Employee Motivation and Compensation

Employee Motivation and Compensation

• Systematic soldiering is the term Frederick Taylor used for employees' tendency to work slowly and produce at a minimum level.
• Financial incentives are monetary rewards for workers exceeding a set production standard.
• Scientific management improves work methods through observation and analysis.
• Frederick Herzberg proposed the two-factor theory, where motivator factors relate to job satisfaction and hygiene factors relate to dissatisfaction.
• According to Herzberg's theory, managers can create a self-motivated workforce by providing feedback and recognition.
• Factors like achievement satisfy employees' higher-level needs based on Herzberg's theory.
• Edward Deci found extrinsic rewards may reduce an employee's intrinsic motivation.
• According to Deci, giving a bonus may detract from an employee's inner desire to work hard.
• Victor Vroom referred to expectancy as the probability that effort leads to success.
• Instrumentality is the perceived relationship between successful performance and reward.
• In Vroom's theory, motivation equals Expectancy * Instrumentality * Valence (E * I * V).
• Valence is the perceived value a person attaches to a reward in Vroom's theory.
• When designing incentive plans, managers should NOT primarily focus on behaviour modification methods.
• Behavior modification is based on principles of rewards and punishments advanced by B.F. Skinner.
• Behavior modification changes behavior through rewards or punishments based on performance.
• A key tenet of behavior modification is that behavior leading to rewards will be repeated

Compensation and Benefits

• Variable pay ties a group's pay to the firm's profitability.
• Christmas bonuses are NOT included in overtime pay computations under the Fair Labor Standards Act.
• The full retirement age for Social Security benefits is 67 for those born in 1960 or later.
• Social Security offers survivor's benefits, disability payments and Medicare but NOT tax refunds for retirees 55+.
• Social Security is funded through taxes on employee wages.
• A pension plan provides a fixed sum upon retirement or disability.
• Social Security taxes apply to all earnings up to $117,000.
• Medicare provides health services to people 65 or over.
• In a non-contributory pension plan, the employer makes all contributions.
• A defined benefit pension plan has a formula for determining retirement benefits.
• A non-contributory, defined benefit plan is where the company contributes and bases benefits on pay at retirement and years of service.
• A contributory, defined contribution plan requires employee contributions, employer contributions, investment choices, and returns impacting the final amount.
• A defined contribution pension plan specifies the employer's contribution to retirement savings.
• A 401(k) plan is a defined contribution plan but deductions DO NOT replace Social Security tax.
• A 401(k) plan involves employees contributing to a fund, often matched by the employer.
• Cash balance plans offer predictable benefits and employees earn interest, but they lack portability.
• The Employee Retirement Income Security Act (ERISA) mandates vesting rights and protection by the Pension Benefits Guarantee Corporation.
• The Job Creation and Worker Assistance Act provides guidelines on rates of return for calculating pension plan values.

Legal and Strategic Compensation

• Accountability is NOT a compensable factor in the Equal Pay Act.
• A pay grade comprises jobs of approximately equal difficulty or importance.
• A wage curve shows the relationship between job value and average pay.
• The purpose of the wage curve is to illustrate the relationship between job value and current average pay rates.
• Phil should provide a pay raise if the current rate is below the wage line.
• A pay range is a series of steps or levels within a pay grade.
• Determining the relevant labor market is most relevant to developing a market-competitive pay system.
• Employee compensation includes all forms of pay or rewards from employment.
• Insurance is NOT a direct financial payment.
• Indirect financial payments are pay in the form of financial benefits, like insurance.
• John's situation is best described as pay for performance, earning commission for every sale.
• Company vision has the LEAST effect on the design of an organization's pay plan.
• The Davis-Bacon Act set wage rates for laborers and mechanics on federal government contracts in 1931.
• The Walsh-Healey Public Contract sets labor standards for employees on government contracts over $10,000.
• The Fair Labor Standards Act covers minimum wage, maximum hours, overtime pay and child labor.
• Termination is NOT addressed by the Fair Labor Standards Act.
• Title VII of the Civil Rights Act prohibits compensation discrimination based on race, color, religion, sex, or national origin.
• An employee covered by the Fair Labor Standards Act receives 150% of normal pay for working over 40 hours in a week.
• Jill earned a minimum of $490 for working 46 hours ($10/hr + 6 hours overtime at $15/hr).
• Joseph will receive 9 hours of time off for 6 hours of overtime work. FLSA requires overtime pay at a rate of 1.5x regular pay, but if an employee works 6 hours of overtime they are entitled to 9 hours off at a later date. As an alternative to overtime pay for hours exceeding 40 in a workweek.
• Fair Labor Standards Act overtime requirements do not apply to employers who use independent contractors.
• Paralegals are typically NOT exempt from the overtime provisions of the Fair Labor Standards Act.
• A personnel director is most likely exempt from overtime pay, not a newspaper writer.
• The job description is the best resource for determining if an employee is exempt or nonexempt.
• The Equal Pay Act says employees of one sex may not be paid less than employees of the opposite sex for equivalent work.
• The Employer Retirement Income Security Act regulates vesting and portability rights.
• Vesting refers to the ownership employees build up in their pension plans if they leave before retirement.
• The Labor Management Relations Act has the LEAST amount of influence on compensation decisions.
• The Family and Medical Leave Act allows Bonnie to take up to 12 weeks of unpaid, job-protected leave to care for her mother.

Collective Bargaining and Equity

• The National Labor Relations Act gives employees the right to organize and bargain collectively.
• Wage rates have historically been the key issue in collective bargaining.
• Unpaid medical leave is the LEAST likely to be negotiated by unions.
• An aligned reward strategy advances a firm's strategic goals through compensation.
• Results of Homelife employee salary surveys in regards to wage satisfaction is LEAST relevant.
• Raising commission percentages is the LEAST likely way an employer would address a cost-of-living differential.
• Equity theory states people are motivated to maintain a balance between contributions and rewards.
• Group is NOT one of the forms of equity related to compensation issues.
• External equity compares a job's pay rate in one company to other companies.
• Jason is most concerned with external equity as he realizes jobs near him have a higher pay rate.
• Internal equity refers to the fairness of a job's pay rate compared to other jobs within the same company.
• Trevor is concerned with internal equity as he found a HR manager with comparable responsibilities earns more than him.
• Individual equity refers to the fairness of an individual's pay compared to co-workers in similar jobs based on performance.
• Audrey is concerned with individual equity as she found out another lawyer who joined the firm at the same time, earns less than she does.
• Procedural equity refers to the perceived fairness of the processes used to make pay decisions.
• External equity defines how a job's pay rate in one company compares to the same job in another company.
• Internal equity best describes how fair a job's pay rate is compared to other jobs within the same company.
• Job analysis comparisons maintains internal equity.
• Performance appraisals and incentive pay are used to maintain individual equity.
• Beth should conduct a salary survey to ensure external equity.