Question

How do Domestic auto manufacturers Employees Value Propositions differ for those being paid at different levels in two-tier wage plans? What are the implications of these differences for each phase in the human resource management process—attracting, developing, and maintaining a talented workforce?

Answer 1

The three major Detroit based US automakers were losing money and facing severe economic crisis owing to their high labour cost in comparison to their Asian and German counterparts. To overcome the crisis, in 2007 the UAW ( United Autoworkers) agreed to a new entry level wage plan under which new workers were hired at $14.2 per hour and could earn a top wage of $15.34 per hour. The present rates have been revised to $15.78 at entry level and $19.28 per hour after completion of four years, but they are still much lesser than those of the employees hired before 2007, who earn arrounf $28 per hour.This significant gap in pay is a cause of discontent among the post 2007 recruits.

The implications during the three HRM processes.

1. Attracting - The automakers will not be able to attract top of the line entry level staff who will be tempted to join other high pay - high growth organisations. Those choosing to join auto industry would be the ones who could not get good jobs.

2. Developing - Being not so sound theoritically and less motivated than those in the other industries, these recruits will be difficult to train and develop to take higher responsibilites. Although it is not the case with every employee, these factors will affect many.

3. Maintaining - The talented workforce will be tempted to hop on to the other lucrative opportunities available in the marketplace and difficult to retain for a long time.