Are Disney World wage scales fair?

I wouldn't think that the issue for Disney isn't so much that people paid what they pay can't do good work, but simply that there are others paying more for the same work.

That's been Disney's problem in Anaheim and Florida, they pay some of the lowest rates on average for their themepark employees.
That means that all the most talented individuals will go to the higher paying jobs elsewhere.

I wonder what percentage of the affected employees at WDW were talking about are retirees and the relative wage isn't as important for them as working for WDW for other CM benefits?
 
A lot fewer than there used to be since Disney started cutting the full time jobs in favor of part time jobs.

I have no agenda to further. Where is the evidence that there is definitely a cause/effect relationship between compensation and quality of work? I would be very interested to read it.......and make a copy for my next merit raise performance review with my boss.
Sorry, I didn't mean to imply that YOU had an agenda. I've just seen his hierarchy used by companies as both a way to emphasize that compensation isn't everything and also to justify not increasing compensation. Never expressly stated of course, but clearly implied.

But think about it. You get merit pay raises. While they are positioned as rewards for past performance, they are really carrots for you to maintain good performance and continue to improve. Companies don't pay you for what you did, they pay you for what they believe you will do. Even bonuses and one-time rewards are really ways to incent you to perform well in the future.

That's because they know if they don't, you will not be as motivated as you would otherwise be, and will also be more likely to leave. If pay didn't matter, you wouldn't get an increase at all unless it was a promotion.

The point, though, isn't just how it affects one person. Its how those policies and levels of compensation affect the employees as a whole. Pay less and you will eventually end up with a lower cut of the talent. Supply and demand applies to the labor market as well.
 
That's because they know if they don't, you will not be as motivated as you would otherwise be, and will also be more likely to leave. If pay didn't matter, you wouldn't get an increase at all unless it was a promotion.

The point, though, isn't just how it affects one person. Its how those policies and levels of compensation affect the employees as a whole. Pay less and you will eventually end up with a lower cut of the talent. Supply and demand applies to the labor market as well.

By and large I agree with you here. Interestingly though, we recently had an "employee satisfaction survey" done where I work involving several thousand employees in different departments. Several of the questions centered on the theme of "would you leave here to work someplace else (similar work) that paid 5% more or 10% more". The responses to both scenarios were overwhelmingly no. That tells me that other factors, be they tangible or intangible, are at play as well. I think Disney is no different. They may currently be under market in terms of wages (and eventually the market will correct that) but the myriad of other reasons probably have a larger impact of employee satisfaction and longevity.
 
But think about it. You get merit pay raises. While they are positioned as rewards for past performance, they are really carrots for you to maintain good performance and continue to improve. Companies don't pay you for what you did, they pay you for what they believe you will do. Even bonuses and one-time rewards are really ways to incent you to perform well in the future.

But does that really apply? Aren't employees under a collective bargaining agreement typically given raises on tenure-triggers rather than from positive performance ratings?
 


Yes, the union aspect adds a layer of complexity. I'm honestly not sure how much performance comes into play on raises at WDW for the rank and file. I believe it does on other issues, like getting requested transfers and promotions of course, but I'm not sure about the wages themselves.

If it is completely tenure-based, that is a problem because it removes a portion of management's ability to incent, but now we're getting into the value of unions in general.

But the question was whether or not compensation is in fact ONE factor in quality and performance. As to how it applies in a practical matter to WDW, yes, the union aspect complicates things.

Still, if Disney believes it should offer more to prospective and current employees than SW or Universal because they expect more from those employees, the union certainly has not stopped that from happening, and wouldn't in the future.

And the below market pay is the same at DLR. It should be clear that this is a strategic decision by management, not a union issue.
 
Also, a friend forwarded this article to me. Not that it settles the debate, but it makes for an interesting perspective. Certainly it highlights the challenges faced when companies buck the trend on the Street. But if its long term results you are interested in, you'll quickly learn that the caving to the whim of the Street isn't always going to serve you well.

This example would seem to be even more relevant to Disney's model, which is supposed to feature quality and service that is superior to its industry competition, and certainly superior to its competion in the local job markets.

http://www.businessweek.com/magazine/content/04_15/b3878084_mz021.htm

The Costco Way
Higher wages mean higher profits. But try telling Wall Street

Costco Wholesale Corp. (COST ) handily beat Wall Street expectations on Mar. 3, posting a 25% profit gain in its most recent quarter on top of a 14% sales hike. The warehouse club even nudged up its profit forecast for the rest of 2004. So how did the market respond? By driving the Issaquah (Wash.) company's stock down by 4%. One problem for Wall Street is that Costco pays its workers much better than archrival Wal-Mart Stores Inc. (WMT ) does and analysts worry that Costco's operating expenses could get out of hand. "At Costco, it's better to be an employee or a customer than a shareholder," says Deutsche Bank (DB ) analyst Bill Dreher.

The market's view of Costco speaks volumes about the so-called Wal-Martization of the U.S. economy. True, the Bentonville (Ark.) retailer has taken a public-relations pounding recently for paying poverty-level wages and shouldering health insurance for fewer than half of its 1.2 million U.S. workers. Still, it remains the darling of the Street, which, like Wal-Mart and many other companies, believes that shareholders are best served if employers do all they can to hold down costs, including the cost of labor.

Surprisingly, however, Costco's high-wage approach actually beats Wal-Mart at its own game on many measures. BusinessWeek ran through the numbers from each company to compare Costco and Sam's Club, the Wal-Mart warehouse unit that competes directly with Costco. We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity. Combined with a smart business strategy that sells a mix of higher-margin products to more affluent customers, Costco actually keeps its labor costs lower than Wal-Mart's as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot. Put another way, the 102,000 Sam's employees in the U.S. generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees.

