Oneof the tools used by organizations to manage their human resource iscompensation. It is through correct compensation systems thatorganizations are able to receive the money’s worth as well asmotivating and retaining skilled employees. Compensation is hence thefeedback from the employer for employees’ work. Today’s employeesare unwilling to work for money alone (Long, 1993). They expect ’’extra’’. This extra is called employee benefits or fringebenefits. They are non-financial rewards offered in addition to asalary to enrich the employees’ lives.
Allworkers receive benefits regardless of their work input because theyare not performance based but instead membership based. As so, fringebenefits do not directly impact employee performance, butinsufficient benefits contribute towards low satisfaction,absenteeism and employee turnover. Employee benefits package mayinclude salaries, commissions, bonuses, life assurance, profitsharing, vouchers, pensions, medical insurance, capital bonds rewardschemes, company cars among others. While the benefits are mainlyimportant for motivating and retaining employees, they also attractnew employees to the organization (Frandsen, 2016). The wholecompensation package still remains among the reasons an employeeapplies for a certain job. The more attractive a package is, the moreinterest a position generates.
Howan organization whose employees are represented by a union can remaincompetitive against an organization whose employees are notrepresented by a union
Inmany organizations, labor takes among the largest chunks of overhead.This then cultivates a concern for any firm, whether its labor forceis unionized or not. The economic debate on how unionized labor canremain competitive against non-unionized ones still rages on.Nonunion organizations are typically more profitable and remuneratethe employees better because the overheads in operating such acompany are lesser.
Unionizedcompanies can remain competitive by managing labor relations. Thiscan be done by making the employees understand that labor markets arelargely driving market forces supply and demand for those jobs thatare competitive. This clarifies that profit factor is not the onlyorganizations concern. As so the union should not try to create acompensation system that is based on leveraging the organization toremunerate its employees above the prevailing market rates, butinstead should base the system on competitiveness (Leonard, 1992).
Unionizedorganizations should bridge the communication gap that eliminates thedirect link between employees and their employer. The latter isprohibited conduct direct negotiation with unionized employees, be itabout performance, pay promotions or pertaining working conditions.This is because the union acts as the voice that airs the workers’grievances, and hence, nothing can change in the workplace withoutinvolving the unions. It further makes it difficult for anorganization to respond to market changes rapidly leading toinefficiencies that could have otherwise been avoided. Eventually,these adjustments may make businesses flexible and more competitive.
Themanagement in unionized organizations should have a clear dialoguewith the union representatives against increasing the wages to anextent that the firm is totally unprofitable to close down. Theyshould have wage concessions so as to maintain the business afloat.In addition, the unions should strive to have full information aboutthe profit levels of a firm to avoid making a wrong assessment of anorganization’s financial position. This mostly happens when anorganization alleges that it is unable to meet the unions’ demandand yet refuses to allow the union to examine the books. Theunionized organizations can reduce union-induced deductions whichaffect future profitability of an organization. If the profit levelsfall, this deters the budget allocations for research and developmentas well as other forms of investments. In turn, it affects a firmnegatively since the unionized organizations tend to be lesstechnologically updated. The factor places them at a risk of gettingout of business should the market conditions change (Frandsen, 2016).
Anotherway that can see unionized organizations profitable is to reduceorganizational campaigns to the firms that can afford to pay unionwages and benefits. Let the unions, not negotiate for increased wageswhen the firm seems likely to close down since this increases it’sthe financial distress. Treating unionized workers as individuals asopposed to group identities can improve the productivity of a workerand later this will translate to businesses being more competitive.The unions constantly ignore individual performance, which wouldallow monitoring of each employee’s performance and consequenttailoring of the contract accordingly. This eliminates thepossibility of allowing employers to peg pay or promotion onindividual achievement.
Unionizedorganizations can remain competitive by getting well-designed unionwork rules. The rules should not be focused on increasing the numberof workers required to do a job or having stringent jobclassifications. This raises the prices of services or commoditieswhich make them lose customers in the process. The loss of customersand higher costs cuts business earnings, making unionized companiesless profitable and less competitive.
Inconclusion, unions have more negative economic impacts as they arelabor cartels who intentionally reduce jobs. Their interest isdriving wages up for their members. The scenario is different incompetitive markets. The effect of the unionization is makingorganization result to less investment, become less competitive,hence causing them to gradually sink. With the above discussedinterventions, the unions and organization’s management canco-exist to see the unionized firms more profitable.
Long,R. J. (1993). The Effect Of Unionization Of Employment Growth OfCanadian Companies. Industrial& Labor Relations Review, 46(4),691-703.
Frandsen,B. R. (2016). The Effects of Collective Bargaining Rights on PublicEmployee Compensation. Industrial& Labor Relations Review, 69(1),84-112.
Leonard,J. S. (1992). Unions and employment growth. IndustrialRelations, 31(1),80.