MGT 462 Final Study Guide

OSHA

- Occupational Safety and Health Administration - Legislation specifies number of breaks to be provided in an 8-hour workday

Social Security Advantages

- Old age or disability benefits - Dependent benefits - Survival benefits surviving family - Lump-sum payments

Maslow's Needs Hierarchy

- People are motivated by inner needs - Needs form a hierarchy from most basic (food and shelter) to higher order (Self-esteem, love, self-actualization)

Factors for LEAVING

- People who feel unfairly treated in pay react by leaving - Poor performers leave when they pay systems are based on individual performance

Productivity/gain sharing Advantages

- Performance reward links - Productivity and quality improvements - Knowledge of business increases - Fosters teamwork, cooperation

FSLA restricts hours and conditions of employment for minors

- Persons under 18 cannot work in hazardous jobs - Persons under 16 cannot be employed in jobs involving interstate commerce except for nonhazardous work for a parent or guardian

Disparate impact

- Practices that have a differential effect on members or protected groups - Are illegal, unless the differences are work-related

Division Between Direct Wages and Employee Benefits

- Presence of unions adds 30-40% to END employee benefits - Percentage of total cost of employee wages allocated to employee benefits

The Equal Pay Act (1963)

- Prohibits wage discrimination on the basis of gender - Differences in pay between men and women doing equal work are legal if based on: Seniority Merit or quality of performance Quality or quantity of production Some factor other than sex - Requires that jobs be equal and not identical

Broad-Brand

- Provides flexibility and control - Involves collapsing salary grades into a few broad bands, each with a sizable range - Set the # bands or levels - Price the bands/levels (Range midpoint often not used)

Characteristics of promotional pay increases

- Size of increment is approximately double a normal merit increase - Represent a reward to employees for commitment and exemplary performance

Types of Surveys

- Subscriptions/Published Surveys - Custom - On-Line Self-Reported - Practices Surveys

Lump sum (Merit) bonuses

- Substitute for merit pay - Based on performance and rec'd as a bonus, not built into base pay - Viewed as less of an entitlement that merit pay

Reasons for Pay Structures

- To standardize pay practices - Balances internal value of job with external market data - Method to communicate company's pay philosophy and priorities/values

Unions do make a difference in wages

- Union workers earn 9-12% > non-union - Union employees in public sector earn 22% more than their non-union counterparts - Managers in union firms > wages non-union

Unions and Alternative Reward Systems

- When employers face extreme competitive pressures, unions are receptive to alternative reward systems linking pay to performance - Preserves their jobs - 20% of all U.S. collective bargaining agreements permit alternative reward systems that link pay to performance

Peer Group: Two Approaches

- Where you compete for as a company - Where you compete for talent

Employee or Independent Contractor: Internal Revenue Service Tests - Behavior control

- Whether the business has a right to control how a task is done, includes: •Instructions that the business gives to the worker •Training that the business gives to the worker

Economic approach

- Worth compared to value/impact on organization - Value of CEO should correspond to some measure of organizational success

Are benefits effective for attracting and retaining?

- Yes and no - Like compensation, as long as an organization's benefit are reasonably competitive (not significantly under market), not. A primary reason for attracting or retaining talent

Balance scorecard Advantages

- communicates organizational priorities

Workers' Compensation

- form of no-fault insurance Covers work-related injuries, diseases, such as: - Medical care for work-related injuries - Temporary disability benefits - Permanent partial and permanent total disability benefits - Survivor benefits - Rehabilitation

Match job description

Don't match title alone, look at scope of role and match to job descriptions Generally, 60-100% of jobs can be mapped to a benchmark job

Importance of choice on perception of benefits

Employees are not necessarily looking for more benefits but rather for greater choice in the benefits they receive

Expatriates

Employees temporarily working and living in a foreign country

Pay transparency under the Act

Employer's may not prohibit employees from disclosing or discussing their own wages or the wages of others, or firm aiding or encouraging other employees to exercise their rights under the law

Restricted stock plans

Grant of stock at a reduced price with the condition that it may not be sold before a specified date

Exporter

"Headquarters Knows Best" - Using the same system increases flexibility - Basic pay systems designed at headquarters

Localizer

"Think Global, Act Local" - May have many systems and competes by providing locally tailored products or services - Pay designed in local areas

Globalizer

"Think/Act Globally and Locally" - Seek a common system to support consistency across all global locations - Global approaches focus first on global business strategy and then adapt to local conditions

National Systems: Comparative Mind-Set: Germany

"nanny state", government regulation on pay; bonuses not widely used; egalitarian; generous social benefits

Midpoint

(Max + Min) / 2 The salary level that is midway between the minimum and maximum of the salary range.

