Chapter 10 - Managing Human Resource Systems

Question 1

Human resource management (HRM)

Answer 1

the process of finding, developing, and keeping the right people to form a qualified workforce

Question 2

The Canadian Charter of Rights and Freedoms was enacted under the government of ________

Answer 2

The Canadian Charter of Rights and Freedoms was enacted under the government of Pierre Trudeau in 1982

It is part of Canada’s constitution, and it covers several fundamental freedoms that affect the workplace.

Question 3

Section 15a of the Charter prohibits _____________

Answer 3

Section 15a of the Charter prohibits discrimination along race, creed, colour, religion, gender, sexual orientation, etc.

Question 4

bona fide occupational qualification (BFOQ)

Answer 4

an exception in employment law that permits sex, age, religion, and the like to be used when making employment decisions, but only if they are “reasonably necessary to the normal operation of that particular business.”

Question 5

BFOQ - example information

Answer 5

For example, if Victoria’s Secret hires models for its lingerie, it probably won’t be taken to task for hiring women, as being female would be seen as a BFOQ for being a women’s lingerie model. But what about being female and being a firefighter? Throughout Canada there are ongoing investigations into gender discrimination against female firefighters (note that we don’t use the term fireman anymore).

Testing women and men against an aerobic standard resulted in many of the female firefighters not qualifying for the job they were already doing. British Columbia’s Supreme Court determined that an aerobic standard for firefighters was not a BFOQ because it was not related to an individual’s performance on the job; the same court ruled that there had been systemic discrimination on a prohibited ground.

Question 6

Human rights commissions in each _____________ have been established under and are responsible for enforcing the Canadian Human Rights Act.

Answer 6

Human rights commissions in each province and territory have been established under and are responsible for enforcing the Canadian Human Rights Act.

Question 7

Some Major Federal and Provincial Employment Laws

Answer 7

The general effect of these laws, which are still evolving through court decisions, is that employers may not discriminate in employment decisions on the basis of gender, sexual orientation, age, religion, colour, national origin, race, or disability.

The intent is to make these factors irrelevant in employment decisions. Stated another way, employment decisions should be based on factors that are “job related,” “reasonably necessary,” or a “business necessity” for successful job performance.

The only time that gender, age, religion, and the like can be used to make employment decisions is when they are considered bona fide occupational qualifications.

Question 8

WHMIS

Answer 8

Workplace Hazardous Materials Information System

Question 9

Employment Discrimination

Answer 9

Discrimination generally falls under one of the general headings in the Charter of Rights and Freedoms and typically leads to an investigation by a provincial or territorial human rights commission.

Discrimination may be intentional or unintentional, but generally, discrimination based on race, religion, ethnic origin, and so forth is easy to see. Unintentional discrimination is harder to identify. Minimum height and weight requirements, which used to be common for police forces, can screen out females or Canadians of Asian origin, who tend to be smaller. Also, some job evaluation systems may include culturally (non–job-related) biased questions; and some job situations may discriminate against some cultures.

Question 10

Workplace Harassment

Answer 10

Workplace harassment is prohibited by several laws, both federal and provincial.

Workplace harassment does not have to be sexual in nature, although it commonly is.

Harassment can also mean that someone is bullying you about your work or tormenting you simply because you are a man or a woman.

Bullying is strictly prohibited under Bill 14 of the Workers Compensation Act of British Columbia (it is also covered in other provinces).

Question 11

Sexual harassment

Answer 11

a form of discrimination in which unwelcome sexual advances, requests for sexual favours, or other verbal or physical conduct of a sexual nature occur while performing one’s job; another form of sexual harassment is when employment outcomes, such as hiring, promotion, or simply keeping one’s job, depend on whether an individual submits to sexual harassment

Question 12

Harassment is….

Answer 12

Harassment is when people make comments or actions that are unwelcome, even though they should know that what they say or do is not welcome.

Question 13

hostile work environment

Answer 13

a form of harassment in which unwelcome and demeaning behaviour creates an intimidating and offensive work environment

There may be no economic injury—that is, harassment isn’t tied to economic outcomes—however, it can lead to psychological injury from a stressful work environment.

Question 14

What should companies do to make sure that harassment laws are not violated?

Answer 14

First, they should respond immediately when harassment is reported. Furthermore, a quick and fair investigation may serve as a deterrent to future harassment.

