Collective Bargaining
Starasr
Chpt7.ppt© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter 7
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Industrial Wage Differentials
- What Wages and Benefits Represent
A standard of living for employees
A cost to be controlled for employers
- Reasons for Wage Differentials
The degree of competition or monopoly in the product market
The value added by workers in a particular industry
The percentage of total product or service cost represented by labor costs
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Evaluating Jobs within the Organization
- Job Analysis—What Is the Job?
Job description
A listing of job factors (tasks, duties, and responsibilities) required to perform the job
Job specification
A listing of the knowledge, skills, abilities, and other factors (KSAOs) required to be possessed by holders of the job
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Evaluating Jobs…(cont’d)
- Methods of Job Evaluation—What is the Job Worth to the Organization?
Ranking
Compares each job to every other job to create a hierarchy of jobs.
Classification
Groups similarly valued jobs into classes.
Point system
Assigns points to each job based on the degree to which job (compensable) factors are present in the job.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Preferences for Determining Wage Structures during Collective Bargaining
External
Factors
Internal
Factors
Wage Structures
Union Preferences
Company Preferences
Include if favorable
Wage Surveys
Job Evaluation
Grievances
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.1 Typical Wage Structure for a Manufacturing Firm
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Surveying Firms’ Wage Structures
- Sources of Wage Surveys
U.S. Department of Labor
National Compensation Survey (NCS)
Occupational Pay Relatives (OPR)
Trade and professional groups
Employer-initiated surveys
Union-initiated surveys
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.2 Typical Results from a Wage Survey
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Production Standards and Wage Incentives
- Production Standards
Expected employee output consistent with the working capacities of normal (typical) operators.
Determined by time studies of effort and motion
Used as the basis for calculating standard and incentive wages
- Goals for Wage-Incentive Plans
Increase employee productivity
Attract prospective employees
Reward employees monetarily
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Incentive Plans
- Employee Reward-Incentive Plans
Lump-sum bonuses
Profit sharing plans
Skill-based pay (SBP)
- Group Gain-sharing Incentive Plans
Scanlon Plan
Sharing of savings from the reduction of total labor costs
Rucker Plan
Ratio of labor costs to dollar value added
Improshare Plan
Reduction in labor costs over base-period labor costs
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Arguments Used by Management and Union Officials in Wage Determination
- General Factors in Wage Outcomes
Differential features of
the job
Wage comparability
Organization’s ability to pay
Productivity
Cost of living
Legal requirements
- Competitive Factors
Operating efficiency
Cost-cutting
Productivity improvement
- Internal Factors
Firm-specific labor costs
Expected profits
Labor market conditions
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Differential Features of the Work:
Job Evaluation and the Wage Spread
- Wage Spread
Represents the internal distribution of the proposed or negotiated wage increase to the bargaining unit employees
- Importance of Spread to Management
Retaining skilled employees
Motivating lesser-skilled employees
- Union Focus
Equal pay for equal work = single rate pay
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.3 Three Examples of Internal Wage Spreads
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.4 Examples of Two-Tier Pay Scales
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Wage Determination Arguments
- Wage Comparability
Wage rates are equal or related among comparable bargaining units.
- Degree of Labor Intensiveness
Wages are less important and easier to bargain for when they are a low percentage of total costs.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Wage Determination Arguments (cont’d)
- Ability to Pay
Ability to pay has limited usefulness; focus is on firm performance, not on employee performance.
Unions expect a firm in good financial condition to pay higher wages, but not reduce wages when the condition of the firm declines.
- Productivity
Conceptually, workers’ wages should vary with changes in their productivity (output to costs).
Productivity increases can occur for reasons unrelated to workers increasing their efficiency.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.5 Average Annual Rates of Change in Manufacturing Output per Hour for the United States and Selected Countries
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Wage Determination Arguments (cont’d)
- Cost of Living
Unions demand higher wages to maintain real wage purchasing power when the cost of living rises.
- Consumer Price Index (CPI)
An index that measures the monthly change in the prices of goods and services for a typical household.
- Comparable Worth
The concept that different jobs that make comparable contributions to the organization should have the same pay rates.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Wage Adjustments during the Term or Duration of the Labor Agreement
- Methods for Adjusting Wages
COLA provisions—scheduled wage increases based on the degree of change in the chosen index
Selection of an index (generally, CPI-W) and base point
Frequency and timing of COLAs
Adoption of a formula (e.g., one cent increase in wages for each three-point rise in CPI)
Effects of COLA in increasing the costs of other compensation elements
Caps or upper limit on the COLA
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Wage Adjustments during the Term or Duration of the Labor Agreement (cont’d)
- Methods for Adjusting Wages (cont’d)
Deferring wage increases in multiyear labor contracts
Back-loaded: larger wage increases occur later in the contract period.
Front-loaded: smaller wage increases occur later in the contract period.
Even-loaded: wage increases are equal in all years of the contract.
Lump-sum pay adjustments
Lump-sum does not become part of regular compensation.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.6 Employer Costs per Hour Worked by Bargaining Status, December 2014
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Health-Care Cost Containment
- Cost Shifting to Employees
Co-payments, deductibles, and increased premium contributions by employees
- Fee-for-Service Plans
Preferred Provider Organization (PPO)
Agree to a fixed/lower rate schedule of fees for their services to company employees.
Health Maintenance Organization (HMO)
Contracts with the employer to deliver services to company employees for a fixed contract amount.
