Employee Relation and Reward

8/16/2019 Employee Relation and Reward

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1. What is trade union?

A Trade union can be define as an association of workers of a certain industry who come

together in order to negotiate for their service conditions and also the legal protection on their

interests. A trade union is a continuous associate of the workers in order to maintain or

improve their working lives’ condition (Prasath, 2 !"#. $oreover, trade union is also an

organi%ation of employees who act collectively in order to promote and protect their mutual

interest by collective bargaining. The concept of trade unions are based on the &class'

struggle among the employees and their capitalist employers ()upta, 2 !*#.

Low level of unionisations of workers from younger generation

The issue of low union density among young workers is one of the most significant

challenges that organised labour faces (+nternational abour -ffice, 2 #. owe and /astin

(2 # have suggested that future union membership growth depends on the way unions can

deal with two ma0or challenges. The first is related to the way union strategies and structures

have to change in order to fit well with the rapid growth and diversity of service sector

employment. The second challenge is related to the ways unions will respond to the

demographic challenge of an ageing union membership, as it tends to be concentrated in

declining or slow'growth sectors. 1ounger workers’ much lower levels of unionisation areevident in almost all countries. ( ryson et al., 2 34 5aynes et al., 2 34 owe and /astin,

2 4 Pascual and 6addington, 2 4 7isser, 2 84 6addington and 9err, 2 2#. +n this

conte:t, three e:planations have been proposed for the low youth density rates observed

across different national settings. The first e:planation suggests that the attitudes of young

workers towards unionism are usually negative (Polavie0a, 2 !#. The second e:planation for

the low density among young workers places an emphasis on the structural characteristics of

youth employment and focuses on the opportunities of young people to unionise (;harlwood,2 24 5aynes et al., 2 34 Pascual and 6addington, 2 4 6addington and 9err, 2 24

6addington and 6hitston, !


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A wide variety of e:planations have been advanced to e:plain the decline in the level or rate

of unionisation among young workers. The first concerns a perceived rise in individualism

among young workers, which is often coupled to a re0ection of the collectivism inherent in

trade unions.

The roots of this argument lie in the new division of labour and in cultural modernisation. +n

particular, the arguments are advanced that individual responsibility is assuming priority over

traditional solidarities, such as trade unions and social democratic parties (7alkenburg and

>oll !


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of welfare states. These successes reinforced the legitimacy of union movements, which, in

turn, encouraged workers to 0oin and members to participate in union activities. The hostile

political and economic climate of the !


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How to increase unionisation of young workers

9ey to encouraging young workers to 0oin trade unions is ensuring that trade unions areavailable in the workplaces where young workers are employed. +n order to reverse the

aggregate membership decline sustained since the mid'!< s, trade union movements should

embark on a vast range of recruitment and organising campaigns. These campaigns could

direct to ensure that a trade union representative is present at every workplace. The impact of

these general recruitment initiatives is not assessed here, although they are fundamental to the

recruitment of more young workers, because it is at the workplace that most young workers

e:perience ineDuality and insecurity. +nstead, these emphasis is on the measures that have

been specifically introduced as a means to attract and engage with young people. +n broad

terms, activities should be concentrate in three areas4

F changing the image of trade unions,

F highlighting an agenda appropriate for young people,

F reforming union organisation to encourage membership and participation.

;hanging the image of trade unions. The view of trade unions held by many young people isheavily influenced by the portrayal of trade unions on the television. 6hile newspapers,

family members and work colleagues also influence the perception of young workers, they

have a minor effect compared with television. chools, colleges and universities are marginal

to the perceptions of young people towards trade unions. =urthermore, many young workers

see trade unions as implicated in their poor situation at work. A central issue is thus the

production of education and information materials appropriate for distribution at schools,

colleges and workplaces, which inform young people of the purpose and functioning of tradeunions.

