Textbook Notes (363,144)
Canada (158,220)
York University (12,357)
ADMS 2600 (126)

ADMS 2600.docx

24 Pages
Unlock Document

York University
Administrative Studies
ADMS 2600
Monica Belcourt

CHAPTER 9: MANAGING COMPENSATION Pay: statement of an employee’s worth by an employer; perception of worth by and employee  Direct Compensation: wages/salaries, commissions, bonuses and incentives  Indirect Compensation: employee recognition programs, rewarding jobs, organizational support, work environment, and flexible hours Strategic Compensation Planning (SCP): compensation of employees to enhance motivation and growth, while aligning efforts with the objectives, philosophies, and culture of the organization.  HR&SCP: SCP mesh monetary payments with specific HR functions  aid/impair recruitment: Recruitment: supply of applicants affects wage rate  pay rates affect selectivity: Selection: selection standards affect level of pay required  pay can motivate training: Training&Development: increased knowledge leads to higher pay  T&D may lead to higher pay: Compensation Management: basis for determining employee’s pay rate  low pay encourages unionization: Labour Relations: pay rates determined through negotiation  (1) Linking Compensation to Organizational Objectives  organizations establish specific goals to join organizational objectives to the compensation program  (1) to reward employee’s past performance  (2) to remain competitive in the labour market  (3) to maintain salary equity among employees  (4) to mesh employees’ future performance with organizational goals  (5) to control the compensation budget  (6) to attract new employees  (7) to reduce unnecessary turnovers  compensation policies typically are established to guide management in achieving these goals  (1) rate of pay: whether it is above, below, or at the prevailing market rate  (2) ability of SCP to gain employee acceptance while motivating productivity  (3) pay level of new recruitments and pay differential based on seniority levels  (4) pay raise intervals and extent of merit/seniority influence  (5) pay levels to achieve sound financial position in relation to the products/services offered  (2) Pay-For-Performance Standard: managers tie compensation to employee effort and performance  Serves to raise productivity and lower labour costs  wide range of compensation options based on pay-for-performance:  merit-based pay; bonuses; salary commissions; job&pay banding, team incentives  concerns: (1) money allocated for annual salary increases (2) PFP measurement (3) employees to cover  (3) Motivating Employees through Compensation:  (1) Pay Equity: employee’s perception that compensation is equal to the value of the work performed  theory explains the role of perception in motivation and the fact that individuals make comparisons  compare value of their input/output ratio with value of ratio for other individuals in similar class of jobs either internally or externally  greater perceived disparity = greater motivation to reduce inequity  (2) Expectancy Theory: predicts that level of motivation depends on attractiveness of the rewards sought and probability of obtaining those rewards in the context of exerted effort  Employee can expect that high effort = high performance = valued reward  (3) Pay Secrecy: policy prohibiting employees from revealing compensation information to anyone  greater freedom for managers in compensation management; no objective base for pursuing complaints about employee pay; covers up existing inequities within pay structure  creates distrust/misperceptions in SCP; reduce motivation; inhibit organizational effectiveness  Bases for Compensation  Hourly Work: work paid on an hourly basis  Piecework: work paid according to the number of units produced  Salary Work: work paid on the basis of weekly, biweekly, or monthly CHAPTER 9: MANAGING COMPENSATION Determining Compensation: Wage Mix  combination of internal and external factors  Internal Factors:  (1) Employer’s Compensation Strategy: policies to lead, lag or match competitor’s pay  (1) internal wage relationship among jobs and skill levels  (2) external competition or employer’s pay position relative to what competitor’s pay  (3) policy of rewarding employee performance  (4) administrative decisions concerning elements of pay system:  payment periods, and short-term or long-term incentives  (2) Worth of a Job: establishing the internal wage relationship among jobs and skill levels  generally base on the subjective influence of the labour market or unionized employees  formal SCP rely on a system of job evaluation: must include market prices and job’s total value delivered to the organization  (3) Employee’s Relative Worth: rewarding individual employee performance  merit raises must be determined by an effective performance appraisal system that differentiates deserving and undeserving employees  (4) Employer’s Ability to Pay: having the resources and profits to pay employees affected by:  employee productivity; capital investment; economic conditions, and competition  External Factors:  (1) Labour Market Conditions: supply&demand forces for qualified labour that can be influenced by:  economic conditions, unions, government interventions  (2) Area Wage Rates: formal wage structure of rates is influenced by those being paid by other area employers for comparable jobs  determined by wage rate surveys: provide external wage equity between surveying organization and other organization competing for labour in the surrounding labour market  (3) Cost of Living: inflation can require that compensation rates be adjusted to help maintain the purchasing power of employees  Consumer Price Index (CPI): measure of the avg. change in prices over time in a fixed market baskets of goods and services  Escalator Clauses: clauses in collective agreements that provide for quarterly cost-of-living adjustments in wages, basing the adjustments on changes in the CPI  (4) Collective Bargaining: most important goal of unions in each new agreement is to achieve increases in real wages to improve