Lynn University Employee Motivation and Job Performance Paper

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Our fourth module addressed how organizations motivate employees to come to work and give their best efforts, through base pay, incentive or variable pay, benefits, and a safe and healthy work environment. Consider what you've learned over these four chapters and write an essay that explores in detail:

The topics needs to be related to (international business management)

  • Introduction
  • Thesis statement
  • the typical balance of base pay (salary or hourly wages) and variable (incentive) pay for common jobs in this industry or career path (chapter-9)
  • how managers can use an incentive plan to drive the desired behaviors and results in your industry or career path (with specific examples for multiple common jobs) (chapter-10)
  • any unusual or innovative benefits that organizations in your industry or career path may offer (chapter-11)
  • workplace safety or health concerns that may be known in this industry or career path, and how managers and HR can help reduce the risk (chapter-12
  • Resolution
  • Conclusion

Each written assignment in this course should include at least 6 pages of double-spaced content in 12-point Times New Roman font, summarizing your key learnings in class and how they are relevant in your industry or career path. Written assignments require application of content from the textbook and any other learning materials provided in the course, as well as your own independent research (especially around industry-specific aspects of the assignment).

Your paper should be formatted and written in the style dictated by the American Psychological Association (APA) 6.0 Style guidelines. Please see the Lynn Library APA Style guide for assistance here, including the pre-formatted template in Microsoft Word. You do not need to use an Abstract or a Table of Contents, but you will need a Title Page and a References Page in the correct formats. You are strongly encouraged to work with the Writing Lab to get assistance with your academic writing; take advantage of this free service, as part of your university education!

You must use APA-formatted in-text citations and References to indicate the source of any ideas you apply from other authors. You are encouraged to summarize and paraphrase whenever possible rather than directly quoting, as your instructor is much more interested in what you now know and understand than in what you can quote from your research. (However, citations and References are still required, even if you're not directly quoting.)

