A Zero Wage Increase Again Case Solution

1. What are the main ideas in the readings for today? What are the three points you found particularly interesting?

The reading provided an insight into a company’s decision making process regarding wage increase and increments. The three points that were particularly interesting have been mentioned below:

• Most of the employees described in the case study displayed a lack of interest in their job and were not performing to the best of their abilities. There were several absentees every day, customer satisfaction rate was low as employees were not handling customers properly and most of the employees were unhappy with their jobs.

• The company had not provided any wage increase in the past few years however, the employees seemed to understand the situation. Most of the employees were with the company for the past few years and even after no wage increase in two years, were sticking around. This showed that the employees were loyal to the company.

• The business owner, Mark, wanted to give employees a wage increase even when there were no profits. Upon the suggestion of Aaron, he was considering to cut back company’s expenses and allocate the funds towards employee wages. However, he was not sure about giving a raise to all of the employees since only a handful of them were doing their jobs properly. 

2. What were the key issues raised in the session?

The case study under discussion revolves around the critical decision of wage increase for the employees at House, Hearth and Home. The company in the case was not making any profits for the past three years that resulted in no wage increase for employees in the year of 2009 and 2010. The business owner, Mark, was perplexed about the situation and the key issues presented in the case were as follows:

• Mark did not want to have another “zero wage increase” year at the company. Having two consecutive years without any increment, Mark was afraid the employees were not going to take it lightly this year. There were already some employees who were not happy with their work and Mark was not sure how to handle them in case a protest began in the aftermath of another “no raise” announcement.

• While there were employees like Simon and Wesley who worked hard and extended their undying support for the company, Mark felt there were several employees who were not even deserving of their current salaries. Giving a raise to such employees was going to be a cost burden for the company. However, giving raise to selective employees, like Simon and Wesley, was out of the question too as it would result in protests by other employees.

• The company’s sales had not increased and it made barely any profits to be used in wage raise. The only way this was possible, as suggested by Aaron, was through cutting back on the company’s expenses and using the savings for giving at least 2.5% wage increase to all the employees. However, the company had several obligations and spending money on employees instead of catering to the obligatory expenses was a difficult decision.