the purchasing power and standard of living of its members  negotiated agreements tend to establish rate patterns within the labour market  Union Scale: prevailing rate that employers must pay for work performed under gov’t contract  (5) Government Regulation: establishing minimum requirements of compensation management  (1) Canada Labour Code (CLC):  Part III of CLC and the Canada Labour Standards Regulations (CLSR) set minimum labour standards for all employees&employers in works that fall within federal jurisdiction  federal CC are covered by CLC but federal public service employees are not  subject to a 40-hour workweek  managerial and professional employees are not covered by the hours-of-work provision  (2) Employment Standards Act: minimum standards with a view to protecting both employees and employers in certain employment situations  collective bargain can override the provisions provided that it benefits the employee and are not less than what are stipulated in the acts  contains provision stipulating that an overtime rate of 1.5 times the base rate must be paid for all hours worked in excess of set minimum prescribed in the province.  (3) Employment Equity: fair employment practices applied to members of designated groups, regulated provincially CHAPTER 9: MANAGING COMPENSATION Job Evaluation Systems: systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within the organization  (1) Job Ranking System: jobs are arrayed on the basis of their relative worth  ranks jobs in order of importance by listing the duties and responsibilities of each job  can be done by a single individual knowledgeable about all jobs or by a committee  Limitations: (1) inaccurate measurement (2) relative importance of the job rather than differences in the degree of importance that may exist between jobs (3) can only be used with a small number of jobs  (2) Job Classification System: jobs are classified&grouped accdg. to a series of fixed wage grades  successive grades = increasing amounts of factors selected to compare jobs  description of job classes represent the scale against which specifications for various jobs are compared  jobs evaluated by comparing job descriptions with the different wage grades in order to slot the job into the appropriate grade  advantage of simplicity but is less precise than point system since the job is evaluated as a whole  (3) Point System: determines the relative value of a job by the total points assigned to it  evaluate jobs quantitatively on the basis of compensable factors:  skills, efforts, responsibilities, and working conditions  fiscal accountability, leadership, teamwork, and project accountability  weighted once selected in relative importance to the organization  complicated but rather simple once in place and provides a more refined basis for making judgments  Point Manual: handbook that contains:  (1) description of the compensable factors  (2) degrees to which these factors may exist within jobs  (3) # of points allocated to each factor and to each degrees into which these factors are divided  point system uses point manual by comparing the job descriptions and job specifications factor by factor, against the various factor-degree description through assigned points  (4) Work Valuation: measure job’s worth through its value to the organization  ends with work hierarchy eventually priced through wage surveys to determine individual pay rates  Job Evaluation for Management Positions: employ either standardized (purchased) program or customized point method to fit management positions  (5) Hay Profile Method: uses 3 factors (1) knowledge (2) mental activity (3) accountability  assumed that these factors represent the most important aspects of all executive positions  percentage value are determined and assigned to each of the 3 factors  jobs are then ranked on the basis of each factor, and point values are assigned on the basis of the percentage-value level at which the job is ranked Compensation Structure:  Wage and Salary Survey: survey of the wages paid to employees of other employers in the surveying organization’s relevant labour market  Collecting Survey Data: (1) conduct own survey (2) third-party surveys: surveys from  government; boards of trade; professional employers; consulting firms  limitations: (1) incompatible with user’s jobs (2) user cannot specify what specific data to collect  Employer-Initiated Surveys: usually survey key/benchmark jobs that are:  (1) important (2) contain a large number of positions (3) relatively stable job content (4) same job content across many organizations (5) acceptable for pay comparisons  usually sent to 10/15 organizations that represent valid sample of other employers CHAPTER 9: MANAGING COMPENSATION Compensation Structure:  Wage Curve: curve in a scattergram representing the relationship  relative worth of jobs VS wage rates  may indicate the rates: (1) internal pay, (2) new rates from job eval. (3) external pay for similar jobs  Pay Grades :groups of jobs within a particular class that are paid the same rate  within wage structure vary in number: determined by (1) slope of wage curve, (2) number&distribution of the jobs within the structure, and (3) organization’s wage administration and promotion policies  Classification System: used for job eval. jobs are grouped into grades as part of eval. process  Point System: pay grades must be established at selected intervals that represent either the point or the evaluated monetary value of these jobs  Rate Ranges: maybe same for each grade or proportionately greater for each successive grade  divided into series of steps: permit employees to receive increases up to the maximum rate for the range on the basis of seniority and/or merit.  ranges of adjoining pay grades overlap: permit an employee with experience to earn as much as or more than a person with less experience in the next higher job classification  determining the appropriate pay grade into which ea. job should be placed on the basis of evaluated worth  employee exceeding required performance may be acknowledged by merit increases within the grade range or by promotion to a job in the next higher pay grade  Red Circle Rates: payment rates above the maximum of the pay range  exceptions to the pay structure, employers often freeze these rates until all ranges are shifted upward through market wage adjustments.  