Ken Lewenza, president of the Canadian Auto Workers union (CAW) says the union is under pressure from Chrysler, Ford, and General Motors to accept performance pay and bonuses rather than across-theboard salary increases. He said the automakers want the recent deal made with auto workers in the United Sates to be the model to follow in Canada.

In the United States, the United Auto Workers union accepted a deal that links pay to company performance in its last two contracts in lieu of higher hourly wages. However, Lewenza says his union remains firmly opposed to the concept of profit sharing. “We have managed to resist what we call gimmick pay...I want us to stick to the traditional way of compensating workers, with no gimmicks attached,” he said. “At the end of the day our position is pretty entrenched. The best way to improve compensation for our members is through hourly increases in wages.”

Do you agree that profit sharing is “gimmick” pay and the best way to improve compensation for autoworkers is through hourly wage increases? What are the implications of these two pay strategies for employee motivation? What are the implications of each strategy for employees, the union, and the automakers? What are the advantages and disadvantages for all concerned? What do you think is the best pay strategy? Explain your answer.