A range of measures is also in place to @bring the perception of trade unions closer to young

people’. Trade unions now have a presence on many university campuses, particularly where

large numbers of students engage in part'time work. ome trade unions also participate in

professional training programmes. Cnions that represent nurses, for e:ample, often have

access to training programmes. This access is used to e:plain the professional advantages

accruing from union membership and serve as a recruitment platform. Efforts the alter theimage of trade unions among young people encompass a union presence at music festivals


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and concerts. Cnion stalls at such events are intended to increase awareness. Cnion

sponsorship is also becoming more popular. The )$ union in the C9 sponsors rentford

and cunthorpe football clubs, thereby ensuring that union logos appear on the players’ shirts.

$etal in Genmark used to sponsor the national women’s’ handball team, but no longer does

so because of financial cuts. The selected use of television by unions is also becoming more

freDuent. Advertisements intended to highlight the benefits of membership are being used, as

well as the more traditional participation of union representatives on news programmes.

=urthermore, many unions have employed young people in high'profile positions in order to

encourage more wide'ranging engagement with young workers.

5ighlight an agenda which is appropriate for young people. An agenda appropriate for young

people must address their situation within the labour market and any shift in attitudes.Throughout the !


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social pact in +taly makes specific reference to measures to address youth unemployment

(Begrelli !


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than assume that they will find the union. =urthermore, these campaigns acknowledge that

there are significant divisions within the category young worker, which necessitate different

recruitment approaches. The reDuirements of students working to fund their education, for

e:ample, differ from those of unskilled, low paid workers in catering or distribution, who are

often employed on atypical contracts. A third group among the young workforce is the

relatively highly paid technicians, specialists and professionals employed in computing,

banking or research and development, who may be relatively well paid. The -rganising

Academy of the Trades Cnion ;ongress (TC;# is specifically directed to the recruitment of

young workers. At the -rganising Academy young people are trained in recruitment,

representation and organising skills, before taking up recruitment positions in unions

affiliated to the TC;. The assumption underpinning the -rganising Academy is that @like best

recruits like’4 that is, young workers are most likely to be recruited by young organisers

(Pascual and 6addington, 2 #


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2. ACAS

Acas stands for the Advisory, ;onciliation and Arbitration ervice. They are a government'

funded organisation that helps sort out employment disputes. 6hen you make a claim to an

employment tribunal, an Acas ;onciliation -fficer will contact you to see if you want to use

Acas to help try and settle your claim. ettling your claim means coming to an agreement

with your employer to stop the case before the tribunal hearing. A settlement usually involves

your employer agreeing to pay you some money and you agreeing not to continue with the

case.

After theyHve spoken to you, the Acas ;onciliation -fficer will contact your employer to see

if theyHre prepared to negotiate through Acas to try and reach a settlement. Beither you or

your employer have to use Acas but youHll usually find their services helpful, particularly if

you donHt have a representative.

+f you have a representative, Acas will speak to them. 1our representative should keep youinformed of how any negotiations are going. ome representatives may choose not to use

Acas and negotiate directly with your employer instead.

+f you agree a settlement through Acas it is binding on both you and your employer. This

means that when youHve signed the agreement, you have to stick to it. o make sure you donHt

agree to any terms of settlement unless you’re sure you want to accept them. 1ou canHt

change your mind and carry on with your case once you have told Acas that you agree to the

settlement.

+f you donHt have a representative, you should try to get advice on the terms of the settlement

before you agree to it.

The settlement will usually be recorded on an Acas form called a ;-T*. 1our case will also

be automatically withdrawn from the tribunal.

ole of ACAS


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Effective relationships and good practice in the workplace help organisations succeed and the

economy grow.

Acas provides e:pert and impartial advice on good practice, and support in finding solutions

when relationships go wrong.

=or every I! Acas spends, there is at least I!2 benefit to the economy.

Acas (Advisory, ;onciliation and Arbitration ervice# provides free and impartial

information and advice to employers and employees on all aspects of workplace relations and

employment law. 6e support good relationships between employers and employees which

underpin business success. ut when things go wrong we help by providing conciliation to

resolve workplace problems.

