Question

1. Much of pay is based on equity or perceptions of equity. People compare themselves to others both inside and outside the organization. These comparisons on both outcomes and inputs can result in tension and dissatisfaction and then turnover. Can you give examples of inequity that caused problems for yourself or others? Try to use equity theory in your discussion if you can

2. The Fair Labor Standards Act deals with minimum wage, child labor laws, and Overtime. The last administration wanted to allow more overtime for more jobs (exempt versus non-exempt). The current administration is likely to change this so that there are fewer jobs of non-exempt status (can receive overtime). What do you think? Second, minimum wage is an important topic and the question is why isn't the minimum wage tied to inflation?

3. With job-based pay, there are a number of problems that can occur. One example is compression when the market lifts the starting pay for the job to approximately the same level as that of workers with more experience in the same job. The reason is that previous raises have not been large enough to offset the steep rise in pay for that job in the market. The result is that experienced workers are making around the same pay as those with no tenure in the job. Then there are other problems such as employees not receiving wages for extra time spent on the job (wage theft). Have you seen compression or other compensation problems?

Answer 1

1. Equity Theory focuses on determining whether the distribution of resources is fair to both the partners. In a fixed budget, the fund allocation to marketing and production activities always result in dissatisfaction and problems in the organization. Top Management considers the production process and the quality of the product to be very important and allocates major portion of the budget for production, ignoring the marketing activities which they consideras wasteful expenditure.

Thus in the absence of effective marketing the awareness and interest towards the product cannot be generated amongst the consumers and as a result company canot gain the market share.

2. I agree with the second administration having fewer jobs of non-exempt status. This is because an employee divides his fixed time between work and leisure time. Overtime influences the employee to work for more number of hours, sacrificing his leisure time which is also very important for the health of the employee. Thus there should be less number of overtime jobs only in case of important fields, and thus the employees dont have to sacrifice their leisure time.

Minimum wage should always be tied to inflation. This is because as there is inflation in the market,the wages paid to the labor should also be in the same proportion , otherwise the purcahsing power of the population reduces, leading to less production and thus lower GDP, whcih is detrimental for the economy.

3. Compression is observed when a better qualified person joins the firm and thus is being hired at a higher package compared to the workers who have been serving the organization since long. This generally happens in higher technology based firms where skills and qualification matters more than the experience of the candidate. When the top management observes that the overtime activity doesnt bring any fruitful results for the firm,the employees stop receiving the wages for extra time spent on the job.