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Copyright Copyright©2016 ©2016Cengage CengageLearning. Learning. All AllRights RightsReserved. Reserved.May Maynot notbebescanned, scanned,copied copiedororduplicated, duplicated,ororposted postedtotoa publicly a publiclyaccessible accessiblewebsite, website,ininwhole wholeororininpart. part. Learning Outcomes — Distinguish a strategic compensation program from one that is non-strategic — Determine how to design pay systems — Estimate whether or not a pay system is consistent within the firm as well as comparable to industry standards and government laws — Be able to design a compensation scorecard Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 Compensation — Way to increase employee’s loyalty toward the organization — Directly linked to an employee’s livelihood — Strategic management ensures that costs are kept down keeping employees’ motivation and performance up Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Figure 9.1 - Compensation Components Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Figure 9.2 - Compensation Alignment Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Strategic Compensation — Compensation of employees in ways that enhance motivation and growth — Aligns employee’s efforts with the objectives of the organization — Links the compensation to the organization’s mission and general business objectives — Serves to mesh the monetary payments made to employees with HR initiatives Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 Goals of Strategic Compensation Policy — To reward employees’ past performance — To remain competitive in the labor market — To maintain salary equity among employees — To mesh employees’ future performance with organizational goals — To control the compensation budget — To attract new employees — To reduce unnecessary turnover Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Linking Compensation to Organizational Objectives — Requires that managers be more strategic about their compensation decisions — Formalized compensation goals serve as guidelines for managers to ensure that wage and benefit policies achieve their intended purpose — Reward employees on the basis of their individual competencies or work contributions toward organizational objectives Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Pay-for-Performance Standard — Standard by which managers tie compensation to employee effort and performance — Refers to a wide range of compensation options — Includes merit-based pay, bonuses, salary commissions, job and pay banding, team/group incentives, and gainsharing programs Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Motivating Employees through Compensation — Pay equity: Employee’s perception that compensation received is equal to the value of the work performed — Distributive fairness - Motivation theory that explains how people respond to situations in which they feel they have received less/more than they deserve Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 Figure 9.3 - Relationship between Pay Equity and Motivation Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 Kinds of Pay Equity External equity • People in similar jobs compare themselves to what others are making in different organizations Internal equity • People compare themselves to peers in different jobs in the same organization Individual equity • People compare themselves to others in their organization with the same job Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Expectancy Theory and Pay — Expectancy theory — Predicts that one’s level of motivation depends on the attractiveness of the rewards sought and the probability of obtaining those rewards — Employees must believe that good performance is valued by their employer and will result in their receiving the expected reward — Motivational value of compensation is determined by employees’ view of compensation Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Figure 9.4 - Pay-for-Performance and Expectancy Theory Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Pay Secrecy — Generates distrust in the compensation system — Reduces employee motivation — Inhibits organizational effectiveness — Cover up inequities existing within the internal pay structure — Justified on the grounds that most employees prefer to have their own pay kept secret Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 Bases for Compensation — Hourly work: Work paid on an hourly basis — Piecework: Work paid according to the number of units produced — Hourly employees - Compensated on an hourly basis — Salaried employees - Compensation is computed on the basis of weekly, biweekly, or monthly pay periods Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Bases for Compensation — Nonexempt employees: Covered by the overtime provisions of the Fair Labor Standards Act (FLSA) — Paid at a rate of one and a half times their regular pay rate for time worked in excess of forty hours in their workweek — Exempt employees: Not covered by the overtime provisions of the FLSA — U.S. Department of Labor (DOL) imposes a narrow definition of exempt status Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Figure 9.6 - Factors Affecting the Pay Mix Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Important Terms in Pay Mix — Consumer price index (CPI) — Measure of the average change in prices over time in a fixed market basket of goods and services — Escalator clauses — Labor agreements clauses that provide for quarterly cost-of-living adjustments in wages, basing the adjustments on changes in the CPI — Real wages — Wage increases larger than rises in the CPI, that is, the real earning power of wages Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Job Evaluation — Systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization — Methods of comparison — Rank the value of jobs from highest to lowest — Classify jobs so they can be benchmarked internally and externally — Award points to each job based on how much they are linked to organizational objectives Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Job Ranking System — Simplest and oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth — Disadvantages — Does not provide a very precise measure of each job’s worth — Final ranking of jobs indicates the relative importance of the job and not the differences in the degree of importance — Effective only with a small number of jobs Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Job Classification System — System of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades — Successive grades require increasing amounts of job responsibility, skill, knowledge, ability, or other factors selected to compare jobs Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Point System — Quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it — Compensable factors - Used for evaluation of jobs quantitatively — Point manual — Handbook that contains a description of the compensable factors and the degrees to which these factors may exist within the jobs — Used for comparing job descriptions and job specifications Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Work Valuation — Job evaluation system that seeks to measure a job’s worth through its value to the organization — Work is measured through standards that come directly from business goals — Process ends with a work hierarchy that is an array of work by value to the organization Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 Hay Profile Method — Job evaluation technique to evaluate executive and managerial positions which uses — Knowledge — Mental activity — Accountability Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 Wage and Salary Surveys — Survey of the wages paid to employees of other employers in the surveying organization’s relevant labor market — Labor market - Area from which employers obtain certain types of workers — Collecting survey data — Bureau of Labor Statistics (BLS) publishes wage and salary data Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 Wage and Salary Surveys States conduct surveys on either a municipal or county basis and make them available to employers — Special surveys are conducted by the trade groups — Problems with published surveys — — — Not always compatible with the user’s jobs User cannot specify what specific data to collect — HRIS and salary surveys — Survey Finder has a database of hundreds of compensation surveys offered by more than fifty independent vendors Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 Wage and Salary Surveys — Employer-initiated surveys — Employers have to select the jobs to be used in the survey and identify the organizations with whom they actually compete for employees — Using key jobs, survey data are tabulated and the compensation structure is completed Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 Wage Curve, Pay Grades, and Rate Ranges Wage curve • Curve in a scattergram representing the relationship between relative worth of jobs and pay rates Pay grades • Groups of jobs within a particular class that are paid the same rate Rate ranges • Range of rates for each pay grade that may be the same for each grade or proportionately greater for each successive grade • Red circle rates: Payment rates above the maximum of the pay range Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 Figure 9.7 - Freehand Wage Curve Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 Figure 9.8 - Single Rate Structure Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 Figure 9.9 - Federal Wage Poster Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32 