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Introduction to Business

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Introduction to Business ­MGT 211
VU
LESSON 18
COMPENSATION AND BENEFITS
Set of rewards that organizations provide to individuals in return for their willingness to perform
various jobs and tasks within the organization.  Compensation includes base salary,
incentives, bonuses, benefits, and other rewards.
a. Wages and Salaries
i. Wages--compensation in the form of money paid for time worked.
ii. Salary--compensation in the form of money paid for discharging the
responsibilities of a job.
b. Incentive Programs--Special compensation program designed to motivate
high performance
i. Individual  Incentives--incentive-based  pay  plan  that  rewards
individual performance.
1. Bonus--Individual performance incentive in the form of a special
payment made over and above the employee's salary
2. Merit
Salary
Systems--Individual
incentive
linking
compensation to performance in nonsales jobs
3. Pay-for-performance (or variable pay)--Individual incentive that
rewards a manager for especially productive output
ii. Company-wide Incentives
1. Profit-sharing plan--Incentive plan for distributing bonuses to
employees when company profits rise above a certain level
2. Gain-sharing plan--Incentive plan that rewards groups for
productivity improvements
3. Pay-for-knowledge  plan--Incentive  plan  to  encourage
employees to learn new skills or become proficient at different
jobs
c. Benefit Programs--compensation other than wages and salaries. Some may
be required by law, such as, workers' compensation insurance (insurance
for compensating workers injured on the job)
i. Retirement Plans--prearranged company pensions provided to retired
employees.
ii. Containing the Costs of Benefits
1. Cafeteria Benefit Plan--benefit plan that sets limits on benefits
per employee, each of whom may choose from a variety of
alternative benefits. It allows employees to choose those benefits
they really want.
2. THE LEGAL CONTEXT OF HR MANAGEMENT
Laws impact many areas of human resource management.
a. Equal Employment Opportunity--The basic goal of all equal employment
opportunity regulation is to protect people from unfair or inappropriate
discrimination in the workplace.
Legally mandated nondiscrimination in
employment on the basis of race, creed, sex, or national origin
i. Protected Classes in the Workplace
1. Protected Class--set of individuals who by nature of one or
more common characteristics are protected by law from
discrimination on the basis of any of those characteristics.
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Introduction to Business ­MGT 211
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ii. Enforcing Equal Employment Opportunity
1. Equal Employment Opportunity Commission (EEOC)--Dept.
of Justice agency created by Title VII to enforce discrimination-
related laws.
2. Affirmative  Action  Plan­practice  of  recruiting  qualified
employees belonging to racial, gender, or ethnic groups who are
underrepresented in an organization.
iii. Legal issues in Compensation
b. Contemporary Legal Issues in HR Management
i. Employee Safety and Health
1. Occupational Safety and Health Act of 1970 (OSHA)--federal
law setting and enforcing guidelines for protecting workers from
unsafe conditions and potential health hazards in the workplace.
Violators are fined for each incident.
ii. Emerging Areas of Discrimination Law
1. AIDS in the Workplace--Organizations must follow a certain
set of guidelines and employ common sense when dealing with
AIDS-related issues. AIDS is considered a disability under ADA.
2. Sexual  Harassment--practice  or  instance  of  making
unwelcome sexual advances in the workplace. It is a violation of
Title VII of the Civil Rights Act of 1964.
a. quid pro quo harassment--form of sexual harassment
in which sexual favors are requested in return for job-
related benefits
b. hostile work environment--form of sexual harassment,
deriving from off-color jokes, lewd comments, and so
forth, that makes the work environment uncomfortable for
some employees
3. Employment-at-Will--principle,  increasingly  modified  by
legislation and judicial decision, that organizations should be
able to retain or dismiss employees at their discretion.
Employees, however, cannot be fired for exercising rights
protected by law such as filing worker compensation claims or
taking excessive time off to serve jury duty.
3. NEW CHALLENGES IN THE WORKPLACE
a. Managing Workforce Diversity
i. Workforce Diversity--range of workers' attitudes, values, and
behaviors that differ by gender, race, and ethnicity. Workforce diversity
has been increasing in recent years and by 2006 it is expected that
almost half all workers in the labor force will be women and almost one-
third will be Blacks, Hispanics, Asian Americans, and others.
b. Managing Knowledge Workers
i. The Nature of Knowledge Work
Knowledge Worker--employee who is of values because of the
knowledge that he or she possesses.  Knowledge workers include
computer scientists, engineers, and physical scientists who tend to work
in high-technology firms and are usually experts in some abstract
knowledge base.
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Introduction to Business ­MGT 211
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ii. Knowledge Worker Management and Labor Markets
1. The demand for knowledge workers has been growing at a
dramatic rate.
2. The growing demand for knowledge workers has inspired some
fairly extreme measure for attracting them, such a high starting
salaries and sign-on bonuses.
c. Contingent and Temporary Workers
i. Trends in Contingent and Temporary Employment--About 10
percent of the U.S. workforce currently uses an alternative form of
employment relationship such as contingent or temporary employment.
1. Contingent Worker--employee hired on something other than a
full-time basis to supplement an organization's permanent
workforce.
ii. Managing Contingent and Temporary Workers--HR managers must
understand how to use contingent workers by using careful planning,
acknowledging  both  their  advantages  and  disadvantages,  and
assessing the real cost of using them.
4. DEALING WITH ORGANIZED LABOR
Labor Union--Group of individuals working together to achieve shared job-related goals,
such as higher pay, shorter working hours, more job security, greater benefits, or better
working conditions.
