Prelim 3 Review - Summary Human Resource Management PDF

Preview

Summary

Prelim 3 review...

Description

Prelim 3 Review Global HR: 1. Parent-Country National (PCN): employees from the country where the company is headquartered a. Expatriate: PCN assigned to an international affiliate (eg. an American employee of Apple sent to a Chinese branch of Apple) 2. Host-Country National (HCN): employees from the country where the international affiliate is located a. Inpatriate: HCN assigned to the company’s parent country (eg. a British employee of Apple sent to work at Apple in America) 3. Third-Country National (TCN): employees who are neither PCNs or HCNs; are migrant workers a. Eg. a British employee of a Chinese firm’s branch in America 4. Pros and Cons of Sending Expats Abroad: a. Pros: i. Quality of work ii. Target country has limited local talent iii. International operation must conform to the standards of the home market b. Cons: i. Sending expatriates is expensive 1. High burnout rates 2. Cultural differences 3. Job requirements ii. Legal risks 1. Immigration laws 5. Culture vs. National Culture: a. Culture: shared values, assumptions, goals, and understandings b. National Culture: norms, beliefs, and customs that exist within the population of a sovereign nation. International companies must tailor policy to the culture of the country they are operating in 6. Hofstede’s 5 Dimensions of National Culture: a. Power Distance: i. Low: strive to equalize the distribution of power and demand justification for inequalities of power ii. High: more likely to accept a hierarchical order in which everyone has a place b. Masculinity vs. Femininity:

i. Femininity: emotional gender roles are similar across sexes ii. Masculinity: emotional gender roles are different across sexes c. Uncertainty Avoidance: i. High: uncomfortable with uncertainty and ambiguity ii. Low: comfortable with uncertainty and ambiguity d. Orientation: i. Long-Term: the future is more important; societal change viewed positively ii. Short-Term: the present (and recent past) is more important; societal change viewed negatively e. Individualism vs. Collectivism: i. Individualism: preference for a loose-knit society in which one is expected to take care of only himself ii. Collectivism: preference for a tight-knit society in which one looks after another in exchange for loyalty 7. Aligning HR practices to national culture: a. Regulatory environment is often different b. Workers rights/protections c. Labor force characteristics 8. Using consistent HR practice across different countries: a. Maintaining corporate values while aligning to national culture is a challenge 9. Labor relations in Europe vs. USA (eg. unions vs. work councils): a. In Europe, in addition to unions, there are works councils i. Both sides must seek advice and input from works councils in negotiating a contract ii. Works councils are elected positions and are legally sanctioned by the European Union Separation and Retention: 1. Separation Rate, Turnover, and Retention: a. Separation/Turnover Rate: the termination of the employment relationship, either voluntary or forced (turnover/total employment) b. Retention: the organization’s efforts to prevent unwanted terminations of the employment relationship i. Arguments for retention: 1. Higher productivity a. In the event of a termination, performance difference, lost business with the exiting employee, lost institutional memory, decreased productivity amongst

stayers, and damage to company reputation all decrease productivity 2. Lower costs a. Exit interviews, administrative time, separation pay, vacation/sick pay, lawsuits and replacement all cost large amounts of money 2. Magnitude of Separation/Turnover Events: a. High Value employee leaving has a significant negative effect on the firm b. Low value employee leaving has a significant positive effect 3. Classifications of Turnover: a. Voluntary vs. Involuntary: i. Voluntary: employee decides to leave by choice ii. Involuntary: employee is terminated for poor performance, work rule violations or through layoffs b. Functional vs. Dysfunctional: i. Functional: lower-performing or disruptive employees leave ii. Dysfunctional turnover: key individuals and high performers leave c. Controllable vs. Uncontrollable: i. Controllable: due to organizational factors ii. Uncontrollable: due to external factors 4. Process Path to Quitting: a. Mounting Pressure: negatives build over time and erode affect. The employee searches for and pursues alternatives b. Shock and Think: a shock leads the employees to reevaluate job and pursue alternatives c. Shock and Act: a shock leads the employee to quit without considering alternatives 5. Embeddedness and Pressure Points for Retention: a. Build Links: provide mentors and employ teams to encourage referrals b. Encourage Fit: provide realistic info, select for fit, and socialize into culture c. Allow for Sacrifice: provide rare and valued rewards, tie compensation to tenure Compensation: 1. Components of Compensation: a. Tangible rewards: can be measured and assigned monetary values i. Base Pay: the basic compensation an employee receives in the form of wages or salary ii. Variable Pay: compensation linked to individual, group or organizational performance

2.

3.

4.

