Mock Arbitration Part One- From the CAC Company Perspective

  • Uncategorized

MockArbitration: Part One- From the CAC Company Perspective

MockArbitration: Part One- From the CAC Company Perspective

Thispaper will seek to address the adjudication of the negotiationsbetween the CAC Company and the International Brotherhood ofElectrical Workers. It is critical to note that the overall laborspending that will be noted will be based on the formulas as noted bythe Harvard Business School, &amp Society for Human ResourceManagement (U.S.), (2005). Salaries are summed to benefits, vacation,commission, sick pay and bonuses just to mention a few of thecomponents that are notable.

Currenttotal cost of labor including benefits, paid time offs and wages

Ona daily basis going by the working hours of staff in the threesections i.e. office staff, warehouse staff and the field staff, thewages are $1324, $4916.1 and $594 respectively. When translating theabove figures on a monthly basis going by 24 days in a month, thewage costs total to about $164018.4.

Asidesfrom the salary costs, there are benefits that CAC offers to itsemployees. The benefits are classified in such a manner that after ayear of service, an employee is accorded one vacation week, two weeksafter seven years of service and three weeks after twelve years ofservice. The cost that the company incurs based on the aboveinformation is as follows.

Betweenone and six years of service

Officestaff= $432

Warehousestaff= $1140

Fieldstaff= $ 108 Total =$1680 Total staff= 30

Between7 and 11 years of service

Officestaff= $ 288

Warehousestaff= $600

Fieldstaff= 108 Total =$996 Total staff= 9

12years and above years of service

Warehousestaff=$180 Total= $180 Total staff= 1

Thetotal cost incurred by the company on vacation time = 1680+996+180=$2856* by individual rate

Theabove figure was arrived at by summing the values obtained bycalculating the amount payable to the three vacation packages. Aclassification of the employees was done based on their duration ofservice and also according to the three departments that are inplace. A multiplication of the number of hours per shift and by thenumber of days in the vacation was done.

N.B.:A multiplication of each hourly rate can be inserted for furtherinformation.

Thetime off costs incurred by the company includes the sick pay which ispaid after every six months of service. The breakdown as per thedepartments is as follows.

Officestaff= 192

Warehousestaff= $510

Fieldstaff=$54 Total= 192+510+54= $756

Thebenefits that are provided by CAC are the HMO and the DMO options forhealth and dental facilities. 55% of the benefits cost is payable tothe employees of the CAC which is given by 55/100* (756+$2856*individual rate).

TheTotal cost= 55/100* ($756+$2856* individual rate) + $164018.4 (wage cost) +$2856* individual rate (vacation cost) + $756 (sick off cost)

Asummary of the current contract terms

The current terms that are present in the contract that is currentlyoperational take note of the following issues. The benefits thecompany offers are accorded to employees who have completed therecommended three month period said to be the trial period. Thebenefits include a vacation time that is split in three where thepersonnel is paid in full during the time. The breakdown takes noteof the duration an employee has served in the company where for thosewho have served between one and six years are accorded one week ofvacation. Those who have served between seven and eleven years aregiven two weeks of vacation time. Finally, those who have served fortwelve years and above are given three weeks of vacation time.

Thepaid sick off facility are offered after every six months of servicewhere a day is given. The meaning is that in every given year,employees can get two days sick off, for those who have served forover a year and one day off for those who have served in a period ofsix months and over but not more than a year. Both dental and healthoptions are provided under the DMO and HMO respectively where thecompany pays 55% of the benefits cost with a full coverage paid bythe employee, for their families. Finally, the work schedule for allthe three sections is spelled out that for the office staff workbetween 8 am and 5 pm with an unpaid lunch. The warehouse staff workbetween 6 am and 4 pm and the field staff work between 7 am and 4 pm,in a workweek of between Monday through Saturday.

Areasof potential trouble in future negotiations

In the coming negotiations, some areas are deemed to cause potentialtrouble. The said areas span across the areas of benefits wheremedical insurance is concerned plus modifications of the currentpackage plus the work schedule for the employees.