Bottom line: Costco pulled in $13,647 in U.S. operating profit per hourly employee last year, vs. $11,039 at Sam's. Over the past five years, Costco's operating income grew at an average of 10.1% annually, slightly besting Sam's 9.8%. Most of Wall Street doesn't see the broader picture, though, and only focuses on the up-front savings Costco would gain if it paid workers less. But a few analysts concede that Costco suffers from the Street's bias toward the low-wage model. "Costco deserves a little more credit than it has been getting lately, [since] it's one of the most productive companies in the industry," says Citigroup/Smith Barney retail analyst Deborah Weinswig. Wal-Mart spokeswoman Mona Williams says that Sam's pays competitively with Costco when all factors are considered, such as promotion opportunities.

PASSING THE BUCK. The larger question here is which model of competition will predominate in the U.S. Costco isn't alone; some companies, even ones like New Balance Athletic Shoe Inc. that face cheap imports from China, have been able to compete by finding ways to lift productivity instead of cutting pay. But most executives find it easier to go the Wal-Mart route, even if shareholders fare just as well either way over the long run.

Yet the cheap-labor model turns out to be costly in many ways. It can fuel poverty and related social ills and dump costs on other companies and taxpayers, who indirectly pick up the health-care tab for all the workers not insured by their parsimonious employers. What's more, the low-wage approach cuts into consumer spending and, potentially, economic growth. "You can't have every company adopt a Wal-Mart strategy. It isn't sustainable," says Rutgers University management professor Eileen Appelbaum, who in 2003 edited a vast study by 38 academics that found employers taking the high road in dozens of industries.

Given Costco's performance, the question for Wall Street shouldn't be why Costco isn't more like Wal-Mart. Rather, why can't Wal-Mart deliver high shareholder returns and high living standards for its workforce? Says Costco CEO James D. Sinegal: "Paying your employees well is not only the right thing to do but it makes for good business."

Look at how Costco pulls it off. Although Sam's $11.52 hourly average wage for full-timers tops the $9.64 earned by a typical Wal-Mart worker, it's still nearly 40% less than Costco's $15.97. Costco also shells out thousands more a year for workers' health and retirement and includes more of them in its health care, 401(k), and profit-sharing plans. "They take a very pro-employee attitude," says Rome Aloise, chief Costco negotiator for the Teamsters, which represents 14,000 Costco workers.

In return for all this generosity, Costco gets one of the most productive and loyal workforces in all of retailing. Only 6% of employees leave after the first year, compared with 21% at Sam's. That saves tons, since Wal-Mart says it costs $2,500 per worker just to test, interview, and train a new hire. Costco's motivated employees also sell more: $795 of sales per square foot, vs. only $516 at Sam's and $411 at BJ's Wholesale Club Inc. (BJ ), its other primary club rival. "Employees are willing to do whatever it takes to get the job done," says Julie Molina, a 17-year Costco worker in South San Francisco, Calif., who makes $17.82 an hour, plus bonuses.

MANAGEMENT SAVVY. Costco's productive workforce more than offsets the higher expense. Its labor and overhead tab, also called its selling, general, and administrative costs (SG&A), total just 9.8% of revenue. While Wal-Mart declines to break out Sam's SG&A, it's likely higher than Costco's but lower than Wal-Mart's 17%. At Target (TGT ), it's 24%. "Paying higher wages translates into more efficiency," says Costco Chief Financial Officer Richard Galanti.

Of course, it's by no means as simple as that sounds, and management has to hustle to make the high-wage strategy work. It's constantly looking for ways to repackage goods into bulk items, which reduces labor, speeds up Costco's just-in-time inventory and distribution system, and boosts sales per square foot. Costco is also savvier than Sam's and BJ's about catering to small shop owners and more affluent customers, who are more likely to buy in bulk and purchase higher-margin goods. Neither rival has been able to match Costco's innovative packaging or merchandising mix, either. Costco was the first wholesale club to offer fresh meat, pharmacies, and photo labs.

Wal-Mart defenders often focus on the undeniable benefits its low prices bring consumers, while ignoring the damage it does to U.S. wages. Costco shows that with enough smarts, companies can help consumers and workers alike.
 
. . . I would have to ask, what is the actual wage that people receive, both starting and actual and how it compares to other jobs in the area. I live and work in the Chicago area in the restaurant business and can not get 17 yo kids to take a host job for less than $8.00/hr . . .


1) Hourly:
. . . this is a union environment
. . . everyone gets paid the same for the identical pay grade and seniority
. . . thus, $7.35 starting wage is $7.35 starting wage
. . . no room for management to move on individual pay or perks
. . . no incentives or bonuses or merit increases (even for CM's that get good comments from guests)
2) Salaried & Management:
. . . there could soime negotiation within the salary grade
. . . but, very little
. . . there is usually many applicants for the same non-union position
. . . typically, it is a take-it-or-leave-it job offer
 


. . . Maybe I'm a bit cynical (ok, no maybe about it) but if the current wage agreement is so "unfair" then why did the union agree to it? There are two parties to these agreements . . .


1) They negotiated months past the contract date.
2) They could not get better terms from WDW.
3) Their only resolution would be a strike.
4) And not enough employees would go on strike.
5) So, you take it or leave it.
6) WDW has them over qa barrell, and WDW knows it.
 
1) They negotiated months past the contract date.
2) They could not get better terms from WDW.
3) Their only resolution would be a strike.
4) And not enough employees would go on strike.
5) So, you take it or leave it.
6) WDW has them over qa barrell, and WDW knows it.

,,,,wait a second who was holding the gun to these peoples heads and forced them to go to work for Disney?
 

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