MCQ
ag98
Week5ExecutivePayUnionsandCollectiveBargaining.pptxLearning outcomes
At the end of this class you should be able to:
Understand your homework for next week your International Reward presentations
Record your Maine Bank Case Study points
Discuss the advantages and disadvantages of the top pay scale for banks and large institutions
Critically evaluate the importance of collective bargaining and its relation with reward
Discuss Unions and Collective Bargaining in your group
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Annual reports
https://www.lloydsbankinggroup.com/investors/annual-report.html
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Bank Bonuses
https://www.ft.com/indepth/bank-bonuses
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Call Centre bonuses
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| IDS report 1106, November 2012 | |
| % of Call Centres that have: | |
| Individual bonus | 41% |
| Company performance bonus | 26% |
| Team performance bonus | 11% |
| Combination of both | 31% |
You can look at updated news : call-centres
Deutsche Bank and call centre employees agree on pay deal
650 staff in Berlin and Essen at the call centre unit DB Direkt
The strike took place over 13 weeks as the bank announced that it was rewarding some staff for a pandemic-related trading boom with a 29% increase in the bonus pool for last year.
The deal envisages the gradual introduction of a 13th month of pay, a one-time payment and wage increases that average out to be around 2.7% per year.
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Fairness and reward
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Recap: Job Evaluation
systematic process to determine value of different jobs in an organisation.
compare jobs with each other to create a pay structure that is fair, equitable, and consistent for everyone.
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GOOGLE COMPENSATION (REWARD) STRATEGY
BE INNOVATIVE
COST CONTAINMENT
RECOGNISE INDIVIDUAL CONTRIBUTION
ATTRACT & REWARD THE BEST
MINIMISE HIERARCHY
MARKET LEADER PAY & BENEFITS
SIGNIFICANT STOCK PROGRAMS
NOTE FAIRNESS NOT MENTIONED
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Centralisation and Decentralisation Departments
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Common to have pay policies centralised in traditional Public Sector Organisations i.e. NHS
A decentralised structure include the major supermarket chains like WM Morrison and Tesco
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NHS Example: Traditional Public Organisation
While aspects of the NHS have been decentralized, there are continuing central accountability structures that, in a more diversified and fragmented system, create a context that ultimately favours stronger centralized accountability Peckham, S. (2014)
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REWARD OF DIRECTORS & EXECUTIVES IN LARGE UK PLCs (‘TOP PAY’)
TOP PAY - TWO CHIEF EXECUTIVES DAME SHARON WHITE
‘The boss of the John Lewis Partnership will not receive a pay rise this year after the business suffered heavy losses and took state support during the pandemic.
Dame Sharon White, the chairwoman, will continue to receive a base salary of £990,000 over 5m AED) “in line with the broader pay review restraint for senior leadership”, the group said in its annual report yesterday.’
The Times Newspaper (2021)
https://www.thetimes.co.uk/article/pay-freeze-imposed-on-john-lewis-boss-sharon-white-vvr7cdf3r
TOP PAY - TWO CHIEF EXECUTIVES FRED GOODWIN
Former accountant/banker
apparent role in collapse Royal Bank of Scotland (RBS).
Resigned from RBS one month before RBS announced that it's 2008 loss totaled £24.1 billion which is the largest annual loss in UK corporate history.
RBS was bailed out by government totaling £45.5bn
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TOP PAY - TWO CHIEF EXECUTIVES FRED GOODWIN
Failure of RBS played an important role in the financial crisis of 2008-9
Triggered the worst recession in the UK since 1930s
Imposed significant direct costs on British taxpayers
Led to a long period of public service and military cutbacks.
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Your Interesting story
WHAT FAMOUS CHIEF EXECUTIVE OF A BANK CAN YOU DISCOVER IN 10 MINUTES ON THE INTERNET:
Discuss their pay/benefits?
Net Worth?
Reason why they joined the business/or had to leave the business?
Redundancy package?
Interesting points to the story….