Competence Based Pay: pay based on skill level, variety of skills possessed, or increased job knowledge  encourage employees to earn higher base pay by learning and performing a wider variety of skills  Benefits: (1) greater productivity (2) increased employee learning&commitment to work (3) improved staffing skill flexibility (4) reduced effects of absenteeism& turnover  encourage employees to continuously learn when new and updated skills are needed  Cons: (1) limit amount of compensation employees can earn (2) hard to develop appropriate measures  Broadbanding: collapses many traditional salary grades into a few wide salary bands  Benefits: (1) encourages lateral skill building (2) addresses need to pay employees performing multiple jobs w/ different skill level requirements (3) eliminates obsession w/ grades (4) encourages employees to move to jobs in which they can develop&add value to the organization (5) enables employers to consider job responsibilities, individual skills and competencies, and career mobility patterns in assigning employee bands Significant Compensation Issues: (1) equally pay for work of equal value (2) wage rate compression  (1) Equal Pay for Work of Equal Value: especially in the context of gender issues  argument is that jobs held by women are not compensated the same as those held by men  Measuring Comparability: no consensus on a comparable worth standard by which to evaluate jobs, nor is there agreement on the ability of current job evaluation techniques to remedy the problem.  (2) Wage Rate Compression: compression of differentials between job classes  occurs when less experienced, often junior employees, earn as much or more than experienced employees due to high starting salaries for new employees  organizational policies to alleviate WRC effect:  (1) reward high performance and merit-worthy employees with large pay increases  (2) design pay structure to allow wide spread between hourly and supervisory employees  (3) prepare high-performing employees for promotions to jobs with higher salary levels  (4) provide equity adjustments for selected employees hardest hit by pay compression  WRC effects: (1) low employee morale (2) issues of reduced employee performance (3) tensions between employees (4) higher absenteeism and turn over (5) employee delinquent behaviour CHAPTER 10: PAY-FOR-PERFORMANCE: INCENTIVE REWARDS Strategic Reasons for Incentive Plans:  (1) establish a performance threshold to qualify for incentive payments  (2) emphasize a shared focus on organizational objectives  (3) create shared commitment in that every individual contributes to organizational success  Incentive Plans as Links to Organizational Objectives:  Advantages: (1) focus on performance targets (2) incentive payouts are variable costs (3) directly related to operating performance (4) team incentives encourage collaboration (5) distribute success among those responsible (6) attract top performers when salary budgets are low  Success depends on: (1) identifying organizational metrics (2) customized incentive plan  Disadvantages: (1) fail to satisfy employee expectations for pay gains (2) management failure to implement leaving employees confused (3) employees may have little ability to affect performance standards (4) dependability of success upon environment within organization Requirements for a Successful Incentive Plan:  (1) employees have some desire for an incentive plan (2) employees are involved (3) clear connection between incentive payments and job performance (4) employees are committed to meeting the standards (5) standards are challenging but achievable (6) payout formulas are simple and understandable (7) payouts are distinct part of compensation (8) plans are clearly&continuously communicated to employees  Setting Performance Measures: (1) measures must be consistent w/ the strategic goals of organization (2) define intent of measures and champion cause relentlessly (3) involve employees (4) consider organization’s culture and workforce demographics (5) widely communicate importance of measures  Administering Incentive Plans:  (1) grant incentives based on differences in individual, team, or organizational performance  (2) have the financial resource s to reward performance  (3) overhead cost associated with plan implementation and administration must be determined Individual Incentive Plans: flexibility describes the design of individual incentive plans  (1) Piecework: oldest incentive plans; simple to compute; predict labour cost with considerable accuracy  Straight Piecework: employees receive a certain rate for each unit produced  Differential Piece Rate: employees whose production exceeds standard amount of output receive a higher rate for all of their work than the rate paid to those who do not exceed the standard amount.  Success if: (1) measurable output (2) quality less critical (3) standardized and constant flow of work  Drawbacks: (1) not always an effective motivator (2) piecework standards can be difficult to develop (3) individual contributions can be difficult to measure (4) not easily applied to work that is highly mechanized (5) piecework may conflict w/ organizational culture (teamwork) and/or group norms (rate busting) (6) ineffective when quality is critical (7) ineffective when technology changes are frequent  (2) Standard Hour Plan: sets rates based on the completion of a job in a predetermined standard time  particularly suited for long-cycle operations or jobs that are nonrepetitive and require a variety of skills  (3) Bonuses: incentive payment given to an employee beyond one’s normal base wage for (1) cost reduction (2) quality improvement (3) or other performance criteria  Spot Bonus: unplanned bonus given for employee effort unrelated to established