Manuela Lopera

Julián Sierra
Juan Sebastián Arcos

A zero wage increase again?

(1) What outcomes does Mark seem to want to achieve by addressing wages/rewards?
What Mark wants to achieve by increasing wages is to stimulate the work performance of his
workers. He considers that some of them are unmotivated: they do not fulfill the functions of
their position and he believes that increasing their salaries, after two years of not receiving
increases, can be a stimulus to improve the performance of each worker. Even though this
might be a possible solution the economy has affected their sales which makes it impossible
to give a raise to every employee. Some economical rewards might actually raise up profit
margins as this would raise their general mood towards positive emotions which have a
positive impact in motivation and consequently results (Robbins, 2017). Furthermore, Mark
noticed that freezing the workers’ wages for the third year could cause many workers to quit
their job or take a raise by their hands stealing some products from the store. With this in
mind, Mark wanted to prevent employees leave their jobs, more inventory to become “lost”,
and the morale tun sunk even lower (MacMillan, 2018).

(2) Contrast the outcomes that might be expected in the following two scenarios:
a. Mark uses the process improvement savings to give a three per cent wage
increase to all employees
If Mark uses the money to improve processes in a wage increase for all his employees,
there could be a shortage of resources for the company's operational process which would
further deteriorate income generation and could become a future layoff of workers
because regular wages could no longer be paid. On the other hand, if it were decided to
give a salary increase to all employees, this could be good because it would motivate
them to continue performing their duties and even to have a better performance because
they would feel encouraged. This decision might not improve the workers compromise
with the organization to the level expected, for this reason other options to have in mind
and apply at the same time can be create programs for employee participation and
involvement which can motivate the workers to give an extra mile as well as redesigning
the work toward a relational job design where employees can access to customer stories.
Both of these can have a boost in involvement and consequently on performance as the
workers can see the direct results their actions can have.
b. Mark uses the money currently available in the budget to give raises to Aaron,
Simon, and Wesley only.
If Mark only offers a salary increase for certain people like Aaron, Simon, Wesley as a
recognition toward a good performance this could motivate workers because they will
understand that by doing a better job, they would receive a better payment. But, on the
other hand, this could cause conflict among the other workers because they would be in
an inferior position and could become aggressive or even bullying for the recognized
employees. This inconvenient generated by subjectively selecting only these three
Manuela Lopera
Julián Sierra
Juan Sebastián Arcos

workers can be resolved by creating a merit-based pay, or a variable-pay program which

could reward anyone in the organization by clear criteria (Robbins, 2017).

(3) As a consultant to Mark, would you advise him to give a raise to all, to none, or to
the deserving minority?
If expenses are reduced a salary raise must be made in the company in order to boost
motivation and preventing people quitting their jobs. Nevertheless, as Mark states there are
some worker who don’t deserve this payment raises. As a consultant, we would recommend
two different options: a variable-pay program. The variable-pay program must be constructed
taking in mind the effort and performance of the workers. Workers will be paid monthly what
they have in their base contract but annually or biannual. The payment workers will receive
would be a different amount in this preestablished months where depending on customer
satisfaction and managers observation they will receive a bigger increase meaning that their
effort will result in higher raise driving the motivation up. A raise to the deserving minority,
under a controlled and preestablished methodology, will motivate the other workers to do a
better job when they have to. This plan has to be presented to all the workers and use as an
example the workers that already do an excellent job. Motivation by a possible pay raise and
by example can improve the organization’s profit margins (Robbins, 2017).
(4) Design a reward system that will improve the behavior of employees like Anne,
Marie and Dougie.
As a priority, the company needs to improve the morale, motivation, and the quality of work
of the workers, this, in a tough environment, because the wages have been frozen for 3 years,
so there is not an economical motivation. As a proposal, the firm could apply an "Opportunity
Period” This mechanism would be focused on the 15% of workers that are not making their
jobs in the best way possible. The Opportunity Period it's about a system of warnings and
rewards.
First, the leader imposes the objectives, the behaviors, and the skills that a worker should
have, the workers who fail in the standards proposed would have a warning , and
immediately the worker would enter into the Opportunity Period, it means that if that worker
has another two more warnings, unfortunately, they will be fired.
But in the other case, if the worker reaches the objectives and improve, it would have a
retribution in the company through incentives such as public recognitions, an additional free-
time day during the month, or other kind of benefits. Due to the financial problems of the
company, economical rewards would not be possible in the company.
This is a tough decision, but the circumstances require it. As the case says, those workers in
the present are not contributing with the processes and development of the company, but as
good leaders of the company, the application of the opportunity period, as the name says it,
gives an opportunity to those workers in order to improve in the company, if they don't, with
the money of their wages would be used in order to increase the wages of the good workers.
Manuela Lopera
Julián Sierra
Juan Sebastián Arcos

Bibliography

MacMillan, K. (2018). A zero wage increase again?. Richard Ivey School of Business
Foundation.
Robbins, S. (2017). Organizational behavior. (17a. ed.) Pearson Educación. Tomado de
http://www.ebooks7-24.com.ezproxy.uniandes.edu.co:8080/?il=5101