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Mis-selling of payment protection insurance (PPI)
Mis-selling of payment protection insurance (PPI) is by far the U.K.’s biggest financial scandal.
Payment Protection Insurance is designed to cover loan or credit card payments if you cannot work, for example, if you become ill or lose your job. Banks and other lenders sold PPI to their customers without fully explaining what it covered.
https://www.which.co.uk/news/2019/05/already-made-a-ppi-claim-you-could-still-be-owed-money/
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TOP PAY IS CRITICISED BECAUSE
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TOP PAY IS CRITICISED BECAUSE
EARNINGS GAP BETWEEN DIRECTORS AND EMPLOYEES IS VERY WIDE
NO DOWNSIDE FOR DIRECTORS WHO RUIN COMPANIES i.e. Fred Goodwin was not punished by the Financial Services Authority (FSA) despite what the regulator described as a “series of bad decisions” in 2007 and 2008.
SHARE OPTIONS MEAN MONEY IS NEVER LOST
TOO MUCH EMPHASIS ON SHORT TERM GAIN
ENCOURAGES UNNECESSARY RISK TAKING
TOP PAY IN THE UK
ELEMENTS
BASIC PAY (can be 50% of total earnings)
SHORT TERM INCENTIVE (STI) SCHEMES
LONG TERM INCENTIVE (LTI) PLANS
which include SHARE OPTIONS & SHARE OWNERSHIP
BENEFITS especially ENHANCED PENSIONS
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TRENDS IN TOP PAY
STI TO LTI
USUALLY WITH A ‘GOLDEN HANDCUFF’
SHARE OPTION TO SHARE OWNERSHIP
PUTS MONEY AT RISK
PERFORMANCE JUDGED AGAINST COMPETITORS
NOT ON SHARE PRICE ALONE
REDUCTION IN EXCESSIVE PAY- OFFS
TO FAILING EXECUTIVES
Pay structures RECAP / type of pay commonly used in UK – Spot Rates/Rate for the job
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RECAP: SPOT RATES and RATE FOR THE JOB do not involve pay scales
SPOT RATES
MANAGER USES HIS/HER JUDGEMENT TO DECIDE PAY
OFTEN IN SMALL OR START UP COMPANIES
COMMON FOR DIRECTORS & FOOTBALLERS
RATE FOR THE JOB
COMMON FOR MANUAL JOBS
WHERE PAY IS NEGOTIATED WITH A UNION
WHERE STAFF BECOME FULLY COMPETENT VERY QUICKLY e.g. refuse collector/council worker digging up roads
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Women chain makers on strike
Seafood Workers: Shrimp pickers, including little 8-year-old Max on the right.
Child labour in the coal mines
Why do we have unions?
Trade Union Activity
After violent protests in 1811 and 1812 Trade unions could now no longer be ignored as a political force, though employers remained reluctant to treat workers' representatives as their equals.
During the 1830s labour unrest and trade union activity reached new levels.
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Union Recognition
A trade union is recognised when it is:
independent, and
recognised by an employer, or two or more associated employers, for the purpose of collective bargaining.
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https://www.cipd.co.uk/knowledge/fundamentals/relations/employees/trade-unions-questions
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One big union?
Numbers of Union members are declining. WHY?
Collective bargaining and reward
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https://www.cipd.co.uk/podcasts/trade-unions
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Employee relations
replaces the term 'industrial relations' which referred to collective relationships between employers and their workforce.
Today’s interpretation of employee relations is much wider and refers to individual as well as collective workplace relationships.
Trade union influence is still an everyday reality for some organisations, particularly in the public sector, but continues to decline across the wider economy.
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https://www.cipd.co.uk/knowledge/fundamentals/relations/employees/factsheet
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What is the process of collective bargaining?
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Union demand/claim
Management proposal
Negotiations
Collective agreement
Third party referral
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Group 1 and 2: Union Representative and Collective Bargaining
Group activity - 20 mins [Prepare your own brief PowerPoint Slides]
Group 1 - Read slides 37-45 and summarise
Group 2 – Read slides 46-52 and summarise
Discuss in class what you have learned
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What is collective bargaining?
