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A comprehensive set of practice questions and answers for the aphr exam, covering key topics such as sustainable competitive advantage, performance management, employee relations, training and development, labor force projections, and legal considerations in hr. Designed to help students prepare for the exam by providing a realistic assessment of their knowledge and understanding of the subject matter.
Typology: Exams
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Sustainable competitive advantage - ✔✔When an organization is able to perform an activity to a greater degree than its competitors for an extended period of time Performance Management duties - ✔✔Preparation and administration of appraisals Discipline Development of performance measures The most common reason for failed overseas assignments is: - ✔✔Choosing people who have the technical skills needed to perform the job, but who lack the necessary personality characteristics and family support A function of employee relations is: - ✔✔Relocation and outplacement services An organization has one HR staff person for every ____ employees - ✔✔ 100 Definition of Development - ✔✔Is more long term in nature. Often includes education in philosophical and theoretical concepts Aimed at developing relationships, often for the purposes of improving leadership skills More general and non-tangible than specific Definition of Training - ✔✔Training is usually a short term process.
Training usually requires guidance (or instruction) in a series of steps to gain a skill, or set of predictable knowledge. Often for non-leadership related activities. Aimed at a specific task or job role. Projections of the U.S. labor force - ✔✔The growth in the labor market of female and minority populations will exceed the growth of white non-Hispanic persons More women will be in the paid labor force than in the past and most will be working full-time The U.S. labor force will be more diverse in racial and ethnic terms than in the past The largest number of openings due to growth and replacement needs according to the Bureau of Labor Statistics is: - ✔✔Service The use of employee empowerment has had what effect upon recruiting? - ✔✔It has shifted the focus away from technical skills to general cognitive and interpersonal skills Increasingly, HR professionals are being viewed as: - ✔✔Strategic partners The largest number of immigrants to the U.S. workforce will come from: - ✔✔North America (Mexico, Canada, Central America, the Caribbean) Dot-com companies offer a dynamic, exciting HR work environment for what reasons? - ✔✔Their small size give HR professionals the ability to speak frequently and directly to the CEO Because of their size and numerous HR needs, HR sees its decisions implemented, quickly sees the impact on the business, and receives personal recognition for successful actions
Because of the importance many HR practices play in a growing company, HR professionals are actively involved in the strategic planning and decision-making process Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against individuals based on: - ✔✔sex, race, color, national origin, and religion Who does Title VII apply to? - ✔✔Companies with at least 15 or more employees including federal, state, and local governments The Americans with Disability Act covers individuals who: - ✔✔Have serious disabilities, such as epilepsy, blindness, or paralysis, that affect their ability to perform major life activities such as walking, learning and working Have a history of disability, such as someone who has had cancer but is currently in remission Are regarded as having a disability, such as an individual who is severely disfigured and is denied employment because an employer fears negative reactions from others The Civil Rights Act of 1991: - ✔✔The amount of punitive damages depends on the size of the organization charged with the discrimination The act amends the CRA of 1866, the CRA of 1964, the ADEA of 1967, and the ADA of 1990 Punitive damages are awarded only in cases of intentional discrimination or with malice or reckless indifference to the employees federally protected rights Civil Rights Act of 1866: - ✔✔Granted citizenship and the same rights enjoyed by white citizens to all male persons in the United States "without distinction of race or color, or previous condition of slavery or involuntary servitude."
The Age Discrimination in Employment Act of 1967: - ✔✔Protects certain applicants and employees 40 years of age and older from discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms, conditions or privileges of employment. The Uniformed Services Employment and Reemployment Rights Act of 1994: - ✔✔Employers must reemploy workers who leave jobs to fulfill military duties for up to 5 years Employers must reemploy workers in the job they would have held if they had not left to serve, including the same seniority, status, and pay Disabled veterans have up to two years to recover from injuries received during their service or training, and employers must make reasonable accommodation for a remaining disability Disparate Treatment - ✔✔An employee who makes a disparate treatment claim alleges that he or she was treated differently than other employees who were similarly situated, and that the difference was based on a protected characteristic. Intentional discrimination Example: A woman with school-aged children is rejected on the assumption that she will frequently be absent from work Disparate Impact - ✔✔Practices in employment, housing, and other areas that adversely affect one group of people of a protected characteristic more than another, even though rules applied by employers or landlords are formally neutral. Unintentional discrimination Example: Black applicants are being disproportionately rejected relative to whites by a paper-and-pencil test Under the Americans with Disability Act, an "undue hardship" has been defined as an action: - ✔✔Requiring significant difficulty or expense
Hostile Working Environment harassment - ✔✔Occurs when an employee is subject to unwelcome advances, sexual innuendos, or offensive gender-related language that is sufficiently severe or pervasive from the perspective of a reasonable person of the same gender as the offended employee. Example: A male employee, over the objections of his female colleagues, continues to display a highly suggestive calendar within his office Rights granted under the Occupational Safety and Health Act: - ✔✔Request an inspection Have a dangerous substance identified Have employer violations posted at the work site Under OSHA's Hazard Communication Standard, organizations must do: - ✔✔Have material safety data sheets for chemicals that employees are exposed to within the workplace Ensure that all containers of hazardous chemicals are labeled with information about the hazard Train employees in the safe handling of all chemicals Bona Fide Occupational Qualification (BFOQ): - ✔✔Quality or an attribute that employers are allowed to consider when making decisions on the hiring and retention of employees - a quality that when considered in other contexts would constitute discrimination and thus be in violation of civil rights employment law. Such qualifications must be listed in the employment offering. Necessary, rather than preferred, characteristic of the job Job Analysis: - ✔✔Establish and document the 'job relatedness' of employment procedures such as training, selection, compensation, and performance appraisal.
Provide a source of legal defensibility of assessment and selection procedures. Job Analysis - Determining Training Needs: - ✔✔Training content Assessment tests to measure effectiveness of training Equipment to be used in delivering the training methods of training (i.e., small group, computer-based, video, classroom...) Job Analysis - Compensation: - ✔✔Skill levels Compensable job factors work environment (e.g., hazards; attention; physical effort) Responsibilities (e.g., fiscal; supervisory) Required level of education (indirectly related to salary level) Job Analysis - Staffing - ✔✔Job duties that should be included in advertisements of vacant positions; Appropriate salary level for the position to help determine what salary should be offered to a candidate; Minimum requirements (education and/or experience) for screening applicants; interview questions; Selection tests/instruments (e.g., written tests; oral tests; job simulations); Applicant appraisal/evaluation forms;
Orientation materials for applicants/new hires Job Analysis - Performance Review: - ✔✔Goals and objectives Performance standards Evaluation criteria Length of probationary periods Duties to be evaluated Methods of Job Analysis: - ✔✔Review of job classification systems Incumbent interviews Supervisor interviews Expert panels Structured questionnaires Task inventories Check lists Open-ended questionnaires Observation
Incumbent work logs What Aspects of a Job Are Analyzed? - ✔✔Duties and Tasks: The basic unit of a job is the performance of specific tasks and duties. Information to be collected about these items may include: frequency, duration, effort, skill, complexity, equipment, standards, etc. Environment: This may have a significant impact on the physical requirements to be able to perform a job. The work environment may include unpleasant conditions such as offensive odors and temperature extremes. There may also be definite risks to the incumbent such as noxious fumes, radioactive substances, hostile and aggressive people, and dangerous explosives. Tools and Equipment: Some duties and tasks are performed using specific equipment and tools. Equipment may include protective clothing. These items need to be specified in a Job Analysis. Relationships Supervision: given and received. Relationships with internal or external people. Requirements: The knowledges, skills, and abilities (KSA's) required to perform the job. While an incumbent may have higher KSA's than those required for the job, a Job Analysis typically only states the minimum requirements to perform the job Repetitive jobs that require physical activity should be analysised through: - ✔✔Videotaping an employee performing the job The most accurate information regarding the time spent on various job tasks for job analysis information is: - ✔✔Incumbents Managerial benefits of job analysis: - ✔✔It provides managers with an understanding of the work flow process It enables managers to make more accurate hiring decisions
