Fundamentals of Compensation and the Regulatory Environment Research Paper

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Compensation Scenario

Scenario Background -- Jack Parks is the benefit manager for a division of USA Motors. He is concerned about the level of absenteeism and the "paid absence" agreement negotiated a decade ago. The theory was that by giving workers a full week of paid absence against which they could charge personal absence, they would be encouraged to plan ahead and let supervisors know when they might be gone so that staffing could remain consistent. In reality, workers discovered that by not charging off any paid absence days they could receive a full week's pay in June when the company paid unused benefit hours. Workers had, in fact, come to think of it as a bonus that coincided with summer vacations when USA shut down for inventory in the summer. Parks believes that he can control this abuse of a benefit by a series of percentile deductions on future pay for chronic absenteeism once vacation, holiday and sick pay was used up. Parks sent his idea to the corporate negotiators who, after looking at the potential corporate benefits, placed it as a high-priority bargaining topic for the upcoming union contract negotiations.

Paid Absence as a Strategy -- In a larger work organization, absenteeism is the single largest cost in terms of lost labor time. It can be viewed as an indicator of poor performance, but because human beings are individuals, with individual and unique needs and issues, must be part of any contract between worker and employee. There is a difference between someone who takes off work to get a serious dental procedure, someone who has stayed up too late and imbibed the night before, and even an employee with fever and flu symptoms who insists on coming to work anyway. One model indicates that when people are dissatisfied with their jobs, they are absent more frequently -- they are withdrawing from the workplace. In some ways, using a paid benefit as a way to make money but become absent, is also indicative of this type of behavior (McClenney, 1992).

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By the same token, it is almost impossible to never be ill, need time off for family issues, or other emergencies that are unplanned. For this reason, it is vital that an employer have a sick leave/absenteeism plan. The issue, though, centers around the legitimate use of such a plan rather than finding ways to abuse the situation and, in the case of thousands of workers, essentially penalizing the company (Treble and Barmby, 2011).

Part 1 -- Will incentive plan work? There are some clear benefits to the company regarding Parks' new Absenteeism Plan; however, there are also some union/worker issues that will be problematical, at best, in gaining its acceptance. Psychologically, it is extremely difficult to have a benefit one day, and then have that benefit taken away or changed dramatically the next. Human nature being what it is, it will appear to many of the workers that they are being punished rather than being rewarded for better attendance. For instance, if Parks' incentive plan were to be implemented without union negotiation, it would look like this:

Standard

Effect

Stays under standard

No effect on salary

None

Exceeds allowable standard, vacation, holiday and sickness/accident plan

Absentee benefits cut 10% for six months

Loss of 10% benefits, variable effect based on actual benefits

Continues to exceed above

Absentee benefits cut actual percentage of absent days incurred

Additional loss of benefit

In essence, this is an incentive plan to come to work -- and would likely be effective for some employees who are chronic in their absenteeism for non-serious reasons. However, in the case of emergencies, this does punish people for unplanned or unmitigated occurrences. There would need to be a series of options (short-term or long-term leave, etc. For situations out of the employee's control).

Part 2 -- How much absenteeism is under an employee's control? In any person's life there are uncontrollable, especially when dealing with children. Sickness, injury, family death, weather, etc. are all parts of absenteeism, termed….....

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