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Advantages and disadvantages of employee loyalty
Two tier wage system pros and cons
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Introduction The concept of having a two-tier wages program is an issue that continues to elicit mixed reactions. The rationale used in the adoption of a two tier wages plan is that organizations will be maintaining a high number of talented employees within the organization. However, the outcome of the two tier wages plan is not as one would expect. On the contrary, the inherent wage disparity for groups in the same job category causes differences in the level of motivation. The argument here is that the two tier wages plan provide an enormous amount of problems than it solves. Employee Value Propositions Difference in Two Tier Wage Plans A two tier wages plan system causes the employee body to perceive an organization as having stratified …show more content…
Employees receiving lower wages will ultimately transit to other organizations that will value their input. Thirdly, organizations without the two tier wages plan tend to attract and retain highly talented employees, which is a disadvantage to the organization practicing a two tier wages plan. How Management, Employees, and Unions Address the Issue The management try to address these challenges by creating a flexible two tier wages plan. Employees try to manage these issues by venturing out to other organizations that value their input. Unions address these issues by creating a level platform. Pros and Cons of Two-Tier Wages Plans for Management, Employees, and Union Organizations continue to lose talented employees under the two tier wages plan. However, these organizations also benefit from lower operations cost. Employees lose morale under the two tier wages plan. However, they gain through skill development. Unions benefit by being a bridge between employers and employees. Conclusion & Recommendations In conclusion, the two tier wages plan will continue to thrive. However, future trends indicate consistent patterns of salary negotiations. Thirdly, organizations need to have increased flexibilities in their programs to maintain the top performing
Almost two years ago the company where I am employed, RGIS LLC, mandated a pay policy change for the hourly employees. Hourly employees make up over 95% of RGIS’s labor staff. This new, four-tier payment scale, aptly named “Pay 4 Performance” (p4), ultimately affected thousands of employees who had been with the company for years and had high pay rates simply as a result of longevity. The four new levels would have a matching pay scale based upon each individual employee’s production. These levels are what RGIS calls an ASET level: Auditor, Specialist, Expert, and TopGun, with each level advancing to a higher production and pay rank, respectively (Company).
It is also the one of the hardest components for management to fulfill. GMFC needs to be an industry leader in pay as well as implement a merit pay policy for employees. Leading the industry in pay and awarding employees pay increases equal to or better than what the union can negotiate is instrumental to keeping the plant union-free (Fossum, 2012). Also basing pay increases on performance and skills learned is a great incentive to boost productivity and employee motivation. As an example, Volkswagen starts their employees the base rate the union would be able to negotiate keeping employees content (Greenhouse, 2014).
As companies look to expand operations and hire new employees, many economic and environmental factors are taken into consideration. The cost of labor is one of the primary concerns as labor generally constitutes a large part of company budgets. The organization of labor by unions further increases this concern. The wages of unionized workers are significantly higher than the wages of nonunion workers in almost every industry (Fossum, 2012). Higher wages generally result in reduced company profits, lower share prices, and reduced shareholder returns (Fossum, 2012). Unionization also reduces the employer’s flexibility with regards to hiring, transferring, or promoting employees (Fossum, 2012). Productivity may be negatively impacted by unionization because merit is often eliminated as a criterion for wage increases or promotions (Fossum, 2012). As a result of these negative impacts, employers are motivated to oppose unionization.
There were a few issues of fairness presented in Michael Simpson’s case that happens in in real world work places that prevents employees from working to their full potential or causing them to leave the work place all together. In this case study Michael Simpson is faced with the dilemma of whether or not he should leave Avery McNeil, the accounting at which he is currently working at. Simpson had interviewed with many consulting firms before graduating college, and had chosen Avery McNeil because it had the potential to allow him the most rapid advancement in his career. Within two years of working their he was promoted to manager and he received a great pay raise. However, a few days later Simpson came upon a sheet with pay grades of other
An employer who pays his employees the bare minimum will not see the same appreciation and respect as an employer who pays his employees livable wages. Lew Prince points out the various benefits that have come with paying his workers above the federal minimum since his business began. He states, “We’ve outlasted 20-store local chain and numerous regional and national chains. Most of these companies paid their employees minimum wage or barely above. My creative, dedicated, and better-paid employees won this life-or-death struggle for us” (Prince). Their loyalty also benefits Prince in the fact that he has to pay very little for employee turnover and constant training costs that other businesses struggle with. What Prince and many other business owners alike gain from higher wages reflects only a portion of the nation that will prosper from this monumental economical
When employees were asked, what factors could be changed at USAA to help maintain employee motivation levels, a couple of them answered with, “higher wages” and “more money”. This response corroborates other studies regarding pay which state surveys will more likely under emphasize the importance of pay relative to other motivational factors. (Rynes, Gerhart & Minette, 2004). “Financial incentives had by far the largest effect on productivity of all interventions. For example, pay was four times more effective than interventions designed to make work more interesting.” (Rynes, 2004). One reason for this phenomenon is social desirable responding. It should be noted, that although pay may be under reported, the results indicate other factors are also important for employee