High Deductible Health Care Plans (HDHCP)
Involves a high deductible insurance policy combined with a health savings account.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Income Maintenance
- Severance Pay
Provides employee with a lump-sum payment at the time of an employee’s termination.
- Supplemental Unemployment Benefit Plan (SUB)
Pays an additional amount to an employee during the time when the employee is temporarily unemployed.
- Work Sharing
In order to avoid a layoff, the parties agree to a less-than-40-hour work week.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Premium Pay—Overtime
- Overtime Pay
Time-and-a-half rate for all hours worked beyond an 8-hour day
Fair Labor Standards Act requires overtime pay only after 40 regular hours of work in a week.
Double-time rate for Sundays and holidays
Equalization of overtime hours among workers, typically by seniority
Mandatory overtime requirements within a required minimum advance notice
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Premium Pay—Other Supplements
- Shift Differential
Hourly premium paid for working undesirable shifts
- Reporting Pay
Minimum guaranteed pay when employee is sent home due to no available work on a workday
- Call-In Pay
Payment for working nonscheduled hours
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Payment for Time Not Worked—Holidays, Vacations, and Rest Periods
- Incidental Nonwork Benefits
Bereavement leave
Jury duty leave
Sick leave
Military leave
Personal leave
Voting leave
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Payment for No Work—Holidays, Vacations, and Rest Periods
- Major Paid-Leave Benefits
Holidays
Eligibility for pay
Typically, there is a required length of service before qualifying for holiday pay.
Must work scheduled work day before and scheduled work day after holiday to qualify for holiday pay.
Vacations
An employee’s amount of annual vacation time increases with the employee’s length of service.
Scheduling of vacations is based on an employee’s seniority.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Pensions
- Age Discrimination in Employment Act (ADEA)
Prohibits mandatory retirement age requirements.
- Pension Plans
Defined benefit plan
Plan pays retired employees a specific amount each month.
The employer must invest sufficient funds such that it can pay its obligations to the retired employees.
Defined contribution plan
An employer contributes a specific amount each month to the retirement account of each employee.
Payout is based on the financial performance of the invested contributions.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Pensions—Other
- Union Effect on Pension Plans
Increased pension coverage and larger benefits
Benefits skewed toward senior employees
Pensions equalized among bargaining unit employees
Higher increases in benefits after retirement
Earlier employee retirement age
- 401(k) Savings Plans
An employer may match the contributions of employees to their tax-deferred retirement accounts.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Pensions—Other (cont’d)
- Employee Stock Ownership Plan (ESOP)
Employees hold stock in their company.
Company stock is basis for employee retirement benefits.
The value of the stock can have a dramatic effect on the retirement prospects of employees.
Unions oppose ESOPs.
- Cash Balance Pension Plans
A tax-deferred employee account to which the employee and employer contribute.
Employees have the option of receiving an annuity payment or a lump-sum payment.
Benefit-neutral to length of employee service.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Pensions—Other (cont’d)
- Vesting
Is sufficient service to acquire rights to retirement benefits
Is required by Employee Retirement Income Security Act.
Cliff vesting schedule
After five years of service, employee is considered fully vested.
Graded vesting schedule
Employees are vested in stages over a period of time.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Family and Other Benefits
- Family and Medical Leave Act of 1993
Requires private employers to provide eligible employees with up to 12 weeks of unpaid leave.
Employee must have been employed for at least one year and worked at least 1,250 hours within the previous 12 months.
- Other Benefits
Prepaid legal services
Employee assistance plans
Education tuition aid
Transportation subsidy
Child-care assistance
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Exhibit 7.7 Union versus Nonunion Employee Median Weekly Earnings, 2014
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Key Terms
- Degree of labor intensiveness
- Job evaluation
- Job factors
- Job analysis
- Job description
- Job specification
- Production standards
- Piece-rate
- Profit-sharing plans
- Gain-sharing plan
- Scanlon plan
- Rucker plan
- Improshare plan
- Skill-based pay (SBP)
- Wage spread
- Skill pay differential
- Two-tier wage plan
- Wage comparability
- Me-too clause
- Ability to pay
- Labor productivity
- Consumer price index (CPI)
- Cost-of-living adjustment (COLA)
- Deferred wage increase
- Wage re-opener
- Back-loaded
- Front-loaded
- Even-loaded
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Key Terms (cont’d)
- Lump-sum pay
- Patient Protection and Affordable Care Act
- Preferred provider organization (PPO)
- Health maintenance organization (HMO)
- High deductible health care plans
- Severance pay
- Supplemental unemployment benefit plan (SUB)
- Work sharing
- Premium pay
- Overtime premium pay rate
- Shift differentials
- Reporting pay
- Call-in pay
- Defined benefit pension plan
- Defined contribution pension plan
- 401(k) plan
- Employee stock ownership plan (ESOP)
- Defined contribution pension plan
- Pension Protection Act of 2006
- Cash balance plan
- Early retirement options
- vesting
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Key Terms (cont’d)
- Employee Retirement Income Security Act (ERISA) of 1974
- “Cliff” vesting schedule
- “Graded” vesting schedule
- Elective deferrals
- Matching contributions
- Family and Medical Leave Act (FMLA) of 1993
- Prepaid legal service plans
- Employee assistance plan (EAP)
- Wellness programs
- Education tuition aid
- Transportation subsidy
- Child-care assistance
- Home computer
- Spillover effect
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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