6e also provide good value, high Duality training and tailored advice to employers. -ur

e:pertise is based on millions of contacts with employers and employees each year and we

are governed by an independent ;ouncil, including representatives of employer and

employee organisations and employment e:perts.

What we do

6e provide advice and support to improve organisational performance and Duality of

working life

6e improve employment relations and prevent conflict by producing statutory ;odes of

Practice and advice and guidance to help employers, for e:ample on how to write an

employment contract or handle discipline and grievance.

6e promote good practice by offering tailored training based on our respected guidance4 we

provide online training through the Acas earning -n ine site and other tools for

organisations to diagnose themselves4 and we offer a range of training courses and employer

network forums. ast year we trained around * , people.

6hen problems start to emerge, or people want help on their situation, we provide employers

and employees with free impartial e:pert advice through our 5elpline and 5elpline -nline

services. ast year we handled over one million calls and Dueries through the 5elpline ( *

!2* !! # and 5elpline -nline, and around ?8J of callers were able to take clear action

based on our advice.


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6here more comple: issues arise we offer in depth pro0ects to assist businesses and their

employees reach a lasting solution. ast year we conducted 223 pro0ects to help address

specific issues in workplaces.

6e help people to resolve disputes at the earliest stage and avoid conflict in the future

6e provide an individual conciliation service. 6hen conflict does arise, anybody planning to

lodge a claim with the Employment Tribunal must first notify Acas. -ur role is to help both

sides reach a mutually acceptable solution, which avoids the potential cost, time and stress of

the tribunal system.

+f we are unable to help those involved reach a solution, the matter can still go to a Tribunal.6e can continue to offer conciliation services right up to the hearing date.

6e also provide collective conciliation services to help employers and employeesH

representatives (Trade Cnions# to reach agreement on issues affecting groups of employees,

such as pay, and terms and conditions. +n 2 !*'!" we conciliated in around ?3 cases,

successfully helping resolve


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-ur e:perts and senior team speak at conferences across the country and beyond, offering

AcasH view on critical issues in the world of work4 and we welcome the leading names in

employment relations and the world of work to speak at our events.

6e use the skills of our people to deliver an e:cellent value for money service

=or every I! which Acas spends, there is at least I!2 benefit to the economy.

6e invite customer feedback and act on it. 6e publish the results of independent evaluations

of our services. 6e know that customers value our input highly, but we are not complacent

and strive continuously to improve.

6e invest in our people to develop their e:pertise and leadership potential further, and

actively work to improve our capability and efficiency, including through the ;ivil ervice

/eform agenda.

!s strike the only way to "rotest at the work"lace?

There are better ways of resolving conflict

6-/9 is an input to the productive process 0ust like any other. o going on strike is an abuse

of market power by an insider group. As things stand, employers can’t sack someone if they

go on strike. ut if a telephone company suddenly decided to stop the lines for 2" hours,

customers are free to voice their displeasure by simply claiming breach of contract and

choosing another provider. 6orse, if a telephone company deliberately refuses to supply a

particular customer, then it is probably in breach of competition legislation under prohibitions

covering &limitation in access to an essential facility or a network . -f course, there are

always going to be frictions between bosses and their workers. ut going on strike is the

wrong way to resolve them.

-n the other hand,

trikes are useful in combating in0ustice

Throughout history, strikes have proved an effective method of protest for the weak 0oined

together against the strong. The first recorded e:ample of industrial action took place in

ancient Egypt under /amses +++, when artisans working on a royal Becropolis downed tools

and the Pharaoh felt threatened enough to raise their wages. +n !


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$ade in Gagenham, a strike of women workers at the =ord plant led to the !< EDual Pay

Act. Another more recent triumph was in Poland, when ech 6alesa and olidarity organised

a revolt in the )dansk shipyards which many credit with playing a significant role in the

eventual defeat of ;ommunism. trikes can still play a hugely important role todayK in ;hina,

where workers have very few rights, a series of strikes at Lapanese factories that supply parts

to car making companies like Toyota and 5onda have forced bosses to respond to workers’

wage demands.

