Student 1
A huge part of job evaluation is the idea of external competitiveness. As human beings, we are constantly comparing ourselves to others, as well as outweighing the pros and cons to every option and every decision that we make. When applying to jobs, accepting a new role, asking for raises, seeking promotions, outside competitors are always being compared in order for the best decision to be made. External competitiveness is defined as the pay relationships among organizationsthe organizations pay relative to its competitors Gerhart, B., Newman, J., & Milkovich, G. 2017, p 215). External competitiveness occurs amongst many if not all companies that have competitors that require their employees to obtain similar qualifications, qualities, experience, and skill sets. When a company increases wages for itss employees, employees of competitors can use this to their advantage in order to seek raises. One example of this is Walmart. On Thursday February 18, 2021 Walmart announced their plan to rage pay for 425,000 of its employees in the United States as large companies face mounting pressure to increase pay for low-wage workers (Walmart will raise wages for 425,000 workers, 2021). According to the article, Amazon raised its starting wage to $15 an hour in October 2018, while Target made that move last year (Walmart will raise wages for 425,000 workers, 2021) . My biggest take away from this article is that external competitiveness is everywhere and that this was an attempt to reward and keep the employees they have to maintain their successful business, rather than lose them to competitors.
Student2-
External Competitiveness refers to pay comparisons with competitors. Some employers may set their pay levels higher than their competition, hoping to attract the best applicants. External competitiveness decisions are based on how both how much and what form and have a two-fold effect on objectives firstly to ensure that the pay is sufficient to attract and retain and secondarily to control labor costs so that the organizations prices of products or services can remain competitive in a global economy. External competitiveness is expressed in practice by setting a pay level that is above, below, or equal to that of competitors and by determining the pay mix relative to those of competitors. Pay level refers to the average of the array of rates paid by an employer: (base + bonuses + benefits + value of stock holdings) / number of employees. Pay mix refers to the various types of payments, or pay forms, that make up total compensation. Both pay-level and pay-mix decisions focus on two objectives: (1) control costs and increase revenues and (2) attract and retain employees.
I read an article about Chris Farkas, CEO of eAlchemy, a Petaluma, California-based company that develops business intelligence and analytics software, who had less room to compete on wages. Rather than provide across-the-board raises to his nine employees, he typically rewards the best performers and bumps up staffers whose pay is below average. This year, he gave slightly bigger increases because of the tighter labor market, which is magnified by the competition for software developers among larger San Francisco area tech companies. But with the tech firms boosting pay more sharply, the number of applications Farkas receives is down about two-thirds from a couple of years ago. It is taking him about three months to fill a job opening, up from about six weeks two years ago and eight weeks last year.
Farkas is mostly responding by touting his firms tight-knit culture and work-life balance that typically has employees toiling no more than 40 hours a week compared with at least 50 hours at other area tech firms and allows them to telecommute three days a week. As the pay gap widens, that gets tougher and tougher.
What I learned from this article is that it is very difficult for small scale business to compete especially in terms of wages with their competitors who are giant organizations. Small businesses, navigating complexities faces more burden in catching up with their competitors especially if they must maintain the same culture and wages.
Student 3-
1.To what extent is the renewed job growth in the automobile industry in the United States due to the use of two-tier wages?
A system of wage payment where individuals doing the same job get different payments is a two-tier wage system. An organization with Two-tier wage system is where salaries and compensations that are received by superior employees are more than those paid to new employees. I believe that job growth and the two-tier wage structure related to each other depending on the economic factors affecting them. However, I think the renewed job growth is not entirely due to the wage structure. I believe that there are other factors such as recovery from recession and unemployment rates which can cause an increase in Job growth. As stated in our case study, Jobs were reduced during the recession and led to an increase unemployment. The two-tier wages systems is economically attractive to organizations especially the automobile industries and unions, Tiered wage systems enable automobile organizations to lessen labor expenses without altering current employees’ earnings and bonuses. This has renewed the job growth rate in the automobile industry. The introduction of two-tier wages brought about many effects in the organizations, both positive and adverse. According to Bentolila et.al (2012), it marked the birth of most of the labor problems that organizations deal with year after year. However, I think the two-tier wages brings a significant development to help motivate hard working workers in the organizations.
