Posted: July 20th, 2016

What is the main scenario?

Read the following scenario.
Jack Parks is a benefits and services manager in the auto electronics division of USA Motors, a major manufacturer of audio systems and auto electronic ignition systems. After analyzing the impact of absenteeism on the division s staffing costs for the previous quarter, he is very concerned. What troubles Parks is an agreement negotiated 10 years ago between the national union and USA Motors that, in effect, pays workers for being absent.
The paid absence agreement was not supposed to work quite that way. The theory was that by giving workers one week of paid absence against which they could charge personal absences, the company would be encouraging workers to notify their supervisors when they would be gone, so that staffing arrangements could be made and production maintained. In practice, workers discovered that, by not charging off any paid absences, they could receive a full week s pay in June when the company paid off the balance of unused paid absences for the previous year. This case bonus, as workers had come to think of it, often coincided with the summer vacations taken by many of the 8,000 hourly employees when USA Motors shuts down for inventory.
As Parks learned, employees with chronic absentee records had figured out how to charge off absences using the regular categories (sick days, as well as excused and unexcused absences), and then collect the cash for the week of paid absences. In Parks s mind, USA Motors might just as well have negotiated a cash bonus for the hourly workers or given them another 10 to 15 cents per hour. After reviewing the division s absenteeism rates for controllable absences (i.e., those categories of absences believed to be of the employee s own choice), Parks concludes that the company could reduce this rate from the previous year s figure of 11%.