COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR

<< BUSINESS MANAGER’S RESPONSIBILITY PROFILE:Accountability, Specific responsibilities

COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE >>

Introduction to Business MGT 211

LESSON 18

COMPENSATION AND BENEFITS

Set of rewards that organizations provide to individuals in return for their willingness to perform

various jobs and tasks within the organization. Compensation includes base salary,

incentives, bonuses, benefits, and other rewards.

a. Wages and Salaries

i. Wages--compensation in the form of money paid for time worked.

ii. Salary--compensation in the form of money paid for discharging the

responsibilities of a job.

b. Incentive Programs--Special compensation program designed to motivate

high performance

i. Individual Incentives--incentive-based pay plan that rewards

individual performance.

1. Bonus--Individual performance incentive in the form of a special

payment made over and above the employee's salary

2. Merit

Salary

Systems--Individual

incentive

linking

compensation to performance in nonsales jobs

3. Pay-for-performance (or variable pay)--Individual incentive that

rewards a manager for especially productive output

ii. Company-wide Incentives

1. Profit-sharing plan--Incentive plan for distributing bonuses to

employees when company profits rise above a certain level

2. Gain-sharing plan--Incentive plan that rewards groups for

productivity improvements

3. Pay-for-knowledge plan--Incentive plan to encourage

employees to learn new skills or become proficient at different

jobs

c. Benefit Programs--compensation other than wages and salaries. Some may

be required by law, such as, workers' compensation insurance (insurance

for compensating workers injured on the job)

i. Retirement Plans--prearranged company pensions provided to retired

employees.

ii. Containing the Costs of Benefits

1. Cafeteria Benefit Plan--benefit plan that sets limits on benefits

per employee, each of whom may choose from a variety of

alternative benefits. It allows employees to choose those benefits

they really want.

2. THE LEGAL CONTEXT OF HR MANAGEMENT

Laws impact many areas of human resource management.

a. Equal Employment Opportunity--The basic goal of all equal employment

opportunity regulation is to protect people from unfair or inappropriate

discrimination in the workplace.

Legally mandated nondiscrimination in

employment on the basis of race, creed, sex, or national origin

i. Protected Classes in the Workplace

1. Protected Class--set of individuals who by nature of one or

more common characteristics are protected by law from

discrimination on the basis of any of those characteristics.

Introduction to Business MGT 211

ii. Enforcing Equal Employment Opportunity

1. Equal Employment Opportunity Commission (EEOC)--Dept.

of Justice agency created by Title VII to enforce discrimination-

related laws.

2. Affirmative Action Planpractice of recruiting qualified

employees belonging to racial, gender, or ethnic groups who are

underrepresented in an organization.

iii. Legal issues in Compensation

b. Contemporary Legal Issues in HR Management

i. Employee Safety and Health

1. Occupational Safety and Health Act of 1970 (OSHA)--federal

law setting and enforcing guidelines for protecting workers from

unsafe conditions and potential health hazards in the workplace.

Violators are fined for each incident.

ii. Emerging Areas of Discrimination Law

1. AIDS in the Workplace--Organizations must follow a certain

set of guidelines and employ common sense when dealing with

AIDS-related issues. AIDS is considered a disability under ADA.

2. Sexual Harassment--practice or instance of making

unwelcome sexual advances in the workplace. It is a violation of

Title VII of the Civil Rights Act of 1964.

a. quid pro quo harassment--form of sexual harassment

in which sexual favors are requested in return for job-

related benefits

b. hostile work environment--form of sexual harassment,

deriving from off-color jokes, lewd comments, and so

forth, that makes the work environment uncomfortable for

some employees

3. Employment-at-Will--principle, increasingly modified by

legislation and judicial decision, that organizations should be

able to retain or dismiss employees at their discretion.

Employees, however, cannot be fired for exercising rights

protected by law such as filing worker compensation claims or

taking excessive time off to serve jury duty.

3. NEW CHALLENGES IN THE WORKPLACE

a. Managing Workforce Diversity

i. Workforce Diversity--range of workers' attitudes, values, and

behaviors that differ by gender, race, and ethnicity. Workforce diversity

has been increasing in recent years and by 2006 it is expected that

almost half all workers in the labor force will be women and almost one-

third will be Blacks, Hispanics, Asian Americans, and others.

b. Managing Knowledge Workers

i. The Nature of Knowledge Work

Knowledge Worker--employee who is of values because of the

knowledge that he or she possesses. Knowledge workers include

computer scientists, engineers, and physical scientists who tend to work

in high-technology firms and are usually experts in some abstract

knowledge base.

Introduction to Business MGT 211

ii. Knowledge Worker Management and Labor Markets

1. The demand for knowledge workers has been growing at a

dramatic rate.

2. The growing demand for knowledge workers has inspired some

fairly extreme measure for attracting them, such a high starting

salaries and sign-on bonuses.

c. Contingent and Temporary Workers

i. Trends in Contingent and Temporary Employment--About 10

percent of the U.S. workforce currently uses an alternative form of

employment relationship such as contingent or temporary employment.