2.To the degree job growth (and increased car sales that come from more competitive labor costs) is based on two tier-wage structures; how sustainable is this approach? Consider, for example, that Fiat and Chrysler CEO Sergio Marchionne stated in 2011 that Long term, (the system) is not a viable structure. It creates two classes of workers within the plant. It doesnt work in the same direction we are working to get this organization to work in unison. Why would Mr. Marchionne make this statement? What are the potential drawbacks of a two-tier structure? When would we expect any such drawbacks to materialize?
Despite reducing the cost of labor expenses that organizations incur, a two-tier wage system has its challenges. This can lead to an interconnected chain of problems that end up retarding the organizations efficiency and management relationship with employees. Two-tier wages system is quite unfair on the part of the employees. Paying people who do the same work differently portrays obvious injustice. In some cases, it demotivates employees, leads to strike, unrest, and protest. Mr. Marchionne believed that the two-tier system is not viable in the long term.
3.What about the use of non-GM workers at the Chevy Sonic plant? What might Mr. Marchionne think about that approach?
Mr. Marchionne does not think two-tier systems to be viable and long-lasting. On the use of non-GM workers at the Chevy Sonic plant, Mr. Marchionne would have really taken the advantage of using the non -GM employees at Chevy because it will produce similar or the same output. I believe the UAW employees will not be in favor of the idea because of the effect it will have on their union.
4.Will the two-tier wage structure go away in the near future? Summarize the pressures to eliminate it as well as the pressures to keep it. Be sure to consider labor costs and productivity of workers and plants at other companies and in other parts of the world. Auto worker Gary Walkowicz, a member of the UAW bargaining committee at Fords Dearborn Truck assembly plant, estimates that Ford could convert its 14,685 Tier 2 workers to Tier 1 wages for $335 million per year. The UAW will likely point out that is a small fraction of the $6.9 billion North American profit earned by Ford the previous year. Your thoughts?
The two-tier wage structure will be there for a while due to economic pressure. They help in short-term reduction of costs and weaken the unions demands on the organizations by reducing their collective bargaining power. Its short-term reduction costs could lead to significant reduction of cost of labor in the long-run and can be useful to companies who is need it to be more efficient. However, it may slow down the decision-making process as coordinating a divided labor force is quite challenging. I believe the 2-tier system can still be useful to certain organizations which find themselves in unstable economies.
5.You may wish to do some research on the new Volkswagen plant in Chattanooga, Tennessee, the last one built in the United States. Also, consider that the Automotive News estimates that the Ford Fiesta (a competitor to the Chevy Sonic) plant in Cuautitln, Mexico may have labor costs as low as $150 per vehicle. Recall also our earlier discussion of where automobile production plants in North America have been built in recent years (as well as where they have not been built).
To be more proactive in reducing labor costs, automobile companies have a great quest to always reduce cost hence their constant establishment of companies in South America. Cheap labor cost in Mexico will be better than the high cost in Tennessee.
6. More recently, Fiat Chrysler CEO Sergio Marchionne referred to the two-tier wage structure as impossible and described it as almost offensive. However, Mr. Marchionnes actual plan may not be to eliminate the two-tier structure entirely. As we saw earlier in the chapter, it appears that base pay differences will remain between the two tiers. However, consistent with suggestions made by Mr. Marchionne leading up to contract negotiations, Tier 2 worker pay may move nearer or even equal that of Tier 1 workers when the companys profits are high through larger profit sharing payments for Tier 2 workers. By the time you read this, details on the new contracts between the UAW and each of the Big Three American car companies should be available. Gather the key facts and evaluate how well the new contracts will serve the interests of the companies and those of the workers (which are similar, yet different).
