Case Solution - A Zero Wage Increase Again?

Submitted by -
Roshan Mandrawalia
(Roll No PGP04134)

Case Summary

Mark Coglin, owner of ‘House, Heart & Home’ has to manage his firm for upcoming wage review process. The
global downturn had negatively affected the company, and there was no increase in wage since last two years.
While understanding the stagnant financial progress of employees he had limited motivation towards
underperforming employees. There were

Simon, the floor manager, is dedicated key employee for Mark who manages to handle issues in his attention.
He also behaves lenient to his employees as noted down by Mark providing a room for them to be absent from
duties especially on Monday. Dougie often used to be absent on Mondays by making some excuse to Simon.
Mark noticed that his employees did not give priorities to their customers as in case of Marie and Anne,
employees from flooring department. Argon, the company controller, suggested Mark to cut down investment
on advertisement and divert it to get better securities, building maintenance attracting customers and to pay off
previous debt. Wesley a responsible yard foreman doesn’t prefer any interruption to his work. He prefers
workers like Kyle who have well-knowledge of their work and expertise in their skill. He feels Marks doesn’t have
those expertise and skills to work along with him.

Mark now back in his office is thinking over issues that prevail in his organization, he is more concerned about
the wages that the employees didn’t receive from last two year. He also needs to resolve employee theft
problem. To improve work culture he is thinking of a reward system with a justification.

Approach

House, Heart & Home is underperforming and there has been no wage increase since last two years. Work
culture of the company is impaired because of lack of motivation from Mark. He is unable to restructure his firm
in efficient manner. Mark need to address various issues in order to improve productivity of his firm while
motivating his employees. These issues are:

1. Both motivation and hygiene factors are currently low scored for the firm which Mark needs to resolve.
2. No strictness to compliances of company which is being misused currently for its flexibility.
3. Increasing employee theft.
4. Restructuring his investments according to requirement and directing the savings in efficient processes.

Content

The company compliances should be clear and should be made mandatory to all employees. Dougie, Marie &
Anne seem to dislike the work culture, avoids responsibilities to take customers, and lack ambition. They were
found to misuse the flexibility provided to them. These employee fall in category of theory X hence Mark must
enforce set of rules. As written in case he can also dismiss up to 15% of underperforming employees which will
probably save some money. New technologies such as punch-in punch-out system for attendance can also be
implemented for an automated evaluative system. Installing a better security system to watch over employee
theft and penalizing such employee who indulge in such activities would discourage such activities in future.
According to McClelland’s theory of needs an opportunity should be given to top management to foster an
organizational culture of honesty and fair dealing among staff will certainly full fill their need to behave powerful
and get even more motivated and confident towards their work. Mark could also acknowledge employees like
Aaron & Kyle personally for putting their good efforts in work which will motivate them intrinsically.

There is evidence from case where Mark had asked Aaron specifically to look for possibility where the
organization can save some money. Finally Aaron arrived at solutions along with the estimated saving in each
reduction. This is in accordance with goal setting theory and such work culture need to be followed in the
organization. Now Its Mark chance to implement those solutions and acknowledge Aaron with a good feedback
and set up even higher and difficult goals to him and for the organization.

A reward system in the organization will be an extrinsic motivation factor hence should be made an extremely
difficult task to achieve. It would also promote healthy competition among employees. These rewards can be set
in form of variable pay, merit-based pay or skill-based pay. Kyle an expertise in his skills can be one such
candidate for reward.

Critic

To any decision Mark arrives there will be serious consequences. Changing the work culture and retracting
employees for their performances will develop a fear among them. Fear being a powerful motivator sometimes
but it may also result in inner anger against Mark. It may be efficient for the current underperforming situation
of House, Heart & Home but in long run it may not be, hence after achieving certain standards, the policies
should remain but the fear factor should be replaced with better recognition system.

A reward system would be discrimination to other employees where they have a tendency to compare
themselves with those who are rewarded. The consequences of this could results in inter personal conflicts
among the employees.

Conclusion

As suggested by Aaron, Mark should look upon reducing advertising cost and divert a part of it in installing
security systems that could watch over absenteeism and employee theft. He should take his role, in setting up
strict company policies along with implementation of serious penalties against employees if found guilty. These
policies should be delivered to employees from top-management staff. This will help in motivating top-level
employees by giving them a chance to behave in powerful manner at the same time the negative consequences
of motivation by fear will not come on Mark. Immediate dismiss of employees might result in anger among staff;
therefore it should be on performance evaluation basis with a prior warning to them. A reward system is a need
in an organization in accordance with Hygiene-motivation theory but simultaneously criteria for the same should
be very high. Mark should set higher and difficult goals for his organization with a periodic review and feedback,
which will promote healthy competition and motivation among the employees.