Australian Chamber of Commerce and Industry Approach to Reward Management - Case Study Example

Reward Management Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 08, 10, 2010 Outline 1. Introduction 2. Australian Council of Trade unions approach to reward management 3. Australian chamber of Commerce and Industry approach to reward management 4. Fair Work Australia’s decision 5. Relevance to contemporary reward management 6. Conclusion Introduction Reward management process is a challenging responsibility both at the industry and national levels in the economy. Without proper reward management strategies in place, economic imbalance can be ignited leading to problems of unemployment, high inflation, glut and low productivity. Clear understanding of the underlying reasons for rewarding should not be ignored since it gives value to whichever strategy applied. Reward management is therefore a very crucial aspect of employer-employee relationship since it forms its point of interaction (Geoff 2000). Contemporary rewarding options should thus not focus more on the short term relationships with employees, but instead extend beyond pay increases to include psychological contracting. For players enhancing reward management at national levels, a holistic approach is essential since variables involved are more diverse while goals are conflicting and stakeholders are fierce, this leads to a mediation kind of reward management approach (Bratton 2003). Rewards management is therefore an integral part of the economic processes which requires a meticulous care and approach. Australian Council of Trade unions approach to reward management Australian Council of Trade Unions – ACTU- is a union representing most of the Australian workforce and just like any other collective bargaining vehicle, it advocates for the best interest of employees (Blyton 2000). ACTU’s submission is basically advocating for a minimum wage increase that is based on dollar increase and not percentage increase. This is further justified by that fact that this increase will qualify the objective of the minimum wage increase since it benefits the low income gap. Submissions ACTU was advocating for an increase in the minimum wages both in the modern awards and minimum wage orders by $27 per week. This increment was to apply for all transitional wage instruments and to schedule 2B awards. ACTU proposed that the effective date of the above changes be on 1st July 2010 arguing that employers have had enough time to prepare for these awards. ACTU was of the view that there had been improvement on the economy of Australia after the economic downtime; consequently employees ought to be rewarded so as to match the productivity levels. ACTU was also of the opinion that moderate and predictable wage increases were good for inflation, employment, productivity growth and international business competitiveness. ACTU did advocate for the minimum wage increment for the low income earning as a means of social inclusion and restoration of relative living standards Analysis From the ACTU’s submission, it is clear that the role of ACTU in reward management is very critical. Reward management involving the process of creating incentives to employees so that they could improve on their productivity and increase their job satisfaction levels. ACTU’s approach has more to do with total reward strategies. This involves consideration of pay increase and benefits, in this sense, the aspect of productivity based rewards are not on their agenda. This kind of systems would also like to link the employee wages to the market (Armstrong 2005). Advocating for a uniform minimum wage is a recipe for low productivity and reluctance by some of the employees to work. The role of union like ACTU is just to assist in negotiating for the level of reward, distribution for the agreed levels and advocate generally for equal pay for all jobs that are of equal value. The ACTU reward strategy is therefore not very productive for industry but essential for employees’ welfare since it focuses more on the welfare and social needs of the employees neglecting the one side of the labour market. The submission by the ACTU neglected some very critical performance parameters like the industry performance of different firms, location and the recessionary effects distributions across firms but advocated for a blanket minimum wage. This might cause some firms to experience increase in production costs consequently leading to price increases which will in turn affect the cost of living. In this sense, it is necessary that the approach by ACTU be adjusted so that it can take into consideration the effects of their submission on the productivity of the economy and achievement of different organizations goals. Australian chamber of Commerce and Industry approach to reward management Australian Chamber of Commerce and Industry (ACCI) is an organization representing Australian employers. Most of ACCI members will be affected by the minimum wage increment through the minimum wage panel. ACCI’s Submissions are as follows; Minimum wage panel should grant a minimum wage and national wage order increase of not more than $ 12.50 up to the equivalent of C10 classification and an increase of $ 10.50 per week for rates above C1o Differential treatment as regards minimum wages claiming that some industries are wage reliant and this might make them experience cost management challenges. They argue that some industries or regional sectors have not stabilized after economic downturn thereby in need of fair treatment. Casual loading of award/agreement free employs to remain at 20%. Deferment of the effective date to a later date other than 1st July 2010 due to implementation challenges. Analysis From the above ACCI’s submissions, it is very clear that employers’ motive of low cost production is being indirectly articulated. It is a proposal indirectly aimed at lowering the