It enables managers to more accurately evaluate subordinates' performance Job Evaluation: - ✔✔Job analysis information is used to judge the relative worth of different jobs within an organization Quantitative Aspects of Job Evaluation: - ✔✔Whole Job Ranking: (simplest method) Job to job comparison used to rank jobs in order from highest to lowest. Job Classification: Groups similar positions into job classes based on pre-defined class specifications. Qualitative Aspects of Job Evaluation: - ✔✔Point Factor: (most widely used) Job descriptions are compared to compensable factors (defined factors and degrees). Points are assigned to the various factors that derive a total score and determine the appropriate pay level. Factor Comparison: Benchmark positions are identified and ranked based on compensable factors. The factors are assigned monetary values based on market rates. Pay for benchmark positions are determined based on the total monetary value of the factors. Other jobs in the organization are compared to the benchmark positions and the monetary values of the factors are summed to determine the pay for each job. Job Design - ✔✔Process of defining how work will be performed and the tasks that will be required in a given job. Job redesign refers to changing the tasks or the way work is performed in an existing job. To effectively design jobs, one must thoroughly understand the job as it exists (through job analysis) and its place in the larger work unit's work-flow process (work-flow analysis) The mechanistic approach to job design: - ✔✔Specialization Skill Variety Work methods autonomy Process of defining how work will be performed and the tasks that will be required in a given job. Job redesign refers to changing the tasks or the way work is performed in an existing job. To effectively
design jobs, one must thoroughly understand the job as it exists (through job analysis) and its place in the larger work unit's work-flow process (work-flow analysis) The motivational approach to job design: - ✔✔Decision-making autonomy Task significance Interdependence Process of defining how work will be performed and the tasks that will be required in a given job. Job redesign refers to changing the tasks or the way work is performed in an existing job. To effectively design jobs, one must thoroughly understand the job as it exists (through job analysis) and its place in the larger work unit's work-flow process (work-flow analysis) The biological approach to job design: - ✔✔Physical demands Ergonomics Work conditions Process of defining how work will be performed and the tasks that will be required in a given job. Job redesign refers to changing the tasks or the way work is performed in an existing job. To effectively design jobs, one must thoroughly understand the job as it exists (through job analysis) and its place in the larger work unit's work-flow process (work-flow analysis) The perceptual approach of job design: - ✔✔Job complexity Information processing Equipment use
Process of defining how work will be performed and the tasks that will be required in a given job. Job redesign refers to changing the tasks or the way work is performed in an existing job. To effectively design jobs, one must thoroughly understand the job as it exists (through job analysis) and its place in the larger work unit's work-flow process (work-flow analysis) Job Rotation: - ✔✔The process of systematically moving a single individual from one job to another over the course of time Job Enrichment: - ✔✔Empowering workers by adding more decision-making authority to jobs Job Enlargement/Extension: - ✔✔Broadening the types of tasks performed; adding to job, combining jobs together Goals in the human resource planning process should come directly from: - ✔✔The analysis of the labor supply and demand Image Advertising: - ✔✔Organizations often advertise specific vacancies. Sometimes, however, organizations advertise just to promote themselves as a good place to work in general. Image advertising is particularly important for companies in highly competitive labor markets that perceive themselves as having a bad image. Indeed, research evidence suggests that the impact of company image on applicant reactions ranks second only to the nature of the work itself Executive Search Firms (ESFs): - ✔✔Almost exclusively find new jobs for people who are already employed. The use of a neutral-appearing selection method that damages a protected group is: - ✔✔Legal if the employer can show that the method is job related and consistent with a business necessity Questions an employer cannot ask an applicant (EEOC Website): - ✔✔Do you have a heart condition? Do you have asthma or any other difficulties breathing?
