Treat Me Fairly
Established minimum wage, overtime requirements, and child protections
Fair Labor Standards Act
Reward systems that provide periodic increases to base pay based upon an employee's length of service.
Seniority/longevity pay
Performance review system based on evaluation of traits or characteristics
Trait systems
Rewards employees for attaining a predetermined work objective
Incentive/Variable Pay
A performance review system that requires individuals to be placed into one of a series of predetermined categories with a limited number of "slots"
Forced distribution
Workweek
Two key advantages of seniority pay
Objective standards and easy administration
Requires employees/managers to capture key events and behaviors that separate successful/unsuccessful results
Three reasons employers use incentive structures
Drive strategy
Increase performance
Control costs
Paid time off in lieu of overtime
Comp time
Hours worked, on-call, travel time, and rest breaks
Compensable Activities
Assumes pay should be determined by differences in job performance
Merit pay
Occurs when supervisors rate all employees close to average
Central Tendency Error
A group incentive plan that rewards the group for increased productivity.
Gainsharing
Scalon Plan
Rucker Plan
Improshar
Shifts performance evaluation feedback to multiple stakeholders
360-degree appraisals
Paid at least a salary of $684 per week and uses advanced knowledge, discretion, and judgment from advanced study or expertise
Learned Professional Exemption
The minimum pay increase meaningful to employees
Just-meaningful pay increase
Three strategies for strengthening the pay-for-performance link
Linked to business goals
Effective job analysis
Open communication
Self-appraisals
Differentiation
Three conditions for effective individual incentives
Objective measures
Employee control of outcomes
Minimizes competition
Occurs when a supervisor rates employees against each other rather than defined standards
Contrast errors
A non-exempt salary intended to cover a predetermined number of hours to be worked regardless of the schedule
Fluctuating Workweek
3 elements of effective merit systems
Clear expectations
Meaningful
Realistic
Direct tie to results and rewards
Three limitations of merit programs
Failure to differentiate
Poor measures
Biases
Lack of communication
Factors other than merit
Undesireable competition
Little motivational value
3 (of 5) factors/decisions to be considered for incentive plan design
Group or individual?
Employee risk-tolerance?
Replace or complement base pay?
Clarity of criteria
Time horizon
3 (of 5) activities to promote non-discriminatory performance evaluations
Job analysis
Behavioral definitions
Supervisor training
Review/Appeals process