Competence-based Pay — Pay based on an employee’s skill level, variety of skills possessed, or increased job knowledge — Systems represent fundamental change in the attitude of management regarding: — How work should be organized — How employees should be paid for their work efforts — Encourages employees to acquire training when new or updated skills are needed by an organization Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 Broadbanding — Collapses many traditional salary grades into a few wide salary bands — Help eliminate the obsession with grades — Encourage employees to move to jobs in which they can develop in their careers and add value to the organization Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34 Government Regulation of Compensation — Davis-Bacon Act of 1931 — Walsh-Healy Act of 1936 — Fair Labor Standards Act of 1938 — Wage and hour provisions — Minimum wage and pay compression — Child labor provisions — Pay equity provisions Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35 Minimum Wage and Pay Compression — Pay rate compression: Compression of pay between new and experienced employees caused by the higher starting salaries of new employees — Differential between hourly workers and their managers — Reasons for pay compression are market based than government based Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36 Ideas for Minimizing Problems — Reward high performance and merit-worthy employees with large pay increases — Design the pay structure to allow a wide spread between hourly and supervisory employees — Prepare high-performing employees for promotions to jobs with higher salary levels — Provide equity adjustments for selected employees hardest hit by pay compression Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37 Child Labor Provisions and Pay Equity Provisions — Child labor provisions — Floor it imposes makes it difficult for high school students and young adults to find jobs — Pay equity provisions — The Equal Pay Act of 1963 — Title VII of the Civil Rights Act of 1964 — Age Discrimination Act of 1967 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 Compensation Assessment — Assessing the effectiveness of compensation system is important to linking compensation with strategy — Measures — Help the company detect potential compensation problems — Make compensation decisions more transparent — Improve the alignment of compensation decisions with organizational objectives Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39 Compensation Assessment — Compensation scorecard: Displays the results for all the measures that a company uses to monitor and compare compensation among internal departments or units — Creates a comparative tool within the organization that can reinforce desired outcomes that are unique to the company’s strategy Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40 Copyright Copyright©2016 ©2016Cengage CengageLearning. Learning. All AllRights RightsReserved. Reserved.May Maynot notbebescanned, scanned,copied copiedororduplicated, duplicated,ororposted postedtotoa publicly a publiclyaccessible accessiblewebsite, website,ininwhole wholeororininpart. part. Learning Outcomes — Implement a strategic incentive program — Detect when and what types of individual incentives are appropriate — Differentiate how gains may be shared with employees under different group incentive plans like the Scanlon and Improshare gainsharing systems Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 Learning Outcomes — Differentiate between profit sharing plans and explain advantages and disadvantages of these programs as an alternative to individual and group incentive systems — Understand how to apply different incentive systems designed for professionals and executives Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Strategic Reasons for Incentive Plans — Variable pay: Tying pay to some measure of individual, group, or organizational performance — Attached to fixed costs allowing flexibility to increase, decrease, or maintain future payments to employees as business conditions warrant — Allows the organization to align its employees’ interests and outcomes with the organization Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Strategic Reasons for Incentive Plans — Incentive pay plans — Establish a performance threshold for employees to qualify for incentive payments — Emphasize a shared focus on organizational objectives — — By broadening the opportunities for incentives to employees Creates an operating environment supporting shared commitment — Through belief that every individual contributes to organizational performance and success Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Figure 10.1 - Types of Incentive Plans Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 Incentive Plans as Links to Organizational Objectives — Purpose of incentive plan — Encourages employees to assume ownership of their jobs, thereby improving effort and job performance — Motivates employees to expend more effort than under hourly and/or seniority-based compensation systems — Supports a compensation strategy to attract and retain top-performing employees Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Advantages of Incentive Pay Programs — Focus employees on specific Performance targets — Incentive payouts are variable costs linked to the achievement of results — Base salaries are fixed costs unrelated to output — Directly related to operating performance — Encourage teamwork when payments are related to team results Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Advantages of Incentive Pay Programs — Distribute success among those related to producing that success — Increase equity and justice — Means to reward or top performers when salary budgets are low Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Requirements for a Successful Incentive Plan — Identify important organizational metrics encouraging employee behavior — Involve employees — Incentive programs should seem fair to employees — Find the right incentive payout — Payout formulas should be simple and understandable — Establish a clear link between performance and payout Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 Setting Performance Measures — Should distinguish between individual and group contributions — Should avoid biases based on likes and dislikes, different personalities, and political agendas — Should distinguish between one group’s contribution over another Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 Problems With Incentive Plan — Can be traced to the choice of performance measures — Overly quantitative, complex measures should be avoided — Selection of performance measure need to evaluate the extent to which employees involved can influence the measurement — Avoid intensifying performance goals continuously trying to exceed previous results — Leads to employee frustration and perception that the standards are unattainable Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Figure 10.3 - Measurement DOs and DON’Ts Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Administering Incentive Plans — Thorough planning must be combined with a cautious approach — Effective administration of incentive plans requires: — To motivate performance implying that poor performance must go unrewarded — Annual salary budgets to be large enough to reward and reinforce exceptional performance — Determination of overhead costs associated with plan implementation and administration Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Individual Incentive Plans - Piecework — Straight piecework: Incentive plan under which employees receive a certain rate for each unit produced — Differential piece rate: Employees whose production exceeds the standard amount of output receive a higher rate for their work than the rate paid to those who do not exceed the standard amount Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 Individual Incentive Plans - Piecework — Benefits of piecework — Wage payment for each employee is simple to compute — Permits organizations to predict its labor costs with accuracy — Since the costs are the same for each unit of output — Computing the piece rate — Based on hourly wage rates that would otherwise be paid for the type of work being performed Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Disadvantages of Piecework — Not an effective motivator — Desire for peer approval outweighs the desire for more money — Difficult to distinguish or measure individual contributions — Not applicable to highly mechanized work where employee has little control over output — Works against organizational culture as it can infringe on employee’s time, productivity, and total pay earned Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Individual Incentive Plans - Standard Hour Plan — Sets rates based on the completion of a job in a predetermined standard time — Popular in service departments in automobile dealerships — Equipment maintenance and product quality can be at risk as employees strive to work faster to earn additional income Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Individual Incentive Plans - Bonus — Supplemental to the base wage — Provides employees with more pay for exerting greater effort along with having the security of basic wage — Acts as tool to increase future performance — Spot bonus: Unplanned bonus given for employee effort unrelated to an established performance measure — Useful for retention and motivation of overburdened employees, during lean financial times Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Individual