Please answer the following questions thoroughly. Frank works 25 hours per week
ID: 393647 • Letter: P
Question
Please answer the following questions thoroughly.
Frank works 25 hours per week for a mail order firm in the packaging department. He received no benefits other than those required by law. Frank does the same type of work as three other employees, all of whom work full time. These employees qualify for pensions, medical care, long-term disability, child care, etc. Is this a good business practice? Assume that Frank would like to work full time, really wants to receive benefits, and feels harmed because of his shortfall. On the other hand, the firm is not legally required to pay Frank benefits, Frank only works part time, and it would be expensive to pay benefits to all part-time employees, including Frank.
Two firms in the chemical solvent industry decide to merge. Employees in the testing department of Firm A have enjoyed high pay for many years. However, Firm A is purchased by Firm B, which has a history of paying low wages. As a result, employees in Firm A’s testing department earn on average $2.00 more per hour than those at Firm B. Upon completion of the merger, what wage levels should prevail? Should wages be cut for those who worked for Firm A? Or, should wages be increased for those in Firm B?
Sue is a 55- year old employee of Company A. Her children are out of college and her parents have both died. Company A offers a child care program to all employees along with an elder care program. However, Sue, like many other employees , has no need for these services, neither now or in the future. Should the company retain these programs? Should alternative benefits for employees who have no use for such services be offered?
Explanation / Answer
The mail order firm is paying Frank what is requires by law. The firm is not legally liable to pay other benefits to Frank as it pays to its full time employees. Although, thinking from the work perspective Frank is doing as compared to other full time employees, this is not a good business practice. However, since the firm is complying with statutory requirements there is no case of non- compliance. The company can offer some benefits as benevolent measures to its part time employees as well, however, since it will have huge cost repercussions, the company may not think about increasing the financial burden. The company may think of having certain tests or criteria offered to the part time employees after which they may be absorbed as full time employees in the firm. This will improve the productivity of both part time employees and full time employees as well due to a sense of competition.
Upon merger or any other strategic alliance, many changes related to the organization structure and the compensation structure need to be done. In this case as well, since firm B has purchased the firm A, and the wages are unequal, in order to maintain the morale of the employees in both the firms, the wages should be made at par with that of firm A. This is because higher wages have been a customary practice in firm A and the employees have enjoyed the same for long now. If the company decides to reduce the wages of employees at Firm A, they will leave the company, which in turn will impact on the company output. This will increase the costs for company and also reduce the revenues. The company can also compare the hierarchical structures of the two companies and perform internal benchmarking to prepare grades and zones of various levels in the organization. This will provide a logic behind fixing the salary ranges for various levels without impacting the employee morale.
The companies today are moving towards cafeteria style benefits. In this type of benefits, the employer offers a variety of benefits to the employees. The employees choose suitable benefits plan from among the available ones. Without having to increase the administrative burden on the company, they can offer a limited number of choices for the employees. Since, Sue will not be able to avail some of the benefits neither in present nor in future, she will always feel demotivated since she is not getting any benefit from her company. However, since other employees might need these benefits, they should retain the same and also include some other benefits.