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Human Resource Management – Final Exam

Pay level
the compensation decision concerning how much to pay employees relative to what they could earn doing the same job elsewhere; external equity, internal equity
External equity
employee perceptions of fairness based on how much they are paid relative to people working in other organizations; determined using pay surveys
Pay survey
gathering information to learn how much employees are being paid by other organizations
Internal equity
employee perceptions of fairness based on how much they are paid relative to others working in the same organization; determined using point systems
Point system
a process of assigning numerical values to each job in order to compare the value of contributions within and across organizations
Meet-the-market strategy
a compensation decision to pay employees an amount similar to what they can make working for other organizations
Lead-the-market strategy
a compensation decision to pay employees an amount above what they might earn working for another organization
Lag-the-market strategy
a compensation decision to pay employees an amount below what they might earn working for another organization
Transactional commitment
a sense of obligation to an organization that is created primarily by financial incentives; Bargain Laborer, Free Agent
Relational commitment
a sense of loyalty to an organization that is based not only on financial incentives but also on social ties; Loyal Soldier, Committed Expert
Uniform rewards
a reward system that minimizes differences among workers and offers similar compensation to all employees; Bargain Laborer, Loyal Soldier
Variable rewards
a reward system that pays some employees substantially more than others in order to emphasize differences between high and low performers; Free Agent, Committed Expert
Reinforcement theory
a psychological theory suggesting that people are motivated by antecedents (environmental cues) and consequents (rewards and punishment); pay-for-performance
Pay-for-performance
compensation practices that use differences in employee performance to determine differences in pay
Goal-setting theory
a psychological theory suggesting that an individual’s conscious choices explain motivation
Justice theory
a psychological theory suggesting that motivation is driven by beliefs about fairness
Equity theory
a justice perspective suggesting that people determine the fairness of their pay by comparing what they give to and receive from the organization with what others give and receive; distributive justice, procedural justice
Distributive justice
perceptions of fairness based on the outcomes (such as pay) received from an organization
Procedural justice
perceptions of fairness based on the processes used to allocate outcomes such as pay
Expectancy theory
a psychological theory suggesting that people are motivated by a combination of three beliefs: valence, instrumentality, and expectancy
Valence
the value that an individual places on a reward being offered
Instrumentality
the belief in the likelihood that the reward will actually be given contingent on high performance
Expectancy
an individual’s belief that he or she can do what is necessary to achieve high performance
Agency theory
an economic theory that uses differences in the interests of principals (owners) and agents (employees) to describe reactions to compensation
Fair Labor Standards Act (FLSA)
federal legislation that governs compensation practices and helps ensure fair treatment of employees; exempt employees, nonexempt employees
Exempt employees
workers, such as executives, administrators, professionals, and sales representatives, who are not covered by the FLSA
Nonexempt employees
all employees who are not explicitly exempt from the FLSA, sometimes referred to as hourly workers
Equal Pay Act
amendment to the FLSA that requires employers to pay men and women the same when performing the same job
Compensation package
the mix of salary, benefits, and other incentives that employees receive from the organization
Base pay
compensation that is consistent across time periods and not directly dependent on performance level; hourly wage or annual salary
At-risk pay
compensation where the amount varies across pay periods depending on performance; individual incentives, group incentives, organization-level rewards
1. piece-rate
2. commission
3. merit pay increase
4. merit bonus
Individual incentives (4)
Piece-rate incentive
an individual incentive program in which each employee is paid a certain amount for each piece of output
Commission
an individual incentive program in which each employee is paid a percentage of the sales revenue that he or she generates
Merit pay increase
an individual incentive program in which an employee’s salary increase is based on performance
Merit bonus
a one-time payment made to an individual for high performance
1. group-based team reward
2. gainsharing
Group incentives (2)
Group-based team reward
a group-level incentive provided to members of a team when the team meets or exceeds a specific goal
Gainsharing
a group-level incentive program that rewards groups of employees for working together to reduce costs and improve productivity
1. profit sharing
2. stock options
3. employee stock ownership plans (ESOPs)
Organization-level rewards (3)
Profit sharing
an organization-wide incentive program under which a portion of organizational profits are shared with employees
Stock options
rights to purchase stock at a specified price in the future
Employee stock ownership plan (ESOP)
a plan under which an organization sets up a trust fund to hold and manage company stock given to employees
1. social security
2. unemployment insurance
3. workers’ compensation
4. unpaid leave
5. healthcare plan
Legally-required benefits (5)