6orkers need strikes to get a fair deal

6hat would the world be like without unions to stand up for their membersM A sweatshop.

1ou 0ust need to look at the appalling conditions of workers in countries like ;hina or

angladesh to see what happens when workers don’t have mature labour legislation. 6e’re

giving in to a to:ic individualistic viewpoint if we eDuate the public good with what benefits

company bosses and shareholders, simply because we’re annoyed that the Tube isn’t running

for a day. Power isn’t naturally shared between owners and workers, it has to be negotiated,

and when negotiations break down, strikes are an effective way, more so than petitions or

placards, of reminding the bosses not to take their workforce for granted.


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#. $m"loyee elations

An industrial relations system consists of the whole gamut of relationships between

employers and employees and employers which are managed by the means of conflict and

cooperation.

A sound industrial relations system is one in which relationships between management and

employees (and their representatives# on the one hand, and between them and the tate on the

other, are more harmonious and cooperative than conflictual and creates an environment

conducive to economic efficiency and the motivation, productivity and development of the

employee and generates employee loyalty and mutual trust.

Actors in the +/ systemK Three main parties are directly involved in industrial relationsK

EmployersK Employers possess certain rights vis'N'vis labours. They have the right to hire

and fire them. $anagement can also affect workers’ interests by e:ercising their right to

relocate, close or merge the factory or to introduce technological changes.

EmployeesK 6orkers seek to improve the terms and conditions of their employment. They

e:change views with management and voice their grievances. They also want to sharedecision making powers of management. 6orkers generally unite to form unions against the

management and get support from these unions.

)overnmentK The central and state government influences and regulates industrial relations

through laws, rules, agreements, awards of court ad the like. +t also includes third parties and

labour and tribunal courts.


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The ma0or parties to employee relations are primarily individual employees and their

managers. 5owever, there are other important stakeholders in management O employee

relations.

Each of the above parties has a particular perspective to bear on the interrelationship betweenmanagement and managed.

$anagers tend to see employee relations in terms of one or more of the following activitiesK

;reating and maintaining employee motivation

-btaining commitment from the workforce

Begotiating terms and conditions of employment with employee representatives

haring decision making with employees

Trade unionists tend to seeK

;ollective bargaining about terms and conditions of employment

/egulating relations with other trade unions

/epresenting individuals and groups of individuals in conflict with their management

+mprove the ability of employees to influence the events in the workplace

+ndividual employees tend to seeK

+mprove their conditions of employment

7oice any grievances

E:change views and ideas with management

hare in decision making

Third parties, such as government ministers, arbitrators, 0udges and civil servants may see

employee relations inK


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;reating and maintaining harmonious relationship at work

;reating a framework of rules of fair conduct in employer employee relations

Establishing peace making arrangements to deal with repercussions of internal conflicts or

decisions made within individual organi%ations.

Achieving a prosperous society with 0ustice

There are many models of industrial relations. Botable among these is the ritish model.

+n the ritish model of industrial relations, there are three principal actors. These areK

(i# the workers and their trade unions,

(ii# the employers and their associations, and,

(iii#the government and its agencies.

The role of the workers and their trade unions is the supply of the skills necessary for the

production of goods and services while the role of the employers is the provision of the raw

materials including human resources and finance for the production of goods and services.

The role of the government and its agencies is the provision of an enabling environment for

the production of goods and services. Each of these actors performs its functions with the

e:pectation of certain rewards for their services. =or instance, the workers and their trade

unions e:pect bountiful salaries and other favourable conditions of employment in return for

their services while the employers and their associations e:pect good profits and other

pecuniary in return for their investments in raw materials and other resources supplied by

them for the production of goods and services. The government and its agencies e:pect ta:

and orderliness in return for their services in providing the enabling environment for the production of goods and services in organisations. A critical look into scenario 0ust painted

would reveal a conte:t of competition no matter how subtle. There are some conte:ts and

models of industrial relations which are not as overtly competitive as revealed above. The

ritish system, as painted above, no doubt, is competitive and that is the system practised in

Bigeria and some other countries of the world (Ayantun0i and Ayantun0i, 2 !*#.


