Case 2: Ethics Dilemma: A Slanted Wage Proposal
In Chapter 2, we learned that management is obligated to engage in good faith bargaining with unions over terms of employment. Setting wage and salary levels is a mandatory subject of bargaining. Johnson Auto Parts is preparing for its negotiations with the union. Mandy Mattson, Director of Labor Relations, asked Roberta Robinson, lead compensation analyst, for a market wage analysis to bring to the bargaining table. Roberta prepared the following material to discuss with Mandy. The report shows the current wage rates and proposed rates based on the market mean and median.
Roberta explained the methodology for surveying the market rates and calculating the market mean and median for each job. Mandy asked why Roberta proposed two rates rather than one. Roberta indicated that she wanted to provide a fuller picture of the market rates and discussed that the mean is less than the median when there are only a few outliers. In this case, the outliers are substantially lower wage rates than the majority reported in the survey. She went on to tell Mandy that she recommends sharing all the information with the union negotiators and to demonstrate good faith by explaining the reasoning for these differences. Mandy abruptly dismissed Roberta’s recommendation, saying that full information will likely lead to higher wage costs. Presenting the mean rates exclusively will keep labor costs down and that will make the shareholders happy. Roberta urged Mandy to reconsider this approach after a further inspection of the data revealed that some companies were unlawfully paying employees less than the lawful state minimum wage rate. The inappropriately low wage rates resulted in lower means than would otherwise be the case.
Questions:
7-8. As a compensation professional, what would you do?
7-9. What factor(s) in this ethical dilemma might influence a person to make a less-than-ethical decision?