Next, take the time to write a clear, understandable harassment policy that is strongly worded, gives specific examples of what constitutes workplace harassment, and spells outs sanctions and punishments, and disseminate it throughout the company. This lets potential harassers and victims know what will not be tolerated and how the firm will deal with harassment should it occur.

Next, establish clear reporting procedures that indicate how, where, and to whom incidents of harassment can be reported. The best procedures ensure that a complaint will receive a quick response, that impartial parties will handle the complaint, and that the privacy of the accused and accuser will be protected.

Finally, managers should be aware that most provinces and many municipalities have their own employment-related laws and enforcement agencies. So compliance with federal law is often not enough. So compliance with federal law is often not enough. In fact, organizations can be in full compliance with federal law and at the same time be in violation of provincial or municipal harassment laws. These laws are constantly being updated, through jurisprudence established in court cases as well as through legislative authority established by the provinces.

Question 15

Human resources planning

Answer 15

an umbrella term that encompasses overarching philosophies, policies, and practices that are in line with the organization’s strategy

Question 16

Recruiting

Answer 16

the process of developing a pool of qualified job applicants

Question 17

Job analysis

Answer 17

a purposeful, systematic process for collecting information on the important work-related aspects of a job in line with the organization’s strategic direction

The information derived from job analysis is absolutely vital to effective HR planning.

Question 18

Typically, a job analysis collects four kinds of information:

Answer 18

work activities, such as what workers do and how, when, and why they do it;

the tools and equipment used to do the job;

the context in which the job is performed, such as the actual working conditions or schedule; and

the personnel requirements for performing the job, meaning the knowledge, skills, and abilities needed to do a job well.

Question 19

job description

Answer 19

a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job to help the organization realize its strategy

Question 20

Job specifications

Answer 20

a written summary of the qualifications needed to successfully perform a particular job to enable the organization to reach its organizational objectives

Question 21

Job analysis, job descriptions, and job specifications comprise the foundation on which all critical human resource activities are built. They are used during recruiting and selection to match applicant qualifications with the requirements of the job. So it is critically important that job descriptions be _________.

Answer 21

Job analysis, job descriptions, and job specifications comprise the foundation on which all critical human resource activities are built. They are used during recruiting and selection to match applicant qualifications with the requirements of the job. So it is critically important that job descriptions be accurate.

Question 22

Turnover is a real problem and a large reason for turnover is because ____________

Answer 22

Turnover is a real problem and a large reason for turnover is because job descriptions are not up to date.

Question 23

Job analyses, job descriptions, and job specifications also help companies meet the ____________ that their human resource decisions be job-related.

Answer 23

Job analyses, job descriptions, and job specifications also help companies meet the legal requirement that their human resource decisions be job-related.

Question 24

Internal recruiting

Answer 24

the process of developing a pool of qualified job applicants from people who already work in the company

Internal recruiting improves employee commitment, morale, and motivation.

It also reduces recruitment startup time and costs, and because employees are already familiar with the company’s culture and procedures, they are more likely to succeed in their new jobs.

Question 25

Job posting

Answer 25

involves advertising job openings within the company to existing employees.

Question 26

career path

Answer 26

a planned sequence of jobs through which employees may advance within an organization. For example, a person who starts as a sales representative may move up to sales manager and then to district or regional sales manager.

Question 27

succession planning

Answer 27

deals with evaluating the needs that are required in future years in terms of staffing to replace people who retire, or who may leave, and to provide personnel for needed strategic growth requirements Succession planning is critical as employees in an organization must develop the correct strategic attributes and skills if they are to move ahead in the organization.

Question 28

External recruiting

Answer 28

the process of developing a pool of qualified job applicants from outside the company External recruitment methods include placing advertisements (newspapers, magazines, direct mail, radio, or television), generating employee referrals (asking current employees to recommend possible job applicants), encouraging walk-ins (people who apply on their own), approaching outside organizations (universities, technical/trade schools, professional societies), using employment services (provincial, federal, or private employment agencies, temporary help agencies, professional search firms), holding special events (career conferences, job fairs), and developing Internet job sites.

Question 29

Realistic job previews

Answer 29

a tool used to explain to potential new employees both the positive and negative aspects of a new job They provide information about pay and hours of work, but they also discuss aspects of the job such as promotion rates, job progression, amount of flexibility, autonomy, stress, interaction with customers, amount of travel, and the corporate culture.