performance measure  (4) Merit Pay: increase in base pay rewarded by successfully achieving some performance standard  Merit Guidelines: guidelines for awarding merit raises that are tied to performance objectives  Problems with Merit Raises:  (1) employees may come to see it as entitlement, unrelated to their performance  (2) often turn out to be increases based on seniority or favouritism  (3) money available for merit raises may be insufficient to adequately raise all employee’s base pay  (4) vagueness regarding merit award criteria  (5) employees unable to differentiate between merit pay and other type of pay increases  (6) employees and managers may hold different views of factors that contribute to job success  (7) may create feelings of pay inequity CHAPTER 10: PAY-FOR-PERFORMANCE: INCENTIVE PROGRAMS Individual Incentive Plans:  (4) Merit Pay:  Motivation through Merit Raises:  (1) develop employee confidence in performance appraisal (2) establish job-related performance criteria (3) separate merit pay from regular pay (4) distinguish merit raises from cost-of-living raises (5) withhold merit payments when performance declines  Lump-Sum Merit Pay: (1) provides a clear link between pay and performance (2) provides financial control by maintaining salary expenses and not escalating base salary levels  (5) Incentive Awards and Recognition: recognize productivity gains, special contributions/achievements  Noncash Incentive Awards: most effective as motivators  (6) Stock Options: granting employees the right to purchase a specific number of shares of the company’s stock at guaranteed price (option price) during a designated time period  (7) Sales Incentive Plans:  (1) Straight Salary Plan: paid for performing various duties not reflected immediately in sales volume  (1) encourages building customer relationships (2) provides compensation in periods of poor sales  may not provide sufficient motivation for maximizing sales volume  (2) Straight Commission Plan: compensation plan based on a percentage of sales  Draw: cash advance that must be paid back as commissions are earned  Disadvantages: (1) emphasis on sales volume (2) neglected customer service after sale (3) earnings fluctuate between good&poor business periods (4) temptation to grant price concessions to get sales  (3) Combined Salary and Commission Plan: includes a straight salary and a commission component  Advantages: (1) combines the advantages of straight salary and straight commission compensation (2) offers greater design flexibility (3) can develop the most favourable ratio of selling expense to sales (4) motivates to achieve specific company marketing objectives in addition to sales volume  (4) Salary and Bonus Plan: pays a salary plus a bonus achieved by reaching targeted sales goals Incentives for Professional Employees: (1) bonuses and merit increases (2) double-track wage systems (3) performance incentive bonuses (4) profit sharing and stock ownership  (5) Executive Pay Package: (1) base pay (2) benefits (3) perks (4) short-term and (5) long-term incentives  (6) Executive Base Salaries: represent 30-40% of total annual compensation  competitive benchmarking: used to set executive pay or to remain competitive for executive talent  (7) Executive Short-Term Incentives: main element of executive short-term incentives are annual bonuses:  (1) immediate cash bonus: keeping w/ PFP strategy linking performance to the effort which it is based  (2) deferred bonuses: provide source of retirement benefits or supplement a regular pension plan  (1) % of company’s total profit (2) profits % in excess of a specific ROI (3) exceeded agreed-on profit level (4) performance ratings or achievements of specific objectives established by the BoD  (8) Executive Long-Term Incentives: primary long-term incentive offered to executives (1) stock options:  performance results as (1) growth in earnings per share (2) ROI (3) stock price appreciation  (2) Stock Appreciation Rights (SARs): cash/stock award determined by increase in stock price during any time chosen by the executive in the option period  (3) Stock Purchase: opportunities for executives to purchase shares of their organization’s stock valued at full market or a discount price  (4) Phantom Stock: grant of units equal in value to the fair market value of a share of stock  (5) Restricted Stock: grant of stock at a reduced price but it cannot be transferred or sold  (6) Performance Units: grant analogous to annual bonuses but the measurement period exceeds 1year.  (7) Performance Shares: grants of actual stock or phantom stock units. Value is contingent on both predetermined performance objectives over a specified period of time and stock market  (9) Executive Benefits: parallel one offered to other employees but are broader in coverage&free of charge  (10) Executive Perquisites: nonmonetary rewards given to executives demonstrating the executive’s importance to the organization but are view as wasteful spending and overly lavish CHAPTER 10: PAY-FOR-PERFORMANCE: INCENTIVE PROGRAMS Incentives for Professional Employees:  Executive Compensation: Ethics and Accountability: growing pay gap between CEOs and employees  Justifications for Big Bonuses: (1) large financial incentives are way to reward superior performance (2) business competition is pressure filled and demanding (3) good executive talent is in great demand (4) effective executives create shareholder value  Criticisms for Big Bonuses: (1) incentive payments are excessive compared to ROI (2) time periods for judging&rewarding performance are too short (3) quarterly earnings growth is emphasized at the expense of R&D (4) emphasis is placed upon equalling/ exceeding salary survey averages (5) benefits do not relate closely to individual performance Group Incentive Plans: enable employees to share benefits of improved efficiency by various work teams  (1) Team Compensation: team members receive reward = production/service standards are met/exceeded  Establishing Team Incentive Payments:  (1) set performance measures upon which payments are