Econ 308 midtrm 2-4
Terms
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- Ratchet effect
- refers to basing next year's target performance on this year's actual performance leading to a perverse incentive for employees not to exceed this year's target performance to avoid raising next year's target performance.
- Relative performance evalutaion
- is the using of other employee's performance to adjust the compensation of an employee. This makes sense if common tandom factors affect the performance of different employees. Edit Card Card FrontRelative performance evalutaion Card Backis the using of other employee's performance to adjust the compensation of an employee. This makes sense if common tandom factors affect the performance of different employees.
- Risk sharing and incentive standpoint
- from risk sharing standpoint it is better to pay employees ixed salaries and let the total risk or random income flows be borne by the shareholders. From incentive standpoint it is better to tie pay to performance e.g stock option. An optiaml compensation contract must strike a balance these two standpoints
- short comings of relative performance evaluation
- -collusion to under perform -electing a poor performer to be the standard -sabotage on coworkers' work performance -admit low quality new hirs Edit Card Card Frontshort comings of relative performance evaluation Card Back-collusion to under perform -electing a poor performer to be the standard -sabotage on coworkers' work performance -admit low quality new hirs
- SMART goals
- specific measurable agreed upon realistic and time bound Edit Card Card FrontSMART goals Card Backspecific measurable agreed upon realistic and time bound
- sometimes employees leaving a firm take customers and knowledge to cometing firm
- EX: A dentist assistant works for a company for years but then after going and getting their dentist degree they decide to leave firm and make one of their own. Knowing all the info they learned from the company they worked for is brought to their new firm. Customers have their rigth to see their optimal benefit in getting care. Edit Card Card Frontsometimes employees leaving a firm take customers and knowledge to cometing firm Card BackEX: A dentist assistant works for a company for years but then after going and getting their dentist degree they decide to leave firm and make one of their own. Knowing all the info they learned from the company they worked for is brought to their new firm. Customers have their rigth to see their optimal benefit in getting care.
- state and explain an internal labor market.
- exists in a firm when outside hiring focuses primarily on filling entry level jobs and most other jobs in the firm are filled from within the firm. firms can have multiple internal labor markets eg white collar-and blue collar workers. firms are more likely to use internal labor markets where specific training of employees is important, eg steel, petroleum, chemical industries. benefits of an internal labor market
- state and explain broad task assignment.
- is to have each employee perform multiple functions. Edit Card Card Frontstate and explain broad task assignment. Card Backis to have each employee perform multiple functions.
- state and explain compensation wage differenital.
- is the extra wage that is paid to attract a worker to a less desirable job. This is how umpleasant jobs got filled. It also shows that it pays for a firm to invest to improve non-wage attractiveness of a job. Edit Card Card Frontstate and explain compensation wage differenital. Card Backis the extra wage that is paid to attract a worker to a less desirable job. This is how umpleasant jobs got filled. It also shows that it pays for a firm to invest to improve non-wage attractiveness of a job.