Reference no: EM133375582

ArcelorMittal Dofasco is a leading Canadian manufacturing company located in Hamilton, Ontario. It started its operations in the early 1900s. The company produces and ships 4.5 million net tons of steel every year for the automotive, energy, construction, and packaging industries. Their products include steel car parts (such as armrests, handles, and brakes), steel appliances (such as refrigerators, freezers, and dryers), construction pieces (such as residential roofing and garage doors), consumer packaging (such as steel cans), and hundreds of other products. The company's motto is, "Our product is steel. Our strength is people." According to the firm, the secret to their success is their people and this is the reason why they created the first profit-sharing program in Canada. Today, Dofasco offers employees competitive compensation with the market. In addition to competitive salaries, the company also provides a variable compensation plan and a profit-sharing program. Both are created to allow employees higher incomes with the company's increasing profitability. Variable compensation is approximately 10 percent of the employees' salary. Profit sharing is 14 percent of Dofasco's pre-tax net profit. Dofasco also offers a great pension plan and group supplemental benefits.

Many people at Dofasco have been employed most of their working lives there; around 50 percent of the organization has recently retired. Over the past few years, the company hired 2000 of the 5000 employees currently working at Dofasco as part of an ongoing hiring campaign. Finding qualified people to fill positions has been an industry challenge; therefore, the compensation system must assist in attracting the right people.

By contrast, Koch Foods operates a plant in Morton, Mississippi, that converts live chickens into packages of chicken parts. All work is centred around the "chain" on which the live chickens are hung, which rattles past line workers at a rate of 90 birds per minute. Workers posted along the chain perform various operations on the chickens as they pass by, such as snipping their heads off or reaching in and yanking out their innards. Unlike Dofasco, and although the company's annual sales figure is around $3 billion, Koch Foods hasn't implemented any pay innovations. Koch Foods simply pays workers an hourly wage not much above the legal minimum. Employee benefits are minimal. The firm has no fixed pension plan, other than a savings plan to which the company contributes, but only when the firm is profitable.

The company's compensation system has been the cause of several lawsuits. A female plant worker sued the company for pay discrimination when she was paid less than her male counterpart in the same position. Another lawsuit entailed two workers alleging that employees must work more than 40 hours a week to meet their quota for chickens but were never reimbursed for overtime nor for travel time between farms. Are you surprised to learn that employee turnover often exceeds 100 percent a year in plants like these?

ArcelorMittal Dofasco is a leading Canadian manufacturing company located in Hamilton, Ontario. It started its operations in the early 1900s. The company produces and ships 4.5 million net tons of steel every year for the automotive, energy, construction, and packaging industries. Their products include steel car parts (such as armrests, handles, and brakes), steel appliances (such as refrigerators, freezers, and dryers), construction pieces (such as residential roofing and garage doors), consumer packaging (such as steel cans), and hundreds of other products. The company's motto is, "Our product is steel. Our strength is people." According to the firm, the secret to their success is their people and this is the reason why they created the first profit-sharing program in Canada. Today, Dofasco offers employees competitive compensation with the market. In addition to competitive salaries, the company also provides a variable compensation plan and a profit-sharing program. Both are created to allow employees higher incomes with the company's increasing profitability. Variable compensation is approximately 10 percent of the employees' salary. Profit sharing is 14 percent of Dofasco's pre-tax net profit. Dofasco also offers a great pension plan and group supplemental benefits.

Many people at Dofasco have been employed most of their working lives there; around 50 percent of the organization has recently retired. Over the past few years, the company hired 2000 of the 5000 employees currently working at Dofasco as part of an ongoing hiring campaign. Finding qualified people to fill positions has been an industry challenge; therefore, the compensation system must assist in attracting the right people.

By contrast, Koch Foods operates a plant in Morton, Mississippi, that converts live chickens into packages of chicken parts. All work is centred around the "chain" on which the live chickens are hung, which rattles past line workers at a rate of 90 birds per minute. Workers posted along the chain perform various operations on the chickens as they pass by, such as snipping their heads off or reaching in and yanking out their innards. Unlike Dofasco, and although the company's annual sales figure is around $3 billion, Koch Foods hasn't implemented any pay innovations. Koch Foods simply pays workers an hourly wage not much above the legal minimum. Employee benefits are minimal. The firm has no fixed pension plan, other than a savings plan to which the company contributes, but only when the firm is profitable.

The company's compensation system has been the cause of several lawsuits. A female plant worker sued the company for pay discrimination when she was paid less than her male counterpart in the same position. Another lawsuit entailed two workers alleging that employees must work more than 40 hours a week to meet their quota for chickens but were never reimbursed for overtime nor for travel time between farms. Are you surprised to learn that employee turnover often exceeds 100 percent a year in plants like these?

Which compensation system is the most effective?