HRM ASSESSMENT #3 Gurmehar Singh Sachdeva Student ID: 20824373 21 July 2022 HRM 303 University of Waterloo Instructor: Vince DiRuzza Q 1. You are a Compensation Specialist for a large financial services company located in Toronto and have been asked to do a compensation survey. Identify and briefly describe the four main steps in conducting a compensation survey. Answer 1. The 4 main steps in conducting a compensation survey are as follows: 1. Identify the jobs to be surveyed: Key job matching is a popular method to match an organization’s jobs to those being surveyed, which is crucial to any compensation survey (Singh & Long, 2021, Digital copy-no pages). It entails selecting well understood and prevalent jobs in the market and asking employers to compare their jobs with these jobs (Singh & Long, 2021). Job tittle and job summary are explained, a variety of job families are represented, examples are provided within each family at both the entry level and the top level, and employers are urged to provide compensation data if they have any such jobs (Ruzza, 2022a). 2. Determine what information to collect: Detailed information regarding the job including information regarding base, indirect and performance pay in addition to the hours worked, pay ranges and employees in each quartile of the pay range etc. need to be accumulated through the survey (Singh & Long, 2021). 3. Determine whom to survey: Employers usually prefer to conduct the survey on other employers in similar industry, geographic location and of similar size (Singh & Long, 2021). 4. Determine how to collect the data: There are 4 ways to collect information: a) personal interviews; although costly, this source can provide best-quality information, b) questionnaires; although the cheapest of all, the data retrieved through this method is least reliable because of the lack of control over who fills out the survey and whether they fill it out accurately, c) telephone interviews; this method addresses some issues with the questionnaire and provides better quality information while being considerably cheaper than a personal interview, and d) internet surveys; this method not only costs less, yields quicker responses and high response rates, but also produces data of no less quality than mail surveys (Ruzza, 2022a). Q 2. Identify one limitation of compensation surveys and provide a brief recommendation on how to address it. Answer 2. One limitation of compensation surveys is that if certain organization jobs are created in a way which is different from what is prevalent in the market, the compensation data may not be available for them (Ruzza, 2022a). My recommendation to address this issue is that job evaluation should be conducted for all organization jobs using a method such as the points method. Following that, important jobs, for which the market compensation data is available, should be considered benchmark jobs. Other jobs, for which the market compensation data is not available, should be compensated based on their relative worth in comparison to the benchmark jobs as suggested by the job evaluation. Q 3. Identify and explain one problem/challenge organizations are faced with when dealing with performance appraisals. Clearly identify the problem/challenge and use relevant external research to assist in your presentation of the problem/challenge. The second part of this question is to provide an appropriate recommendation that will resolve the problem/challenge presented. Answer 3. Lack of objectivity in performance appraisal is a major issue that organizations face when dealing with performance appraisals (Sherman, 2020). This is because managers may employ different standards and criteria to judge the performances of the employees (Sherman, 2020). Employees may feel that they are not being evaluated based on their performance but on their gender, race or personal factors such as how much the employer likes the employee (Sherman, 2020). The employer may engage in such inaccuracies unintentionally or intentionally for several reasons (Singh & Long, 2021). For example- an employee, whose job performance is ordinary, may get a higher rating because the manager doesn’t want to damage his/ her relationship with that employee. The lack of objectivity, therefore, threatens performance appraisal reliability and validity. My recommendation for this problem is that the performance appraisal system should be restructured in a way that has two components: an objective component and a formal feedback component. The objective component will comprise of clearly defined and communicated standards that an employee must achieve to be considered for a merit pay. These standards should reflect desired behavior expected of the employees and should be attainable. For example- sales staff should maintain an average client retention rate of 60% or above. The formal feedback component will require the manager to discuss the strengths and weaknesses of the employees along with concrete steps to improve. This formal meeting should be based on performance across the forementioned standards. These meetings should be complemented with regular informal meetings between the manager and the employees to foster regular exchange of valuable feedback and therefore, reduce bias at the time of appraisals. Q 4. There are four main reasons for organizations to conduct performance appraisals. Identify and briefly explain what you feel is the most important reason. Answer 4. One of the key reasons to conduct performance appraisals is developmental reason (Singh & Long, 2021). I believe developmental reason is most important because it fosters communication between the employees and their supervisors. Such communication is facilitated by exchange of feedback. This feedback can boost employee productivity by discovering weaknesses in employee performance, discussing how to overcome them, and expressing how employees’ contributions are regarded by the supervisor and the firm (Singh & Long, 2021). Q 5. Discuss the pros and cons of nonmonetary reward programs. Answer 5. There are several pros of implementing nonmonetary reward programs. Firstly, nonmonetary rewards can complement a fair and equitable compensation system to develop a “culture of employee commitment to the organization and its goals” (Singh & Long, 2021). Secondly, nonmonetary rewards help an organization to attract and