The contract will benefit both parties at the end. With an implementation of the contract, the system will become more efficient, and all the stakeholders will be contented. Such a harmony would help the organizations grow and increase their efficiency.
7.How do you think the UAW and the workers it represents will react to Mr. Marchionnes plan? Consider the global competitive market forces we have identified and consider also the degree to which worker interests in keeping and creating jobs and achieving higher wages (and/or total compensation) are in line with Fiat Chryslers interests. How large have profit-sharing payments for workers been at Fiat Chrysler and at Ford and GM in recent years? Why would the companies wish to raise pay levels using these sorts of payments rather than via increases to base wages? How will the UAW and workers likely react? Explain.
Mr. Marchionnes did not really plan to do eliminate the 2-tier radically but was aiming at a gradual process. The workers will feel betrayed by Mr. Marchionne. I believe that instead of totally dismissing the two-tier wage system, it would be better if an organization will learn how to improve it to be convenient for all the parties involved.
Student4-
1. A two-tier pay structure is a type of compensation structure in which one group of employees is paid less than the other. This is a violation of the pay equal to the work of the elders, the more profitable employees are paid more than other or new employees.
This leads to the following results in an organization: Experienced employees are paid more without increasing the overall compensation burden on the organization; A more competitive environment and better outcomes such as employees wanting to increase their productivity and compensation packages; New hires are hired at no cost to the company.
Use of a two-tier wage renewed job growth of the automobile industry in the united states in the following ways:
- Reducing labor costs per car allows significant savings for auto companies. Therefore, when an organization has to save so much money, it will provide maximum employment opportunities.
- The company can save about four hundred and fifty dollars per vehicle by reducing its labor costs. In addition, the company saves approximately seventy-two million annually, allowing U.S. vehicle manufacturers to become more competitive within the global market.
- New employment growth in the automotive industry in the United States has been significantly increased rather than double-digit. It is also clear from this case that the decline in the number of jobs due to recession and bankruptcy will lead to more employment opportunities.
- Hiring employees from an outside supplier, or also called contract employees, free up time for Tier 1 employees, making contract workers work easier and making skilled workers more focused on design and construction.
Therefore, the two-tier approach has been very sustainable, and the automotive industry, especially General Motors. Is more beneficial for. Implementing low paid employees who are able to perform most of the ongoing, simple tasks and tool work directed by a consultant is usually a Tier 1 employee. This savings can be used to increase market share and promotional activities that have contributed to increasing business sales and profits.
2. The two-tier wage structure represents a payment in which the workers are divided into two groups. One group earns less than the other group even though they share the same work profile. It is a “pay for performance” structure that compensates more productive workers in the form of bonuses and incentives without increasing base benefits. Compared to the compensation and base pay received by Tier 1 employees, Tier 2 employees received better compensation and base pay.
This approach hinges. Not because it forms the basis of internal conflict. Low paid employees will not feel motivated and motivated to work towards a common goal. This system complicates organizations. Employees are not able to take advantage of opportunities under the pressure of low pay. Even well-paid people don’t like to be part of it because their pay is so low.
He is the CEO of Fiat and Chrysler. Sergio Marchionne opposes the system because he thinks it will not work in the long run. He has made this statement to highlight a fact. An organization with different labor packages will not be able to form an effective team. Because Tier 2 employees do not receive the same base salary and incentives, they will not be eligible in the same direction. This whole process directly affects the company’s performance.
The Tier 2 wage structure has the following shortcomings: pay inequality; Two groups create employee dissatisfaction; Working towards a common goal seems to be lost on employees; Employees can never implement a cooperative approach.
These shortcomings can be addressed when employers are running out of cash or in the early stages of business. This system pays good dividends if applied for a short time. Employees placed on a two-tier system should be informed that they will receive equal pay for equal work when the company reaches the stage of development.
