Term Paper on "Human Resources What Balance of Intrinsic"

Term Paper 5 pages (2047 words) Sources: 1+

[EXCERPT] . . . .

Human Resources

What balance of intrinsic and extrinsic compensation is likely to exist in a company that successfully pursues a lowest cost strategy? Why?

A company that pursues a lowest cost strategy tries to keep the price of the good or service it provides at the lowest price point possible. Increasing the volume of sales is how it derives its revenue, rather than maintaining a reputation for individuation or quality. To keep prices low the company must keep input costs low. Wages are a significant input cost. One example of such a lowest cost strategy company is McDonald's. Workers are often employed part-time at the minimum wage. There is a company-engineered high level of workforce turnover. Extrinsic and intrinsic motivators are kept at a minimum, as often employees are grateful for getting any wages at all (given it is their first job or they are difficult to employee because of a spotty job history). Extrinsic "carrot" type motivators might be flexible work schedules, or "stick" motivators such as surveillance by managers and punishment if employees fail to follow correct procedures and fail to come to work on time.

Intrinsic motivators to encourage employees to select and stay at a particular Wendy's, for example, over a McDonald's down the block may be because Wendy's has a friendlier atmosphere. It might take worker's suggestions to improve store efficiency, and treat employees with respect. But there is a disincentive to encourage retention, as the company must pay these workers higher wages and benefits

What should the minimum wage be? Defend your answer.

The minimum wage should be the lowest wage an employee can make working full-time to support him or herself above the poverty line within a particular area. The costs of living that should be taken into consideration are that area's rents, the cost of food, and the costs of basic necessary goods and services like transportation. Access to adequate public transportation or maintaining a car in areas that lack public transportation must also be factored into setting the minimum wage. While it is true that many workers at minimum wage jobs are part-time, without some minimum compensation there is little incentive for workers to become employed at such jobs if they are seeking to extricate themselves from poverty and remain off of welfare. Despite classical economic theory that suggests that competition for workers will keep wages up, in the real world, workers are not infinitely mobile, like consumers are with their money (although even that is limited to some degree). Workers, especially minimum wage workers often have transportation and childcare issues that mean they can only work in a few jobs close by their homes, and if there was no minimum wage the wages provided by these entry-level jobs would sink below the federal minimum standard of what is necessary to live on a basic level.

Summarize the provisions of the Medicare Prescription Drug Improvement and Modernization Act of 2003. In your opinion, is this a good law? Explain.

After this Act passed, Medicare recipients happy with their current coverage could remain within their program, through a stand-alone drug program. However, the Act created a second option that allowed seniors to choose a new program called Medicare Advantage. This allowed seniors to join an integrated health plan, which would provide hospital coverage, doctor coverage and prescription drug coverage. Beneficiaries could also enroll in so-called Preferred Provider Organizations similar to PPOs available to privately insured Americans. Critics of the bill noted that although 89% of all seniors chose traditional Medicare rather than going to a Medicare HMO when given that option, under the 2003 plan, seniors were not permitted to stay in traditional Medicare and to have a Medicare-run prescription drug benefits unless private insurance plans were unavailable in their area ("Medicare RX," 2003, a News Hour with Jim Lehrer Transcript). The Act seemed to convey little added value to the Medicare program, or expand senior choices to any great degree. Furthermore, it is unclear if seniors wanted more choices, or simply drugs that are less costly. A better way to help seniors that need drugs to function normally might be to address the spiraling health care costs of America in general of which prescription drugs are only one facet.

What can be done to make the function of compensation committees consistent with shareholder interest? Explain.

Recently, compensation committees have come under fire for excessively compensating CEOs with exorbitant salaries, perks and stock options. While stock options have traditionally been thought of as a way of ensuring that the interests of top management and the company will be commensurate with shareholders, this has not proved to be the case. The vague philosophy of many committees' mandates, haphazard schedule of meetings, and lack of focus has contributed to a disconnection between the committee's role and the interests of management. Ways to ensure that committees are more independent include prohibiting mangers from attending meetings and to assess corporate gain on an index in relation to corporate rivals, not simply in the "abstract" (Rieter, 2004). Simply because a company does well one year does not mean it is the result of the CEO's brilliance.

In a further attempt both to align the interests of management with those of shareholders and to reduce short-term stock price incentives, long-term incentives increasingly include elements that require recipients to actually hold the stock, or its value, for longer terms (as opposed to being able to exercise options as soon as they vest, sell the underlying stock, and pocket immediate gains, irrespective of longer-term corporate, or stock, performance)" (Rieter, 2004).

Works Cited

Medicare RX." (2003, 17 June). A News Hour with Jim Lehrer Transcript. Retrieved 1 Feb 2008 at http://www.pbs.org/newshour/bb/health/jan-june03/medicare_06-17.html

Rieter, Bill. (2004, Aug 11). "The Role of Compensation Committees in Corporate

Governance." Retrieved from Findlaw 1 Feb 2008 at http://library.findlaw.com/2004/Aug/11/133540.html

Do you think the companies should express the benefit conducting HRD programs in dollar terms? Briefly describe the Return on Investment (ROI) and utility analysis approaches. Discuss the limitations of conducting ROI? How can these limitations be overcome?

Utility analysis states that employees' performances generate results that have monetary value. These results differ in the degree to which they produce results even when the employees hold the same position and operate within similar departments "The direct implication of these assumptions is that the level of results produced by performers in their jobs have different monetary consequences for the organizations that employ them" (Utility analysis: An introduction," 2004, Vital Enterprises). In short, certain employees provide more value through their utility to the company, and deserve to be compensated and retained, while others that do not provide such value should not be rewarded or eliminated.

ROI analysis specifies the ratio of income to cost of employees. Employees with a high ROI will bring great value to the company, more than the cost the company in salary. But when used evaluate performance, performance can be affected by multiple exterior factors, positive and negative, outside of the employee's control ("Technical Terms Used in Project Portfolio Management," 2005, Glossary). ROI must be used with other assessment devices, such as performance reviews by superiors expressed in qualitative not quantitative terms. The overall rate of success of employees in comparable positions, general market performance, and the employee's own past performance must also be taken into consideration.

Kirkpatrick argues that training efforts can be evaluated according to four criteria: reaction, learning, job behavior, and results. Do you agree with Kirkpatrick's Four Levels of Evaluation? Is this always easy to conduct all four levels of evaluations? Why or why not?

Theoretically, assessing training by scrutinizing all of Kilpatrick's Four Levels seems sound. However, it can be quite difficult to conduct a review of all Four Levels for every employee in a large corporation. Learning may be evaluated by a test, but really, until the real world stretches the employee to use the knowledge, it is hard to know if the training was effective. Behavior cannot be monitored at all times, and job performance and results, although they may seem to be the ultimate test, are in interaction with a number of extraneous variables, like market demands and the performance of other employees. Furthermore, some training might be quite ineffective, but an employee might learn very well 'on the job.' Comparing the performance results on all Four Levels of all the employees to graduate from a particular training program and who receive the instruction of a particular teacher is one way to place the results of the program within a context. Also, the subsequent performance of the employees over the years should be tracked, to see if the program gave employees an added advantage in building upon the core skills acquired in the training, to see if their success is or is not simply the result of their personal drive.

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