Question 30

When recruiting managers, organizations tend to rely most heavily on ________________

Answer 30

When recruiting managers, organizations tend to rely most heavily on newspaper ads, employee referrals, and search firms Most students will find themselves relying more and more on web searches, utilizing sites such as Monster, Workopolis, Facebook, LinkedIn, and VancouverJobShop.

Question 31

Internet job listings generate _____ times as many résumés as one ad in the Sunday newspaper.

Answer 31

Internet job listings generate nine times as many résumés as one ad in the Sunday newspaper. And because these sites attract so many applicants and offer so many services, companies can find qualified applicants without resorting to recruitment firms, which typically charge 25 percent or more of a new hire’s salary.

Question 32

Selection

Answer 32

the process of gathering information about job applicants to decide who should be offered a job

Question 33

Validation

Answer 33

the process of determining how well a selection test or procedure predicts future job performance; the better or more accurate the prediction of future job performance, the more valid a test is said to be

Question 34

human resource information system (HRIS)

Answer 34

a computerized system for gathering, analyzing, storing, and disseminating information related to the HRM process Applicants invited to Facebook’s campus for onsite interviews must solve more difficult coding problems, including a take-home “hack.” Facebook engineer Carlos Bueno says, “If it says ‘expert in X’ (on your résumé), we will try to schedule you with a proven expert in X, so be prepared. If you are not, leave it off your résumé.”

Question 35

Résumés also pose problems for companies

Answer 35

Studies have found that as many as one-third of job applicants intentionally falsify some information on their résumés and that 80 percent of the information on résumés may be misleading. Therefore, managers should verify the information collected via résumés and application forms by comparing it with additional information collected during interviews and other stages of the selection process, such as references and background checks

Question 36

employment references

Answer 36

sources such as previous employers or coworkers who can provide job-related information about job candidates

Question 37

Background checks

Answer 37

procedures used to verify the truthfulness and accuracy of information that applicants provide about themselves and to uncover negative, job-related background information not provided by applicants Background checks are conducted by contacting “educational institutions, prior employers, court records, police and governmental agencies, and other informational sources either by telephone, mail, remote computer access, or through in-person investigations.”

Question 38

A former employer should not impede a former employee’s job search - info

Answer 38

The Supreme Court of Canada ruled that employers have an obligation to act in good faith when an employee is terminated. In Jack Wallace v. The United Grain Growers, the plaintiff was awarded 24 months’ salary when it was found that United Grain Growers neglected to provide a reference letter for him to secure a new job.

Question 39

Don’t Ask (Topics to Avoid in an Interview)

Answer 39

Gender, gender identity, gender expression, marital status, or family status. Source of income. Previous names. Next of kin. Asking for names of relatives or next of kin before hiring is not recommended. Such information can reveal the gender, marital status, place of origin, or ancestry of the applicant. Dependants and child care. Avoid inquiries about an applicant’s spouse, number of children or dependants, child care arrangements, or plans to have children. Age and date of birth. Previous address. Citizenship. Physical or mental disability. Sexual orientation. Workers’ Compensation. Language ability. It is appropriate to ask applicants if they have some proficiency in the languages that are specifically required for the job. Educational institutions. Religious beliefs.

Question 40

Specific ability tests (aptitude tests)

Answer 40

tests that measure the extent to which an applicant possesses the particular kind of ability needed to do a job well For example, clerical workers have to be good at accurately reading and scanning numbers.

Question 41

Cognitive ability tests

Answer 41

tests that measure the extent to which applicants have abilities in perceptual speed, verbal comprehension, numerical aptitude, general reasoning, and spatial aptitude Specific ability tests predict job performance in only particular types of jobs, whereas cognitive ability tests accurately predict job performance in almost all kinds of jobs. This is because people with strong cognitive or mental abilities are usually good at learning new things, processing complex information, solving problems, and making decisions—abilities that are important in almost all jobs. In fact, cognitive ability tests are almost always the best predictors of job performance.

Question 42

Biographical data (biodata)

Answer 42

extensive surveys that ask applicants questions about their personal backgrounds and life experiences The basic idea behind biodata is that past behaviour is the best predictor of future behaviour. Biodata can be a very good predictor of future job performance, especially in an entry-level job.