Incentive Plans - Merit Pay — Links an increase in base pay to how successfully an employee performs his or her job — Becomes part of base pay once issued regardless of future performance — Serves as motivator to employees perceiving a raise to be related to the performance required to earn it — Merit guidelines: Used for awarding merit raises that are tied to performance objectives Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Problems with Merit Raises — Money available for merit increases may be inadequate to satisfactorily raise all employees’ base pay — Managers may have no guidance in how to define and measure performance — Employees may not believe that compensation is tied to effort and performance — Unable to differentiate between merit pay and other types of pay increases Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Problems with Merit Raises — Employees and managers may hold different views of the factors contributing to job success — Creates feelings of pay inequity Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Individual Incentive Plans - Awards and Recognition — Awards — Used to recognize productivity gains, special contributions or achievements, and service to the organization — Tangible awards presented with the right message and style can make employees feel appreciated — Simultaneously underscoring a company — Recognition — Conduit that shows employees that the company appreciates their efforts, their unique gifts, and their contributions Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Individual Incentive Plans - Sales Incentives — Unique needs of sales incentive plans — Performance standards for sales employees are difficult to develop because performance is affected by external factors — Sales volume may not be an accurate indicator of the effort salespeople have expended, hence salespeople are entitled to a degree of stability in their income Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 Types of Sales Incentive Plans Straight salary plan • Permits salespeople to be paid for performing various duties that are not reflected immediately in their sales volume Straight commission plan • Based on percentage of sales Combination salary and commission plan • Includes a straight salary and commission Sales plus bonus plan • Pays a salary plus a bonus achieved by reaching targeted sales goals Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 Group Incentive Plans - Team Compensation — Team incentive plans: All team members receive an incentive bonus payment when production or service standards are met or exceeded — Advantages — Establishes a psychological climate that fosters cooperation and a collective desire to fulfill organizational goals and objectives — Promotes a pay-for-performance philosophy Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 Group Incentive Plans - Team Compensation — Approaches in establishing team incentive payments — Set performance measures upon which incentive payments are based — Determine the size of the incentive bonus — Create a payout formula and should be explained to employees in detail Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 Group Incentive Plans - Team Compensation — Problems associated with team compensation — Individual team members may perceive that their efforts contribute little to team success or to the attainment of the incentive reward — Intergroup social problems — Complex payout formulas or insufficient payout reward Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 Group Incentive Plans - Gainsharing Incentive Plan — Programs under which both employees and the organization share financial gains by a predetermined formula — Reflects improved productivity and profitability — Increase in productivity is gained when: — Greater output is obtained with less or equal input — Equal production output is obtained with less input Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 Variations of Gainsharing Plans Scanlon plan • Bonus incentive plan using employee and management committees to gain cost-reduction improvements Improshare • Gainsharing program where bonuses are based on the overall productivity of the work team Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 Figure 10.4 - Scanlon Plan Suggestion Process Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 Enterprise Incentive Plan - Profit Sharing — Procedure by which an employer pays, or makes available to all regular employees, special current or deferred sums based on the organization’s profits — Advantages — Gives employees the opportunity to increase their earnings by contributing to the growth of the organization’s profits — Stimulates employees to think and feel like partners in the enterprise — Garners total commitment from employees rather than specific areas Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32 Enterprise Incentive Plan - Profit Sharing — Disadvantages — Profits shared with employees may be the result of factors over which employees have no control — Decreased motivational value as profit sharing payments are made once a year or deferred until retirement may reduce their motivational value — If failed to pay off for several years in a row, has an adverse effect on productivity and employee morale Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 Enterprise Incentive Plan - Stock Options — Method of motivating and compensating hourly employees, salaried and executive personnel — Advantages — Implemented as part of an employee benefit plan or as part of a corporate culture — — Links employee effort to stock performance Boosts morale of disenfranchised employees in budget cuts and downsizing — Disadvantage — Extravagance of executive stock option plans and dubious corporate accounting procedures Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34 Enterprise Incentive Plan - Employee Stock Ownership Plans (ESOPs) — Stock plans in which an organization contributes shares of its stock to an established trust for the purpose of stock purchases by its employees — Employer establishes an ESOP trust that qualifies as a tax-exempt employee trust under Section 401(a) of the Internal Revenue Code — Stock allocations are based on employee wages or seniority Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35 Enterprise Incentive Plan - Employee Stock Ownership Plans (ESOPs) — Employees leaving or retiring can sell their stock back to the organization, or sell it on the open market if traded publicly — Advantages — Usage is encouraged by favorable federal income tax provisions — Provides retirement benefits for the employees Employers can provide retirement benefits to the employees at relatively low cost — Increases employees’ pride of ownership in the organization — Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36 Enterprise Incentive Plan - Employee Stock Ownership Plans (ESOPs) — Disadvantages — Privately held companies are incapable to pay back the stock of employees when they retire — Pensioner becomes dependent on the price of company stock — Future retirees are vulnerable to stock market fluctuations and management mistakes — Not guaranteed by federally established Pension Benefit Guaranty Corporation Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37 Incentives for Professional Employees — Professional employees — For many professions, the primary incentive system is based on an up or out model — Junior professionals are hired and are given a set amount of time to make valuable contributions to become a partner — Motivation is influenced by their increased mobility across companies — Can receive compensation beyond base pay Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 The Executive Pay Package — Components — Base salary — Short-term incentives or bonuses — Long-term incentives or stock plans — Benefits — Perks Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39 The Executive Pay Package — Executive base salaries — Represents 30 or 40 percent of total annual compensation — Largest portion is received in long-term incentive rewards and bonuses — Influenced by levels of competitive salaries in the job market Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40 The Executive Pay Package — Executive short-term incentives — Annual bonuses form the main element — Bonus payment in form of cash or stock and may be paid immediately, deferred for a short time, or deferred until retirement — Paid in cash, keeping with their pay-for-performance strategy — Based on: — Percentage of company’s total profits Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 41 The Executive Pay Package — Percentage of profits in excess of a specific return on stockholders’ investments — Annual profit plan where the amount is determined by the extent to which an agreed-upon profit level is exceeded — Executive long-term incentives — Offered in the form of stock options — Stock options serves to retain key executive personnel — Objected for the magnitude of rewards Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42 The Executive Pay Package — Pay for performance option can be undermined when executives are granted additional options — Though company stock prices fall or performance indexes decline — Executive benefits — Benefits package offered to executives can be parallel to other groups of employees — Include programs for health insurance, life insurance, retirement plans, and vacations — Are broader in coverage and free of charge Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 43 The Executive Pay Package — Gives financial assistance in the form of trusts for estate planning, payment