Do you have a disability which would interfere with your ability to perform the job? How many days were you sick last year? Have you ever filed for workers' compensation? Have you ever been injured on the job? Have you ever been treated for mental health problems? What prescription drugs are you currently taking? What is the use of a resume? - ✔✔As a basis for deciding which candidates to investigate further When does an organization check references? - ✔✔After it has determined that the applicant is a finalist for the job What is an assessment center? - ✔✔Uses multiple selection methods to rate either applicants or job incumbents on their managerial potential. Personality Tests: - ✔✔Tests are used to determine if employees have the personality characteristics necessary to be successful in specific managerial jobs or jobs involving international assignments Inbasket: - ✔✔Simulation of the administrative tasks of the manager's job. The exercise includes a variety of documents that may appear in the in-basket on a manager's desk. The participants read the materials and decide how to respond to them. Responses might include delegating tasks, scheduling meetings, writing replies, or completely ignoring the memo! Leaderless Group Discussion: - ✔✔A team of five to seven employees is assigned a problem and must work together to solve it within a certain time period. The problem may involve buying and selling supplies, nominating a subordinate for an award, or assembling a product
Performance Appraisal: - ✔✔Process of measuring employees' performance. Performance appraisal information can be useful for employee development under certain conditions. The appraisal system must tell employees specifically about their performance problems and how they can improve their performance. This includes providing a clear understanding of the differences between current performance and expected performance, identifying causes of the performance discrepancy, and developing action plans to improve performance. Managers must be trained in frequent performance feedback. Managers also need to monitor employees' progress in carrying out action plans Upward Feedback: - ✔✔Refers to appraisal that involves collecting subordinates' evaluations of managers' behaviors or skills 360 - degree Feedback System: - ✔✔A special case of upward feedback. In 360-degree feedback systems, employees' behaviors or skills are evaluated not only by subordinates but by peers, customers, their bosses, and themselves. The raters complete a questionnaire asking them to rate the person on a number of different dimensions Coaching: - ✔✔Peer or manager who works with an employee to motivate him, help him develop skills, and provide reinforcement and feedback. There are three roles that a coach can play. Part of coaching may be one-on-one with an employee (such as giving feedback). Another role is to help employees learn for themselves. This involves helping them find experts who can assist them with their concerns and teaching them how to obtain feedback from others. Third, coaching may involve providing resources such as mentors, courses, or job experiences that the employee may not be able to gain access to without the coach's help Mentoring: - ✔✔Experienced, productive senior employee who helps develop a less experienced employee (the protégé). Because of the lack of potential mentors and recognizing that employees can benefit from relationships with peers and colleagues some companies have initiated and supported group and peer mentoring.
Most mentoring relationships develop informally as a result of interests or values shared by the mentor and protégé. Research suggests that employees with certain personality characteristics (like emotional stability, the ability to adapt their behavior based on the situation, and high needs for power and achievement) are most likely to seek a mentor and be an attractive protégé for a mentor. Mentoring relationships can also develop as part of a formal mentoring program, that is, a planned company effort to bring together successful senior employees with less experienced employees Validity: - ✔✔Degree to which a measure is free from random error. Arrows shot at target hit the bulls eye, but not necessarily every arrow hits the bulls eye. Reliability: - ✔✔Degree to which a measure is free from random error. Arrows shot at target are very close to one another, but not necessarily a bulls eye. Which type of interview tends to have the highest validity? - ✔✔Behavior description interviews Cognitive Ability Tests: - ✔✔Differentiate individuals based on their mental rather than physical capacities. Cognitive ability has many different facets, although we will focus only on three dominant ones. Verbal comprehension refers to a person's capacity to understand and use written and spoken language. Quantitative ability concerns the speed and accuracy with which one can solve arithmetic problems of all kinds. Reasoning ability, a broader concept, refers to a person's capacity to invent solutions to many diverse problems. Physical Ability Tests: - ✔✔Tests of physical abilities may be relevant not only to predicting performance but to predicting occupational injuries and disabilities as well. There are seven classes of tests in this area: ones that evaluate