retain young and talented employees (inproma, n.d.). These rewards are extremely popular, especially among millennials. Thirdly, several nonmonetary rewards, such as subsidized gym memberships and employee recognition programs, are inexpensive (inproma, n.d.). This is especially true if the return on investment (ROI) for such rewards is considered. Nonmonetary reward programs also have some disadvantages. Firstly, in the absence of an adequate compensation system and trust between the management and the workforce, nonmonetary rewards may be perceived as an attempt to manipulate the workers to put more effort into their jobs without receiving financial benefits (Singh & Long, 2021). Secondly, since non-monetary rewards require a certain degree of trust between the management and the workforce, these rewards might not work for a classical firm (Singh & Long, 2021). This is because workers generally don’t value any recognition they receive from managers they don’t trust or regard. Lastly, designing an effective and fair nonmonetary reward program can be a complex and time-consuming process (inproma, n.d.). Q 6. Review expectancy theory from Chapter 3. Now, using expectancy theory, discuss the potential motivational impact of profit-sharing pay systems on employees. Answer 6. Expectancy theory proposes that the motivation to perform a task depends on its perceived valence, instrumentality and expectancy (Singh & Long, 2021). The potential of profit-sharing pay systems to motivate employees to produce desired behavior depends on how they are designed and implemented. The profit-sharing plans are expected to positively influence employee behaviors if the “bonus percentage exceeds 10 percent of profits” (Singh & Long, 2021). Therefore, perceived valence, which is “the net value of the consequences of that behaviour” (Singh & Long, 2021), may be positive if the percentage of profit shared is more than 10 percent. Hence, desirable behaviour may follow. Discretionary approach to bonus determination may threaten the instrumentality of profit-sharing plans because such plans leave the employees in ambiguity about the extent to which their performance relates to the rewards (Singh & Long, 2021). Fixed formula plans with clear guidelines are a better alternative to overcome this problem and therefore, result in desirable behavior. Lastly, the performance expected of employees to reap the benefits from the plan should be perceived as attainable in the minds of the employees, otherwise they may not be motivated to perform the task, no matter how high the net reward (valence) is. In other words, employee expectancy that they can accomplish the required behaviour also needs to be positive to motivate them (Singh & Long, 2021). Q 7. Discuss the pros and cons of flexible versus fixed benefit plans. Answer 7. The pros of flexible versus fixed benefit plans are: 1) Flexible benefit plans allow organizations to reduce or contain their cost associated with employee benefits whereas cost of implementing a fixed benefit system often increases with time as the existing benefits become more expensive or as new benefits are purchased to address the various needs of employees (Singh & Long, 2021). 2) As our society has evolved and workforce has become more diverse, the needs of employees have also changed and grown. Flexible benefit plans help accommodating such diverse needs of employees without increasing the cost for employers (Singh & Long, 2021). 3) Flexible benefit plans fit well with both high-involvement and classical managerial strategies (Singh & Long, 2021). Cons of flexible versus fixed benefits plans: 1) Implementing a flexible benefit plan may not always be the cheaper option. Designing such plans can be costly because it entails the cost of personnel responsible for the design process and that of hiring consultants (Ruzza, 2022b). Moreover, administration and communication costs associated with flexible benefits plans is generally higher than fixed benefits plans (Ruzza, 2022b). Finally, flexible benefits plans may not enjoy the economies of scale in purchasing benefits that fixed benefits plans does because of the lack of volume (Ruzza, 2022b). 2) Employees might get confused about which benefits to choose because of the countless options available under the flexible benefit plans, and this may lead them to making bad decisions (Ruzza, 2022b). This problem can have serious consequences, for example- they might be left without coverage in an emergency (Ruzza, 2022b). 3) The administration of flexible benefits plans is complex and costly for employer whereas fixed benefit plans are simple and cheaper to administer and easy to communicate (Ruzza, 2022b). Q 8. Do you think the COVID-19 pandemic would lead to the adoption of new types of employee benefits? If so, what types and why? If not, why? Answer 8. Yes, I believe COVID-19 pandemic would and has already led to the adoption of new types of employee benefits. These employee benefits are related to flexible work arrangements. Hybrid work models with greater flexibility are the future of work (Allen, 2021). These work arrangements are aimed at restoring employee work-life balance, mental health and wellness, all of which have been adversely impacted by the pandemic. Since employees’ well-being impacts their productivity, the provision of such benefits has become important, especially considering how pandemic has aggravated work-related burnout which existed well before pandemic (Allen, 2021). References Allen, T. (2021, April 7). The pandemic is changing employee benefits. Harvard Business Review. Retrieved July 21, 2022, from https://hbr.org/2021/04/the-pandemic-is-changingemployee-benefits. Inproma. (n.d.). The pros and cons of monetary vs. non-monetary incentives for employees. Retrieved July 19, 2022, from https://www.inproma.com/industry-insights/the-pros-andcons-of-monetary-vs-non-monetary-incentives-for-employees/. Ruzza, V. D. (2022a). HRM 303 Spring 2022 Week 8 Chapter 9 June 21 & 23. Lecture Slides. Ruzza, V. D. (2022b). HRM 303 Spring 2022 Week 11 Chapter 12 July 12 & 14. Lecture Slides. Sherman, F. (2020, July 23). Challenges in performance appraisal. Chron. Retrieved July 19, 2022, from https://smallbusiness.chron.com/challenges-performance-appraisal-1262.html Singh, P., & Long, R. J. (2021). Strategic compensation in Canada-7th Edition. Top Hat Nelson.
