Exam 2 Review Class 18 10 22 Sang Hoon Han PhD Candidate CPA Department of Management and Human Resources Fisher College of Business The Ohio State University SLDS Complete exam arrangement by Wed 23rd 3pm Students who requested SLDS Exam Accommodations please complete your exam arrangement by Wed 23rd by 3pm I can upload the individualized exams only to those who completed their exam arrangements Wed 23rd by 3pm is the last point until which I can upload those individualized exams 2 Exam 2 You must take it Otherwise you will get zero points for Exam 2 50 multiple choice questions 50 questions x 2pts 100 pts Closed book Bring your pencil and Buck ID for the exam Exam Time Thursday 10 24 5 30PM 6 50PM same as class hours Schoenbaum 105 same classroom 3 Final Grade Exams 1 2 3 extra points 4 What have we learned so far Organizational Culture and Socialization Job design Compensation Performance Management Training and Development Technology and HRM Star Employees Today have both this review slide and the original lecture slides together side by side 5 Compensation ILM Position ELM Person Pay determinant Pay decision process Which equity to focus on o How much contribution is made by the position o Skillsets of the person Job evaluation of the position Demands and supply for the skillsets in the external labor market Internal equity o Comparison between positions within the organization Low mobility across organizations o Less focus on external equity Same job function at different organizations can be paid differently External equity o Employers should attract and retain workers from external labor market with certain skills by paying comparable pays Employees can move to other organizations if their current employers pay is not satisfactory 6 Compensation True or False Company A relies on the internal labor market in its workforce planning A Pay is mainly decided based on the job evaluation of each job position O B Pay is mainly decided based on the person s skills and abilities X C Employees working for job positions with higher contributions to the organizational performance are paid higher than employees working for job positions with lower contributions O D Pay levels differ significantly between employees with better skillsets and worse skillsets X 7 E The employer focuses on external equity X Compensation True of False Company X relies on the external labor market in its workforce planning A Employees are paid by the level of contributions that their positions make to the organizational performance X B Company X is concerned about the pay level for the corresponding function at the competing companies O C Labor market demands and supply for the skillsets that an individual employee possesses are the key factors of pay decisions O D Employees are not likely to move to other organizations even if their current employers pay is not satisfactory X E Employers attract workers with certain skills from the external 8 labor market by paying competitive pay O Compensation True of False A Goal setting theory Locke et al 1981 suggests generally positive performance effects of PFP O B Expectancy theory Vroom 1964 may suggest positive performance effects of PFP for employees O C Overall tournament theory Lazear 1998 suggests positive performance effects of PFP O D Cognitive evaluation theory Deci Ryan 1985 supports negative view on PFP O E Self determination theory Ryan Deci 2000 suggests that PFP can be positive if it is designed in a way that enhances autonomy competence and relatedness O 9 Compensation Piecework Rates Wages based on the amount workers produce Straight Piecework Rates o Incentive pay in which the employer pays the same rate per piece o Example Alice assembles microchip boards Alice gets paid 1 50 for every board he assembles 10 Compensation Pay for Individual Performance o Performance Bonuses o Sales Commissions Pay for Group Performance o Gainsharing o Group Bonuses o Team Awards Pay for Organizational Performance o Profit Sharing o Stock Options o Employee Stock Ownership Plans 11 Compensation True or false Team incentive plans may support team level planning and problem solving O Team incentive plans may motivate employees learning for better interpersonal skills as well as knowledge sharing within teams O Individual members of a team may have difficulty understanding the relationship between their individual efforts and team level incentives O Even in a team where team incentive plans are implemented each individual team member s contribution to the team performance may differ across individuals O 12 Compensation Rights to buy a certain number of shares of stock at a specified price is A Profit Sharing B Employee Stock Ownership Plans ESOP C Merit based Pay D Incentive Pay E Stock Options 13 Compensation Pay Dispersion o Negative view Equity theory Pay dispersion can provoke inequity perceptions o Contingent view Explained dispersion productivity relevant equity perceived e g performance Unexplained dispersion productivity irrelevant inequity perceived e g politics 14 Compensation True of False Goal setting theory Locke et al 1981 suggests generally positive performance effects of pay dispersion O Overall tournament theory Lazear 1998 suggests positive performance effects of pay dispersion O Equity theory suggests that pay dispersion can provoke inequity perceptions of employees in some cases O According to the contingent view e g Trevor et al 2012 pay dispersion can produce either equity or inequity perceptions depending on the source of dispersion O 15 Performance Management Rater biases o Halo effect Evaluation of a single characteristic of a person influences evaluations of overall performance o Contrast effect Biased evaluation of a person affected o Recency effect Tendency to rely heavily on recent vs by the comparison of the person to another person old information when evaluating employees performance o Stereotype An individual s set of beliefs about the characteristics or attributes of a group Performance Management Leniency strictness central tendency Similar to me error Note Alpha error i e Type I error i e false positive Unqualified person that is selected Alpha error is not likely occur in performance appraisals Alpha error likely occurs in the context of selection conviction etc 17 Performance Management Validity Whether the appraisal 1 measures all the relevant aspects of performance 2 and omits irrelevant aspects of performance o Minimize
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