownership

-Part of employee pay is company stock
-Focus on organizational success is even stronger than in profit/gain sharing (i.e., true “owner” mentality)
Adv: Reduces labor costs during bad times
Dis: Those without stock don’t see their contributions as relevant. Employees assume a high risk

What are the categories of contextual performance and what are some examples?

-Behaviors that create a better work environment that facilitates the core production of goods and services
Ex: Sportsmanship, Loyalty, Self-development

Psychological Contract

-A set of expectations employee have regarding organizations; including pay, benefits, promotions, training, job security, career development, support w/ personal problems

Why do we care about benefits?

-Benefits are a part of overall compensation
-Benefits may influence employee behavior

Reasons why benefits are complex

-Cost vs. benefit
-Hard for most EEs to estimate $ worth
-Hard to understand what’s available and how to take advantage

Reasons for benefits growth

-New Deal legislation under FDR
-Labor market shortages during WWII
-Tax benefits for organizations
-Advantages of “group” rates
-Growth in Organized Labor (Unions)

4 major types of benefit programs

-Social insurance- Legally Required
-Private group insurance – Optional
-Retirement – Optional
-Pay for time not worked & Family Medical Leave - mixed

-Private group insurance

Medical, Disability

-Retirement

Defined benefit, Defined contribution

-Pay for time not worked

-Vacations– not mandated
-Sick leave – not mandated
-Family and Medical Leave Act of 1993 (FMLA)

Social security

-What’s it for?
-Old Age, Survivors, Disability, and Health Insurance Act (OASDHI)
-Where’s the $ come from?
~8% tax deducted from employee’s check & employers match it

Unemployment insurance/comp

-Objective: to minimize the hardship of unemployment
-$ from tax on employers based on use (experience rating)
-Eligibility: work 1 year, not on strike, actively seeking work, not fired for cause, nor voluntarily quit
-Unemployment income is about half of pay and lasts for 26 weeks

Worker's comp

-$ Provide benefits to workers who suffer work-related injuries, or illness, or, if death, $ to their survivors.
-Compensation typically only 2/3 of pre-injury earnings

Medical insurance

-May include: hospital, surgery, checkups, dental, vision, birthing center, and prescription drugs
-Very important to EEs!

Disability insurance

-(An additional security to workers compensation disability comp)
-Short term = 6 months or less
-Long term = > six months to whole life (with some of social security providing funding)
-Usually = 50-70% of wages

Defined benefit plans

-Company guaranteed retirement benefit based on years of service, age and pay level
-Pension Benefit Guaranty Corporation (PBGC)
-“Insures” at least in portion, the benefits in case of severe financial difficulty -- up to $5,812/EE(age65)/month in 2020
-Employer must pay roughly $30 annual per participant for “insurance” of these benefits
Benefits in excess of PBGC limits are not guaranteed

Defined contribution

-No promised benefit or PBGC rules
-Employee makes a “contribution” each month to a retirement account, employers usually match it (up to X%), it is then invested in, one of several funds of employee’s choice (managed by e.g. AIG, Valic, Prudential)
-Attractive to EEs because of pretax benefit
-Companies often match contributions up to certain amount

Differences/advantages b/w DB and DC

Defined Benefits:
-Guaranteed benefit
Defined Contributions:
-Risk shifts to employee
-No daily accounting measures (age, service, etc)
-No insurance premiums to insure the benefit
-No tracking of employees after termination (they take their plan with them) (ROLLOVERS)

Minimum vesting requirements

20 percent vested after 2 years, 40 percent after 3 years, 60 percent after 4 years, 80 percent after 5 years, and 100 percent after 6 years.

What are 2 common models for vesting structure?

-Graded(3-7 years, at least 20% at year 3)
-Cliff(0% until year 5)

Vacation days/sick days

Not mandated

FMLA (what it covers, who's eligible)

Organizations with 50+ employees must provide as much as 12 weeks unpaid leave after childbirth or adoption; to care for seriously ill child, spouse or parent; or for own illness – It’s required by law
Eligible: Must have 1 year service, work more than 25 hrs/week, and not in top 10% of highest paid

HMO's

Can only use HMO services (cross your fingers)

PPO's

Can go outside of network for increased cost; usually more variety in network than HMO; but more expensive than HMOs

Employee wellness programs

Passive:
-emphasis on building awareness, people identify own problems and take action (e.g.,
health education program, fitness facility)
Active:
-emphasis on reinforcement & support; individualized tracking (e.g., outreach and
follow-up model). More effective.

Flexible benefit plans

Permits pretax contributions to an employee account that can be drawn on to pay for uncovered health care expenses (e.g., medication, copayments)

cafeteria plans-Pros

Allow employees to choose from a variety of pre-tax benefits

cafeteria plans-Cons

It may require workers to pay out-of-pocket expenses.

Flexible spending accounts (Limitations and Requirements)

-Permits pretax contributions to an employee account that can be drawn on to pay for uncovered health care expenses (e.g., medication, copayments)
-No legal, individual limit; but typically between $2000-$5000 capped by employer
-Legal pretax limit of $5000 for dependents (no matter how many dependents)

Why do people join unions?

-Dissatisfaction with pay and benefits
-Fear of job insecurity
-Impersonal attitude of management
-Opportunity for leadership and organization
-Family and peer pressure

Wages for union versus non-union

Wage advantage is about 10% for union employees

How does union membership affect productivity?

Decreased?
-Higher labor costs
-Lowers permissible workloads or extensive tasks
-Strikes, slowdowns, or “working-to-rule” (following every workplace rule and doing no -better)
Increased?
-Reduces turnover by allowing voice
-More shared knowledge because of less competition (pay is determined by union negotiation)

How can HR prevent the creation of unions?

-Increase the organization’s profits
-Keep labor costs low, raise output and keep organization’s operations flexible.
-Avoid the need for unions by being responsive to worker’s rights

What are some practical reasons why organizations should diversify?

-Legal Reasons
-Labor Market Conditions
-Customer Needs
-Diversity generates better teams
-Improve Corporate Image

What are the basic types of training for diversity?

-Attitude Awareness & Change Programs
-Behavior-Based Programs

Attitude Awareness Training

-Increase awareness of cultural and ethnic differences in effort to avoid stereotypes
-Disadvantage - could actually accentuate differences and stereotypes