(1) muscular tension, (2) muscular power, (3) muscular endurance, (4) cardiovascular endurance, (5) flexibility, (6) balance, (7) coordination. Situational Interview: - ✔✔An interview procedure where applicants are confronted with specific issues, questions, or problems that are likely to arise on the job. Can be particularly effective when assessing sensitive issues dealing with the honesty and integrity of candidates Training: - ✔✔Refers to a planned effort by a company to facilitate learning of job-related competencies, knowledge, skills, and behaviors by employees. The goal of training is for employees to master the knowledge, skills, and behaviors emphasized in training and apply them to their day-to-day activities On boarding: - ✔✔Refers to the process of helping new hires adjust to social and performance aspects of their new jobs.104 This is important to help employees adjust to their jobs by establishing relationships to increase satisfaction, clarifying goals and expectations to improve performance, and providing feedback, coaching, and follow-up activities to reduce turnover
Behavior Modeling: - ✔✔In the workplace, a component of social learning theory, is the act of showing employees how to do something and guiding them through the process of imitating the modeled behavior. The most accurate way to evaluate the training program is: - ✔✔Measure performance, knowledge, or attitudes among all employees before the training; train only part of the employees; and then, after the training, measure performance again, comparing the results of the two groups. Orientation: - ✔✔Training designed to prepare employees to perform their jobs effectively, learn about the organization, and establish work relationships Purpose of performance management systems: - ✔✔Administrative Developmental Strategic Strategic Congruence: - ✔✔Extent to which a performance management system elicits job performance that is congruent with the organization's strategy, goals, and culture. If a company emphasizes customer service, then its performance management system should assess how well its employees are serving the company's customers Acceptability: - ✔✔Refers to whether the people who use a performance measure accept it. Many elaborate performance measures are extremely valid and reliable, but they consume so much of managers' time that they refuse to use it. Alternatively, those being evaluated by a measure may not accept it Specificity: - ✔✔Extent to which a performance measure tells employees what is expected of them and how they can meet these expectations. Specificity is relevant to both the strategic and developmental purposes of performance management. If a measure does not specify what an employee must do to help the company achieve its strategic goals, it does not achieve its strategic purpose. Additionally, if the measure fails to point out employees' performance problems, it is almost impossible for the employees to correct their performance
Interrater Reliability: - ✔✔Consistency among the different individuals who evaluate the employees performance. Management by Objectives - ✔✔Management model that aims to improve performance of an organization by clearly defining objectives that are agreed to by both management and employees Similar to me rating error: - ✔✔Individuals who are similar to us in race, gender, background, interest, beliefs, etc. receive higher ratings than those who are not Contrast rating error: - ✔✔Ratings influenced by comparison between individuals instead of an objective standard Example: Employee receives lower than deserved rating because he/she is compared to outstanding peers Leniency rating error: - ✔✔Rater gives high ratings to all employees regardless of their performance Strictness rating error: - ✔✔Rater gives low ratings to all employees regardless of their performance Central tendency rating error: - ✔✔Rater gives middle or average ratings to all employees despite their performance Halo rating error: - ✔✔Rater gives employee high ratings on all aspects of performance because of their overall positivie impression of the employee Horns rating error: - ✔✔Rater gives employee low ratings on all aspects of performance because of an overall negative impression of the employee The employment-at-will doctrine: - ✔✔Has eroded significantly in recent years
Employment-at-will doctrine: - ✔✔Historically, in the absence of a specified contract, either the employer or the employee could sever the employment relationship at any time. The severing of this relationship could be for "good cause," "no cause," or even "bad cause." This doctrine has eroded significantly over time Wrongful Discharge: - ✔✔Typically attempts to establish that the discharge either (1) violated an implied contract or covenant (that is, the employer acted unfairly) (2) violated public policy (that is, the employee was terminated because he or she refused to do something illegal, unethical, or unsafe). Wrongful discharge suits can also be filed as a civil rights infringement if the person discharged is a member of a protected group Six Determinants of Procedural Justice: - ✔✔1. Consistency: The procedures are applied consistently across time and other persons