Question 43

Biodata - information

Answer 43

some of the information requested in biodata surveys is related to topics that employers should avoid in applications, interviews, or other parts of the selection process. This information can be requested in biodata questionnaires provided that the company can demonstrate that the information is job-related (i.e., valid) and does not have an adverse impact on protected groups of job applicants. Biodata surveys should be reviewed by HR professionals for legality, validated and tested for adverse impact, and thoroughly vetted by knowledgeable professionals before they are used to make selection decisions. For example, studies have found that married Canadian military recruits have a much higher attrition rate than single recruits, yet it is illegal in Canada to discriminate against anyone on the basis of marital status.

Question 44

Work sample tests

Answer 44

tests that require applicants to perform tasks that are actually done on the job or example, one computer-based work sample test in the real estate industry has applicants assume the role of a real estate agent who must decide how to interact with virtual clients in a game-like scenario. And, as in real life, the clients are variously frustrating, confused, demanding, or indecisive. In one situation, the wife loves the house but the husband hates it. The applicants, just like actual real estate agents, must demonstrate what they will do in these realistic situations.

Question 45

Assessment centres

Answer 45

a series of managerial simulations, graded by trained observers, that are used to determine applicants’ capability for managerial work assessment centres are most often used to select applicants who have high potential to be good managers. Assessment centres often last two to five days and require participants to complete a number of tests and exercises that simulate managerial work.

Question 46

in-basket exercise

Answer 46

usually a computer-simulated test in which the applicant is given a manager’s in-basket containing emails, memos, phone messages, VoIP messages, organizational policies, and other communications normally received by and available to managers. Applicants have a limited time to read through the in-basket, prioritize the items, and decide how to deal with each item. Experienced managers then score the applicants’ decisions and recommendations.

Question 47

leaderless group discussion

Answer 47

a group of six applicants is given approximately two hours to solve a problem, but no one is put in charge (hence “leaderless”) Trained observers watch and score each participant on the extent to which he or she facilitates discussion, listens, leads, persuades, and works well with others.

Question 48

interviews

Answer 48

a selection tool in which company representatives ask job applicants job-related questions to determine whether they are qualified for the job Interviews are probably the most frequently used and heavily relied upon tools for selecting among job candidates.

Question 49

unstructured interviews

Answer 49

interviews in which interviewers are free to ask the applicants anything they want unstructured interviews are about half as accurate as structured interviews at predicting which job applicants should be hired.

Question 50

structured interviews

Answer 50

interviews in which all applicants are asked the same set of standardized questions, usually including situational, behavioural, background, and job knowledge questions This approach improves the accuracy, usefulness, and validity of the interview; in addition, it is less likely that interviewers will ask questions that violate employment laws

Question 51

The primary advantage of structured interviews is _________________

Answer 51

The primary advantage of structured interviews is that comparing applicants is much easier because they are all asked the same questions.

Question 52

Structured interviews typically contain four types of questions:

Answer 52

situational, behavioural, background, and job knowledge

Question 53

Situational questions ask applicants how they would respond in a __________________

Answer 53

Situational questions ask applicants how they would respond in a hypothetical situation (e.g., “What would you do if…”)

Question 54

Behavioural questions ask applicants what they did in ____________ that may be similar to what is required for the job for which they are applying

Answer 54

Behavioural questions ask applicants what they did in previous jobs that may be similar to what is required for the job for which they are applying (e.g., “In your previous jobs, tell me about…”)

Question 55

Background questions ask applicants about __________________

Answer 55

Background questions ask applicants about their work experience, education, and other qualifications (e.g., “Tell me about the training you received at…”)

Question 56

job knowledge questions ask applicants to __________________

Answer 56

job knowledge questions ask applicants to demonstrate their job knowledge (e.g., for nurses, “Give me an example of a time when one of your patients had a severe reaction to a medication. How did you handle it?”)

Question 57

Semistructured interviews

Answer 57

in between structured and unstructured interviews A large part of the semistructured interview (perhaps as much as 80 percent) is based on structured questions, but some time is set aside for unstructured interviewing to allow the interviewer to probe into ambiguous or missing information uncovered during the structured portion of the interview.

