Projecting Labor Contract Costs *
Companies
that employ large numbers of workers with varying
wages and skill levels must perform particularly complicated
calculations in order to project future wage increases.
Pratt & Whitney Auto-Air Inc. certainly exemplifies
the type of corporation that would benefit greatly
from an automated tool designed to forecast employee
wage increases. More specifically, such a program
would facilitate the company's negotiations with
the workers' Union, helping to create economic
figures acceptable to both the corporation's management
and the Union.
The complexity of the wage computations can be attributed
both to the number of variables involved in the calculation
process and the diversity of wage classifications.
There are three main factors affecting wages, namely,
cost of living allowance, progression rates of pay
and wage increases guaranteed by contract terms, as
outlined in the Union workers' agreement
The purpose of this project is to implement Microsoft
Excel in developing a program that can accurately
forecast future wages for each individual presently
employed by Pratt & Whitney Auto-Air, Inc. This model
could serve two different yet equally important purposes
for Pratt & Whitney Auto-Air, Inc. First, this program
could replace the company's current system of
calculating weekly payrolls, a task undertaken by
two company accountants. This would relieve the accountants
of this time consuming task, allowing them to concentrate
on economic issues more important to the corporation.
More importantly, though, the model could prove to
be a vital tool to the company during its contract
negotiations with the labor Union. By allowing management
to consider different combinations of salary increases
for the many job categories, using the three wage
increases as inputs, the program would enable management
to determine an optimal set of wage increases that
seems most beneficial to the company's finances.
The program also will calculate the percent increase
of employee salaries.
* Summary prepared by Ferit Kivanc. George H. Schriver,
Pratt and Whitney Autoair, is the liaison. M. J. Winter
will be the manager.
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