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%. &road'anding

A pay structure that consolidates a large number of pay grades and salary ranges into much

fewer broad bands with relatively wide salary ranges, typically with ! percent differences

between minimum and ma:imum or more. (6orldat6ork, 2 "#

imply stated, broadbanding refers to the collapsing of 0ob clusters or tiers of positions into a

few wide bands to manage career growth and deliver pay. 6hen broadbanding was created

and massaged to its present defined form, several ob0ectives were foundK

F Gevelopment of broader work force skills

F ;areer development among employees

F /eduction of administration with 0ob evaluation, salary structure and merit pay.

(he Advantages of &road'anding

treamlines 5ierarchy

ometimes an organi%ation has become too hierarchical for the strategic direction of the

company4 finding it has become too slow to react, taking too much time to get information

from the top down and even less effective at getting messages from the lower rungs up to the

ears of senior management. roadbanding reduces the number of levels or layers within a


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company. This is the best face'saving way for an organi%ation to collapse salary ranges and

supporting de'layering. This flattens an organi%ational structure and reduces the hierarchy.

=acilitates +nternal $ovement

6hether we like it or not, some great person'to'0ob matches 0ust do not happen because of

the way a 0ob has been classified or positioned with an assigned salary band. +f that new

position is not a lateral or at a higher rung, most rational people will not seriously consider a

transfer that results in a demotion. That is 0ust not a positive step for their career

development. 6ith broadbanding, more internal movement is facilitated, because the

probability increases that one’s current 0ob and alternate position are within the same

enormous range of pay. This makes pay take a back seat and puts forward other attributes of a

position, encouraging internal mobility and potentially more developmental assignments.

Puts Added Trust in $anagement

6ith broadbanding, managers have great latitude to pay what they want to an employee. This

absolutely can reduce the push'pull between the hiring manager and the human resources

organi%ation. Bow the issue of pay shifts to the control of the hiring manager and the

challenge of Goes one have enough money in the current budgetM or not. The perception of 5/ as a regulating gate keeper to preserve the salary structure diminishes. $anagers are

entrusted with greater autonomy.

(he )isadvantages of &road'anding

Bo Awareness of E:ternal $arket /ates

Traditional salary structures, when done right, give current information to your managementteam about what market rates are. 6ith broadbanding, if a manager wants to pay at the

market midpoint, they are left baffled and guessing. There is no midpoint in a broad band.

That also means the comp ratio tool cannot be used.

$ay ead to +neDuities

roadbanding’s fle:ibility and trust in management may or may not be warranted. +n a broadbanding system, it is relatively easy to have two people with the same responsibilities


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have earnings that are thousands and thousands of dollars apart. roadbanding weakens the

linkage between salary growth and skill development for the ne:t higher'level, since it is so

far off as to not be a motivator. Go you want supervisors and their direct reports in the same

pay bandM That can easily happen with broadbanding.

+t only takes a few reckless managers rewarding a few individuals inappropriately to have an

entire pay system called into Duestion. 6hether your pay system is fair or not fair is not Duite

as important as if it is perceived as fair. +f your pay system is perceived as not fair, you could

see an increase in EE-; complaints. Gid you know the Gepartment of abor added

additional auditors after the passage of the illy edbetter EDual Pay Act in 2


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*. +actors that influence internal and e,ternal "ay

A combination of e:ternal and internal factors can influence, directly or indirectly, the rates at

which employees are paid. Through their interaction these factors constitute the wage mi:,

the following factors can affect the pay structure of a companyK

$,ternal +actors

The ma0or e:ternal factors that influence pay rates include labour market conditions, area pay

rates, cost of living, legal reDuirements, and collective bargaining if the employer is

unioni%ed.

abour $arket ;onditions

The labour market reflects the forces of supply and demand for Dualified labour within an

area. These forces help to influence the wage rates reDuired to recruit or retain competent

employees. +t must be recogni%ed, however, that counter'forces can reduce the full impact of

supply and demand on the labour market. The economic power of unions, for e:ample, may

prevent employers from lowering pay rates even when unemployment is high among union

members. )overnment regulations also may prevent an employer from paying at a market

rate less than an established minimum.