Social security system
a federal program that requires workers to pay into a retirement fund, from which they will draw when they have reached a certain age
Unemployment insurance
a network of state-mandated insurance plans that provide monetary assistance to workers who lose their jobs through no fault of their own
Workers’ compensation
state programs that provide workers and families with compensation for work-related accidents and injuries
Healthcare plan
an insurance plan that provides workers with medical services
1. life insurance
2. disability insurance
3. flexible schedule
4. retirement; defined benefit, defined contribution
5. paid leave; pay without work, sick leave
Discretionary benefits (5)
Life insurance
a form of insurance that pays benefits to family members or other beneficiaries when an insured person dies
Disability insurance
a form of insurance that provides benefits to individuals who develop mental or physical conditions that prevent them from working
Defined benefit plan
a retirement plan under which an organization provides retired individuals with a fixed amount of money each month; the amount is usually based on number of years employed and pay level at retirement
Defined contribution plan
a retirement plan under which the employer and/or the employee contribute to a fund for which only the contributions are defined and benefits vary according to the amount accumulated in the fund at retirement
Pay without work
compensation paid for time off, such as holidays
Sick leave
compensation paid to employees who are unable to work because they are ill
1. traditional
2. managed care; HMO, PPO
3. health savings account
Types of healthcare plans (3)
Health maintenance organization (HMO)
a healthcare plan under which the provider receives a fixed amount for providing necessary services to individuals who are enrolled in the plan
Health savings account (HSA)
a personal savings account that an employee can use to pay healthcare costs
Line of sight
the extent to which employees can see that their actions influence the outcomes used to determine whether they receive a particular reward
Flexible benefits program/cafeteria benefits
a benefit program that allows employees to choose the benefits they want from a list of available benefits
Wagner Act
a federal law passed in 1935 that created the National Labor Relations Board and provided employees with the express right to organize unions; formally known as the National Labor Relations Act
National Labor Relations Board (NLRB)
a board of five members appointed by the POTUS to enforce the Wagner Act
Taft-Hartley Act
a federal law passed in 1947 that regulates union activities and requires unions to bargain in good faith; formally known as the Labor-Management Relations Act
1. collective action
2. union organizing
3. joining a union
4. going on strike
5. collective bargaining
Wagner Act protected activities (5)
Collective bargaining
the process in which labor unions and employers negotiate contracts defining the terms and conditions under which union members will work
1. exclusive representative of bargaining unit
2. wages, hours, terms and conditions of employment
3. grievance procedures
4. union security provisions
Components of collective bargaining (4)
Right-to-work laws
state laws that require open-shop labor agreements
Labor union
an organization representing the collective interests of workers
Featherbedding
a practice in which a union requires a company to pay employees wages for work that is not performed; defined as an unfair labor practice
Closed shop
an organization that hires only workers who belong to a certain union
Union shop
an organization that requires workers to join a union as soon as they are hired
Boycott
an organized action in which consumers refuse to purchase goods or services from a company; unions engaged in labor disputes may support these of the companies involved in the disputes
Mandatory bargaining topics
issues, such as wages, hours, and working conditions, that must be discussed as part of collective bargaining
Strike
an action in which union members refuse to perform their job duties as a result of a labor dispute
Lockout
an action in which an employer closes a workplace or otherwise prevents union members from working as a result of a labor dispute
Union steward
a representative of the union who acts as an advocate for employees
1. higher pay
2. better benefits
3. more job security
4. better working conditions
Impact of unions on unionized employees (4)
1. higher productivity
2. lower profits
3. less flexibility
Impact of unions on union shops (3)
Authorization card campaign
a campaign in which employees or labor union representatives seek signatures from employees requesting a vote on union representation
Decertification election
an election to remove a union’s authorization to represent employees
Alignment
the state in which organizational practices are in their proper place relative to other practices
Vertical alignment
the state in which an organization’s human resource strategy supports its competitive business strategy
Horizontal alignment
the state in which individual human resource practices fit together and support each other
Turnaround strategy
a competitive business strategy that focuses on radical change to return a company to profitability
Global expansion strategy
a competitive business strategy that focuses on increasing an organization’s presence in foreign countries
Growth strategy
a competitive business strategy that focuses on expanding products and services into new markets
Rational strategic approach
an approach in which organizational leaders carefully plan a strategy before carrying it out
Evolutionary strategic approach
an approach in which an organization’s strategy unfolds over time in response to common issues

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