The above examples of pay show that the more skills, experience employees are with the organization the more they are compensated. Organizations would benefit by utilizing the same practice’s Disney extends to their workforces. For those businesses whose primary purpose of their plan is to only meet compliance requirements could greatly benefit by developing a comprehensive benefit plan. This could help increase their return on investment. The value I believe a business may gain from Disney’s compensation plan is to appeal to competent workers, to maintain those workers, and to motivate workers to direct their energies towards achieving the goals of the organization. Companies can set up policies to conduct a market study on a regular basis to implement a real performance appraisal system and then work on retaining good employees and elimination of poor performing workers. By following Disney’s lead of in obtaining those who best fit their company’s culture and supporting the company’s Mission. To guarantee that the pay structure is externally competitive, a pay survey should be shown. The results of a survey to be valid, the market pay data must be from the relevant labor market for each benchmark job. I would advise that a survey of regional and global pay data should be collected from the company, because for example, most of the office support, HR and operations jobs will be filled by local applicants. A job analysis is the procedure of reviewing jobs in an alike business. The result of this process is a job description “that includes the job title, a summary of the job tasks, a list of the essential tasks and responsibilities, and a description of the work context “(Burke, 2008). A job description consists of the knowledge, skills and aptitudes necessary to do the job. A job evaluation is the process of adjudicating the comparative value of job within a company
Deciding which pay form to use when compensating employees is extremely important to a company. Many things are taken into consideration: labor costs, the correlation between performance and pay, customer service, and the ability to attract and retain employees which is extremely important to FastCat’s need for innovation. We believe a single pay structure coincides with our single based plan for the organization. We want to keep things simple and understandable to all areas of the organization. This strategy will allow employees to understand how their performance and the performance of others relate to the success of the company through specific measures. It is also important that the strategies align with the objectives of FastCat. We beli...
After reviewing Holland’s organizational strategy and exit interviews from the last seven years it is certain that through the new and effective compensation and benefits program created for Holland Enterprises, it will decrease the turnover rate, increase employee satisfaction and engagement and benefit the organization’s overall profits. Through careful consideration of pay structures, incentive awards, internal and external equities and the organizations benefits package Holland Enterprises new compensation benefits package will provide an effective and competitive compensation program. Henderson (2010) writes, “To survive and be successful in a global economy, an organization must be competitive. A major factor underlying organizational competitiveness is labor costs. Not only must an organization pay its workforce a competitive wage within its geographic region, but it also must vary the kinds and amounts of rewards offered, recognizing differences in individual contributions.” (p. 13)
According to Herzberg’s two factor theory, there exists ‘hygiene factors’, extrinsic factors of a workplace that lead to either dissatisfaction or non-dissatisfaction, but not motivation. As well, there are motivation factors, intrinsically rewarding factors of a workplace that “[emphasize] factors associated with the work itself or with outcomes directly derived from it”. In raising the salary of his employees, Dan hoped that the extrinsic reward of a pay increase would lead to intrinsically beneficial opportunities for personal growth for his employees. The opportunities for personal growth should in turn further motivate employees in their job. When Dan chose to raise the salaries of his employees, he was “influenced by research showing
Because of this, many employees tend to leave when they have found a job with higher pay. This increases the training costs for their employees, as they tend to not stay for too long.
In any organization, sometimes, monetary schemes doesnot get people involve to pursue work in a certain way, rather it demoralize and threatens the self-esteem of employees. According to Meyer (1975), “the basis for most of the problems with merit pay plans is that most people think their own performance is above average”. The amount may ...
Employee compensation and reward systems have undergone a couple of paradigm shifts since inception. Reward systems were traditionally compensation based and focused on the individual or the position (Beam 1995). After a recession in the early 1980's, employers turned to performance based models in an attempt to save money while still rewarding top performers (Applebaum & Shapiro, 1992). Today, the most successful organizations are using a total reward model, a hybrid of the performance based model combined with strategic human resource management planning to create reward systems that both benefit the employee and help organizations realize their operational goals (Chen & Hsieh, 2006).
There is considerable debate over merit pay and the effect it has on employees within an organization. Psychologists believe merit pay is related to the incentive theory of psychology; people respond to rewards and with the proper motivation, it increases performance (Cherry). Employers consider merit pay an effective tool and a form of competition strategy for motivating employees to achieve positive performance outcomes. Many employers ignore the fact that incentive plans may motivate some individuals while others have high work ethics and do not need motivation. The intent of this paper is to discuss merit pay used by companies, the motivational factors on employees to reach high achievement, and the challenges that employees face due
Organizations are working hard in today’s world of business, not only to remain competitive, but also to focus on stability and structure. Employees are the backbone of an organization. It is becoming more important to offer quality HRM programs to staff, in order to support the retention of trained and experienced staff. Employees have always been concerned with salary however, there is a new focus emerging that looks at compensation as a whole entity. Monetary wages are now just as important as other benefits such as paid time off, medical and dental offerings and retirement. This paper will discuss the importance of the total compensation program which includes many aspects, not just salary. Attention must be paid to equal pay, pay