of mortgage interest, and legal help — Perks or perquisites: Special nonmonetary benefits given to executives — Means of demonstrating the executive’s importance to the organization — Cost is weighed against the added efficiency and managerial effectiveness generated as facilitates in company’s productivity Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44 Executive Compensation: Ethics and Accountability — Justification of bonuses — Large financial incentives are a way to reward superior performance — Business competition is pressure-filled and demanding — Good executive talent is in great demand — Effective executives create shareholder value — Fact of business life, reflecting market compensation trends Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 45 Executive Compensation Reform — Internal Revenue Service (IRS) makes executive pay a part of every corporate audit — Securities and Exchange Commission issued pay disclosure rules requiring companies listed on the New York Stock Exchange and NASDAQ to disclose the true size of their top executive pay packages — Financial Accounting Standards Board (FASB) requires stock options to be recognized as an expense on income statements Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 46 Executive Compensation Reform — Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203) was signed into effect giving share holders say on pay — Voting shareholders of a company must ultimately approve of its executive salaries Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47 Copyright Copyright©2016 ©2016Cengage CengageLearning. Learning. All AllRights RightsReserved. Reserved.May Maynot notbebescanned, scanned,copied copiedororduplicated, duplicated,ororposted postedtotoa publicly a publiclyaccessible accessiblewebsite, website,ininwhole wholeororininpart. part. Learning Outcomes — Detect strategies companies use to develop benefits plans that are cost effective — Identify and explain the employee benefits required by law — Describe the types of work/life benefits that employers may provide — Describe the different types of retirement programs and pension plans and the regulations related to them Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 Elements of a Successful Benefits Program — Many forces are weighed and kept in balance for benefits programs to succeed — Needs of employees are considered as they can differ from firm to firm Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Selecting Benefits — When designing benefit programs, company can: — Purchase detailed compensation data — Hire outside firms to aid in the designing process — Involve employees’ participation — — Conduct opinion survey Establish committees to over look the program Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Flexible Benefits — Flexible benefits plans — Enable individual employees to choose benefits best suited to their particular needs — Prevent certain benefits from being wasted on employees who have no need for them — Employees are offered core benefits package of life and health insurance, sick leave, and vacation — Give certain amount of funds to purchase other benefits needed through the plan Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Advantages of Flexible Benefits — Employees select benefits of greatest value to them — Employers manage benefits costs by limiting the dollars being spent — Employees are compensated by funds for other benefits — Prepaid legal services — Financial planning — Dental insurance — Long-term care insurance Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 Administering Benefits — Program can be costly and time consuming — Managing the benefits program on an online platform becomes easier — Online benefits system is called employee self-service (ESS) — Results in significant cost savings — Feedback of different online systems being trialed, can be obtained Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Communicating Employee Benefits — Improved with passage of Employee Retirement Income Security Act (ERISA) in 1974 — Requires employees to be informed about their pension and other benefits in a understandable manner — Allows suing of employers for misleading about health and welfare benefits — Using multiple media techniques — Firms mail out printed benefit statements with detailed explanation of an employee’s benefits Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Designing Benefits Information — Avoid complex language when describing benefits — Explain purpose of a benefit, its value for employees, and pros and cons of different benefit plans — Use graphics to make information understandable at a glance — Provide numerous examples illustrating how a benefit choice might affect different types of employees Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Cost Containment Strategies — Firms require employees to pay part of the cost of their benefits — Increase amounts paid for benefits in the form of premiums, copays, and deductibles — Large companies cut health care plans, formerly provided to retirees Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 Containing Medical Benefits Costs — Overuse of costly health care services have lead firms turn to — Health savings accounts — High-deductible health insurance plans (HDHP) — — Insurance plan characterized by high deductibles and low premiums Amounts contributed is deducted from their earnings when paying income taxes Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 Containing Medical Benefits Costs — Health care spending account (HSA) along with HDHP — Employers and employees contribute to on a pretax basis — — Advantage - Funds belonging to the employee remain in the account until the end of the year, even if he or she leaves the company Disadvantage of HDHP — On receiving a treatment, employee has to pay a deductible — Percentage of the employee’s care or all of it until a high threshold is met Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Containing Medical Benefits Costs — Health maintenance organizations (HMO) and preferred provider organizations (PPOs) serve as vehicles for reducing costs — Reason - Offer discounted rates — HMO: Organizations of physicians and health care professionals that provide a wide range of services to subscribers and dependents on a prepaid basis — PPO: Network of physicians who establish an organization that guarantees lower health care costs to employers and their employees Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Containing Medical Benefits Costs — HMO and PPO are couple with tax advantaged accounts — Health reimbursement account (HRA) - Allows employees to be reimbursed by their companies for their out-of-pocket expenses — Flexible spending account (FSA) - Used by employees to pay for health-related expenses Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Containing Dental, Optical, and Mental Health Benefits Costs — Dental plans — Help pay for dental care costs — Encourage employees to receive regular dental attention — Optical benefits — Cover or offset cost of seeing an optometrist once or twice a year, cost of contacts lenses and glasses purchased periodically — Mental Health Parity and Addiction Equity Act — Requires group health plans to treat mental health benefits the same way they do medical and surgical benefits Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 Containing Additional Costs — To combat obesity and related problems, companies offer lower health care premiums — Firms are penalizing employees for unhealthy habits such as smoking, by charging them higher health care premiums — Companies are waiving deductibles and copays if employees are travelling abroad for medical procedures Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Value-Based Health Initiatives — Focus on more than cost-cutting — Look at medical care their employees use and need — Target benefits and health programs based on those requirements Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Wellness Programs — Sponsored by employers — Designed to encourage employees to maintain and improve health and well-being by — Getting regular checkups — Eating properly — Exercising — Managing stress levels Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Disease Management Programs — Provide patients and their caregivers with information on monitoring and treating medical conditions — Coordinating communication between them, their health care providers, employers, and insurers Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Employee Assistance Programs — Services provided by employers to help workers cope with a wide variety of problems that interfere with the way they perform their jobs — Provides diagnosis, counseling, and referral for advice or treatment related to — Alcohol or drug abuse — Emotional difficulties — Financial or family difficulties — Counselling services are provided by some companies Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Employee Benefits Required by Law Social security insurance Unemployment insurance Workers’ compensation insurance Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Social Security Insurance — Protect workers against the loss of earnings resulting from old age and unemployment — Amended to include disability or dependents, incase of death of the worker supporting them — Together known as Old Age, Survivors, and Disability Insurance (OASDI) Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Social Security Insurance — Supported by tax levied against an employee’s earnings — Matched by employer in each pay period — Tax revenues are used to pay major benefits — Retirement — Disability — Survivors’ — Medicare Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Unemployment Insurance — Protects workers who lose their jobs through no fault of their own — Eligible workers: — Submit an application for unemployment compensation with state employment agencies — Register for available work — Willing to accept any suitable employment that may be offered to them Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 Workers’ Compensation Insurance — State-mandated insurance provided to workers to defray the loss of income and cost of treatment due to work-related injuries or illness — Covers — Injuries on the job — Work-related illnesses Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 COBRA Insurance — Mandates that employers make health care coverage at the same rate the employer would pay — Available to employees, their spouses, and their dependents on termination of employment, death, or divorce — Coverage offered for 18 to 36 months depending on qualifying guidelines Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 Benefits Provided by the Patient Protection and Affordable Care Act — Firms that employ fifty or more people working for thirty hours or more per week, but do not offer them health insurance are required to pay a penalty to the government — Employers must offer coverage for employee’s children until they turn twenty-six — Copays or deductibles cannot be charged to employees and dependents for preventive care related services Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 Benefits Provided by the Patient Protection and Affordable Care Act — Lifetime dollar limits on key health care benefits are not allowed — Employees cannot lose insurance coverage solely because of an honest mistake made on insurance applications Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 Family and Medical Leave Act (FMLA) — Employer must grant an eligible employee up to 12 workweeks of unpaid leave in a 12-month period for — Birth of and care for a newborn child — Adoption or foster care placement of a child — Care for an immediate family member — Serious health condition of the employee — On return from FMLA leave, employee must be restored to his original job or to an equivalent job Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 Work-Life Discretionary Benefits — Organizations seek to create a work/life organizational climate that allows employees to balance work with personal needs — Organization are adapting work-life programs to accommodate the entrance of Generation Y employees into the workplace Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 Child and Elder Care — Child care - Provided to a child by an employee who remains actively at work — Elder care: Provided to an elderly relative by an employee who remains actively at work — Backup care program: Employer provides or subsidizes temporary care for its employee’s elders or children when their regular arrangements fall through Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 Payment for Time Not Worked — Vacations with pay — Paid holidays — Sick leave — Sabbaticals — Paid (or unpaid) time away from a job for four or more weeks employees take off to renew themselves before returning to work Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32 Payment for Time Not Worked — Severance pay — One-time payment sometimes given to an employee who is being involuntarily terminated — Supplemental unemployment benefits (SUBs) — Plan that enables an employee who is laid off to draw, in addition to state unemployment compensation, weekly benefits from the employer that are paid from a fund created for this purpose Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 Life Insurance — Provides: — Death benefits to beneficiaries — Accidental death and dismemberment benefits — Premium costs are paid by employer — Face value of the life insurance is equal to two times yearly wages of the employee Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34 Long-Term Care Insurance — Designed to pay for nursing home and other medicalrelated costs during old age — Strategic benefit to attract and retain employees — Workers caring for older parents and relatives — Advantage — Enrolled employees receive coverage automatically and need not pass physical examination Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35 Other Benefits and Services — Credit unions — Serve financial needs of employees and attract potential employees — Educational assistance — Proactive employers view educational assistance programs — Also called tuition aid — Business tool that supports talent management as critical human capital investment Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36 Figure 11.4 - Other Benefits Organizations Offer Employees Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37 Retirement Programs — No law mandating retirement age in United States — Factors that influences an employee to retire — Personal/financial condition — Health — Family obligations — Satisfaction from work — Ability to meet changing job demands Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 Preretirement and Phased Retirement Programs — Requires major financial lifestyle adjustment — Seminars are conducted to create awareness of kinds of adjustments required when employees retire — Phased retirement: Program that allows its employees to gradually cut their hours before retiring Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39 Pension Plans — Reward employees for their years of service by providing them with income when they retire — Categorized based on — Contributions made by employer — Amount of pension benefits to be paid Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40 Types of Pension Plans Contributory plan • Contributions are made jointly by employees and employers Noncontributory plan • Contributions are made solely by the employer Defined benefit plan • Amount an employee is to receive on retirement is specifically set forth Defined contribution plan • Establishes basis on which an employer will contribute to the pension fund Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 401(k) Savings Plans — Allows employees to save through payroll deductions — Reduces taxable income and have their contributions matched by the employer — Depends on: — Money that goes into the plan — Rate of return on investments purchased — Stock-funded plans — Price of the company’s stock Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42 401(k) Savings Plans — Shortcomings — Employees need not participate in the plans — — Leaves them short on retirement income aside from social security after they retire Employees lack investing experience and do not know the best way to invest the money in their 401(k)s — Congress passed the Pension Protection Act in 2006 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 43 Pension Protection Act — Allows employers to automatically enroll employees in defined contribution plans — Permits higher contribution limits for 401(k) plans — Enables workers to build larger retirement holdings — Gives workers greater control over how their accounts are invested Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44 Cash Balance Pension Plans — Allows employer to make yearly contribution into employee’s retirement savings account — Based on percentage of employee’s pay, typically four percent — Benefits depend on employee’s age and years of service with the company Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 45 Federal Regulation of Pension Plans — Private pension plans are subject to federal regulation under Employee Retirement Income Security Act (ERISA) — Vesting: Guarantee of accrued pension benefits to participants at retirement age, regardless of their employment status at that time — Prevents companies from laying off employees before they retire, so they are unable to collect their pensions Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 46 Federal Regulation of Pension Plans — According to ERISA — Pension plans must provide employees with vested rights to their accrued benefits after they meet a certain minimum years of service — Minimum funding standards should be followed to ensure availability of pension benefits to employees upon retiring — Pension Benefit Guaranty Corporation (PBGC) was created — Ensures that if a plan is terminated, guaranteed minimum benefits are paid to participants Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47 Domestic Partner Benefits — Employers are granting benefits to employees who establish domestic partnerships — Can consist of both same-sex and unmarried oppositesex couples — Require employees to sign an Affidavit of Domestic Partnership Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 48 Copyright Copyright©2016 ©2016Cengage CengageLearning. Learning. All AllRights RightsReserved. Reserved.May Maynot notbebescanned, scanned,copied copiedororduplicated, duplicated,ororposted postedtotoa publicly a publiclyaccessible accessiblewebsite, website,ininwhole wholeororininpart. part. Learning Outcomes — Summarize the general provisions of the Occupational Safety and Health Act (OSHA) — Describe the measures managers and employees can take to create a safe work environment — Identify ways to control and eliminate various on-thejob health hazards — Describe the programs organizations utilize to build better health among their workforces Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 Occupational Safety and Health Act (OSHA) — General provisions — Assure safety and health of America’s workers by setting and enforcing standards — Provide