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Autumn, 2004
Recruiting in a
Competitive Market
The erosion of the multi-layered hierarchy,
broader, more open communication, an aging
workforce and fewer new entrants to the
workforce are all contributing to an
increasingly competitive recruiting environment.
That in turn has begun making what had been an
individually negotiated senior management and
executive perk a more commonly used enticement
for potential new hires in all positions.
The Related Service Credit is an
interesting and potentially complicated
recruiting tactic. Related Service Credits
provide new employees with credit for their work
experience in other organizations, usually in
similar positions; sometimes in similar
positions and similar industries. Related
Service Credits are typically applied to
vacation entitlement and health benefit waiting
periods. Seniority and service recognition are
being included in some instances. Savings plans
and pension plans do not yet appear to be
included though those two are the obvious next
possibilities.
How Related Service Credits Work
Health Benefits – the typical waiting periods
for coverage are waived with the new employee
being eligible for benefits effective with their
date of hire for those benefits where there is
usually a waiting period of some duration. For
example: dental coverage often has a waiting
period of 3 months before the new employee is
eligible to participate. The related service
credit eliminates the waiting period.
Vacation Time – the typical work experience
required to reach the next level of vacation
time allotment is waived and credit is given for
experience in other organizations.
For example where the company provides 2 weeks
vacation after 1 year, 3 weeks after 5 years and
4 weeks after 10 years, 5 weeks after 15 years,
6 weeks after 20 years.
A Related Service Credit for vacation could
provide a new employee with 10 or more years’
related experience with 4 weeks vacation in the
first year.
Seniority and Service Recognition – typically
seniority affects such things as order in which
people are laid off and recalled to work, who
has first option on prime vacation times and
service recognition has to do with receipt of
some form of recognition for years of service.
If credit is given for related service the new
employee acquires the rights associated with the
level of credit provided.
Potential Issues with Related Service
Credits
- Longer-term employees who have worked with
the organization may be demotivated by the
“gifting” to new hires of something they feel
is recognition for their loyalty and
contribution to the company.
- There needs to be some carefully thought
out solutions to some of the issues related to
how the related service credit is applied. How
much related service credit is provided and
how it is determined which might help to
resolve some of the issue noted above and will
help to prevent situations like the example
that follows.
A highly valued employee who joined the
company a few years ago and who did not
receive any credit for related service
discovers that new hires are receiving credit
for related service and says: “I had 20+ years
related experience when I joined here five and
a half years ago and I should get credit for
that service too”. Where equal credit for
experience is provided it would not be
unreasonable for that person to think they
should receive 6 weeks vacation time (using
the above example of vacation) for related
service and 3 weeks vacation for experience
gained in this company.
- Identifying which of the employment
benefits could be and would be included. Where
there is a Collective Agreement involved this
can become considerably more complex.
- Identifying the cost associated with
implementing Related Service Credits and
determining if it is a cost effective
recruiting tool.
- While it does not appear to have become an
issue yet, it is reasonable to think the
potential exists for a discriminatory
employment practices challenge on the basis of
age discrimination as the related service
experience is only possible for older workers.
A good approach to addressing this issue is
to determine whether this is an approach that is
consistent with organizational culture and to be
proactive in developing a policy for Related
Service Credit prior to it becoming a pressure
point in a specific recruiting situation.
Interested in seeing how Anne can help resolve
recruiting issues? See the
Recruiting Case Study.
Looking for more information or need some help
with these or other HR issues? Please
get in touch.
News
Compensation and Benefits
- Canada’s Auditor General has rebuked the
Federal Government for the EI surplus (+$2
Billion in 2003 for a total accumulated
surplus of $46 Billion) which has led to a
reduction in 2005 premiums (down to $2.73/$00
of insurable earnings for employers and
$1.95/$100 of insurable earnings for
employees). Also down though considerably more
significantly are those who are eligible to
collect EI: from about 75% of unemployed
Canadians in 1990 to 38% of unemployed
Canadians in 2003.
- A survey conducted by Hewitt Associates
indicates that the majority of Canadian
companies do not provide Christmas/holiday
bonuses. Employers prefer to show appreciation
by hosting a party with about 90% planning on
holding one in 2004.
Federal Labour Standards
- Federal Labour Standards are under review
due to changes in demographics, technology and
greater work-life balance issues. The
Commission’s (headed by legal scholar and
labour law expert Harry Arthurs) report and
recommendations will be submitted to the
Ministry of Labour in January 2006.
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