Question 58

Structured and unstructured interviews - information

Answer 58

Contrary to what you’ve probably heard, recent evidence indicates that even unstructured interviews do a fairly good job. When conducted properly, however, structured interviews can lead to much more accurate hiring decisions than unstructured ones. The validity of structured interviews can sometimes rival that of cognitive ability tests. But even more important, because interviews are especially good at assessing applicants’ interpersonal skills, they work particularly well with cognitive ability tests. The combination (i.e., smart people who work well in conjunction with others) leads to even better selection decisions than using either alone.

Question 59

Training

Answer 59

developing the skills, experience, and knowledge employees need to perform their jobs or improve their performance Canadian companies spend more than $7 billion a year on training.

Question 60

Needs assessment

Answer 60

the process of identifying and prioritizing the learning needs of employees Needs assessments can be conducted by identifying performance deficiencies, listening to customer complaints, surveying employees and managers, or formally testing employees’ skills and knowledge.

Question 61

________________ restricts employers from discriminating on the basis of age, gender, race, colour, religion, national origin, or disability when selecting training participants.

Answer 61

Employment law restricts employers from discriminating on the basis of age, gender, race, colour, religion, national origin, or disability when selecting training participants.

Question 62

if the training objective is to impart information or knowledge to trainees, then you should use ______________

Answer 62

if the training objective is to impart information or knowledge to trainees, then you should use films and videos, lectures, and planned readings.

Question 63

If the objective is to develop analytical and problem-solving skills, then use ______________

Answer 63

If the objective is to develop analytical and problem-solving skills, then use case studies, coaching and mentoring, and group discussions.

Question 64

If practising, learning, or changing job behaviours is the objective, then use __________________

Answer 64

If practising, learning, or changing job behaviours is the objective, then use on-the-job training, role playing, simulations and games, and vestibule training.

Question 65

If training is supposed to meet more than one of these objectives, then ________________

Answer 65

If training is supposed to meet more than one of these objectives, then your best choice may be to combine one of the previous methods with computer-based training.

Question 66

several disadvantages to elearning

Answer 66

First, despite its increasing popularity, it’s not always the appropriate training method. Elearning can be a good way to impart information, but it isn’t always as effective for changing job behaviours or for developing problem-solving and analytical skills. Second, elearning requires a significant investment in computers and high-speed Internet and network connections for all employees. Finally, although elearning can be faster, many employees find it so boring and unengaging that they may choose to do their jobs rather than complete elearning courses when sitting alone at their desks.

Question 67

Training can be evaluated in four ways:

Answer 67

on reactions (how satisfied trainees were with the program), on learning (how much employees improved their knowledge or skills), on behaviour (how much employees actually changed their on-the-job behaviour because of training), on results (how much training improved job performance—for example, how much it increased sales or quality, or decreased costs).

Question 68

Performance appraisal

Answer 68

the process of assessing how well employees are doing their jobs Most employees and managers intensely dislike performance appraisals. 70 percent of employees are dissatisfied with the performance appraisal process at their company. And according to the Society for Human Resource Management, 90 percent of human resource managers are dissatisfied with their company’s performance appraisal system.

Question 69

Workers often have strong doubts about the accuracy of their performance appraisals—and they may be right.

Answer 69

For example, it’s widely known that assessors are prone to errors when rating worker performance. One of the reasons managers make these errors is that they often don’t spend enough time gathering or reviewing performance data.

Question 70

To minimize rating errors and improve the accuracy of job performance measures, two general approaches have been taken:

Answer 70

improving performance appraisal measures themselves training performance raters to be more accurate.

Question 71

One way for companies to improve performance appraisals is to use as many _____________ as possible.

Answer 71

One way for companies to improve performance appraisals is to use as many objective performance measures as possible.

Question 72

Objective performance measures

Answer 72

measures of job performance that are easily and directly counted or quantified But when objective measures aren’t available—and frequently they aren’t—subjective measures have to be used instead.

Question 73

Subjective performance measures

Answer 73

require that someone judge or assess a worker’s performance. The most common kind of subjective performance measure is the graphic rating scale (GRS) see Exhibit 10.7.

Question 74

behavioural observation scale (BOS)

Answer 74

a rating scale that indicates the frequency with which workers perform specific behaviours that are representative of the job dimensions critical to successful job performance BOSs work well for rating critical dimensions of performance Also, studies have found that managers strongly prefer BOSs when giving performance feedback; when differentiating between poor, average, and good workers; when identifying training needs; and when measuring performance. see Exhibit 10.7.