Range width/spread

(Max-Min)/Min Distance from the salary range minimum to the salary range maximum.

Midpoint Differentials

(Midpoint B - Midpoint A)/Midpoint A The % increase in the midpoints from one salary grade to the next.

Short Term Incentives ("STIs")

- 1 year or less 1. Merit pay 2. Lump-sum bonuses awards 3. Individual spot plans 4. Individual Incentive plans 5. Group/team incentive plans

U.S. Federal Pay Regulations

- 1990: Americans with Disabilities Act (ADA) - 1993: Family and Medical Leave Act (FMLA)

Special compensation problems

- A graduate's knowledge is valuable but becomes obsolete - When salary plateaus arise, many make career changes - It's not all about cash - interesting work, cutting edge technology, training - A dual-career ladder provides two ways of progressing in an organization

Stock Option

- A right to purchase Company stock at a future date, at a specified price - During a specified period of time - No investment (cost) at time of insurance (grant)

Organizational strategy

- A sales compensation plan should link desired behaviors to organizational strategy - Salespeople must know when to stress customer service and when to stress sales - Relying on straight sales commission motivates aggressive sales behavior - Incentive plans state the size of incentive and necessary performance objectives

Productivity/gain sharing Disadvantages

- Administratively complicated - Drop-off in quality - Management must open the books - Payouts occur even if company's financial performance is poor

Challenges for German Model

- Aging population - Low birth rates - Early retirement ages - High pension and unemployment benefits - Inflexible labor markets

Social comparisons

- Between levels - Executive salaries bear a consistent relative relationship to subordinates pay

Agency theory

- CEOs will maximize their own pay, sometimes at the expense of shareholders and the company - Compensation should ensure that executives have the best interests of stockholders during decision making.

Union declining in importance

- Change in structure of American industry - Unions no more a solution to workers' problems - Reduced intensity of union organizing efforts - Management's hand stance against unions

Equity theory

- Employees are motivated when perceived outputs are equal to perceived inputs - Fairness!

Compensation and influence on desired behaviors

- Employers want employees to perform in ways that lead to better organizational performance - Organizational success ultimately depends on human behavior which is influenced by HR practices

The Social Contract outside the US

- Employment relationship, viewed as part of the social contract, is more than an exchange between an individual and an employer - Compensation decisions require understanding of these "contracts" - Social contracts evolve over time

CA Fair Pay Act of 2016:

- Existing laws relating to pay equity were expanded in three significant ways: 1. Pay Equity 2. Pay Transparency under the Act 3. Record retention

Employee or Independent Contractor: Internal Revenue Service Tests - Financial control

- Extent to which the worker has unreimbursed business expenses - Extent of the worker's investment - Extent to which the worker makes his or her services available to the relevant market - How pays the worker - Extent to which worker can realize a profit or loss

Overtime

- FSLA requires payment at one-and-a-half times the standard for working more than 40 hours per week - Goal is to make less costly hiring another person versus paying overtime

Changes in traditional model

- Focus on long-term employment rather life-time employment - Young employees seek employment in non-Japanese firms - Companies are increasingly using performance-based pay

Demand on the Labor Market

- Government a big employer (16% US labor force) = 2.7M people - Indirectly affects labor demand through its purchases (military) & financial policy decisions

Supervisors Solutions

- Higher-base than subordinates - Pay Overtime - Add variable pay

Health Care Cost Control Strategies

- Motivate employees to change their demand for health care through changes in 1. Plan design: deductibles, co-insurance amounts 2. Administration: co-pays, eligibility - Change structure of health care delivery systems - Direct contracting with doctors and hospitals Limited PPOs - Promote wellness

Expectancy Theory

- Motivation is the product of three perceptions; expectancy, instrumentality, and valence - It argues that people behave as if they cognitively evaluate what behaviors are possible in relation to the value of rewards offered in exchange

P=f(M, A, E)

- Motivation, Ability, Environment (Opportunity) - Compensation alone can't change behavior

