Case synopsis

The case is about the company ‘House, hearth and home’. One of the owners of the company Mark,
is facing a dilemma on how to reward his employees with a wage increase. It was mentioned in the
case that due to an economic downturn, the company has had two consecutive years of frozen
wages, and now Mark has to find a way to offer some financial benefits for his hard-working
employees this year.

His company controller Aron did suggest some cost saving plans; however, Mark does not want to
the company funds to go to all employees, because he knows there are some under forming
employees in the company that do not deserve the wage increase. But if he only rewards his hard-
working employees, he knows that a major dispute can occur.

Mark has to make a decision amongst three alternatives that whether all employees should get a
wage increase, or none of them, or the deserving minority.

1. What is Mark’s goal here? What does he want to achieve by addressing the wage
issue and what in the case makes you think that?

Mark's goal is to compensate and motivate hard working employees who add value to the
company. Specifically,those workers who are dedicated to their jobs (Simon, Wesley and
Kyle).

Mark also hopes to increase employee motivation and performance through the wage increase
and help that will also help to increase their productivity

Finally, Mark hopes to stop the (potential) increase in stolen inventory.

The belief is employees being paid more will be less inclined to steal, as stated by Mark.

2. As a consultant to Mark, would you advise him to give a raise to all employees, to
none, or to the deserving minority? Explain your reasoning and how would you
lessen the possible negative repercussions /consequences (Total of 10 marks)?

I believe Mark should give a raise to only the good performers.

Because firstly it is difficult to give wage increases because of the global downturn,

Secondly, if Mark gives a raise to the deserving employees it will further motivate them and
give them a sense of value and recognition, and it will also encourage the under forming
employees to work harder and possibly earn a raise in the upcoming years.

A major benefit of only giving the deserving minority a raise is that it will free up some
money that could be put towards some type of investments like security systems, building
maintenance, or even pay down some of their debt.

I believe Mark should give a raise to only the good performers.

Because firstly it is difficult to give wage increases because of the global downturn,
Secondly, if Mark gives a raise to the deserving employees it will further motivate them and
give them a sense of value and recognition, and it will also encourage the under forming
employees to work harder and possibly earn a raise in the upcoming years.

A major benefit of only giving the deserving minority a raise is that it will free up some
money that could be put towards some type of investments like security systems, building
maintenance, or even pay down some of their debt.

3. Briefly suggest and explain to Mark what to do with employees like Anne, Marie
and Dougie (Total of 5 marks)?

Mark should implement a disciplinary system to improve the performance of their

employees, for example he can apply a punishment and reward-based system, and they
should make sure the employees strictly follow their attendance and give them small
perquisites to keep them motivated. This will also resolve the stolen inventory issue,
The belief is employees being paid more will be less inclined to steal, as stated by Mark.

Mark has two options on what to do with Anne, Marie, and Dougie. He could either cut their
wage completely to save money or he could increase their wage with everyone else on the
condition of these employees working harder and providing better customer service.
If Mark
goes with option one and cuts their wage, it would likely de-motivate Anne, Marie, and
Dougie
more since there has already been a two year wage freeze. This would result in either the loss
of
all three employees with Mark taking the risk of actually finding three new motivated people
or
it would prevent the solution he is looking for, which is dealing with lazy employees and
wage
cuts or increases. If Mark decides to increase their wage as long as he sees these employees
are
providing better customer service and no longer calling in sick after every long weekend, it
would likely motivate them more to be better employees, and he could reward each person
evenly with that 2.5-3.0% wage increase.
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