Area Pay /ates


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A formal pay structure should provide rates that are in line with those being paid by other

employers for comparable 0obs within the area. Gata pertaining to area pay rates may be

obtained from local pay surveys. 6age'survey data may be obtained from a variety of

sources, often available on the +nternet, Gepartment of abour, and =ederal /eserve anks.

Gata from area wage surveys can be used to prevent the rates for certain 0obs from drifting

too far above or below those of other employers in the region. 6hen rates rise above e:isting

area levels, an employer’s labour costs may become e:cessive. ;onversely, if they drop too

far below area levels, it may be difficult to recruit and retain competent personnel. 6age'

survey data must also take into account indirect wages paid in the form of benefits.

;ost of iving

ecause of inflation, compensation rates have had to be ad0usted upward periodically to help

employees maintain their purchasing power. This can be achieved through escalator clauses

found in various labour agreements. These clauses provide for Duarterly cost'of'living

ad0ustments (;- A# in wages based on changes in the consumer price inde: (;P+#. The ;P+

is a measure of the average change in prices over time in a fi:ed &market basket of goods

and services.

The ;P+ is largely used to set pays. The inde: is based on prices of food, clothing, shelter,and fuels4 transportation fares4 charges for medical services4 and prices of other goods and

services that people buy for day'to'day living. The ureau of abor tatistics collects price

information on a monthly basis and calculates the ;P+ for the nation as a whole and various

C. . city averages. eparate inde:es are also published by si%e of city and by region of the

country. Employers in a number of communities monitor changes in the ;P+ as a basis for

compensation decisions.

;ollective argaining

-ne of the primary functions of a labour union is to bargain collectively over conditions of

employment, the most important of which is compensation. The union’s goal in each new

agreement is to achieve increases in real wages''wage increases larger than the increase in the

;P+''thereby improving the purchasing power and standard of living of its members. This

goal includes gaining pay settlements that eDual if not e:ceed the pattern established by other

unions within the area.


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The agreements negotiated by unions tend to establish rate patterns within the labour market.

As a result, pays are generally higher in areas where organi%ed labour is strong. To recruit and

retain competent personnel and avoid unioni%ation, non'union employers must either meet or

e:ceed these rates. The &union scale also becomes the prevailing rate that all employers

must pay for work performed under government contract. The impact of collective bargaining

therefore e:tends beyond that segment of the labour force that is unioni%ed.

!nternal +actors-

The internal factors that influence pay rates are the employerHs compensation policy, the

worth of a 0ob, an employeeHs relative worth in meeting 0ob reDuirements, and an employerHs

ability to pay.

Employer’s ;ompensation PolicyK

The compensation ob0ectives of two organi%ations can be Duite different. -ne might strive to

be an industry pay leader, while another seeks to be wage'competitive by paying employees

at the seventy'fifth percentile of their competitors’ wages. oth employers strive to promote a

compensation policy that is fair and competitive.

All employers will establish numerous compensation ob0ectives that affect the pay employees

receive. As a minimum, both large and small employers should set pay policies reflectingK

!. the internal pay relationship among 0obs and skill levels.

2. the e:ternal competition or an employer’s pay position relative to what competitors are

paying.

*. a policy of rewarding employee performance.

". administration decisions concerning elements of the pay system such as overtime

premiums, payment periods, short'term or long'term incentives.

6orth of a Lob

-rgani%ations without a formal compensation program generally base the worth of 0obs on

the sub0ective opinions of people familiar with the 0obs. +n such instances, pay rates may be


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influenced heavily by the labour market or, in the case of unioni%ed employers, by collective

bargaining.

