STRATEGIC COMPENSATION

AHumanResource
ManagementApproach
Chapter4

TraditionalBasesforPay:
SeniorityandMerit

41

PreparedbyDavidOakes

CollectiveBargaining
Designedto:
Negotiatelaborcontracts

Providegrievanceprocedures

Ledto:
Jobcontrolunionism

Collectivebargainingunits
Unionshops

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SeniorityPay
Designedtoawardjobtenure
Setbasepaywithtimedesignated
increases
Facilitatesadministrationofpay
Avoidsperceptionoffavoritism
Poorfitwithmostcompetitivestrategies

43

LongevityPay
Designedto
Paygrademaximumforlengthofservice
Toreduceemployeeturnover

Usedformostgovernmentemployees
GeneralScheduleSystemforfederal
employees

44

GeneralSchedule
Dividedinto15Steps

Basedonskills,education,&
experiencelevels
Employeeseligiblefor10
withingradepayincreases
Stepwaitingperiodsof13years

45

MeritPayPlans
Payincreasesbasedonperformance

Rewardexcellenteffortorresults
Motivatefutureperformance
Helpsretainvaluedemployees
In2004,raisesaveraged3.5%

46

ElementsofMeritPay
Basedonobjective&subjective
indicatorsofjobperformance
Periodicperformancereviews
Realistic&attainablestandards
Payincreasesreflectperformance

47

PerformanceAppraisalPlans
Traitsystems
Comparisonsystems
Behavioralsystems
Goalorientedsystems

48

TraitSystemCharacteristics
Workquality Judgment
Appearance

Leadershipresponsibility

Dependability Decisionmakingability
Cooperation
Initiative

Creativity

49

ComparisonSystems
Rates&ranksperformance
Payraisesbasedonranking
Types

Forceddistribution
Pairedcomparisons

410

BehavioralSystems
Criticalincidenttechnique
(CIT)
Behaviorallyanchoredratingscales
(BARS)

Behavioralobservationscales
(BOS)

411

CriticalIncidentTechnique
Employees&supervisorsidentify
&labeljobbehaviors&results
Supervisorsobserve&record
Requiresextensivedocumentation

412

BehaviorallyAnchoredRating
Scales
Basedon810expectedjob
behaviors
Employeesratedonabilityto
performeachbehavior
Ratingshighlydefensible

413

BehavioralObservationScales
Documentspositiveperformance
behaviorsonjobdimensions
Employeesratedonexhibitedbehaviors
Ratingsaveragedforoverallrating

414

GoalOrientedSystem
ManagementbyObjectives
Supervisors&employeessetobjectives
Highlyeffectivetechnique
Ratedonhowwellobjectivesaremet
Mainlyforprofessionals&managers

415

PerformanceAppraisalPractices
Conductajobanalysis
Incorporateresultsintoratings
Trainssupervisorsonuse
ImplementFormalappealsprocess

416

SourcesofPerformanceAppraisal
Information
Employee
Supervisor
Coworkers
Subordinates
Customers/clients

417

360DegreePerformanceAppraisal
Usesmorethanoneappraisalsource
Reducesrecruiting&hiringcosts
Appropriateforworkteamevaluations

418

CommonRatersErrors
Biaserrors
Contrasterrors
Errorsofcentraltendency
Errorsofleniencyorstrictness

419

BiasErrors
Firstimpressioneffect
Positivehaloeffect
Negativehaloeffect
Similartomeeffect
Illegaldiscriminatorybiases

420

ContrastErrors
Supervisorcomparesemployees
performancestootheremployees,not
toexplicitperformancestandards

Whatifthebestemployeeisaverage?

421

ErrorsofCentralTendency
Supervisorsrateallemployeesas
average
Usuallyoccurswhenonlyextreme
behaviorsrequiredocumentation

422

ErrorsofLeniency
Leniencyerrorsmanagersrate
employeesperformancesmore
highlythantheywouldratethem
usingobjectivecriteria
Causesemployeestobelievethey
aregoingtoreceivelargerpay
raisesthantheydeserve

423

PayForPerformanceLink
Linkappraisalstobusinessgoals
Analyzejobs
Communicate
Establisheffectiveappraisals
Empoweremployees
Differentiateamongperformers

424

LimitationsofMeritPayPrograms
Failuretodifferentiate

Undesirablesocial
structures

Poormeasures

Usingnonmeritfactors

Supervisorbiases

Undesirablecompetition

Poorcommunication

Motivationalvaluesmall

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CompetitiveStrategies
LowestCost
Reduceoutputcostsperemployee
Meritpayworksiftiedtolong
termproductivity

Differentiation
Makeproductorserviceunique
Meritpaycanpromotecreativity
andrisktaking

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