Asummary of the demands of labor and management

Thedemands of labor, in summary, touch on the modification of thevacation time that is accrued, amendments to the sick time offpolicy, addition of personal time off, adjustments to the benefitsand finally, changes to the work schedule. The demands of themanagement, on the other hand, addresses the changes to the vacationplan, adjustments to the sick time policy, inception of lifeinsurance as well as the introduction of the reimbursement scheme.

Detailedoverview of the total cost of a new contract if all labor demandswere satisfied by arbitration

Accruedvacation time=$10057301 (amount payable during holidays)

Theabove figure was arrived at by summing the data obtained bycalculating the amount payable to the four vacation packages. Aclassification of the employees was done based on their duration ofservice and also according to the three departments that are inplace. A multiplication of the hourly rate together with the numberof hours per shift and by the number of days in the vacation wasdone.

Sicktime policy=$6342.29 (monthly)

Theabove figure was arrived at by multiplying the day provided in agiven leave plus the projected monthly wage for all the employees,using the new earnings based on the proposed work hour adjustment.

Personaltime off policy=$3615.55 (monthly)

Theabove figure was arrived at by multiplying the hours proposed for anindividual policy, by the total wage, on a monthly basis.

Benefits=70% of total cost to be covered by the company, cafeteria plan,vision plan (70% and 50% respectively for employees and familycoverage respectively)

Workschedule (wage costs) =$152219.76

Totalcost=Accrued vacation time cost ($10057301) + Work schedule (wage costs)($152219.76) + Sick time policy ($6342.29) (monthly) + Personal timeoff policy ($3615.55) (monthly) + Benefits= 70% of total cost to becovered by the company, cafeteria plan, vision plan (70% and 50%respectively for employees and family coverage respectively) +Tuition reimbursement plan= 100%, 75% and 50% for grades A, B and Crespectively= Approximately $10219478.6

Detailedoverview of the labor cost if the company is successful inarbitration

Vacationpolicy=$85500.6 (amount payable to employees during holidays)

Theabove figure was arrived at by summing the values obtained bycalculating the amount payable to the three vacation packages. Aclassification of the employees was done based on their duration ofservice and also according to the three departments that are inplace. A multiplication of the hourly rate together with the numberof hours per shift and by the number of days in the vacation wasdone.

Sicktime policy=$80746.8 (monthly)

Theabove figure was arrived at by multiplying the day provided in agiven leave plus the projected monthly wage for all the employees,using the new earnings based on the proposed work hour adjustment.

Timeoff policy= $723.11 (monthly)

Theabove figure was arrived at by multiplying the hours proposed forpersonal policy, by the total wage, on a monthly basis.

Thevalue below was arrived at by multiplying the hourly wage rate by thenumber of hours worked in a shift and summing the data for allemployees

Wagep/m=$164018.4

Lifeinsurance plan= benefit equal to annual salary=$1968220.8

Tuitionreimbursement plan= 100%, 75% and 50% for grades A, B and Crespectively.

Laborcosts=Vacation policy ($85500.6) + Wage p/m=$164018.4 + Life insuranceplan= benefit equal to annual salary=$1968220.8 + Tuitionreimbursement plan= 100%, 75% and 50% for grades A, B and Crespectively + Time off policy ($723.11) (monthly) + Sick timepolicy=$80746.8 (monthly)= Approximately $ 2299209.71

Giventhe above blueprint from the cost structures of both the labor andthe management`s point of views where the approximate values are$10219478.6 and $2299209.71 respectively, the company is likely to besuccessful in its arbitration quests. When drawing the comparisonsbetween the proposed costs noted by the labor and the managementsections, the values by the management are rather fair compared tothose indicated by labor. The accrued vacation from the management isreasonable as well as other policies like the sick and personalpolicy. The management has also resorted to incorporate new packagesin insurance and education which further enhances their success andthus winning chances.

(Originalfigures were retrieved from the Mock Arbitration instructions).

References

HarvardBusiness School, &amp Society for Human Resource Management (U.S.).(2005). Theessentials of finance and budgeting.Boston: Harvard Business School Press in partnership with Society forHuman Resource Management.

MockArbitration Instructions. (n.d). Retrieved 30 August 2016.

Close Menu