Chapter 4 ECON 365 Flashcards Preview

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Flashcards in Chapter 4 ECON 365 Deck (47):

The following is benefits for what:

* Can distribute recruitment cost and training costs over time.

* Evaluation of abilities easier: Better Job Assignment

* Better performance evaluation: Incentive contracts easier

* Loyalty to the employer and co-workers: identification with firm's goals

* Promotion from within (internal labor market)

Benefits of Long Term Employment Relationships.


The following is benefits for what:

* Difficult to adopt in a new environment
-Inflexibility in a downturn
-Inflexibility in work organization

* Greater room for lobbying: Employees will not work hard because the they will be promoted because they know someone.

* Greater emphasis on formal rules for promotion and seniority for pay scales

* Internal labor market: not always the best candidate available for position

Costs of long-term employment relationships


What is the Following:

-When combination of workers by skilled not profit.

Turnover is good for a firm


What type of worker has more firm-specific skill

Older Workers


What type of worker has the most resent education, more technology savvy.

Young Workers.


What type of workers are the following:

* Rapid tech change

* Most Human Capital is attainable through schooling, not OJT

* Firm dose not need much firm-specific capital
-Production process is not "quirky"

Factors that favor Younger wokers


What three thing will make a firm alter its mix?

Change in technology, demand for product, prices of inputs


The following represents managing turnover:

* Wage system competitive

* Non-wage remuneration: flexible working time, training and job enrichment, promotions, human relations

*identify key workers

Avoid (Reduce) Turnover


The following represents managing turnover:

* Teamwork in key positions

* Documentation, knowledge, management

* Change tasks periodically

Reduce costs of turnover


The following represents managing turnover:

* Up-or-out

Strategic turnover


What is it when a company lure good workers away from other companies.



Are most raids successful?



Why are firm-specific human capital would affect a raid?

Because a worker is more valuable in the old firm than in the new firm


What is it when a raider knows less about the true ability of the worker than the other firm dose.

Winner's Curse


When the other firm (current employer) has the power to decide to match your offer or not.

What type of worker is it when the work is good?

What type of work is it when the worker is not so good?




Is the worker a "peach" or a "lemon" if it is a winner curse?



What are three advantage that counter raids matching outside offers?

Allows the worker to force up own wage:

You do not lose good workers

Better knowledge about productivity

Let bad workers go


What are the three disadvantages of a counter raids matching outside offers?

Policy of allowing matching leads to too much OJS

Permanent wage negotiations

Relationships because unstable

Job search literature


What are two things that you can do to avoid being the target of being raided?

General problem if training programs is provided

Don't make workers "quality" visible to outsiders


what are the issues to consider when strategies for cutting cost?

Impact on remaining workers

Impact on laid off workers

Treatment of laid off workers can influence behavior of remaining workers


What are three cost of wage cutting across the board?

Is it allowed by law? Agreement with union or works council necessary

Bad motivational effects on all worker

Best workers feel mistreated and leave


What is the formula for laying off workers?

PV(W) > PV(K)


What is the formula to determining if you should buyout workers

PV (W) > PV (K) and PV ( A) > PV (K)


What is the formula for rent after change?

PV (bK) - PV (W)


Who is the least suited for buy-outs?

Workers with lots of firm specific capital


What are two different circumstances for thinking about employee turnover

1. Downsizing
2. in and out workforce


What allows the firm to increase workforce quality by screening more candidates per time period



what causes more chances the firm gets to consider new job candidates the greater the odds more talented workers will be discovered.



What is valuable only to the extent that different in ablility are valuable



What is also desirable to some extent for employees who have been promoted to new positions



What is also valuable when small differences in talent or matching lead to large difference in productivity or costs.



What benefits and allows new blood into the organization.



What dose the following do?

- benefits your firm because you can obtain some of the new ideas and innovations for competitors.

-young workers learned to latest technology techniques in college or graduate school.

-younger workers bring fresh ideas and technology.

-old workers have a deeper understanding of the business and are likely to have invested in knowledge that is specific to the firm.

=opportunity for the two groups to cross train or collaborate with each other.

Turnover and hiring of workers from other firms.


What also generally benefits from turnover to bring in new idea and current employees are experts at the firm's current way of doing business.

Organizational change


When is it more likely to hire employees at the bottom and promote from within to develop specific human capital.

Organizational change


What is necessary when the organizational structure dictates that the hierarchy narrow rapidly at some level.



What is more specific to the firm the training the higher turn over costs.

specific human capital


What is more idiosyncratic business, methods or cultures are more likely to what to have low turn over.

Specific human capital


What is the following

1. the small number of employees who create the most value or innovation for your organization.

2. most likely to posses valuable intellectual property or customer relationships that they might take with if they leave.

key employees, consider treating themas partners.


What means that they employee will inevitably end up disappointed and employees may infer that the employer is untrustworthy.

overstating the value


What is the following;

-have limited effectiveness because of the reluctance of courts to enforce strong clauses in them.

-because it is impossible to control some information and ideas that an employee carries to a new firm.

non compete agreement


What is some attention can be given to procedures by which the knowledge that is created as part of conducting the work can documented for reuse.

Knowledge management strategy


What is one in which employees who are not promoted must leave the firm and seek a new job

up or out system.


what is often than not the worker who are easy to steal are the ones not worth stealing, and if outside firm can outbid the worker's current employer than maybe the outsider is bidding too much.

Winner's Curse


What is most likely to yield profitable outcome when the at get workers is worth more to the raider than to the current firm and when the current firm is aware of the fact.



The following are what?

1 Workers who have recently completed a schooling program are ripe for the picking

2 Workers who are employed by firms in rapidly changing industries especially those that are dealing declining are good targets for raiding

3 workers who employed in industries undergoing rapid technical changes are likely to be good targets

conditions for a profitable raid


What is a potential employer will worry that the worker is not high quality because the prior employer.