based (2) determine the size of the incentive bonus (3) create payout formula and fully explain to employees how payouts will be distributed  (1) builds team culture (2) individual contributions depend on group cooperation (3) reduce employee complaints over individual standards (4) encourage cross-training&acquiring of new interpersonal skills  Drawbacks: (1) perceive that individual efforts contribute little to team success (2) intergroup social problems (3) complex payout formulas or insufficient payout rewards  (2) Gainsharing Incentive Plans: employees and organization share financial gains according to a predetermined formula that reflects improved productivity and profitability  (1) Scanlon Plan: plan using employee and management committees to gain cost-reduction improvements  effective employee participation using committees on which employees are represented  (2) Network Improshare: bonuses are based on the overall productivity of the work team  promotes increased interaction and support between employees and management  Important Lessons: (1) employees must feel the feeling of involvement in the organization (2) attitude of management is of paramount important (3) plans do not necessarily stimulate cooperation Enterprise Incentive Plans: all organizational members participate in the plan`s compensation payout  (1) Profit-Sharing Plan: employer pays, or make available to all regular employees, special current or deferred sums based on the profits of the enterprise  Variations: profit share range from 5-50% of net profit however 20-25% is mostly shared  Advantages: (1) stimulate employees to concern themselves with welfare of organization as they feel more like partners (2) motivate total employee commitment  Challenges: (1) agreement over division of profits between company and employees (2) possibility of no payout due to financial condition of company  (2) Employee Stock Option Plans: grant employees the right to purchase a specific number of shares of the company`s stock at a guaranteed price (option price)  (3) Employee Stock Ownership Plans: stock plans in which organizations contribute share of stocks to an established trust for the purpose of stock purchases by employees  Advantages: (1) increase pride of ownership in the organization (2) increase productivity and interest in how the company is managed (3) does not require company to pay out in cash (4) retirement benefits  Challenges: (1) potential inability to pay back shares especially private companies (2) retirement benefits are vulnerable to stock market fluctuations and management mistakes (3) demotivate employees when stock prices fall (4) restrict employee decision making Effective Incentive Plans:  (1) direct relationship between performance and incentives (2) link between efforts and rewards  (3) money must be of value to employee  (4) must be neither criterion deficient or criterion contaminated  (5) high trust in organization and effective communication  (6) no pressure from peers to reduce or increase output while risking safety CHAPTER 11: EMPLOYEE BENEFITS Employee Benefits Programs: indirect compensation intended to improve the quality of work/personal lives  HRIS and Employee Benefits: interactive employee benefits software program with the advantages of:  (1) reduced administrational costs (2) increased efficiencies (3) accuracy (4) self-service administration (5) greater flexibility in benefits selection  Requirements for a Sound Benefits Program: (1) selecting benefits that target important needs while promoting strategic organizational objectives (2) effective administration of benefits programs  Strategic Benefits Planning: chief objectives of most benefits programs are to:  (1) improve employee work satisfaction (2) meet employee health&security requirements (3) attract and motivate employees (4) reduce turnover (5) maintain a favourable competitive position  Allowing for Employee Involvement: helps ensure management is moving in the right direction of satisfying relevant employee needs and wants  Benefits for a Diverse Workplace: must take into consideration (1) gender diversity (2) age group diversity (3) racial diversity (4) people with disabilities  Flexible Benefits Plan: enable employees to choose benefits that are best suited to their particular needs  employees are offered core benefits then given a specified # of credits to buy other needed benefits  Pros: (1) reduced benefits costs (2) adapts to a constantly diversified workforce (3) employees gain greater understanding of benefits offered and cost associated (4) maximize psychological value of benefits program (5) competitive advantage in retaining and recruiting employees  Cons: (1) poor employee benefits selection results in unwanted financial costs (2) added costs in establishing/administering flexible plan  plan may be outsource to consulting firms specializing in benefits  accommodate the constant flow of new laws and regulations  Communicating Employee Benefits Information: effectively and frequently  communicate via: (1) in-house publications (2) group meeting&training classes (3) online modules (4) Bulletin boards (5) Payroll inserts (6) specialty brochures (7) interactive self-service systems Concerns of Management: close attention to the factors that must be kept in balance for a successful program  (1) union demands (2) benefits other employers offer (3) tax consequences (4) rising costs  cost-containment strategies: (1) contribution changes (2) dollar limits/cap (3) coverage changes (4) benefits caps (5) use of preferred providers and flexible benefits (6) uncover instances of fraudulent claims Employee Benefits Required by Law:  (1) Canada and Quebec Pension Plans (CPP/QPP): cover almost all Canadians ages 18-70  to receive retirement benefit , must apply to HRSDC at least 6 months in advance of retirement  require employers to match the contributions made by employees  revenue from contributions used to pay: (1) retirement pensions (2) disability & (3) survivor’s benefits  all Canadian workers have the right to claim benefits wherever