How the Role of Unions Can Affect Compensation Program Management Within an Organization

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Labor unions are set up to look into the interests of workers and to ensure that they get the fair compensation that is due to them. They also ensure that companies don’t exploit their workforce. However, the efforts of these unions are not always beneficial to workers and the companies, and sometimes the bargaining power they hold over companies can have a detrimental effect on the interests of the workers.

Higher and More Equal Wages

Labor unions ensure that workers earn higher wages and compensation than in institutions where there are no unions. Unions are also likely to work for the increase in wages for employees that receive a lower or medium range compensation package, or for workers in the blue-collar category as opposed to those in the white-collar tier. Workers that don’t hold college degrees also depend on labor unions to negotiate better salaries for them. As a result, they set a wages benchmark. And companies that don’t have unions have to match these levels and offer competitive wages to recruit the workforce they need.

Benefits Packages

In addition to basic wages, companies with a unionized workforce offer better benefits by way of health, life, dental and disability insurance. Vacation time, sick leave and salaried time-offs, in addition to assistance with expenses for higher education and counselling in legal matters are other benefits they offer. In keeping with the rising trend towards family oriented welfare programs, companies permit workers to take time off to care for elderly relatives and children, and might also allow them to work from home. They set up day care centers at workplaces and offer less stringent work hours.

Non-wage Compensations

Aside from the fixed wages and benefits workers receive, companies often offer other compensations by way of options such as regular bonuses, percentages or shares in the profits the company makes and stock of the company. And employees might prefer to accept positions in companies that offer these pluses even if they offer lower salaries. However, labor unions typically expect companies to pay higher standard wages because of which companies might have to offer lower additional non-wage compensations.

Awareness and Unemployment Compensation

Unions keep employees informed about their rights and the compensations they are eligible for thus empowering them. If the workers have any complaints against the company, unions assist them by providing representation and information about the proper procedures. Labor unions also assist workers with negotiations regarding the unemployment compensation they are entitled to receive if they are separated. In case of situations where employees lose their jobs for filing legitimate claims or if the company contests the workers claims, unions provide assistance when required.

Retirement Benefits

Workers belonging to unions are more likely to remain with the company for longer periods and are thus eligible for better disability and retirement packages. Typically, unionized workers retire earlier than other workers and claim better pension. Companies also offer better health insurance to retired workers and are likely to contribute more amounts to the retirement funds at later dates. On the flip side, because of the added expenditure, companies have to employ fewer workers and this leads to unemployment among workers that don’t belong to unions. Companies might also have to raise the prices on their products to compensate for extra labor costs.

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Source by Saroj Aggarwal

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