Performance-based incentives

- Profit sharing - Stock/equity ownership

Social Security

- Provides replacement income such as: -Old age/disability benefits (69%) - Benefits for dependents of retired or disabled workers (16%) - Benefits for surviving family members of deceased worker (16%) - Lump-sum death payments

Employee or Independent Contractor

- Regulations that help classify a worker as an employee or independent contractor - Employers must pay: Social security, unemployment and workers compensation taxes on wages and salaries

Team/group incentives Advantages

- Reinforces teamwork and team identity/ - Stimulates ideas and problem solving - Minimizes distinctions between team members - May better reflect how work is performed

Compa ratios

- Relationship of base salary to the midpoint - Base salary/midpoint - Employees are higher in their salary range: - They are overpaid, they are ready for promotion, and they are high in demand

Problems in designing pay

- Salary plateaus due to knowledge obsolescence of mature professionals - Dual-career ladder shows two different ways of progressing in an organization

Number of data points in survey data

- Sample size ("n") is a significant consideration in evaluating survey data - Larger sample size means more valid the data is - You want the denominator in data to be larger - Sample sizes includes both # of companies represented in the data and number of incumbents represented in the data

Challenges for Japanese Model

- Slow economic growth - Controlling labor costs - Availability of cheap labor in Asian countries

Long term incentive plans ("LTIPs")

- greater than 1 year 1. Stock options 2. Restricted stock units ("RSUs") 3. Employee stock ownership plans ("ESOPs")

Long-Term Incentives for Executives

- incentive stock options - non qualified stock options - phantom stock plans - restricted stock plans - performance share/unit plans

Cash profit sharing Disadvantages

- profit influenced by many factors beyond employee control - may be viewed as an entitlement - limited motivational impact

Pay for performance

- signals movement - away from entitlement pay towards a pay that varies with individual or organizational performance - also called variable pay programs, at risk pay, incentive pay

Cash profit sharing Advantage

- simple, easily understood - Low administrative costs

Furor Over Executive Compensation Academics

- social comparisons - economic approach - agency theory

Importance of benefits

- they are VERY important

Unemployment Insurance Coverage

- weekly benefit amount for 26 weeks - must meet state requirements for wages earned or time worked during an established (one year) period of time (base period) - must be determined to be unemployed through no fault of your own & meet other eligibility requirements of State law

Merit increases and distribution theories

1. Budget 2. Performance 3. Range Penetration

Where you compete for as a company:

1. Company Size 2. Industry 3. Company Type:

Process of Market Pricing

1. Competitive rates for jobs which external market data available are calculated 2. Remaining, non-benchmark jobs, are blended into pay hierarchy

Steps in Designing a Pay Structure

1. Create Job Worth Hierarchy 2. Collect Market Data 3. Create the salary structure. 4. Create pay ranges

Three general global compensation strategies

1. Localizer 2. Exporter 3. Globalizer

Governments' interests typically related to

1. Pay fairness & discrimination 2. Safety nets • Minimum wage & unemployment insurance 3. Protection from exploitation • Overtime pay & child labor - People, and countries, differ in their view of what role government should pay

Matching your job

1. Start with benchmark jobs 2. Slot non-benchmark jobs

Characteristics of special groups

1. They don't quite fit the basic or traditional model 2. Tend to be strategically important 3. Positions tend to have built-in conflict - Special groups receive special treatment

3 elements of motivation

1. What is important to a person (needs) 2. Offering rewards in exchange for desirable employee behavior (exchange) 3. Setting goals with the intent to influence desired behavior (motivation)

Equity

A long-term incentive that uses stock/options are the payout vehicle

Use of Surveys

A. To understand external pay levels B. To understand pay mix/vehicles C. To understand pay practices D. For Budgets E. Information for Communications F. For Diagnosing Pay Issues G. foundation for creating pay structures that align pay philosophy and business strategy

International Geographic Scope

Across several countries

National Geographic Scope

Across the country

Gain sharing plans

An incentive plan that engages employees in a common effort to achieve productivity objectives and share the gains

Profit sharing plans

An inventive plan that engages employees in a common effect to achieve profitability objectives and share the profits

Cost-of-living adjustments

Based on economic factors in the region you are making the adjustments, has nothing to do with performance.