3. A two-tier pay system is a two-tier payment system where the workforce is divided into lower and higher payers. Outsourced employees are offered 20 on an hourly basis which is comparatively less than Tier 1 and Tier 2 workers. It reflects the company’s inequality and uniqueness towards existing employees in order to reduce its own responsibilities and costs.
Mr. Marchionne is generally sensitive to any inequality in such situations. According to him, due to the two-tier pay system, the input value of their salaries, performance appraisals or promotions compared to other employees can be understood in proportion to the input value propositions. If there is no match in the salaries of the new workers as compared to the old colleagues, then there is inequality in the new worker and consequently de-motivation. Therefore, even in this case, he will express his dissatisfaction with such decisions.
4. This case illustrates the two-tier pay system adopted by companies for cost reduction. It is actually used by companies to protect them when they are not performing well. These companies operate on a profit-sharing model. Having no benefits means they are not responsible for providing higher compensation benefits to employees.
The two-tier pay system will not be completely abolished in the near future. There are many business owners who like this system because it is the most powerful tool to reduce costs. Each coin has two sides, both good and bad.
The pressures to eliminate two tier wage system are as follows:
- Inequality in pay is the biggest shortcoming in this system. In a way, it is against the law to insist on equal pay for equal work.
- Employee dissatisfaction is always seen in this system which acts as a barrier to beneficial results.
- Due to the pay gap, employees can never work towards the general directional goal. They are not able to work together which is not good for the company’s performance graph.
The arguments to keep this system into practice are as follows:
- It is considered a powerful tool to reduce labor costs by reducing the company’s costs.
- For companies in the early stages, this technique is useful because companies themselves are not sure how much profit they are going to make.
- To earn more incentives, employees always feel excited and motivated.
Ford can convert its Tier 2 employees to Tier 1 at a cost of $335 million per year, a small fraction of their annual profit. This should be done without giving a second thought. The company Ford is earning enough to maintain an equal pay policy for equal work. To keep a company growing, employees and customers must be happy. UAW has highlighted the right point. The company Ford merged Tier 1 and Tier 2 employees so that all employees could work towards a common goal.
5. The case speaks to the two-tier system that is prevalent in the automotive industry. This system helps companies manage their finances. The two-tier system is based on the benefit sharing model. If a profit is made, workers are responsible for getting more incentives. If there is no benefit, no incentives will be given.
Research on new automotive plans shows that a two-tier pay system still exists. UAW and three major companies have agreed to pay less to new workers. The cost of labor in Mexico is approximately $150 per vehicle, much lower than the cost per vehicle that provides workers with $50 / hour. It takes about 17 to 18 hours to build a normal vehicle. Therefore, the price per vehicle provided by the companies in the United States is much higher than that offered by Mexico and its allies.
If two levels of tier-two systems are considered, the giant companies have a thin line between the salaries of tier-1 workers and tier-2 workers. Overseas operating already helps them save a lot of money. Although these companies maintain dominance in their home countries, assembling and other services are also performed in other countries. These companies receive a small amount of quality work in countries other than the United States.
The plants that have been planted in recent years follow the same two-tiered pay system with a thin line of difference. These workers also understand that they need to prove themselves if they are to be considered a level 1 employee.
6. The question is about the agreement reached between UAW and the three major US companies. The Big Three is a group of three American companies. The CEO of one of these companies is against the two-tier pay system, which he said is abusive and inappropriate.
Although many claims have been made against the two-tier pay system, it is still valid. Initially, the UAW thought the payroll system was a private matter, but after a series of complaints from tier 2 wage receivers, it went away. It first fights Fiat’s targeting system and gradually targets all three major companies.
It first fights Fiat’s targeting system and gradually targets all three major companies. There are many examples of UAWs in which people get a second salary. They are not able to get jobs when they try to move from the tier 2 wage system to a new place.