training, outreach, and education — Establish partnerships — Encourage continual improvements in workplace safety and health — OSHA’s coverage — Private sector employees — Public employees in state and local governments Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 OSHA Standards — Employers need to: — Become familiar with those standards that are applicable to their establishments — Ensure that their employees use personal protective gear when required for safety — Enforcement of the Act — OSHA is authorized to: — — — Conduct workplace inspections Issue citations Impose penalties on employers Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 OSHA’s System of Inspection Priorities First Level • Inspection of imminent danger situations Second Level • Investigation of catastrophes, fatalities, and accidents that result in hospitalization of five or more employees Third Level • Investigation of valid employee complaints of alleged violations of standards or of unsafe or unhealthful working conditions Fourth Level • Special-emphasis inspections aimed at specific high-hazard industries, occupations, or substances that are injurious to health Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Citations and Penalties Other than serious • Violation that has a direct relationship to job safety and health, but one unlikely to cause death or serious physical harm Serious • Violation for which there is substantial probability that death or serious physical harm could result Willful • Violation that the employer intentionally and knowingly commits Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 OSHA Consultation Assistance — Onsite consultation — Consultants from the state government or private contractors help employers identify hazardous conditions and determine corrective measures — Cooperative programs — Alliances — Strategic Partnership Programs (SPPs) — Voluntary Protection Programs (VPPs) — Safety and Health Achievement Recognition Program (SHARP) Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Responsibilities and Rights Under OSHA — Employers’ responsibilities and rights — Inform all employees about the safety and health requirements of OSHA — Required to keep certain records and post an annual summary of work-related injuries and illnesses — Provide employees with protective equipment when necessary and ensure it is used — Provide workers with safety training and be prepared to discipline employees for failing to comply with safety rules Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Incidence Rate — The number of injuries and illnesses per 100 full-time employees during a given year — Same formula can be used to compute incidence rates for: — Number of workdays lost because of injuries and illnesses — Number of nonfatal injuries and illnesses without lost workdays — Cases involving only injuries or only illnesses Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Employee’s Responsibilities and Rights Under OSHA — Required to comply with all applicable OSHA standards — Report hazardous conditions — Follow all employer safety and health rules and regulations — Right to demand safe and healthy conditions on the job without fear of punishment — Right-to-know laws: Require employers and manufacturers to give employees information about the toxic and hazardous substances Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 Promoting a Safe Work Environment — Creating a culture of safety — Interviewing for safety and fitness-for-duty tests — — The key role of the supervisor — — Fitness-for-duty evaluations: Determine an employee’s physical, mental, and emotional fitness Communicate to an employee the need to work safely Proactive safety training programs — Safety and health training is legally required Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 Enforcing Safety Rules — Ways to involve and engage employees in company safety programs — — — — — Jointly set safety standards with managers Participate in safety training Help design and implement special safety training programs Establish safety incentives and rewards Be involved in accident investigations Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Investigating and Recording Accidents — Recordable case: Any occupational death, illness, or injury to be recorded in the log — Recordable accidents — — — — — Death Days away from work Restricted work or transfer to another job Medical treatment beyond first aid Other problems include loss of consciousness or diagnosis of a significant injury or illness by a healthcare professional Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Figure 12.3 - Guide to Recording Cases under the Occupational Safety and Health Act Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Safety Hazards and Issues — Fatigue — More of a problem in organizations that operate around the clock or have night shifts — May not result in life or death consequences for most jobs — Distracted driving — Employer can be penalized for giving workers incentive to engage in distracted driving Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 Safety Hazards and Issues — Workplace violence - Any physical assault, threatening behavior, or verbal abuse occurring in the work setting — Beatings and stabbings — Suicides — Shootings — Rapes — Near suicides — Psychological traumas such as threats — Obscene phone calls Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Safety Hazards and Issues — Reducing violence in the workplace — Management commitment and employee involvement in preventing acts of violence — Analyzing the workplace to uncover areas of potential violence — Preventing and controlling violence by designing safe workplaces and work practices — Providing violence prevention training throughout the organization — Evaluating violence program effectiveness Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Figure 12.4 - Violence Indicators: Know the Warning Signs Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Safety Hazards and Issues — Workplace emergencies — Floods — Hurricanes — Tornadoes — Fires — Toxic gas releases — Chemical spills — Radiological accidents — Explosions — Civil disturbances and terrorism Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Safety Hazards and Issues — OSHA requires companies to have emergency action plans to deal with incidents — Emergency action plans — — — Procedures for reporting a fire or other emergency Evacuating a facility Accounting for employees after an evacuation Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Safety Hazards and Issues — Crisis management teams — Composed of hourly and managerial employees — Work in conjunction with HR to conduct initial risk assessment surveys — Develop emergency action plans — Perform crisis intervention during emergency events — Mandate — Gather facts about threat — Decide if organization should intervene — Determine most appropriate method Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Figure 12.5 - Calming an Angry Employee Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Figure 12.6 - Key Elements for a Successful Ergonomics Program Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Creating a Healthy Work Environment — Health hazards and issues — Cumulative trauma disorders: Injuries of the muscles, nerves, tendons, ligaments, joints, and spinal discs caused by repeated stress and strains — Computer workstation issues — Visual difficulties — Muscular aches and pains — Job stress Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 Creating a Healthy Work Environment — Chemical hazards — — Smoking and tobacco smoke — — Material safety data sheets (MSDSs): Document that contains vital information about hazardous substances Organizations initiate smoking policies specifying when and where smoking will be allowed Bloodborne pathogens — In industries where employees may come in contact with blood or other body fluids, employers are required to follow OSHA’s bloodborne pathogen standards Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 Building Better Physical and Emotional Health Among Employees — Issues that workplace programs can address to help improve employee welfare — Wellness and weight issues — — — Increasing a person’s physical exercise Adopting nutritional dietary programs Job stress and burnout — Stress: Any adjustive demand caused by physical, mental, or emotional factors that requires coping behavior Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 Building Better Physical and Emotional Health Among Employees — — Eustress: Positive stress that accompanies achievement and exhilaration Distress: Harmful stress characterized by a loss of feelings of security and adequacy Burnout: Severe stage of distress, manifesting itself in depression, frustration, and loss of productivity — Depression: Negative emotional state marked by feelings of: — — — — — Low spirits Gloominess Sadness Loss of pleasure in ordinary activities Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 Building Better Physical and Emotional Health Among Employees — Alcoholism — — Classified as a disability under American with Disability Act (ADA) — Prevalent across the sexes — Affects workers in every occupational category Drug abuse — Abuse of illegal drugs by employees increases costs for organizations due to: — Safety risks and theft — Reduced productivity — Absenteeism — Accidents Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 Figure 12.8 - Tips for Reducing JobRelated Stress Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29
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Running Head: EMPLOYEES MOTIVATION