-rgani%ations with formal compensation programs, however, are more likely to rely on a

system of 0ob eva!uation to aid in rate determination. Even when rates are sub0ect tocollective bargaining, 0ob evaluation can assist the organi%ation in maintaining some degree

of control over its pay structure.

The use of 0ob evaluation is widespread in both the public and the private sector. The 0obs

covered most freDuently by 0ob evaluation comprise clerical, technical, and various blue'

collar groups, whereas those 0obs covered least freDuently are managerial and top'e:ecutive

positions.

Employee’s /elative 6orth

+t is common practice in some industries, notably construction, for unions to negotiate a

single rate for 0obs in a particular occupation. This egalitarian practice is based on the

argument that employees who possess the same Dualifications should receive the same rate of

pay. =urthermore, the itinerant nature of work in the construction industry usually prevents

the accumulation of employment seniority on which pay differentials might be based. Even

so, it is not uncommon for employers in the trades to seek to retain their most competent

employees by paying them more than the union scale.

+n industrial and office 0obs, differences in employee performance can be recogni%ed and

rewarded through promotion and with various incentive systems. uperior performance can

be rewarded by granting merit raises on the basis of steps within a rate range established for a

0ob class.

+f merit raises are to have their intended value, however, they must be determined by an

effective performance appraisal system that differentiates between those employees who

deserve the raises and those who do not. This system, moreover, must provide a visible and

credible relationship between performance and any raises received. Cnfortunately, too many

so'called merit systems provide for raises to be granted automatically. As a result, employees

tend to be rewarded more for merely being present than for being productive on the 0ob.


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Employer’s Ability to Pay

+n the public sector, the amount of pay and benefits employees can receive is limited by the

funds budgeted for this purpose and by the willingness of ta:payers to provide them. +n the

private sector, pay levels are limited by profits and other financial resources available toemployers. Thus an organi%ationHs ability to pay is determined in part by the productivity of

its employees.

+ncreased productivity is a result not only of their performance, but also of the amount of

capital the organi%ation has invested in labour'saving eDuipment. )enerally, increases in

capital investment reduce the number of employees reDuired to perform the work and in'

crease an employerHs ability to provide higher pay for those it employs.

Economic conditions and competition faced by employers can also significantly affect the

rates they are able to pay. ;ompetition and recessions can force prices down and reduce the

income from which compensation payments are derived. +n such situations, employers have

little choice but to reduce wages andQor lay off employees, or, even worse, to go out of

business.

. eward "ackage for e,"atriate

There are varieties of different reward packages the employers offer to their employees other

than money, each of which has its own effectiveness and varies from organi%ation to

organi%ation. +t is imperative for the organi%ations to understand the impact of their reward

strategies and the success of such reward packages depend greatly upon the best fit of their

packages to the employee’s preferences.

+nstead of local staff, e:patriates are the professionals who perform their 0ob duties outside

the country where they have been brought up. Therefore, the reward considerations for such

employees by their employer are different compared to the locally hired employees. 6ith the

growing trend of e:patriates, it is an important aspect of compensations practices by various

organi%ations. )lobal reward practices are eDually important for the organi%ations especially

the $B;s, and e:patriate compensation is the most important part of such practices.


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E:patriate ;ompensation

E:patriate compensation has always been considered a matter of dissent and trepidation (=ish

and 6ood, !


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on the assignment until the desired goal is accomplished. 6entland (2 *# and Ba%ir et al.

(2 !2# contended that in a number of compensation strategies, choosing the best fit is a real

challenge for multinational enterprises.

The alance heet Approach

alance sheet approach is considered as an all'encompassing method in compensating the

e:patriates ( ims and chraeder, 2 34 helton, 2 ?4 olomon, !


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($yers, !


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=actors Affecting E:patriate ;ompensation

=ra%ee (!


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educational e:penses at primary and secondary school level by covering the tuition fee or

miscellaneous for international and private schools (Allard, !

Documents

Employee Relation and Reward