Ccm_Certification_Requirements

Errata—September 2009 for CMS 1—Compensation Concepts and Principles Modules 9 and 14 The accompanying material updates CMS 1—Compensation Concepts and Principles. This Errata replaces the Errata—September 2008. It is required reading for purposes of the CEBS program and is subject to inclusion on the national examination for CMS 1. The Certified Employee Benefit Specialist Program International Foundation of Employee Benefit Plans 18700 W. Bluemound Rd., P.O. Box 1270, Brookfield, WI 53008-1270, (262) 786-6700 1 Errata—September 2009 CMS 1—Compensation Concepts and Principles Module 9—Pay for Performance: Plan Design and Performance Appraisal 1. Learning Guide, replace pages 9.19-9.20. 2 Module 14—Exam Review Questions 1. Learning Guide, replace pages 14.9-14.10, 14.19-14.20 and 14.29-14.30. 14. Does the level of pay influence an individual’s motivation to perform their job well' Explain. (Text, pp. 241-242) There is evidence to suggest that management and workers alike believe pay should be tied to performance. Workers believe the most important factor for salary increases should be job performance. Research does suggest that tying pay to individual performance can have a positive impact on employee performance. There is also strong evidence that pay for performance can have a direct, and at times substantial, impact on organizational performance. Most well-controlled studies where organizations base part of pay on some measure of corporate or division performance report increases in performance of about 4-6% per year. 15. Identify and briefly describe the common errors in appraising performance. (Text, p. 243) Nine common errors in the performance appraisal process are: (1) Halo error. Involves an appraiser giving favourable ratings to all job duties based on impressive performance in just one job function. For example, a rater who is intolerant of tardiness rates a prompt employee high across all performance dimensions exclusively because of this one characteristic. (2) Negative halo error. The opposite of a halo error. Involves downgrading an employee across all performance dimensions exclusively because of poor performance on one dimension. (3) First-impression error. Involves developing a negative or positive opinion of an employee early in the review period and allowing that to negatively or positively influence all later perceptions of performance. (4) Recency error. The opposite of first-impression error. Involves allowing performance, either good or bad, at the end of the review period to play too large a role in determining an employee’s rating for the entire period. (5) Leniency error. Involves consistently rating someone higher than is deserved. (6) Strictness error. The opposite of leniency error. Involves rating an employee consistently lower than is deserved. (7) Central tendency error. Involves avoiding extremes in ratings across employees. (8) Similar-to-me error. Involves giving better ratings to employees who are like the rater in behaviour and/or personality. (9) Spillover error. Involves continuing to downgrade an employee for performance errors in prior rating periods and not spending enough time preparing for the appraisal. module 9: Pay for Performance: Plan Design and Performance Appraisal CMS 1 - 9 / 0 9 9.19 NOTES 9.20 CMS 1 - 9 / 0 9 CMS 1: COM PENSATION CONCEPTS AND PRINCIPLES 19. Which of the following statements regarding a merit pay system is correct' A. It links increases in base pay to how highly employees are rated on a subjective performance evaluation B. The merit pay an employee receives is not added into his or her base pay C. Employees view merit pay as less of an entitlement than a lump-sum bonus D. They offer employees a promise of pay for some objective, preestablished level of performance 20. Which of the following predictions about performance-based pay best describes the agency theory of motivation' A. Employees dislike risky pay and will demand a wage premium in exchange for accepting performance-based pay B. Pay must be contingent upon achievement of important performance goals C. Pay must follow closely behind performance D. Pay is motivating to the extent it is connected with meeting an employee’s need for recognition and achievement 21. Which of the following statements regarding the risk levels of compensation components is correct' A. A lump-sum bonus is the riskiest component of compensation B. A profit-sharing plan is less risky than a gain-sharing plan C. An across-the-board increase is the most secure compensation element D. A cost-of-living increase presents some risk to an employee because the payment is at the discretion of the employer 22. Which of the following statements best describes the compensating differentials theory' A. Work with negative characteristics requires higher pay to attract employees B. Above-market wages will improve efficiency by attracting employees who will perform