Question 75

rater training

Answer 75

training performance appraisal raters in how to avoid rating errors and increase rating accuracy

Question 76

frame-of-reference training

Answer 76

Most effective in this regard is frame-of-reference training, in which a group of trainees learn how to conduct performance appraisals by watching a video of an employee at work. Next, they evaluate the performance of the person in the video. A trainer (i.e., subject matter expert) then shares his or her evaluations, and trainees’ evaluations are compared with the expert’s. The expert then explains his or her evaluations. This process is repeated until the differences in evaluations by trainees and evaluations by the expert are minimized. The logic behind frame-of-reference training is that by adopting the frame of reference used by an expert, trainees will be able to accurately observe, judge, and use the scale to evaluate performance of others.

Question 77

Sharing Performance Feedback With Employees - information

Answer 77

After gathering accurate performance data, the next step is to share performance feedback with employees. Unfortunately, even when performance appraisal ratings are accurate, the appraisal process often breaks down at the feedback stage. Employees become defensive and dislike hearing any negative assessments of their work, no matter how small. Managers become defensive, too, and dislike giving appraisal feedback as much as employees dislike receiving it.

Question 78

What can be done to overcome the inherent difficulties in performance appraisal feedback sessions? Since performance appraisal ratings have traditionally been the judgments of just one person, the boss, one possibility is to use _______________

Answer 78

What can be done to overcome the inherent difficulties in performance appraisal feedback sessions? Since performance appraisal ratings have traditionally been the judgments of just one person, the boss, one possibility is to use 360-degree feedback.

Question 79

360-degree feedback

Answer 79

a performance appraisal process in which feedback is obtained from the boss, subordinates, peers and coworkers, and the employees themselves. The data, which are obtained anonymously (except for the feedback from the boss), are compiled into a feedback report that compares the employee’s self-ratings with those of the boss, subordinates, peers, and coworkers. Usually, a consultant or human resource specialist discusses the results with the employee. The advantage of 360-degree programs is that feedback such as “You don’t listen” is often more credible when it comes from several people.

Question 80

Managers can do three things to make performance reviews as comfortable and productive as possible. #1

Answer 80

First, they can separate developmental feedback, which is designed to improve future performance, from administrative feedback, which is used as a reward for past performance When managers give developmental feedback, they’re acting as coaches, but when they give administrative feedback, they’re acting as judges.

Question 81

Managers can do three things to make performance reviews as comfortable and productive as possible. #2

Answer 81

Second, Meyer suggests that performance appraisal feedback sessions be based on self-appraisals, in which employees carefully assess their own strengths, weaknesses, successes, and failures in writing.

Question 82

Managers can do three things to make performance reviews as comfortable and productive as possible. #3

Answer 82

what people do with the performance feedback they receive really matters. A study of 1,361 senior managers found that managers who reviewed their 360-degree feedback with an executive coach (hired by the company) were more likely to set specific goals for improvement, ask their bosses for ways to improve, and subsequently improve their performance.

Question 83

Why is discussing 360-degree feedback with subordinates so effective?

Answer 83

These discussions help managers better understand their weaknesses, force them to develop a plan to improve, and demonstrate to the subordinates the managers’ public commitment to improving. In short, it helps to have people discuss their performance feedback with others, but it particularly helps to have them discuss their feedback with the people who provided it.

Question 84

Compensation

Answer 84

the financial and nonfinancial rewards that organizations give employees in exchange for their work

Question 85

Employee separation

Answer 85

the voluntary or involuntary loss of an employee

Question 86

Involuntary separation

Answer 86

occurs when employers decide to terminate or lay off employees

Question 87

Voluntary separation

Answer 87

occurs when employees decide to quit or retire.

Question 88

There are three basic kinds of compensation decisions:

Answer 88

pay level, pay variability, and pay structure

Question 89

Pay-level decisions

Answer 89

decisions about whether to pay workers at a level that is below, above, or at current market wages Companies use job evaluation to set their pay structures

Question 90

Job evaluation

Answer 90

a process that determines the worth of each job in a company by establishing the market value of the knowledge, skills, and requirements needed to perform it

Question 91

Above-market wages

Answer 91

can attract a larger, more qualified pool of job applicants, increase the rate of job acceptance, decrease the time it takes to fill positions, and increase the time that employees stay.