Phantom stock plans

Cash or stock award determined by increase in stock price during any time chosen (by the executive) in the option period

Performance share/unit plans

Cash or stock award earned through achieving specific goals

CPI or Consumer Price Index

Change in price of goods

Local country nationals (LCNs)

Citizens of a foreign country where the parent employer operates

Third country nationals (TCNs)

Citizens of neither the employer's parent country nor the foreign country

Parent-country Nationals (PCNs)

Citizens of the employer's home country living and working in another country

Create the salary structure

Cluster/group jobs that have similar internal value and external value (internal ranking and market pay levels into salary/pay grades or levels)

HMO (Health Maintenance Organization)

Comprehensive benefits for a fixed fee to provider

Custom

Conducted on behalf of sponsor company/organization

Linking pay to performance

Decide how much of a merit increase is given for different levels of performance

Overlap

Degree to which adjacent salary ranges or grades in a given salary structure include the same pay.

Create pay ranges

Determine the minimum, maximum, midpoint, range, etc.

PPO (Preferred Provider Organization):

Direct contract with selected providers

Disparate treatment

Disparate or unequal treatment applies different standards to different employees

Range widths

Distance from the salary range minimum to the salary range

Herzberg's two-factor theory

Employees are motivated by two types of motivators; hygiene factors and satisfiers

Noncontributory

Employer only

Defined benefit plans

Employers establish the limits of their responsibility for employee benefits in terms of a specific benefit and the options included. As the cost of these options rises in future years, the employer is obligates to provide the benefit as negotiates, despite its increased cost.

Practice Surveys

Focus more "how", eligibility, timing, turnover, equity burn rates, etc.

Supervisors Issue

Generally exempt, so not paid overtime, while their subordinates are

Compensatory time off

Government workers

Quality-based measures

Growing trend toward linking sales compensation to customer satisfaction measures

Actual Pay

How you performed or how the company performed in the job.

Benchmarking jobs

Identify your internal jobs that are standard across industries, relatively stable jobs, such as HR Generalist, Accountant, etc

Hygiene Factors

In their absence prevent behaviors, but in their presence cannot motivate performance

Collect Market Data

Incorporate external market values from salary surveys

Target Pay

Is what the job is worth.

The Social Contract in the US

Known for the small role of government and lack of relationship between government, employees, and employers,

National Systems: Comparative Mind-Set: US

Less job security; market-sensitive pay; cost control (variable pay; reward individual performance (meritocracy)

National Systems: Comparative Mind-Set: Japan

Loyalty, security (lifetime), seniority-based promotions, egalitarian (internal alignment vs market alignment); the "nail standing too high gets pounded down"

Funding

Many team/group incentive plans have thresholds or triggers before they are funded.

Why use base pay in setting structures?

Measures basic value of the work, rather than performance level of the employee

General increase

Merit is given annually for performance

Minimum (relative to the midpoint):

Midpoint/ (1+(Range Spread/2))

Maximum (relative to the midpoint):

Minimum *(1+Range Spread)

Standard compensation might not work

More reliance on incentive payments tied to individual performance

Product to be sold

Nature of product, type of customers sold into have most significant influence on designing pay plans

Minimum

New in job

On Call

No legal requirement to pay, unless limit person's activities while on call

The Spillover Effect Outcomes

Nonunion management continues to enjoy freedom from union "interference" in decision making and workers enjoy the "spillover effective" rewards

Examples of Pay Philosophies

Our competitive strategy will deliver rewards at the market competitive median for median performance, at the 75th percentile for 75th percentile performance and so on. We emphasize work-life balance, our benefits ensure that every person is fully present and focused when they are at work

Employee benefits

Part of the total compensation package (other than pay for time worked) provided to employees in whole or in part by employer payments

Midpoint

Proficient and meeting performance expectations

Subscriptions/Published Surveys

Publisher collects, analyzes, summarizes, and reports on data

Nonqualified stock options

Purchase of stock at a stipulated price, not conforming with Internal Revenue Code

Incentive stock options

Purchase of stock at stipulated price, conforming with Internal Revenue Code

Which of these vehicles always has an inherit value?

Restricted stock plans

What Can Comp Do

Self-audits

In the Dan Pink video, the basic premise is the money motivates but only for rudimentary tasks?

TRUE

Over time, will lump-sum bonuses cost employers less than merit pay?

TRUE

Above midpoint

Tenure, performance, skills, high demand job

Midpoint progression

The % increase in the midpoints from one salary grade to the next

Record retention

The Act extends, from 2 to 3 years, an employer's obligation to maintain records of wages & pay rates, job classifications, & other terms of employment

What income is covered?