Outcome Fairness: - ✔✔Refers to the judgment that people make with respect to the outcomes received relative to the outcomes received by other people with whom they identify (referent others). Clearly, a situation where one person is losing his or her job while others are not is conducive to perceptions of outcome unfairness on the part of the discharged employee Procedural Justice: - ✔✔Focuses specifically on the methods used to determine the outcomes received. Even given all the negative ramifications of being dismissed from one's job, the person being dismissed may accept the decision with minimum anger if the procedures used to arrive at the decision are consistent, unbiased, accurate, correctable, representative, and ethical. When the procedures for the decisions are perceived in this fashion, the individual does not feel unfairly singled out, and this helps maintain his or her faith in the system as a whole, even if he or she is unhappy with the specific decision that was triggered by the system. Interactional Justice: - ✔✔Refers to the interpersonal nature of how the outcomes were implemented. For example, in many documented cases, after giving employees the news of their termination, employers immediately have security guards whisk them out of the building with their various personal items haphazardly thrown together in cardboard boxes. This strips the person of their dignity, as well as their job, and employees who witness this happen to a co-worker show a drastically lower level of organizational commitment from that day forward Four Determinants of Interactional Justice: - ✔✔1. Explanation: Emphasize aspects of procedural fairness that justify the decision
Two central components: documentation (which includes specific publication of work rules and job descriptions that should be in place prior to administering discipline) and progressive punitive measures Example of Punitive Measures: First Offense: Unofficial verbal warning Second Offense: Official written warning Third Offense: Second official warning, with threat of temporary suspension Fourth Offense: Temporary suspension and "last chance notification" Fifth Offense: Termination Alternative Dispute Resolution: - ✔✔Techniques that show promise in resolving disputes in a timely, constructive, cost-effective manner. Alternative dispute resolution can take on many different forms, but in general, ADR proceeds through the four stages Stages in Alternative Dispute Resolution: - ✔✔Stage 1: Open Door Policy: Two people in conflict attempt to arrive at a settlement together. If none can be reached, they proceed to Stage 2: Peer Review: A panel composed of representatives from the organization that are at the same level of those people in the dispute hears the case and attempts to help the parties arrive at a settlement. If non can be reached, they proceed to Stage 3: Mediation: A neutral third party from outside the organization hears the case and, via a nonbinding process, tries to help the disputants arrive at a settlement. If non can be reached, the parties proceed to
Stage 4: Arbitration: A professional arbitrator from outside the organization hears the case and resolves it unilaterally by rendering a specific decision or award. Most arbitrators are experienced employment attorneys or retired judges. Employee Assistance Program (EAP): - ✔✔Referral service that supervisors or employees can use to seek professional treatment for various problems. EAPs vary widely, but most share some basic elements. First, the programs are usually identified in official documents published by the employer (such as employee handbooks). Supervisors (and union representatives, where relevant) are trained to use the referral service for employees whom they suspect of having health-related problems. Employees are also trained to use the system to make self-referrals when necessary. Outplacement Counseling: - ✔✔Which tries to help dismissed employees manage the transition from one job to another. There is a great deal of variability in the services offered via outplacement programs, typically including career counseling, job search support, résumé critiques, job interviewing training, and provision of networking opportunities Generally speaking, the contents of employees' e-mail and voice-mail messages on companies' systems are: - ✔✔Not private but protected communications. The Workers' Adjustment Retraining and Notification Act: - ✔✔Organizations with more than 100 employees give 60 days' notice before any closings or layoffs that will affect at least 50 full-time employees. Human Resource Professionals develop pay structures based on: - ✔✔Legal Requirements Market Forces Company Goals Equity Theory: - ✔✔Suggests that people evaluate the fairness of their situations by comparing them with those of other people Benchmarking: - ✔✔Procedure in which an organization compares its own practices against those of the competition
Rate Ranges: - ✔✔Permits a company to recognize differences in employee performance, seniority, training, and so forth in setting individual pay Key Jobs: - ✔✔Have relatively stable content and—perhaps most important—are common to many organizations. Therefore, it is possible to obtain market pay survey data on them Nonkey Jobs: - ✔✔Have relatively stable content and—perhaps most important—are common to many organizations. Therefore, it is possible to obtain market pay survey data on them The Fair Labor Standards Act (FLSA): - ✔✔Establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Minimum wage: 7.25 Pay Grade: - ✔✔A pay grade is a step within a compensation system that defines the amount of pay an employee will receive. The pay grade is generally defined by the level of the responsibilities performed within the job description of the position, the authority exercised by the position, and the length of time the employee has performed the job. Broad Banding: - ✔✔When an organization reduces the number of levels (pay grades) in its job structure by combining some of its pay grades Merit Pay: - ✔✔Annual pay increases are linked to performance appraisal ratings. Merit pay is most common for white-collar employees. The system gives the biggest pay increase to the best performers and to those whose pay is relatively low for their job. Merit pay increases ARE rolled into base pay.
