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 receive their fair compensation. They also make sure that companies don’t exploit their workforce. However, the efforts of these unions are not always beneficial to workers and companies and, at times, the bargaining power they have over companies can have a detrimental effect on the interests of workers.
Higher and equal wages
Unions ensure that workers earn higher wages and compensation than in non-union institutions. Unions are also likely to work for higher wages for employees who receive a lower or mid-rank compensation package, or for workers in the blue-collar category as opposed to white-collar workers. Workers without college degrees also rely on unions to negotiate better wages for them. As a result, they established a salary benchmark. And companies that don’t have unions must match these levels and offer competitive wages to hire the workforce they need.
Benefit packages
In addition to basic wages, unionized companies offer better benefits in the form of health, life, dental and disability insurance. Vacation, sick leave and paid leave, as well as assistance with higher education expenses and legal advice, are other benefits they offer. In keeping with the growing trend toward family-oriented wellness programs, companies allow workers to take time off to care for their older relatives and children, and may also allow them to work from home. They establish daycare centers at workplaces and offer less strict work hours.
Non-salary compensation
In addition to the fixed wages and benefits that workers receive, companies often offer other compensation through options such as regular bonuses, percentages, or share of the profits the company makes and company shares. And employees may prefer to accept positions at companies that offer these benefits even if they offer lower salaries. However, unions often expect companies to pay higher standard wages as a result of which companies may have to offer lower additional non-wage compensation.
Unemployment compensation and awareness
Unions keep employees informed of their rights and the compensation they are eligible for, empowering them. If workers have any complaints against the company, unions help them by providing representation and information on proper procedures. Unions also assist workers in negotiations about the unemployment compensation they are entitled to receive if they separate. In situations where employees lose their jobs because of legitimate claims or if the company contests workers’ claims, unions provide assistance when needed.
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 demand a better pension. Companies also offer 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 expense, companies have to employ fewer workers and this leads to unemployment among non-union workers. Companies may also have to raise the prices of their products to compensate for the additional labor costs.
