Chapter 7 - Recognizing and Rewarding Employees

Simple to understand and use advantage more refined

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Unformatted text preview: obs within the area o use wage- survey data Cost of Living • because of inflation, compensation rates tend to be adjusted upward periodically to help employees maintain their purchasing power o consumer price index (CPI) – measure of the average change in prices over time in a fixed “market basket” of goods and services ! Price of food, clothing, shelter, fuels, medical, etc. ! statistics Canada calculated CPI for Canada ! using CPI to determine changes in pay rates creates inequities among those who receive wage increase Collective Bargaining • one of primary functions of a labour union is to bargain collectively over conditions of employment (most important is compensation) • real wages – wage increases larger than rises in the consumer price index; real earning power of wages o union’s goal is to achieve increases in real wages to improve standard of living of its members • agreements negotiated by unions tend to establish rate patterns within the labour market o wages higher in areas where organized labour is strong • non- union employers must meet or exceed rates to recruit and retain competent personnel and avoid unionization • “union scale” becomes prevailing rate that all employers must pay for work performed under government contract Legal Requirements • Legislation is in place that either influences or requires certain pay rates • Pay equity legislation obliges certain companies to pay the same wage rate for jobs of dissimilar nature and is based on comparing jobs performed mostly by men to jobs performed mostly by women • Company must use a “gender- neutral” system and compare jobs based on amount and type of skill, effort, and responsibility needed to perform job and working conditions Job Evaluation Systems • Way to determine relative worth of jobs in an organization Job Ranking System • Simplest and oldest system • Arrays jobs on basis of their relative worth • Job ranking can be done by single individual knowledgeable about all jobs or by committee composed of management and employee representatives • Weakness – does not provide very refined measure of job’s worth Job Classification System • Jobs that are sufficiently alike with respect to duties and responsibilities are grouped and will have common name and common pay • Increasing job responsibility, skill, knowledge, ability, or other factors selecte...
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