OB 112-1

Case 2 Questions
1. Summarize the consequences of Price’s decision.
a. Who are the stakeholders that were affected by Price’s decision?
Dan, the employees, Lucas, other businesses, and the customers.
b. What are the consequences of Price’s decision for each stakeholder?
1.His employees who were increased income can benefits from that, while some
employees who were already paid more than 75000 feel inequality. 2.Dan has to price
cut the remuneration to pay for the increases but also being portrayed as the nicest
boss. 3.Lucas, Dan's brother and co-worker, can't benefit from his ownership of shares.
4.Other businesses who can't afford to increase the income are made to look stingy
because employees are the biggest expense, and they need to manage those costs to
survive. 5.Some of customers against the "socialist" gesture and stopped their business
with Gravity Payments, while some withdrew their business due to an anticipation of a
fee increase, in spite of the repeated assurances that this would not happen.
c. What should Price have done before increasing the employees’ salaries to
avoid unexpected challenges and negative reactions from various
stakeholders?
Do the research, like 75000 is a threshold, marginal benefits grow below 75000, but
don’t above 75000. Also, low income does associate with low life evaluation and low
emotional well-being. That's why Dan should increase the income. But he also has to
consider all the stakeholders' opinions.
2. Evaluate Price’s decision.
a. Do you think Price’s decision might create problems for his company? If
so, what?
The company get lots of famous and benefits such as client owing to the media's
promotion but also has to move most of the profit use for the increases and the
shareholder may be angry about that.
b. Do you think his decision would be effective in motivating employees?
Why or why not?
Yes, but also no. That changes the low-income employees' lives so it will motivate them.
For example, some people can move out of parents' house, afford to have a baby, or let
their children have good education. But some of low-income employees don't like it,
either. Owing that wages are advertised publicly and having the same pay make them
uncomfortable. They may start to question themselves do they worth it. On the contrary,
it shackles high performers to less motivated them and makes them feel unequal.
c. Besides increasing minimum salaries, what would you recommend to
Price to motivate employees?