5.

b. Intangible Rewards: cannot be easily measured or quantified i. Decision-making authority ii. Supportive work environment Laws Governing Compensation: a. Fair Labor Standards Act (FLSA) i. Minimum wage ii. Child labor provisions iii. Exempt and Nonexempt Status 1. Governs who is eligible for overtime pay a. Exempt: not required to be paid overtime b. Nonexempt: must be paid overtime iv. Equal Pay Act of 1963: prohibits employers from using different pay scales for men and women performing substantially the same job Compensation Philosophies: a. Entitlement Philosophy: assumes that individuals who have worked another year are entitled to pay increases with little regard for performance differences b. Performance Philosophy: assumes that compensation decisions reflect performance differences (“pay-for-performance”) Global Compensation Design Issues: a. Home-Country-Based Approach: pay expatriates enough to maintain the style of living they had at home abroad b. Host-Country-Based Approach: pay expatriates at the same level as workers from the host country Developing a Base Pay System: a. Job Evaluation Methods: i. Ranking: places jobs in order from highest to lowest value to the organization ii. Classification: descriptions of job classes are written and then each job is placed into a class iii. Point Factor: looks at compensable factors (dimension that is part of, and can be rated, for every job) and assigns points to them iv. Factor-Comparison Method: combines the ranking and point factor methods b. Pay Surveys and Legal Issues: i. Pay Survey: a report compiling compensation data for workers performing similar jobs in other organizations

1. Need to identify benchmark jobs (stable and with common content at all firms) that can then be used to compare other jobs to 2. Can obtain surveys conducted by other companies, do your own survey, or use the internet ii. Legal Issues: 1. Employers use outside sources to avoid possible conflicts of interest/collusion a. It is easy to fix wages if you know what other firms are paying 6. Pay Structures: a. Internal: i. Job Evaluation through Compensable Factors: compares jobs to each other based on a relative scale; can be used to determine which jobs deserve more pay b. External: i. Market Research: the labor market sets a floor for pay; need to pay enough to attract that best people while maintaining appropriate product prices c. Components: i. Grading: firms use pay grades to group individuals with approximately the same worth 1. Job Evaluation Points: can compare job evaluation value to market value via pay surveys and generate a graph 2. Market Banding: groups jobs into pay grades based on similar market survey amounts. Midpoint is used to find the minimum and maximum amount of compensation ii. Pay Ranges: uses market data and job evaluation points to establish a minimum/maximum pay for each job grade 7. Determining Pay Increases: a. Performance-Based Increases: i. Targeting High Performers: 1. Giving significantly higher raises to top employees (eg. a 50% higher raise for top employees over everyone else) ii. Pay Adjustment Matrix: 1. Establish grades for pay with a minimum, a midpoint, and a maximum; a compa-ratio (pay/midpoint) under 1.0 means the employee is paid under the midpoint and one over 1.0 means the employee is paid over the midpoint

b. Standardized Pay Adjustments: i. Seniority: 1. Pay increases are made after pre-set amounts of time (eg. 30, 60, 90 days to increase retention of new hires) ii. Cost-of-Living Adjustments: 1. Employees wages are increased to compensate for inflation and rising prices, often tied to the Consumer Price Index (CPI) iii. Across-the-Board Increases: 1. Raises given to everyone; not tied to performance despite often being called so iv. Lump-Sum Increases: 1. Increases given in the form of a one-time payment; essentially is a bonus that does not increase base pay 8. Equity, Expectancy, and Efficiency Wage Theories: a. Equity: individuals judge fairness (equity) in compensation by their inputs and outcomes against the inputs and outcomes of referent others b. Expectancy: employer must finds rewards that are valued by the employee; a break between the promise and delivery of the reward will decrease motivation c. Efficiency Wage: firms may pay employees more than their MRPL as a means of motivating them 9. Procedural and Distributive Justice: a. Procedural: the perceived fairness of the process and procedures used to make decisions about employees, including their pay b. Distributive: the perceived fairness of how rewards are distributed 10. Social Desirability Bias and the Self-Reported Importance of Pay: a. Rewards may encourage or motivate action i. Pay may be related 11. Incentive Pay: a. Theories: i. Some people or groups contribute more to organizational success than others ii. Some people perform better and are more productive than others iii. Employees or groups who perform better or contribute more should receive more compensation b. Individual: i. Piece-Rate System: determines wages by multiplying units produced by a set amount

ii.

Bonuses: a one-time payment to recognize performance that does not change base pay c. Group/Team: i. Group/Team Results: production, cost savings, or quality improvement may be rewarded ii. Gainsharing: resulting gains from a project are shared amongst group members d. Organizational: i. Profit Sharing: distributes some portion of company profits back to employees with the goals of: 1. Increased organizational performance 2. Attract/retain employees 3. Improve product/service quality 4. Enhance employee morale 5. Focus employees on organizational goals 12. Pay Level vs. Pay Mix a. Pay Level: how much an employee is paid (direct compensation and benefits) b. Pay Mix: how an employee’s total compensation is allocated (eg. $x salary, $y benefits) c. Theories (sorting vs. motivation)? 13. Wrap-Up: a. AMO Model of Performance: i. Performance is a function of Ability, Motivation, and Opportunity ii. Relations for HR: 1. Ability: can be increased with training, learning, and development opportunities 2. Motivation: can be increased with internal and external rewards, performance reviews, feedback, career development, employment security, and work-life balance 3. Opportunity: ??? iii. Internal and External Approaches to Business Strategy and Competitive Advantage: 1. Internal Factors: strengths and weaknesses 2. External Factors: opportunities and threats 3. Porter’s Five Forces and Competitive Advantage: a. Threat of new entrants b. Bargaining power of suppliers c. Bargaining power of customers

d. Threat of substitutes e. Existing industry competition b. Resourced-Based View: i. Competitive advantage lies primarily in the application of a bundle of valuable tangible or intangible resources at a firm’s disposal 1. VRIO: Value, Rarity, Imitability, Organization...