they are employed in Canada  Can. cross-border agreements w/ other countries to protect acquired social security rights of employees  (2) Employment Insurance (EI): payable to claimants who are unemployed and are actively seeking work  benefit pay determined by # of hours of employment in the past year and the regional unemployment rate  entitled after employee have contributed enough for a qualifying period and after a waiting period  ineligible for EI if resigned or terminated  unless proven no reasonable alternative to leaving jobs  Worksharing Programs: organization reduces workweek for all employees in a particular group instead of laying them off  company pays for time worked and employee draws EI for the rest of the workweek  (3) Worker’s Compensation Insurance: insurance given due to work-related injuries or illness  based on the following principles: (1) employers share collective liability (2) based on loss of earnings (3) no-fault&nonadversarial thus no recourse to the courts  employees cannot (1) be required to make contributions toward WCI (2) waive off rights to receive  (4) Provincial Hospital and Medical Services: 3 months resident in Can. to receive health care benefits  applications must be made and approval must be given prior coverage starts  include (1) services of health care professionals (2) hospital services (3) hospital-administered drugs CHAPTER 11: EMPLOYEE BENEFITS Optional Major Employee Benefits:  (1) Health Care Benefits: receiving most attention owing to sharply rising costs and employee concerns  past health benefits: (1) medical (2) surgical (3) and hospital expenses  today under pressure to also include: (1) prescription drugs (2) dental (3) optical (4) mental health care  Cost Containment:(1) coverage reductions (2) increased deductibles (3) increased coordination of benefits  (4) Education and Motivation: (1) communicate cost of benefits (2) provide incentives to employees to reduce costs (3) teach employees to live healthily and how to plan for retirement  (2) Change Coverage: (1) dollar limits (2) eliminate duplicate coverage (3) remove upgrades (4) minimum fees to be paid by employees  (3) System Change: (1)form partnerships to provide discounts (2) defined-distribution plans (3) claims management approach and audit claims  (2) Payment for Time not Worked:  (1) Vacations with Pay: eligibility varies by industry, locale, and size or organization  about 25% of employees do not take all of vacation allotment, because: (1) did not schedule in advance (2) prefer cash in lieu of time (3) too busy at work  Paid Holiday: (1) additional 1-3 personal days off (2) standard statutory holidays  (2) Sick Leave: compensated because of illness or injury  (1)ST disability plans: (1) salary continuance programs (2) sick leave credit (3) weekly indemnity plan  (2) LT disability plans: (1) WCI (2) 50-70% of pre-disability insurance  (3) Severance Pay: given to terminated employees at the time of an employer-initiated terminations  no strict rule for severance pay, but following are guidelines based on court decisions:  (1) 2 weeks per year of service: (1) labourers (2) production workers (3) administrative support staff  (2) 3 weeks per year of service: (1) technical (2) professional (3) supervisor (4) managerial jobs  (3) 4 weeks per year of service: senior management  (3) Life Insurance: provide financial security to the dependants of the employee in case of death  group life insurance most commonly provided  (4) Retirement Programs:  Retirement Policies: (1) may retire at age 55 (2) can work until age 71 then must retire  silver handshake: early retirement incentive: increased pension benefits for several years or cash bonus  can offset cost of retirement by (1) paying lower compensation to replacements (2) reducing workforce  early retirement: (1) health (2) personal (3) job satisfaction (4) attractive pension (5) future layoffs  Preretirement Programs: attempt to lessen disappointment of retirement  (1) how to live on reduced/fixed income (2) coping of lost prestige (3) family conflict (4) idleness  Pension Plans: were based on reward philosophy  now based on earnings philosophy: deferred income employees accumulate during their working lives  categorized: (1) employer (2) employee contributions (3) amount of pension benefits to be paid  (1) Contributory Plan: contributions are made jointly by employees and employer  (2) Non-contributory Plan: contributions are made solely by the employer  (3) Defined-benefit Plan: determined according to a predetermined formula  usually based on (1) years of service (2) average earnings (3) age at time of retirement  (4) Define-contribution Plans: establishes the basis on which an employer will contribute to the fund  (1) profit sharing (2) matching employee contributions (3) employer-sponsored RRSPs  Federal Regulation of Pension Plans: Income Tax Act: (1) standards affecting amount of contributions deducted from income (2) how pension benefits can be taxed  Vesting: guarantee of benefits to participants at retirement age, regardless of employment status  2 years of service in organization  considered fully vested and locked in  Pension Portability: multiple-employer plans  cover employees of 2/more unrelated organizations  Pension Funds: administered through (1) trusted plan: contributions placed in a trust fund (2) insured plan: used to purchase insurance annuities administered by insurance companies CHAPTER 11: EMPLOYEE BENEFITS Employee Services: Creating a Work-Life Setting  (1) Creating a Family-friendly Setting: (1) share purchase plan (2) extra vacation days (3) quarterly corporate events (4) emergency short-term day care (5) discounts on home computers  (2) Employee Assistance Programs: services provided by employers to help workers cope with a wide variety of problems that interfere with work performance  (1) Counselling Service: provide professional counselling  (2) Child and Elder Care: (1) adult/child day care in the community (2)financial assistance (3) alternative work schedules (4) family leave (5) on/near-site care centres (6) mildly ill child care (7) elder care counselling (8) educational fairs&seminars (9) printed resources (10) support groups  (3) Legal Services: covered employees normally pay monthly/annual fee to be enrolled in the plan  (1) access plans: free telephone/office consultation; documents review; discounts on legal fees  (2) comprehensive plans: representation in divorce cases, real estate transactions, civil&criminal trials  (4) Financial Planning: covers (1) investments (2) tax planning&management (3) estate planning  (5) Housing and Moving Expenses: (1) help in search of living quarters (2) paying for travel&moving expenses (3) protecting transferred employees from loss when selling homes  (6) Transportation Pooling: employer-organized van pooling  (7) Credit Unions: (1) variety of deposits (2) other banking services (3) loans to members  (8) Recreational and Social Services: (1) sports programs (2) memberships at health clubs and fitness centres (3) social function events sponsored by the organization CHAPTER 5: EXPANDING TALENT POOL: RECRUITMENT AND CAREERS Recruitment: process of locating potential individuals who might join the organization and encouraging them to apply for existing or anticipated job openings Recruiting Talent Externally: (1) ability to find specialized skills (2) new ideas and new methods  Outside Sources for Recruitment:  vary with the (1) type of position to be filled in(2) employee diversity (3) condition of labour market:  high unemployment: maintain adequate supply of qualified applicants from unsolicited resumes alone  low unemployment: force to advertise heavily and/or seek assistance from employment agencies  (1) Advertisements: most common method reaching a large audience of possible applicants  (1) websites (2) news papers (3) trade journals (4) radio (5) TV (6) billboards (7) posters (8) e-mail  (2) Unsolicited Applications and Resumes: percentage of acceptable applicants is not high  employees contacting employer’s of own initiative will be better employees  (3) Internet Recruiting: common search tactic by job seekers&recruiters to spread news of a new position  (4) Employee Referrals: the way most jobs are filled  (1) word-of-mouth (2) referral portals  quality of employee-referred applicants is normally quite high  increase effectiveness of employee referrals:  (1) Up the ante: employer offers referral bonus to employees for employee referral  (2) Pay-for-performance: save part of the referral bonus until new hire has stayed for 6 months  (3) Tailor the program: educating employees about the types of people organization wants to hire  communicate the skills required and reaffirmation of the values and ethics sought in applicants  (4) Increased visibility: publicize referral program through celebrating successes  (5) Keep the Data: even if the referral does not get the job; for future use when vacancy arises  (6) Rethink your taboos: good idea to broaden the search even to former employees or relatives  (7) Widen the program: corporate friends that can be used to seek potential candidates  (8) Measure Results: analyze and assess the volume of referrals, qualifications of candidates and success of new hires to fine-tune the program  Disadvantages: (1) corporate inbreeding and systematic discrimination (2) nepotism: preference of hiring relatives of current employees CHAPTER 5: EXPANDING TALENT POOL: RECRUITMENT AND CAREERS Recruiting Talent Externally:  Outside Sources for Recruitment:  (5) Executive Search Firms: do not advertise in media nor accept fees from individual being placed  fees charged ranges from 25-40% of the annual salary for position to be filled paid by the client firm  outside hire of executives normally perform less than internal promotion because unfamiliarity  must develop inside-outsiders: internal candidates who have an outsider perspective  (6) Educational Institutions: source of young applicants with formal training but low FT work experience  failures of employers to recruit well-qualified prospects: (1) poor recruitment program (2) failure to maintain a planned and continuing effort on a long-term basis (3) recruiters are not sufficiently trained (4) visit too many campuses (5) mismanaging applicant visits (6) failure to follow-up candidates  recruits through: (1) work-study programs (2) internships (3) low-interest loans (4) scholarships  (7) Professional Associations: offers placement service to members as one of their benefits  advertisements are publicized on their journals or their national meetings  (8) Labour Unions: principal source of blue-collar and some professional jobs  (9) Public Employment Agency: responsible for administering provincial employment insurance program  assist employees w/ employment testing, job analysis, evaluation programs &community wage surveys  HRSDC: developed computerized job bank that lists job openings, and provincial employment offices are connected to this bank  (10)Private Employment & Temporary Agency: charges fee to tailor services to the specific needs oclients  temporary workers: short-term assignments or to help when managers cannot justify hiring FT  adds flexibility since temps can be laid off easily with less cost  Global Labour Market: trend of a global workforce and attract the best talent wherever  China&India: as firms attempt to staff the burgeoning high tech industries in these nations  Challenges: (1) local, national and international laws (2) different labour costs, pre-employment and compensation practices (3) cultural differences (4) security (5) advertise employment brand  Improving the Effectiveness of External Recruitment:  (1) Calculating Yield Ratios: % of applicants from source that make it to next stage of selection process  (2) Calculating Costs of Recruitment:  = average source cost per hire; AC = ad costs, total monthly expenditure; AF = agency fee, total paid; RB = referral bonuses; NC = no-cost hired, walk-ins, non-profit agencies; H = total hires  can provide information about the utility of different sources of recruitment  (3) Organizational Recruiters: (1) HR