Covers:
terms and conditions of workers in a defined 'bargaining unit'.
all employees in a workplace or just certain groups of workers, e.g. technicians.
One of the aims of a trade union is to negotiate with employers about matters affecting their members and other employees.
Once recognised in a workplace, the negotiations with the employer are called collective bargaining; these negotiations are about the terms and conditions of employment.
Collective agreements within the workplace cover both union and non-union staff. Trade unions often negotiates on behalf of the staff employed in a specific group/unit.
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What is the collective bargaining process?
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Collective Bargaining
As a general rule, collective bargaining involves negotiations on pay, hours and holidays (the core topics). Parties often voluntarily reach agreement on other issues.
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What is collective bargaining?
Trade unions and employers will agree on how the process will operate, for example:
who will represent the workers, or group of workers (bargaining unit) in negotiations?
which workers are included in the bargaining unit?
how often meetings will take place?
which issues, including which terms and conditions will be discussed?
how failures to agree will be resolved?
how discussions will work if more than one trade union is recognised?
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Collective bargaining and reward
Less than a third (29%) of all employees in the UK are covered by collective bargaining. In the private sector coverage is lower at around a sixth of the total %.
The key bargaining level is the company or the workplace.
Pay and other aspects of reward are determined by collective bargaining between an organisation and a union.
For all public sector employees and a minority of manual (‘shop floor’)* workers in companies.
The opposite of individual pay contracts.
* ‘Shop’ refers to a workshop and not a retail store
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Third Party Referral
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Exercise of a power delegated by contract to a third party (mediator) to resolve disputes to settle their difference by giving his Expert opinion on any matter referred to him by the parties.
Third-party intervention such impartial facilitation, conciliation, mediation and arbitration to avoid strikes and resolve collective bargaining disputes.
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‘Old style’ collective bargaining. Example: London underground with Bob Crow (1961 – 2014), the Union leader Hero or ‘held to ransom’ costing taxpayers millions 2019 – 55,011 GBP (AED21,583 approx.)
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‘Old style’
Strong militant unions
Frequent strikes
National pay bargaining
Rate for the job, no pay scales
No performance pay
https://www.youtube.com/watch?v=7nOHfKHwWwU
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Collective bargaining and reward is changing
Strikes can result in business downturn and redundancies.
Reduced government spending in the public sector.
Legislation e.g. national minimum wage.
Decline in union power in the private sector.
Union mergers.
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Unite: the largest UK union
Unite the Union, commonly known as Unite, is a British and Irish trade union, formed on 1 May 2007, by the merger of Amicus and the Transport and General Workers' Union. It is the largest trade union in the UK and Ireland. The General Secretary of Unite is Len McCluskey.
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Collective bargaining and reward
Trends:
Reduced or no pay award to save jobs particularly in public sector where government spending is reduced.
Local pay bargaining.
Pay linked to changes in work practices.
Long-term e.g. two-year pay agreements.
Appraisal and performance related pay.
Increases not always matching inflation.
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Collective bargaining negotiation
Basic pay
Rates for overtime
Allowances
Hours of work
Changes in work practice
Pensions
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Trends in pay determined by Collective Bargaining
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Trends in pay determined by collective bargaining/union and business resolution can include the following but one - which is the odd one out?:
pensions provision
a trend towards local pay bargaining
increased use of appraisal and performance related pay
pay linked to changes in work practices
an increase in union membership in the UK private sector
Trade union and reward
Major concerns to Unions and Employees:
Having to accept low pay to save jobs.
The public sector pay rise cap.
Company response to the national living wage.
Pensions changes.
Executive pay.
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Unions protest about pensions
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Reward (pay) agreements are usually about…..
Not just about pay.
Can involve items such as:
hours of work
length of agreement
staffing levels
overtime rates etc.
In a negotiation, the employer may ‘win’ on certain items, the union ‘win’ on others
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5 minutes to revise narrow graded pay structure for MOCK