Profit Sharing: - ✔✔Payments are based on a measure of organization performance (profits), and the payments do not become part of the base salary. Profit sharing has two potential advantages. First, it may encourage employees to think more like owners, taking a broad view of what needs to be done to make the organization more effective. Thus, the sort of narrow self-interest encouraged by individual incentive plans (and perhaps also by merit pay) is presumably less of an issue. Instead, increased cooperation and citizenship are expected. Second, because payments do not become part of base pay, but instead are variable pay, labor costs are automatically reduced during difficult economic times, and wealth is shared during good times Ownership: Stock Options - ✔✔Give employees the opportunity to buy stock at a fixed price. Say the employees receive options to purchase stock at $10 per share in 2014, and the stock price reaches $30 per share in 2019. They have the option of purchasing stock ("exercising" their stock options) at $10 per share in 2019, thus making a tidy return on investment if the shares are then sold. If the stock price goes down to $8 per share in the year 2019, however, there will be no financial gain. Therefore, employees are encouraged to act in ways that will benefit the organization. Employee stock ownership plans (ESOPs): - ✔✔Employee ownership plan that provides employers certain tax and financial advantages when stock is granted to employees. Gainsharing: - ✔✔A form of group compensation based on group or plant performance (rather than organization wide profits) that does not become part of base salary Social Security Act of 1935: - ✔✔Social Security retirement (old-age insurance) benefits for fully insured workers begin at age 65 years and 6 months (full benefits) or age 62 (at a permanent reduction in benefits) for those born in 1940. The full retirement age now rises with birth year, reaching age 67 for those born in 1960 or later. Although the amount of the benefit depends on one's earnings history, benefits go up very little after a certain earnings level Unemployment Insurance has four major objectives: (1) to offset lost income during involuntary unemployment,
(2) to help unemployed workers find new jobs, (3) to provide an incentive for employers to stabilize employment, and (4) to preserve investments in worker skills by providing income during short-term layoffs (which allows workers to return to their employer rather than start over with another employer). The unemployment insurance program is financed largely through federal and state taxes on employers Unemployed workers are eligible for benefits if they (1) have a prior attachment to the workforce (often 52 weeks or four quarters of work at a minimum level of pay); (2) are available for work; (3) are actively seeking work (including registering at the local unemployment office); and (4) were not discharged for cause (such as willful misconduct), did not quit voluntarily, and are not out of work because of a labor dispute. Benefits also vary by state, but they are typically about 50% of a person's earnings and last for 26 weeks. Extended benefits for up to 13 weeks are also available Workers Compensation: - ✔✔Cover job-related injuries and death. Workers' compensation benefits fall into four major categories: (1) disability income, (2) medical care, (3) death benefits, and (4) rehabilitative services. Disability income is typically two-thirds of predisability earnings, although each state has its own minimum and maximum. In contrast to unemployment insurance benefits, disability benefits are tax free Consolidated Omnibus Budget Reconciliation Act (COBRA): - ✔✔The 1985 act that requires employers to permit employees to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff. Family and Medical Leave Act (FMLA): - ✔✔Since 1993 the Family and Medical Leave Act requires organizations with 50 or more employees within a 75-mile radius to provide as much as 12 weeks of unpaid leave after childbirth or adoption; to care for a seriously ill child, spouse, or parent; or for an
employee's own serious illness. Employees are guaranteed the same or a comparable job on their return to work. Employees with less than one year of service or who work under 25 hours per week or who are among the 10% highest paid are not covered. Health Maintenance Organizations (HMOs): - ✔✔Health care plan that provides benefits on a prepaid basis for employees who are required to use only HMO medical service providers. HMOs differ from more traditional providers by focusing on preventive care and outpatient treatment, requiring employees to use only HMO services, and providing benefits on a prepaid basis. Preferred Provider Organizations (PPOs): - ✔✔A group of health care providers who contract with employers, insurance companies, and so forth to provide health care at a reduced fee. Defined Benefit Plan: - ✔✔Guarantees a specified level of retirement income. Cafeteria-Style Plans: - ✔✔Benefit plans that permit employees to choose the types and amounts of benefits they want Pay-Or-Play Plans: - ✔✔To play differently is the middle ground between paying premiums ("play") and paying the penalties ("pay"). It means the company chooses not to offer a traditional group health insurance plan, pays any applicable penalties, and instead offers employees a health insurance allowance (called "Pure Defined Contribution") Flexible Spending Accounts: - ✔✔A Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs. You don't pay taxes on this money. This means you'll save an amount equal to the taxes you would have paid on the money you set aside. Seniority System: - ✔✔The pay system most frequently used in a union setting. Closed Shops: - ✔✔Must be a due paying member of a union before you can be hired into the position. This is ILLEGAL