How the role of unions can affect the management of the compensation program within an organization
Unions are created to look out for the interests of workers and ensure that they get the fair compensation they are owed. They also ensure that companies do not exploit their workforce. However, the efforts of these unions are not always beneficial to workers and companies, and sometimes the bargaining power they have over companies can have a detrimental effect on the interests of workers.
Higher and more equal wages
Unions ensure that workers earn higher wages and compensation than in institutions where there are no unions. Unions are also likely to work for increased wages for employees who receive a low- or mid-range compensation package, or for workers in the blue-collar category as opposed to those at the white-collar level. Workers without college degrees also rely on unions to negotiate better wages for them. As a result, they set a salary benchmark. And non-union companies have to match these levels and offer competitive wages to hire the labor they need.
benefit packages
In addition to basic wages, companies with a unionized workforce offer better benefits in the form of health, life, dental, and disability insurance. Vacations, sick leave and paid leave, in addition to assistance with higher education expenses and advice on legal matters, are other benefits they offer. In keeping with the growing trend toward family-oriented wellness programs, companies are allowing workers to take time off to care for elderly relatives and children, and may also allow them to work from home. They set up crèches at workplaces and offer less strict work hours.
Non-salary compensation
In addition to the fixed wages and benefits workers receive, companies often offer other compensation through options such as periodic bonuses, percentage or company profit sharing, and company stock. And employees may prefer to accept positions with companies that offer these advantages even if they offer lower wages. However, unions typically expect companies to pay higher standard wages, so companies may have to offer additional lower non-salary compensation.
Awareness and Unemployment Compensation
Unions keep employees informed about their rights and the compensation they are eligible for to empower them. If workers have a grievance against the company, unions help them by providing representation and information on the proper procedures. Unions also help workers with negotiations about the unemployment compensation they are entitled to receive if they are separated. In situations where employees lose their jobs for filing legitimate claims or the company disputes workers’ claims, unions provide assistance where necessary.
retirement benefits
Workers who belong to unions are more likely to stay with the company for longer periods and are therefore eligible for better disability and retirement packages. Unionized workers generally retire earlier than other workers and claim a better pension. Companies are also offering better health insurance to retired workers and are likely to contribute more to retirement funds at a later date. On the other hand, due to the additional spending, companies have to employ fewer workers and this creates unemployment among non-union workers. Companies may also have to increase the prices of their products to offset the additional labor costs.