Question 92

Pay variability decisions

Answer 92

concern the extent to which employees’ pay varies with individual and organizational performance Linking pay to performance is intended to increase employee motivation, effort, and job performance. Piecework, sales commissions, profit sharing, employee stock ownership plans, and stock options are common pay variability options

Question 93

piecework

Answer 93

a compensation system in which employees are paid a set rate for each item they produce

Question 94

commission

Answer 94

a compensation system in which employees earn a percentage of each sale they make

Question 95

profit sharing

Answer 95

a compensation system in which a company pays a percentage of its profits to employees in addition to their regular compensation The more profitable the company, the more profit is shared.

Question 96

employee stock ownership plan (ESOP)

Answer 96

a compensation system that awards employees shares of company stock in addition to their regular compensation

Question 97

stock options

Answer 97

a compensation system that gives employees the right to purchase shares of stock at a set price, even if the value of the stock increases above that price

Question 98

Pay structure decisions

Answer 98

concerned with internal pay distributions—that is, the extent to which people in the company receive very different levels of pay.

Question 99

hierarchical pay structures

Answer 99

there are big differences from one pay level to the next. The highest pay levels are for people near the top of the pay distribution. The basic idea behind hierarchical pay structures is that large differences in pay between jobs or organizational levels should motivate people to work harder to obtain those higher paying jobs.

Question 100

compressed pay structures

Answer 100

typically have fewer pay levels and smaller differences in pay between levels. Pay is less dispersed and more similar across jobs in the company. The basic idea behind compressed pay structures is that similar pay levels should lead to higher levels of cooperation, feelings of fairness and common purpose, and better group and team performance.

Question 101

So, should a company choose a hierarchical pay structure or a compressed one?

Answer 101

Studies tend to indicate that there are significant problems with the hierarchical approach. The most damaging finding is that there appears to be little link between organizational performance and the pay of top managers. Furthermore, studies of professional athletes indicate that hierarchical pay structures (e.g., paying superstars 40 to 50 times more than the lowest paid athlete on the team) hurt the performance of teams and individual players. Likewise, managers are twice as likely to quit their jobs when their companies have strongly hierarchical pay structures (i.e., when they’re paid dramatically less than the people above them). It seems that hierarchical pay structures work best for independent work, where it’s easy to determine the contributions of individual performers and little coordination with others is needed to get the job done. In other words, hierarchical pay structures work best when clear links can be drawn between individual performance and individual rewards. By contrast, compressed pay structures, in which everyone receives similar pay, seem to work best for work that requires employees to work together. Some companies are pursuing a middle ground, combining hierarchical and compressed pay structures by giving ordinary workers the chance to earn more through ESOPs, stock options, and profit sharing.

Question 102

Wrongful discharge

Answer 102

a legal doctrine that requires employers to have a job-related reason to terminate employees

Question 103

Downsizing

Answer 103

the planned elimination of jobs in a company

Question 104

outplacement services

Answer 104

employment-counselling services offered to employees who are losing their jobs because of downsizing

Question 105

Early retirement incentive programs (ERIPs)

Answer 105

programs that offer financial benefits to employees to encourage them to retire early

Question 106

phased retirement

Answer 106

employees transition to retirement by working reduced hours over a period of time before completely retiring

Question 107

Employee turnover

Answer 107

loss of employees who voluntarily choose to leave the company In general, most companies try to keep the rate of employee turnover low to reduce recruiting, hiring, training, and replacement costs.

Question 108

functional turnover

Answer 108

loss of poorly performing employees who voluntarily choose to leave a company Functional turnover gives the organization a chance to replace poor performers with better ones. One study found that simply replacing poorly performing leavers with average workers would increase the revenues produced by retail salespeople in an upscale department store by $112,000 per person per year

Question 109

dysfunctional turnover

Answer 109

loss of high-performing employees who voluntarily choose to leave a company Employee turnover should be carefully analyzed to determine whether good or poor performers are choosing to leave the organization. If the company is losing too many high performers, managers should determine the reasons and find ways to reduce the loss of valuable employees. The company may have to raise salary levels, offer enhanced benefits, or improve working conditions to retain skilled workers.