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Chapter Four. Traditional Bases for Pay: Seniority and Merit. Seniority/Longevity Pay. Historical overview Who participates Effectiveness of seniority pay systems Design of seniority pay and longevity pay plans Advantages of seniority pay Fitting seniority pay with competitive strategies.

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chapter four

Chapter Four

Traditional Bases for Pay: Seniority and Merit

seniority longevity pay
Seniority/Longevity Pay
  • Historical overview
  • Who participates
  • Effectiveness of seniority pay systems
  • Design of seniority pay and longevity pay plans
  • Advantages of seniority pay
  • Fitting seniority pay with competitive strategies
exhibit 4 2 a sample seniority policy for junior and advanced clerk jobs
Exhibit 4-2A Sample Seniority Policy for Junior and Advanced Clerk Jobs

$8.60/hr

24 months

$7.95/hr

9 months

$7.25/hr

15 months

$7.50/hr

6 months

$6.85/hr

9 months

Advanced Clerk

$6.50/hr

3 months

Junior Clerk

merit pay
Merit Pay
  • Who participates?
  • Elements of merit pay
performance appraisal
Performance Appraisal
  • Basis of Merit Pay
  • Types of performance appraisal plans
  • The performance appraisal process
exhibit 4 5 a trait oriented performance appraisal rating form
Exhibit 4-5A Trait-Oriented Performance Appraisal Rating Form

Employee’s Name:

Supervisor’s Name:

Employee’s Position:

Review Period:

INSTRUCTIONS: For each trait below, circle the phrase that best represents the employee.

1. Diligence

a. outstanding b. above average c. average d. below average e. poor

2. Cooperation with others

a. outstanding b. above average c. average d. below average e. poor

3. Communication skills

a. outstanding b. above average c. average d. below average e. poor

4. Leadership

a. outstanding b. above average c. average d. below average e. poor

5. Decisiveness

a. outstanding b. above average c. average d. below average e. poor

exhibit 4 7 a paired comparison performance appraisal rating form
Exhibit 4-7A Paired Comparison Performance Appraisal Rating Form

INSTRUCTIONS: Please indicate by placing a X which employee of each pair has performed most effective during the past year. Refer to the duties listed in the job description for animal keeper as a basis for judging performance.

_____ Bob Brown

_____ Mary Green

_____ Bob Brown

_____ Jim Smith

_____ Bob Brown

_____ Allen Jones

X

_____ Mary Green

_____ Jim Smith

_____ Mary Green

_____ Allen Jones

_____ Jim Smith

_____ Allen Jones

X

X

X

X

X

exhibit 4 8 a critical incidents performance appraisal rating form
Exhibit 4-8A Critical Incidents Performance Appraisal Rating Form

INSTRUCTIONS: For each description of work behavior below, circle the number that best describes how frequently the employee engages in that behavior.

1. The incumbent removes manure the unconsumed food from the animal enclosures.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

2. The incumbent haphazardly measures the feed items when placing them in the animal enclosures.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

3. The incumbent leaves refuse dropped by visitors on and around the public walkways.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

4. The incumbent skillfully identifies instances of abnormal behavior among the animals, which represent signs of illness.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

slide9
Exhibit 4-9A Behaviorally Anchored Rating Scale for the Cleaning Dimension of the Animal Keeper Job

INSTRUCTIONS: On the scale below, from 7 to 1, circle the number that best describes how frequently the employee engages in that behavior.

The incumbent could be expected to thoroughly clean the animal enclosures and remove refuse from the public walkways as often as needed.

The incumbent could be expected to thoroughly clean the animal enclosures and remove refuse from the walkways twice daily.

The incumbent could be expected to clean the animal enclosures and remove refuse from the public walkways in a sketchy fashion twice daily.

The incumbent could be expected to rarely clean the animal enclosures or remove refuse from the public walkways.

7

|

6

|

5

|

4

|

3

|

2

|

1

exhibit 4 12 the impact of equal pay raise percentage amounts for distinct salaries
Exhibit 4-12The Impact of Equal Pay Raise Percentage Amounts for Distinct Salaries

At the end of 1995, Anne Brown earned $50,000 per year as a systems analyst, and John Williams earned $35,000 per year as an administrative assistant. Each received a 5 percent pay increase every year until the year 2000.

ANNE BROWN

JOHN WILLIAMS

1996

1997

1998

1999

2000

$52,500

$55,125

$57,881

$60,775

$63,814

$36,750

$38,587

$40,516

$42,542

$44,669

strengthening the pay for performance link
Strengthening the Pay-for-Performance Link
  • Link PA plans to business goals
  • Analyze jobs
  • Communicate
  • Establish effective appraisals
  • Empower employees
  • Differentiate among performers
limitations of merit pay plans
Limitations of Merit Pay Plans
  • Failure to differentiate among performers
  • Poor performance measures
  • Supervisors’ biased ratings
  • Lack of open communication between management and employees
  • Undesirable social structures
  • Factors other than merit
  • Undesirable competition
  • Little motivational value
linking merit pay with competitive strategy
Linking Merit Pay with Competitive Strategy
  • Lowest-cost competitive strategy
  • Differentiation competitive strategy