The Worker Economic Opportunity Act makes stock options and bonuses exempt from overtime pay calculations

Slot non-benchmark jobs

The differences are quantified when jobs content does not sufficiently match survey jobs

Aging or trending the survey data

The process of updating pay data to forecast the competitive rates for the future when pay decisions will be implemented.

Purpose of Surveys

The systematic process of collecting and making judgements about the compensation paid by other employees. They provide information about how the market values jobs and provide data to help to translate policy into pay levels, pay mix, and structures.

Portal-to-Portal Act

Time spent on activities before beginning the "principal activity" is generally not compensable; but if "integral" to principal activity is compensable

On-Line Self-Reported

Timely, cost-effective, easy to use; emerging type of survey

Market Pricing

To base most of the internal pay structure on external competitiveness & rates, breaking down the boundaries between internal organization and external market forces

Unemployment Insurance Financing

Unemployment compensation is financed 100% by employers that pay federal and state unemployment insurance tax in the majority of states

Create Job Worth Hierarchy

Use your relative ranking of jobs according to the organization's internal value

Traditional Time-Off (TTO):

Vacation time and sick time tracked separately

Regional Geographic Scope

Within a particular area of the state or several states

Local Geographic Scope

Within relatively small areas such as cities or Metropolitan Statistical Areas

Workers show strong interest in unions when

Workplace relations are bad, management is not trustworthy, or workers feel they have little influence over decisions affecting them

Coinsurance

a proportion of insurance premiums are paid by the employee

Red circle

above maximum of pay range

Deductibles

an employee claim for insurance is preceded by the requirement that the first $x be paid by the claimant

Green circle

below minimum of pay range

Defined contribution plan

employers establish the limits of their responsibility for employee benefits in terms of a dollar contribution maximum

The Lilly Ledbetter Fair Pay Act

increases compliance challenges

Peer group

list of companies similar to your own based on SIZE, INDUSTRY, LOCATION, type of company that are either-competitors in your product market or talent market.

Variable pay types

monetary & non-monetary rewards

• Definition of Pay Philosophies

o Average pay of benchmark jobs set to average pay of similar jobs in comparable companies

The Spillover Effect

occurs when employers avoid unionization by offering wages, benefits, and conditions won unionized firms

Example of employee benefits

vacations, time off, life insurance, pension, workers compensation

Sales compensation

very reliant on performance-based incentives based on individual performance

Restricted Stock

- An award of actual company shares of stock - There is no price paid - There is a vesting period, like stock options - There is always some value unless the share price goes to zero - Vesting criteria varies and is defined by your company

Self-audits

- Analyze compensation regularly based on gender, national origin, and age •Base salaries •merit increases •promotions •training opportunities •bonus payments •special awards

Why would organizations use market pricing?

- Assumption is there is little value in internal alignment; de-emphasizes internal value - Time and expense of internal alignment process - Takes pay off the table, not a competitive advantage or disadvantage - Fairness presumed to be reflected by market rates

Goals of compensation

- Attract, retain, motivate - Reinforce desired behaviors - Sufficient to recruit and hire good employees (attract) - Ensure good employees stay with the company (retain) - Build further knowledge and skills (training) - Motivate employees to perform well on their jobs

Paid Time-Off (PTO)

- Combines vacation, sick and other medical time-off - More expensive than TTO

Contingent Workers

- Defined as anyone hired: Through a temporary agency On an on-call basis As an independent contractor - As the employee status is temporary and benefits are less or nonexistent Higher wages tend to compensate

Two theories of discrimination behavior

- Disparate treatment - Disparate impact

Union-nonunion wage differential varies from year to year

- During periods of higher unemployment, impact of unions is larger - During strong economies, union-nonunion gap is smaller

Defined Benefit (DB) Plans

- Dying breed - cost and unfavorable accounting rules - Employer provides specific pension level defined in terms of: • Fixed dollar amount of percentage-of-earnings amount which varies with seniority - Employer finances this obligation by: • Following an actuarially determined formula • Making current payments that will yield the future pension benefit for a retiring employee

Pay Equity

- Employee comparison based on location - Employee comparison based on responsibility - The permitted reasons for pay differences are: A seniority system A merit system A system t• The permitted reasons for pay differences are: o A seniority system o A merit system o A system that measures earnings by quantity or quality of production o A bona fide factor other than sex, including skills, education, training, experience, shift, or geography

Trade Unions and Employee Involvement

- Europe remains highly unionized - Asia is less heavily unionized - Some countries set pay by collective agreement even without unions - In addition to unions, some countries allow work councils, which must be involved in any changes to a pay plan

Furor Over Executive Compensation Counter arguments

- Executive compensation is a reflection of changes in the market - to compete must pay market relevant comp packages - High risk, high reward - Executives earn compensation by linking pay to performance

Supply on the Labor Market

- Government affects labor supply through legislation - Immigration policy and how rigorously it is enforced is an important factor in labor supply

Defined Contribution (DC) Plans

- Growing over DB plans - Specific contributions by employer - Popular forms of these plans • 401 (k) plan • Basic employee stock ownership plan (ESOP) • ESOP as a pension vehicle - cash at retirement based upon stock value at that time • Qualified deferred compensation plan • Cash balance plans - hybrid of DB and DC plans

Range penetration

- How far into the range the employees pay is - Employee pay-minimum/maximum-minimum

Balance scorecard Disadvantages

- If financial targets are not met, there may be a reduced payout - Can be complex

Stock ownership or options Disadvantages

- Indirect pay/performance ink - Employees may be required to put up money to exercise grants

Factors for JOINING

- Level of pay - Pay system characteristics such as: job satisfaction, pay and benefits, social, and organizational commitment.

Furor Over Executive Compensation Critics' arguments

- Levels of compensation not justified under any circumstances - Pay in other countries are much lower

Bonuses

- Linked to company profits or personal performance - Incentives linked to completion of projects on or before deadlines - Bonuses for achievements

Focal Review

- Linking performance and pay (performance review + merit increases) - Determine performance review ratings - Establish merit budgets - Evaluate where employee is in relation to salary range (or market) = range penetration

Merit pay

- Links increases in base pay to how highly employees are rated on a performance evaluation - Pay for individual performance based on performance evaluation - USED THE MOST!!

Team/group incentives Disadvantages

- May be difficult to isolate impact of team - Not all employees can be placed on a team - Can be administratively complex - May create team competition - Difficult to set equitable targets for all teams

Stock ownership or options Advantages

- Minimal impact on the financial statements - Have powerful impact on employee behavior - Tax deferral to employees

Executive Compensation

- More emphasis on pay-for-performance - More pay at risk in form of long-term incentive (performance equity) - Far fewer "perks"

How to Age Data

1. Find effective date of survey data 2. Decide on a target date for the data 3. Determine the annual adjustment factor 4. Apply aging factor to market data

Employee or Independent Contractor: 2 General Criteria to Classify

1. How much control the firm exercises - behavioral control & financial control 2. The type and permanence of the relationship

Fair Labor Standards Act (1938): Three Major provisions

1. Minimum wage 2. Hours of work 3. Child labor

Advantages of group benefits

1. Most benefits are not taxable - provision of a benefit rather than an equivalent wage increase avoids payment of federal and state personal income tax. 2. Many group-based benefits, health, life, legal insurance, etc., can be purchases at lower rates than could be obtained by employees acting on their own 3. Group insurance also has relatively easy qualification standards, giving security to a set of employees who might not otherwise qualify

Where you compete for talent

1. Occupation 2. Geography/location

Merit Guidelines

1. What should the poorest performer be paid as an increase? 2. How much should average performers be paid as an increase? 3. How much should top performers be paid? 4. What should be the size of the percentage increase differential between different levels of performance?

ADEA

prohibit discrimination based on age

ADA

prohibit discrimination based on disability

Title VII of the Civil Rights Act of 1964

prohibits discrimination based on: Sex, race, color, religion, or national origin in any employment condition

Satisfiers Factor

recognition, promotion, and achievement

Regulation

relates to the legal and regulatory environment for HR decisions - Countries differ on regulatory restrictions • Maximum hours worked • Hiring and firing workers The social contract in Europe Comes at a cost • Generous worker protection may undermine worker incentive • The tax burden is 60% higher than U.S. to help insulate workers from unemployment

Sales professionals

require high initiative and low supervision

Contributory

shared cost

Contracts

specify hourly and overtime pay, premium pay and pay schedule and occupation-wage differentials