Business: Compensation Woe: How to Pay?

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Westinghouse and the Equitable Life Assurance Society have introduced an intriguing salary gimmick: they are giving their workers the choice of taking their annual raises in a single lump sum as soon as the increases are granted, rather than having them parceled out in paychecks through the year. Employees like this option because it allows them to use their raises to buy big-ticket items like cars, color TVs and refrigerators sooner rather than later, when they may cost more. But some employers fear that the practice of giving lump-sum raises, if it were to spread, might fan inflation by fostering a buy-now philosophy.

In negotiations on a new three-year contract with the United Rubber Workers this summer, the rubber companies agreed to a significant sweetener in the cost of living adjustment (COLA) provisions. Workers got an advance on anticipated COLA increases; in the first three months of the first year of the contract, for instance, an extra 200 an hour was tacked onto their paychecks, giving some 75,000 workers an extra $600,000 per week in take-home pay. Conceivably, such COLA advances could become widespread; at present 60% of all unionized workers are employed under contracts that have COLA provisions.

Another new compensation wrinkle that more and more employers are adopting is the Tax Reduction Act Stock Ownership Plan, or TRASOP. Under a law passed by Congress in 1975, a company can get an extra tax credit of up to 1% of its investment in new plant and equipment if it distributes that tax saving to employees in the form of company stock. The value of TRASOP to employees is lessened by the fact that they get the shares only when they leave the company. While this and other new departures in pay are engaging enough, most earners would probably agree with Daniel Lesh, manager of compensation at Honeywell Inc. Says he:

'With today's rapid rate of inflation, employees need money, not benefits. You have to put rewards in cash."