Labor Relations--Process of dealing with employees who are represented by a union.
Collective Bargaining--Process by which labor and management negotiate conditions of
employment for union-represented workers.
a. Unionism Today
i. Trends in Union Membership--U.S. labor unions have experienced
increasing difficulties in attracting new members. Union membership
has declined, together with the percentage of successful union-
organizing campaigns. There are some recent exceptions.
ii. Trends in Union-Management Relations--The gradual decline in
unionization in the United States has been accompanied by some
significant trends in union-management relations. Unions remain quite
strong in some sectors, notably the automobile and steel industries.
Unions generally are in a weakened position, and many have taken a
more conciliatory stance in their relations with management.  Most
experts agree that improved union-management relations have
benefited both sides.
iii. Trends  in  Bargaining  Perspectives--Changes  in  bargaining
perspectives  have  occurred  in  response  to  recent  trends.
Organizational downsizing and several years of low inflation in the U.S.
have found unions fighting against wage cuts, rather than striving for
wage increases. Another common goal of union strategy is preserving
what's already been won, as organizations seek lower health care and
other benefits. Unions also place greater emphasis on job security and
improved pension plans.  Unions have begun to set their sights on
preserving jobs for workers in the United States in the face of business
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efforts to relocate production in some sectors to countries where labor
costs are lower.
iv. The Future of Unions--Despite declining membership and some loss
of power, labor unions remain a major factor in the U.S. business world.
Some unions still wield considerable power, especially in the traditional
strongholds of goods-producing industries.
5. COLLECTIVE BARGAINING
Collective bargaining is an ongoing process involving both the drafting and the
administering of the terms of the labor contract. It begins as soon as the union is
recognized as the exclusive negotiator for its members.
a. Reaching Agreement on Contract Terms--Law requires that union leaders
and management representatives must sit down at the bargaining table and
negotiate in good faith. Sessions focus on identifying the bargaining zone.
b. Contract Issues
i. Compensation--Unions generally want their members to earn higher
wages; compensation is the most common contract issue.
1. cost-of-living adjustment (COLA)­labor contract clause tying
future raises to changes in consumer purchasing power
2. wage reopener clause­clause allowing wage rates to be
renegotiated during the life of the labor contract
ii. Benefits (e.g., health insurance, retirement benefits, paid holidays,
working conditions)--Unions typically want employers to pay all or most
of the costs of benefits.
iii. Job Security--In some cases, demands for job security entail the
company's promise not to move to another location, or a stipulation that
if workforce reductions must occur, seniority will be used to determine
which employees lose their jobs.
iv. Other Union Issues (e.g., working hours, overtime policies, rest period
arrangements, differential pay plans for shift employees, the use of
temporary workers, grievance procedures, and allowable union
activities)
v. Management Rights--Management wants as much control as possible
over hiring policies and work assignments. Unions try to limit
management rights by specifying hiring, assignment, and other policies.
c. When Bargaining Fails
Although it is generally agreed that both parties suffer when, after bargaining,
an impasse is reached and action is taken, both sides can use several tactics to
support their cause.
i. Union Tactics
1. Strike--labor action in which employees temporarily walk off the
job and refuse to work. Most strikes in the United States are
economic strikes, triggered by stalemates over mandatory
bargaining items including such noneconomic issues as working
hours.
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2. Sympathy Strike (or Secondary Strike) --strike in which one
union strikes to support action initiated by another.
3. Wildcat Strike--strike that is unauthorized by strikers' union.
4. Other Labor Actions
a. Picketing--labor action in which workers publicize their
grievances at the entrance to an employer's facility.
b. Boycott--labor action in which workers refuse to buy the
products of a targeted employer.
c. Slowdown--labor action in which workers perform jobs
at a slower than normal pace.
ii. Management Tactics--Like workers, management can respond
forcefully to an impasse.
1. Lockout--management tactic whereby workers are denied
access to the employer's workplace.
2. Strikebreaker--worker hired as permanent or temporary
replacement for a striking employee.
iii. Mediation and Arbitration--Mediation and arbitration make use of a
third party to help resolve the dispute.
1. Mediation­method of resolving a labor dispute in which a third
party suggests, but does not impose, a settlement.
2. Voluntary Arbitration­method of resolving a labor dispute in
which both parties agree to submit to the judgment of a neutral
party.
3. Compulsory Arbitration­method of resolving a labor dispute in
which both parties are legally required to accept the judgment of
a neutral party.
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Table of Contents:
  1. INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
  2. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
  3. BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
  4. SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
  5. PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
  6. PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
  7. PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
  8. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
  9. JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
  10. LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
  11. WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
  12. COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
  13. WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
  14. HUMAN RESOURCE MANAGEMENT:Human Resource Planning
  15. STAFFING:STAFFING THE ORGANIZATION
  16. STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
  17. BUSINESS MANAGERíS RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
  18. COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
  19. COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
  20. STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
  21. MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
  22. MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
  23. THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
  24. MARKET RESEARCH:Market information, Market Segmentation, Market Trends
  25. MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
  26. MARKETING RESEARCH:Data Warehousing and Data Mining
  27. LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
  28. UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
  29. THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
  30. PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
  31. PROMOTION:Information and Exchange Values, Promotional Strategies
  32. ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
  33. PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
  34. SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
  35. THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
  36. THE PLANNING PROCESS:Strengths, Weaknesses, Threats
  37. TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
  38. TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
  39. TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
  40. BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
  41. NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
  42. BUSINESS ORGANIZATIONS:Organization as a System
  43. ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
  44. TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
  45. FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures