It is important for large companies like GWC Valve, to understand how important it truly is to take into consideration the basics in determining pay rates. There are four basic considerations that influence the formulation of any pay plan and these involve either union issues, compensation policy, equity and legal requirements.
When it comes to the union influences on compensation decisions, there are union and labour relations laws that influence how the pay plans are designed. There is a history with wage rates being the main issue in collective bargaining. These include all issues like time off with pay, income security, cost of living adjustments, and even pensions, which is one of the most important aspects. The compensation policies are there to provide guidelines regarding the wages and benefits. In this case, companies need to decide whether they want to be a leader or a follower regarding things like pay, business strategy and cost of different types of compensation. Perceptions of equity internally and externally is important for a company’s reputation. External equity is when the employees perceive their pay as fair, given the pay rates in other organizations and the internal equity is employees perceive their pay as fair, given the pay rates of others in the organization. When it comes to the legal considerations in compensation there are several laws regulating compensation.
For pay equity is important since providing equal pay to male-dominated job classes and female-dominated job classes of equal value to the employer. There is a purpose to pay equity, which is to reduce systematic gender discrimination in compensation for work performed by employees. There are different factors that influence individuals pays such as hours worked, educational levels, experience levels, and the level of unionization contributed to the wage gap and sometimes there can be systematic discrimination that can be present.