recruiters for large employer (2) HR generalist for smaller employer (3) managers/supervisors if no HR department (4) recruiting process outsourcing company  imperative that these recruiters have (1) a great understanding of the job (2) personable, enthusiastic and competent characteristics for the organization’s recruitment program to succeed  (4) Realistic Job Previews: informing about all aspects of the job: both its desirable&undesirable facets  Pros: (1) applicants more successful when hired due to fewer surprises (2) improved employee job satisfaction (3) reduced voluntary turnover (4) enhanced communications (5) realistic job expectations Recruiting Talent Internally:  Advantages and Limitations of Recruiting Internally:  Advantages: (1) capitalizes on past investments in current employees (2) rewards past performance and encourages continued commitment to the organization (3) decreased socialization costs (4) accurate records of past performance (5) transfer can protect employees from layoffs or broaden job experience (6) encourages other employees to display similar performance to gain promotion  Limitations: (1) current employees may lack competencies for placement where specialized skills are needed (2) hazard of corporate inbreeding or employee cloning (3) exhaust supply of viable internal candidates (4)lessens creativity and innovation needed in a dynamic business environment CHAPTER 5: EXPANDING TALENT POOL: RECRUITMENT AND CAREERS Recruiting Talent Internally:  Methods for Identifying Qualified Candidates:  (1) Inventorying Management Talent: skill inventories capturing the qualifications of employees  (1) used to identify potential candidates for available jobs (2) helpful in succession planning of high- potential employees who may be groomed as replacements for managers or senior management  (2) Job Posting&Bidding: posting job notices&maintaining employee list looking for upgraded positions  publicized in (1) firm’s intranet (2) employee publications (3) special handouts (4) direct mail (5) PAM  job bidding is more effective when it is part of a career development programs  (3) Performance Appraisals: (1) used in making promotions and career decisions (2) identifying and developing all employees  managers should be concerned with subordinates’ potential for advancement  9-box grid: comparative diagram that includes appraisal and assessment data to allow managers to easily see an employee’s actual and potential performance  (4) Using Assessment Centres: process by which individuals are evaluated as they participate in a series of situations that resemble what they might be called on to handle on the job  (1) increases an organization’s ability to select employees who will perform successfully in managerial positions (2) to assists and promote the development of skill for their current positions  (1) In-basket Exercises: simulate a problem situation to test participant’s problem solving skills  (2) Leadership Group Discussions: gathered to discuss an assigned topic; with/out designated roles; given little or no instruction in how to approach topic  (3) Role-Playing: might involve preparing for and engaging in a customer meeting/team leader meeting  (4) Behavioural Interviews: questions about what to do in a particular work circumstance  favourably bias for those who are strong in interpersonal skills and have the ability to influence others Career Management: Developing Talent Over Time  decision about talent must be considered w/in the context of long-term priorities of business & employee  integrating career dev. w/other HR programs creates synergies in which all HR aspects reinforce one another  Goal: Matching Individual and Organizational Needs  Employees Role: responsible for initiating and managing their own career planning  Organization’s Role: establishing a favourable career  Development Climate: (1) support of top management (2) designed and implemented by HR managers and senior line managers (3) system should reflect organizational goals, culture and HR philosophy (4) management must be trained in job design, performance appraisal, career planning, and counselling  Blending Individual and Organizational Goals: career development must be designed to blend OG&IG  Identifying Career Opportunities and Requirements:  (1) Competency Analysis: ensures that transfer/promotion requires growth on the part of the employee  measurement of 3 basic competencies: (1) know-how (2) problem solving (3) accountability  (2) Identify Job Progressions: hierarchy of jobs a new employee might experience, ranging from a starting job to jobs that successively require more competencies  (3) Recognize Lots of Possibilities:  (1) Promotion: change of assignment to a job at a higher level within the organization  based on (1) merit (2) seniority (3) potential  challenge of what weight is given to each factor  “Peter Principle”  individuals are promoted due to successful past performance  extremely good employees may be prevented by managers  lost of needed competencies  (2) Transfer: placement in another job for which duties, responsibilities, status and remuneration are approximately equal to those of the previous  (3) Demotion: downward transfer into a lower-level job that can provide developmental opportunities  Relocation Services: services provided to an employee which might include help in moving, selling home, orienting to a new culture, and or learning a new language  (4) Organizational Exit: best option if limited career opportunities internally but available externally  Outplacement Services: services provided by organization to help terminated employees find new jobs CHAPTER 5: EXPANDING TALENT POOL: RECRUITMENT AND CAREERS Career Management: Developing Talent Over Time  Identifying Career Opportunities and Requirements:  (4) Career Paths: lines of advancement in an occupational field within an organization  (5)Boundary-less Career: employees prefer to see themselves as self-directed “free agents”
More Less

Related notes for ADMS 2600

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.