This is due to their Tier 2 tag. Companies also have a lot of offers; He added that the Tier 2 pay system has been one of his savings since the recession. He also said that they provide adequate compensation to the employees as per the distribution of profits. UAW does not win the case, but a new contract is made to protect the interests of employees.
Of the top three companies, Fiat is in favor of removing the two-tier wage structure. The other two agree with UAW that Tier 2 salaried employees should be compensated in much the same way as Tier 1 employees. They are contracted to serve the interests of employees. Crossing the gap is a slogan adopted by companies to make employees happy and make the company competitive.
7. The case illustrates the concept of a two-tier pay system. Many companies apply this concept to lower labor costs. Is a powerful tool for managing the company’s finances even in adverse conditions. The system has both advantages and disadvantages.
Marchionne, who is the CEO of Fiat, is strongly opposed to the Tier 2 system and seeks to bridge the gap between the two groups of workers. Both UAW and employees will probably appreciate his plans because he is speaking in favor of employees.
Fiat and Chrysler are taking care of employee interests, so it is taking further steps to increase employee satisfaction. Creating jobs and getting paid more is compatible with Fiat and Chrysler in line with global competitive market forces. This is because Fiat Chrysler understands that happy employees contribute more. They work with more dedication and willingness which results in an increase in the performance of the company. It will also help in creating a positive image of the company in the market and more employees would like to be a part of it. The automotive sector depends entirely on the speed of labor. The more work they do, the more vehicles are completed.
Profit-sharing payments for workers in the big three companies are still fixed in the companies but some of the terms and conditions imposed by the UAW are being complied with. Companies are not allowed to harass employees in the form of low compensation. They are asked to draw a thin line between the packages given to both groups. Fiat Chrysler is slowly working to eliminate this system. In recent years the method of profit sharing has made a significant contribution in the interest of the workers. Bonuses and incentives are provided to employees with reference to the profits made by the companies. Many workers appreciate this structure because it keeps them motivated to do better.
Companies are not interested in increasing the base pay, but they want to close the gap by increasing the employee benefit percentage. This is because automobile companies cannot set aside profits and distribute salaries to employees in times of recession. If the base salary remains low. They can also pay compensation in times of slow or negative growth. An increase in base pay would be a compelling factor and companies would be restricted from paying higher compensation even if they were not making a profit. It is easier for them to distribute if they earn more.
UAW and employees are totally against the two-tier pay system, but the agreement and compromise give them a sign of relief. Companies are also trying to serve the interests of the workers. They are not inflexible in their behavior. Workers and UAW may impose some other conditions. And conditions. Workers will also be satisfied that companies are thinking in their favor.
Student 5-
Read the job descriptions. Are they accurate descriptions for jobs that you would be applying for? Why or why not? Are there jobs for which you cannot find an appropriate match? Why do you think this is the case?
I believe that the description for the job of Human Resources Assistant I is very accurate. An HR Assistant provides administrative support to one or more human resources functions, including recruiting, employee/labor relations, compensation, benefits, training, equal employment opportunity, and/or employee records. According to www.salary.com that is the job description, and thorough research that is what the job entails. I find that most Human Resources jobs are pretty common and that an appropriate match will always be able to be found. I’ve only been recently applying for jobs and I believe HR-related jobs are broad because every organization needs HR.
Look for a description of how these salary data are developed. Do you think it provides enough information? Why or why not? Discuss some of the factors that might impair the accuracy of these data. What are the implications of using inaccurate salary data for individuals or companies?
Salary data is developed by employees reporting their salaries. I believe for most jobs the salary data provides enough information. I think the information is accurate and up to date because employees report their salaries. Some factors that might impair the accuracy of the data are if only a few employees report on a specific job title. This will cause the sample to be small, and the average may be skewed. Some implications of using inaccurate salary data for individuals or companies are just bad on principle, it can have serious negative effects on a business. If an organization is paying their employees too much, then their bottom line will start to suffer and if they are paying their employees too little, retention and employee engagement will become an issue.
