In: Operations Management
Provide an example that best illustrates either an in common or conflicting view of compensation in relation to one or more of the other groups, employees, society?
Two-tier wage system is a payroll mechanism in which one set of employees are paid lesser than the other set of employees. Basically the management has a differential compensation plan for the freshers and the lateral hires. Freshers are those employees, who are directly out of college and have no prior experience. Lateral hires are those, who are switching companies and have relevant work experience. The differential pay is based on the level of experience of the lateral hires.
The advantages of two-tier wage system are:
The disadvantages of two-tier wage system are:
There are many advocates of this two-tier wage system who say that this mechanism acts as a trigger for the employees in lower-tier to improve their performance. Those who are against this differential compensation strategy state that this is against the policy of one wage for all and establish discrimination against the equality of the workforce.