1. Contingent Worker--employee hired on something other than a

full-time basis to supplement an organization's permanent

workforce.

ii. Managing Contingent and Temporary Workers--HR managers must

understand how to use contingent workers by using careful planning,

acknowledging both their advantages and disadvantages, and

assessing the real cost of using them.

4. DEALING WITH ORGANIZED LABOR

Labor Union--Group of individuals working together to achieve shared job-related goals,

such as higher pay, shorter working hours, more job security, greater benefits, or better

working conditions.

Labor Relations--Process of dealing with employees who are represented by a union.

Collective Bargaining--Process by which labor and management negotiate conditions of

employment for union-represented workers.

a. Unionism Today

i. Trends in Union Membership--U.S. labor unions have experienced

increasing difficulties in attracting new members. Union membership

has declined, together with the percentage of successful union-

organizing campaigns. There are some recent exceptions.

ii. Trends in Union-Management Relations--The gradual decline in

unionization in the United States has been accompanied by some

significant trends in union-management relations. Unions remain quite

strong in some sectors, notably the automobile and steel industries.

Unions generally are in a weakened position, and many have taken a

more conciliatory stance in their relations with management. Most

experts agree that improved union-management relations have

benefited both sides.

iii. Trends in Bargaining Perspectives--Changes in bargaining

perspectives have occurred in response to recent trends.

Organizational downsizing and several years of low inflation in the U.S.

have found unions fighting against wage cuts, rather than striving for

wage increases. Another common goal of union strategy is preserving

what's already been won, as organizations seek lower health care and

other benefits. Unions also place greater emphasis on job security and

improved pension plans. Unions have begun to set their sights on

preserving jobs for workers in the United States in the face of business

Introduction to Business MGT 211

efforts to relocate production in some sectors to countries where labor

costs are lower.

iv. The Future of Unions--Despite declining membership and some loss

of power, labor unions remain a major factor in the U.S. business world.

Some unions still wield considerable power, especially in the traditional

strongholds of goods-producing industries.

5. COLLECTIVE BARGAINING

Collective bargaining is an ongoing process involving both the drafting and the

administering of the terms of the labor contract. It begins as soon as the union is

recognized as the exclusive negotiator for its members.

a. Reaching Agreement on Contract Terms--Law requires that union leaders

and management representatives must sit down at the bargaining table and

negotiate in good faith. Sessions focus on identifying the bargaining zone.

b. Contract Issues

i. Compensation--Unions generally want their members to earn higher

wages; compensation is the most common contract issue.

1. cost-of-living adjustment (COLA)labor contract clause tying

future raises to changes in consumer purchasing power

2. wage reopener clauseclause allowing wage rates to be

renegotiated during the life of the labor contract

ii. Benefits (e.g., health insurance, retirement benefits, paid holidays,

working conditions)--Unions typically want employers to pay all or most

of the costs of benefits.

iii. Job Security--In some cases, demands for job security entail the

company's promise not to move to another location, or a stipulation that

if workforce reductions must occur, seniority will be used to determine

which employees lose their jobs.

iv. Other Union Issues (e.g., working hours, overtime policies, rest period

arrangements, differential pay plans for shift employees, the use of

temporary workers, grievance procedures, and allowable union

activities)

v. Management Rights--Management wants as much control as possible

over hiring policies and work assignments. Unions try to limit

management rights by specifying hiring, assignment, and other policies.

c. When Bargaining Fails

Although it is generally agreed that both parties suffer when, after bargaining,

an impasse is reached and action is taken, both sides can use several tactics to

support their cause.

i. Union Tactics

1. Strike--labor action in which employees temporarily walk off the

job and refuse to work. Most strikes in the United States are

economic strikes, triggered by stalemates over mandatory

bargaining items including such noneconomic issues as working

hours.

Introduction to Business MGT 211

2. Sympathy Strike (or Secondary Strike) --strike in which one

union strikes to support action initiated by another.

3. Wildcat Strike--strike that is unauthorized by strikers' union.

4. Other Labor Actions

a. Picketing--labor action in which workers publicize their

grievances at the entrance to an employer's facility.

b. Boycott--labor action in which workers refuse to buy the

products of a targeted employer.

c. Slowdown--labor action in which workers perform jobs

at a slower than normal pace.

ii. Management Tactics--Like workers, management can respond

forcefully to an impasse.

1. Lockout--management tactic whereby workers are denied

access to the employer's workplace.

2. Strikebreaker--worker hired as permanent or temporary

replacement for a striking employee.

iii. Mediation and Arbitration--Mediation and arbitration make use of a

third party to help resolve the dispute.

1. Mediationmethod of resolving a labor dispute in which a third

party suggests, but does not impose, a settlement.

2. Voluntary Arbitrationmethod of resolving a labor dispute in

which both parties agree to submit to the judgment of a neutral

party.

3. Compulsory Arbitrationmethod of resolving a labor dispute in

which both parties are legally required to accept the judgment of

a neutral party.

Table of Contents: