Climbing the corporate ladder – systematically

In Money, News Reports on November 13, 2014 at 12:08 pm

There’s a story in MSM today that you probably missed. It’s to do with the progressive wage model. Sounds “blah’’ I know but I have been trying to wrap my head around this concept that the labour movement has been promoting for some time now. Most of us would probably associate the model with cleaners who now operate with a minimum wage floor that will go up when they obtain skills or can do “high-order’’ work. More recently, the security industry was announced as sector number 2, to begin in 2016, to be followed by workers in landscaping. I can understand the need for a wage floor for the lower paid because they simply are paid too poorly. In fact, for cleaners, adoption of the model is part of a licensing scheme that all cleaning companies must get before they can bid for contracts.

But I can’t seem to wrap my head round why other better-paid sectors would need it. So the NTUC is happy that nearly 270 unionised companies have come on board to adopt the model, which is basically a career and wage progression ladder. I would have thought private sector companies, especially the big ones, would have human resource departments which have already mapped out how their employees should be assessed and paid or promoted. It seems the private sector already does plenty of merit-based promotion and payment but the labour movement wants to make this process more systematic and transparent. I wonder how many companies actually want to tell their employees how they promote and pay people. After all, this an important lever for a company to get more from its workers. And would they want to be bound by a wage structure that says when and how they should promote? Seems to me a bit like tying the hands of employers. At the very minimum, they have to abide by a wage floor for employees.

Looking through the case studies presented by NTUC at its conference yesterday, I was surprised that Singapore Airlines and SMRT were among the companies that have recently adopted the model. SIA promotes not just on merit, but also level of competency. Here’s what its human resource person said: “In the past, promotions were hard to come by. People had to wait for vacancies to arrive through resignation. Our staff are loyal so the attrition rate is low, as far as our general staff are concerned, so you had to wait a long time for vacancies to arrive.” Since it implemented the model, it has promoted 85 general staff.

I guess that’s a point in employees favour. Too often, they look up at the seniors in the company hierarchy and wonder when they will be pushed off their perch so that a vacancy is available. It must be pretty demoralising for a young person to see so many not much older people above him on the ladder. It’s a temptation to job-hop, to seek better prospects elsewhere. Yet, I wonder too how the companies feel about having a bigger and bigger wage bill, unless of course, it is accompanied by bigger and bigger output.

It seems some people in the F&B sector are taking on the model with a starting pay of $1,300 a month for service crew, instead of $1,200 a month. Instead of five levels to the top, which is Operations Manager, it created another two rungs in between. I think employers will have to keep persuading staff that this isn’t a way to slow down progression, which will be how some people will see it (as road blocks rather than rungs). I had a look at the ladder and the good thing is that the top level can stand to earn at least $4,500 a month instead of the current maximum of $3,800. Of course, how long it will take to get through seven levels instead of jumping through five….It seems that the labour movement wants these companies to be a nucleaus of sorts to infect the rest of the sector and has set up tripartite sectoral committees which will decide on wage increments and any changes to the ladder. It’s like price-fixing with a floor, except that both employers and unions have a hand in it.

I asked NTUC why employers would even want to be part of this and the answer that came back: Labour crunch. Employers would want their workers to stay on rather than job hop to the next employer who pays $10 more. I suppose in this full employment period, this is the best time to press employers to raise wages in accordance with skills and more or better service. I hope though that it isn’t the case that just because someone has a diploma or two, it means an automatic push up the ladder. Because it can turn the phrase “life-long learning’’ into a weary paper chase. And we thought we left school a long time ago!

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