What is the relevant labor market for these jobs? How big are the differences between salaries in different locations?
I believe that the jobs are all relevant in the labor market. The salaries for the same position in other locations were very similar, there was a little different but not an overwhelming one. The reasoning could be the supply and demand for this particular job in the different locations.
What factors can shape an organizational external competitiveness?
Some factors that can shape an organizational external competitiveness are nature of Demand, nature of supply, product market factors, level of product demand, degree of competition, organizational factors, and employer size.
Which jobs are paid more or less? Is this what you would have expected? Why or why not?
Since I chose Human Resources Assistant I, Human Resources Assistant II and Human Resources Assistant III obviously pay more because they are a higher ranking. I would expect this because they are higher levels so they should be compensated more.
What factors could explain the differences in the salaries?
The factors that could explain this difference in the salaries are that these are jobs that require more qualifications. These jobs are higher ranking, so the higher up in the ladder someone is, the higher their salary will be.
For each job, compare the median salary to the low and high averages. How much variation exists? What factors might explain this variation in pay rates for the same job?
After comparing the median salary to the low and high averages, I found that there is a variation that exists. The variation is a couple of thousand in both directions. The highest variation I see is ten thousand in both directions from the median. Some factors that might explain this variation in the pay rates for the same job are more qualified people and people who may have more experience in the field. Raises may also have an influence.
With this information available for free, why would you bother with consultants surveys?
Even though this information is available for free, I believe that consultants surveys are more accurate. They also may be more specific about the jobs we look for.
If you were a manager, how would you justify paying one of your employees either higher or lower than the results shown on this website?
If I were a manager, I would justify paying one of my employees either higher or lower than the results shown on this website by looking at employees individually. I would look at their experience, their education, and all the factors that go into an individual’s salary.
Student-6
- I chose to research credentialing specialist, human resources assistant, and mechanical engineer. I believe that the job descriptions are pretty accurate especially for the credentialing specialist and human resource assistant because these positions are very task oriented and require more administrative experience and skills. These job descriptions can be more vague as opposed to when I researched the job description of a mechanical engineer. This position it can be difficult to find an appropriate match because depending on the company, it can be a very specific role and not every aspect of the position is mentioned in the job description. There are some aspects of a position you dont realize are apart of it until you have the job.
- I do not think the description of this salary data is developed and does not provide enough information I think the salary range is too large and broad and does not provide an accurate indication of what they offer. I also believe there is inaccurate information because depending on the individual hired, or the companys financial abilities at the time, salaries can change. Depending on the employees level of expertise, education, and skills their wages can differ, so not all information can be the same for everyone. I thin this can be problematic because the inaccuracies can either deter applicants away, and or mislead employees from thinking the pay is higher or lower than it really is, thus wasting time on both sides.
- I looked at locations such as NY, NY, Florida, and Texas, and there is a large difference in pay for all three positions. New York had the highest salary margins, with Texas following, and Florida in the bottom. Floridas pay was a quarter of New Yorks offerings.
- Supply and demand, competition, market value, government regulations and policies, as well as stakeholders influence on the company, have an impact on external competitiveness.
- Human Resources assistant is paid the least, with credentialing specialist in the middle, and mechanical engineer is paid the most. This is exactly what I expected as mechanical engineering is a more specialized career which requires a specialized degree and experience as opposed to the other two positions.
- I think there is a decent amount of variation. I believe the reasoning behind it includes travel costs, amount of experience, level of education, and cost of living.
- Although I could gain this information for free, I would participate in these surveys to help ensure the accuracy of a position that I may have held in the past of currently hold. I would use the consults survey because it would include more accurate data.
- If I were a manager I would justify paying my employees lower or higher than the results on the website because it does not factor everything. An employee may be paid more on the website but they have more work than someone else might. They may have the same job description but they may have a different quantity of work. I also think work culture, type of management, job security, etc may play a role as well and may not be included in the reasoning behind a salary decision.
