Discussion - Chapter 5 Compensation Strategy

discussion 5 Lesson 5 Discussion - Formulating a Strategy 1. Discuss your approach to case question 1. Alliston Instruments - Case Question 1 Q: Analyze the pay system at Alliston Instruments. A quick synopsis of the Alliston Instruments pay system is that it operates in the manufacturing industry, sub-industry medical devices. At least 250 employees are unionized and had secured higher base wages in the last 2 years. For the unionized employees, these wages are now frozen and in lieu of a pay raise, the employer and the union agreed to an incentive program (pay for performance). There are 293 employees which means at least 43 are not unionized. Those llenon-unionized (supervisors, etc.) have not had a pay increase in over a year, but their responsibilities have significantly increased. The marketplace has become extremely competitive both in product quality and price. This is not to the benefit of Alliston Instruments. Sales have gone down, product defects have increased, and the price per unit has had to increase as a result of the extra labour and production costs. The employer is locked into a collective bargaining agreement that includes job security for the existing staff (protects the works by avoiding another 50 person or similiar layoff that was experienced once recently but never experienced before). This means that it would be extremely costly to reduce employee numbers. However, the employer is handcuffed to the base pay and performance pay mix that it agreed to. 2 new supervisors were hired this year to address the additional demands and tasks for this incentive program, along with a clerical person. However, 3 supervisors quit in the last year. Customers are switching to the competitors and they have also complained about quality and cost of Alliston products which means they have lost faith in Alliston Instruments. Sales have significantly decreased and are still decreasing. The incentive plan is costing the employer time, money, market share, and...