prentice hall, inc. © 2006 4-1 a human resource management approach strategic compensation prepared...
TRANSCRIPT
![Page 1: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/1.jpg)
Prentice Hall, Inc. © 2006
4-1
A Human Resource A Human Resource Management ApproachManagement Approach
STRATEGIC STRATEGIC COMPENSATIONCOMPENSATION
Prepared by David Oakes
Chapter Chapter 4 4
Traditional Bases for Pay: Traditional Bases for Pay: Seniority and MeritSeniority and Merit
![Page 2: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/2.jpg)
Prentice Hall, Inc. © 2006
4-2
Collective BargainingCollective Bargaining
Designed to: Negotiate labor contracts Provide grievance procedures
Led to: Job control unionism Collective bargaining units Union shops
![Page 3: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/3.jpg)
Prentice Hall, Inc. © 2006
4-3
Seniority PaySeniority Pay
Designed to award job tenure
Set base pay with time- designated increases
Facilitates administration of pay
Avoids perception of favoritism Poor fit with most competitive strategies
![Page 4: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/4.jpg)
Prentice Hall, Inc. © 2006
4-4
Longevity PayLongevity Pay
Designed to Pay grade maximum for length of service To reduce employee turnover
Used for most government employees
General Schedule System for federal employees
![Page 5: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/5.jpg)
Prentice Hall, Inc. © 2006
4-5
General ScheduleGeneral Schedule
Divided into 15 Steps
Based on skills, education, & experience levels
Employees eligible for 10 within-grade pay increases Step waiting periods of 1-3 years
![Page 6: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/6.jpg)
Prentice Hall, Inc. © 2006
4-6
Merit Pay PlansMerit Pay Plans
Pay increases based on performance Reward excellent effort or results Motivate future performance Helps retain valued employees In 2004, raises averaged 3.5%
![Page 7: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/7.jpg)
Prentice Hall, Inc. © 2006
4-7
Elements of Merit PayElements of Merit Pay
Based on objective & subjective indicators of job performance
Periodic performance reviews
Realistic & attainable standards
Pay increases reflect performance
![Page 8: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/8.jpg)
Prentice Hall, Inc. © 2006
4-8
Performance Appraisal PlansPerformance Appraisal Plans
Trait systems
Comparison systems
Behavioral systems
Goal - oriented systems
![Page 9: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/9.jpg)
Prentice Hall, Inc. © 2006
4-9
Trait System CharacteristicsTrait System Characteristics
Work quality
Appearance
Dependability
Cooperation
Initiative
Judgment
Leadership responsibility
Decision-making ability
Creativity
![Page 10: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/10.jpg)
Prentice Hall, Inc. © 2006
4-10
Comparison SystemsComparison Systems
Rates & ranks performance Pay raises based on ranking
Types Forced distribution Paired comparisons
![Page 11: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/11.jpg)
Prentice Hall, Inc. © 2006
4-11
Behavioral SystemsBehavioral Systems
Critical-incident technique (CIT)
Behaviorally-anchored rating scales
(BARS) Behavioral observation scales (BOS)
![Page 12: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/12.jpg)
Prentice Hall, Inc. © 2006
4-12
Critical Incident TechniqueCritical Incident Technique
Employees & supervisors identify & label job behaviors & results
Supervisors observe & record
Requires extensive documentation
![Page 13: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/13.jpg)
Prentice Hall, Inc. © 2006
4-13
Behaviorally-Anchored Rating Behaviorally-Anchored Rating ScalesScales
Based on 8 - 10 expected job behaviors
Employees rated on ability to
perform each behavior
Ratings highly defensible
![Page 14: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/14.jpg)
Prentice Hall, Inc. © 2006
4-14
Behavioral Observation ScalesBehavioral Observation Scales
Documents positive performance behaviors on job dimensions
Employees rated on exhibited behaviors
Ratings averaged for over-all rating
![Page 15: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/15.jpg)
Prentice Hall, Inc. © 2006
4-15
Goal - Oriented SystemGoal - Oriented System
Management- by-Objectives Supervisors & employees set objectives Highly effective technique Rated on how well objectives are met Mainly for professionals & managers
![Page 16: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/16.jpg)
Prentice Hall, Inc. © 2006
4-16
Performance Appraisal PracticesPerformance Appraisal Practices
Conduct a job analysis
Incorporate results into ratings
Trains supervisors on use
Implement Formal appeals process
![Page 17: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/17.jpg)
Prentice Hall, Inc. © 2006
4-17
Sources of Performance Appraisal Sources of Performance Appraisal InformationInformation
Employee
Supervisor
Coworkers
Subordinates
Customers/clients
![Page 18: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/18.jpg)
Prentice Hall, Inc. © 2006
4-18
360 Degree Performance Appraisal360 Degree Performance Appraisal
Uses more than one appraisal source
Reduces recruiting & hiring costs
Appropriate for work team evaluations
![Page 19: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/19.jpg)
Prentice Hall, Inc. © 2006
4-19
Common Raters’ ErrorsCommon Raters’ Errors
Bias errors
Contrast errors
Errors of central tendency
Errors of leniency or strictness
![Page 20: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/20.jpg)
Prentice Hall, Inc. © 2006
4-20
Bias ErrorsBias Errors
First-impression effect Positive halo effect Negative halo effect Similar-to-me effect Illegal discriminatory biases
![Page 21: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/21.jpg)
Prentice Hall, Inc. © 2006
4-21
Contrast ErrorsContrast Errors
Supervisor compares employees’
performances to other employees, not
to explicit performance standards
What if the best employee is average?
![Page 22: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/22.jpg)
Prentice Hall, Inc. © 2006
4-22
Errors of Central TendencyErrors of Central Tendency
Supervisors rate all employees as average
Usually occurs when only extreme
behaviors require documentation
![Page 23: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/23.jpg)
Prentice Hall, Inc. © 2006
4-23
Errors of LeniencyErrors of Leniency
Leniency errors-managers rate employees’ performances more highly than they would rate them using objective criteria
Causes employees to believe they are going to receive larger pay raises than they deserve
![Page 24: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/24.jpg)
Prentice Hall, Inc. © 2006
4-24
Pay For Performance LinkPay For Performance Link
Link appraisals to business goals Analyze jobs Communicate Establish effective appraisals Empower employees Differentiate among performers
![Page 25: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/25.jpg)
Prentice Hall, Inc. © 2006
4-25
Limitations of Merit Pay ProgramsLimitations of Merit Pay Programs
Failure to differentiate
Poor measures
Supervisor biases
Poor communication
Undesirable social structures
Using non-merit factors Undesirable competition
Motivational value small
![Page 26: Prentice Hall, Inc. © 2006 4-1 A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 4 Traditional Bases for Pay:](https://reader035.vdocuments.site/reader035/viewer/2022062320/56649cfd5503460f949cd962/html5/thumbnails/26.jpg)
Prentice Hall, Inc. © 2006
4-26
Competitive Strategies Competitive Strategies
Lowest-Cost Reduce output costs per employee Merit pay works if tied to long - term productivity
Differentiation Make product or service unique Merit pay can promote creativity
and risk-taking