Labor unions have really impacted compensation in my work place. Prior to the intervention of the labor union, the organization used to offer inequitable and unfair remuneration to its employees. Incentives and benefits were a rare scenario and no employee received them despite their exemplary performance. The labor union engaged the organization in a thorough collective bargaining process that led to improved compensation. Working conditions, Wages and benefits were improved to a satisfactory level. This resulted to improved job performance, job satisfaction and recruitment. The overall performance of the organization improved enormously.
Employees are continuously joining labor unions as the popularity of the unions is continuously increasing. As such these unions are expected to pose a great challenge to compensation practices in the next decade. Various laws have also been enacted to empower the unions. Employers will have to provide the best compensation. Cost of obtaining and maintaining labor will increase and some organization may resort to reducing the number of their employees.
Seniority pay practice
Each employee is treated identically thus eliminating the perception of favoritism. It creates a team of highly-experienced incumbents in a job. For instance a manager who has been doing the same tasks for 25 years is likely to perform better than one who has been doing it for 2 years. It also produces a stable workforce of loyal employees with a low employee turnover.
Seniority pay system is incompatible with a strategy to develop a high-performing staff. For instance, there is no financial incentive for an employee to do something more than the minimum acceptable performance since all employees are treated the same. Higher performing employees are more likely to leave an organization while the underperforming employees are retained. The system discourages creativity and innovation which would otherwise have led to improved job performance.
Merit pay practice
Merit pay systems eliminate low performance in organizations by encouraging employees to work harder and produce better results. It leads to an improvement in the general performance of an organization. Merit pay helps to increase the salaries of employees who are underpaid. It helps an organization to retain the best brains while at the same time encouraging creativity and innovation in the workplace.
The goodwill and cooperation between employees is compromised as everyone tries to perform best and outdo the colleague. Dishonesty and corruption is encouraged as everyone tries to earn the most. For organizations such as schools, teachers might award students marks that they do not deserve just to please the administrators and earn more. This will land a country into a bureaucratic nightmare.
Merit pay practice is more acceptable to my organization as it enables employees to earn in proportion to their efforts. It will therefore drive the employees to be more creative, innovative and work smart.
The organization uses Trait-Focused Performance Appraisal system where the dependability, helpfulness and punctuality of each employee are rated on specific intervals to check the progress of the employees. Sometimes, a comparison is done to determine those whose performance is wanting.
It uses a simple checklist that makes it easy to conduct evaluation. Enables the management to know the traits exhibited by employees thus accord responsibilities accordingly. It enables a healthy competition between the workers.
Performance evaluation is at the discretion of the supervisor and personal bias regularly prevails. Most employees end up with marks that are not satisfactory. This makes the system unreliable and inaccurate. It is only effective for departments such as the customer service department while very ineffective in most departments of the organization.