Employee Motivation
Name
Institutional Affiliation
Date

1

EMPLOYEES MOTIVATION

2

Introduction
The essential aspect of any flourishing business around is the employees. Employees’
motivation is a requisite aspect of the organization as it drives to the heightened performance of
the organization. The rule is plain; the happier the employees are while working in the business,
the more efficient and smooth the flow of the business. Companies motivate their employees for
several motives, but the primary purpose is to empower the company to fits its goals effectively
and for the smooth running of the organization (Lăzăroiu, 2015). A business where employees
are less motivated plays a dangerous game. Motivated employees drive to heighten productivity
and permit the company to accomplish higher output. Envision having employees who are
unmotivated in whatever they do. Such employees will probably be consuming much of their
time at work, sitting, watching, or maybe using the company’s internet to surf or looking for jobs
elsewhere. This is wastage of time and resources, and no one wants to plant his or her business to
such a mess.
The benefits of motivating employees are apparent but are directly determined by how
employees are motivated. There are three significant ways of motivating employees. Firstly,
valuing employees’ contributions and recognizing individual contributions appropriately.
Secondly, creating a positive working environment and lastly, increasing positive
communication and relationship within the workplace.
An organization can honor employees’ contribution through compensation (Snell, Morris
& Bohlander, 2016). Employees can be rewarded in many ways, broadly classified as monetary
and non-monetary compensation. The monetary employee motivation often corresponds with the
employee’s job satisfaction and include the base payment with is the guaranteed payment and the

EMPLOYEES MOTIVATION

3

variable payment. The base payment is that salary that the employee is destined to earn after the
agreed period; it maybe hourly, weekly, biweekly, and some goes up to monthly. The
government governs base salary through the creation of minimum wage policy. From the
minimum wage policy, the amount of base payment that an employee can earn is determined by
his or her skills and the level of experience, otherwise, if employees with similar skills and
expertise should receive the same wage (Lăzăroiu, 2015).
Additionally, other compensation elements rely strongly on the ...


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