cost of production through low increment in the form of minimum wage. The ACCI reward strategy as implied in the submission is that of productivity based but since most employers would like to compensate employee based on outputs. Even though it is inherently compulsory that minimum wage increment is produced by the panel, the suggestion of ACCI for just a mere $10 increment is a reflection of a conservative approach to employee remuneration. ACCI did not even consider a wage freeze of the previous years in their submission reflecting their one-sided view. ACCI’s proposal that some of their members be given differential treatment is an indication that they would wish to reward employees based on an in-house strategy that will usually be pegged to service delivery across different sectors with varied profitability. The blanket minimum wage reward system is actually based on social-welfare agendas which to a wide extend differ with the productivity system which are preferred by capitalistic societies. Fair Work Australia’s decision With the conflicting submissions between employers and employees unions, necessary mediation can only be facilitated through a judgment of an independent body. Minimum wage panel created under the Fair Work Act of 2009 has the normal responsibility of receiving submissions from various stakeholders. The panel reviews modern award minimum wages, make national minimum wage order and review wages in transitional instruments. The fair work panel has to establish a safety net of minimum wages after considerations of performance and productivity, social inclusion, principle of equal remuneration for work of comparable value, simplicity and their impacts on inflation and national economy (Horman 2000). Fair wage Australia’s decision is after consideration of the fair work act 2009, submissions of different stakeholders and assessment of various economic parameters. This makes it very reliable since it brings out the different stakeholder views hence striking a balance in the reward management. The decision of fair work panel is therefore a very holistic approach since it looks not only on the interest of the employers represented by ACCI and employees represented by ACTU but it also has critical look on the economic development of Australia. The panel’s decision is as follows; Modern award minimum wages are increased by $26 per week and 69 cents per hour (on the basis of 38 hour week). This will relate to junior employees whom training arrangements apply and employees with disability and to piece rates. This will also relate to Transitional instruments wages including Division 2B enterprise awards but not Division 2B state awards. National minimum wage of &569.90 per week or &15 per hour Casual loading of award/agreement free employs to remain at 21%. From the decision of the fair work panel, it is clear that most of the recommendation of the ACTU were taken into consideration even though exact figures were not awarded. Submissions of the ACCI were equally forming part of the decision. Relevance to contemporary reward management The decision of the fair work Australia panel is the objective decision regarding employee rewarding since it considered the productivity factors of the economy, the employees submission, Fair Work Act 2009, and the employers opinion too. A good reward management system should always consider the strategies of rewarding high performers, supporting business goals, linking pay to the market, achieving and maintaining market competitiveness, ensuring internal equity and maintain highly effective manpower. With the lopsided approaches by both ACCI and ACTU being much of a contest than a joint strategy development, it is necessary to always appreciate that both employers and employees are interdependent. This calls for objectivity while making rewarding decisions where the job satisfaction to employees is achieved at the same time the productivity levels to the employer are optimum (Shields 2007). It is therefore imperative when considering a minimum rewards to be more objective to the interest of the low income earners at the same time considerate to the wage dependant sectors of the economy just as the Fair Work panel did. The decision of the Fair work therefore attained the goal of social inclusion by increasing the minimum wage of the low income employees. To improve on the productivity of the economy, the increased living standards due to the wage increment will result in increased demand for industrial goods. These subsequent dependencies ultimately will result in improved economic activity which is favorable to the whole economy. Minimum wage panel therefore were able to mediate objectively in the favor of the employees, employers and the economy. Conclusion Effective reward management system should always meet the expectations of the employers, employees and the economy. This will lead to harmonious working relationship for all. It is therefore very important during collective bargain agreements to accept the submissions of the stakeholders but rely on an independent body for the ultimate agreement. This will ensure that cross-sectional interests are included in the bargain. This will also ensure that the vibrancy of the economy is maintained at positive levels with all stakeholders’ satisfaction. References Armstrong, M & Stephens, T 2005, A Handbook of Employee Reward Management and Practice, Kogan Page, Thousand Oaks. Blyton, P & Turnbull, P 2000, Reassessing human resource management, Sage Publications, Canberra. Bratton, J & Gold, J 2003, Human Resource Management: Theory and Practice, Macmillan, Sydney. Geoff, W & Jan, D 2000, Reward management: a critical text, Routledge, Melbourne. Horman, G & Thorpe, R 2000, Strategic Reward Systems, FT Prentice Hall, Thousand Oaks. Shields, J 2007, Managing employee performance and reward: concepts, practices, strategies, Cambridge University Press, London. Read More