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Zero wage

increase again?

Fahad Usman
Shahzaib Mubassar
Intro and Overview

● House, Hearth & Home is a hardware store.


● Mark Coglin is the owner and is also assumed general
manager.
● It had almost 100 employees.
● They also had annual sales of $20 million.
● Sales had shrunk almost $4 million every year.
Industry

● House, Hearth & Home is a Member of both the


residential construction sector as well as home
renovation.
● Home industry as a whole seems to be highly dependent
upon the larger macroeconomic state
● A stagnant and temporarily declining stage of the
industry, with recent signs of renewed customer interest
and demand for certain items.
Key issue

● There has not been a wage increase in two years (2009 & 2010) at his
company.
● Many internal employee problems have surfaced.
● Impaired corporate culture due to its general manager/owner’s failure to
implement an impactful managerial motivational approach.
● No wage increase for the third year in a row would probably lead to
discontent and tensions among the staff members.

● Several motivational theories can be applied by Mark to keep the


employees motivated.
Motivational theories that can be
implemented by Mark:-

1. -Maslow’s hierarchy of Needs places esteem as a higher-order need.

- By addressing employees an increase in their wages and therefore giving them


a form of recognition, Mark could boost their esteem, and increase their
motivation.

2. -The expectancy theory shows a direct link between personal effort and
rewards. Indeed, individuals tend to adapt their amount of effort respectively to
the outcome that this effort will procure them.

-If ‘House, Hearth & Home’ employees feel that their efforts and good
performance is not going to lead to any external rewards, they might adapt their
amount of effort and therefore be less motivated and effective.
3. -Adam’s Equity Theory (1967) states that employees are interested maintaining
balance of the scales between how much they put into their organisation (effort),
and how much they receive from their organisation as an outcome (rewards).

-By now allowing them rewards for the efforts, these “life-blood” employees are
receiving an equal output for their input which is likely to satisfy these employees
(Adam’s Equity Theory).
Key Stakeholders
1.Owners/general Manager: Mark – Lack of financial growth
severally impacts employees and himself

2.House, Hearth & Home Customers:– Buying power of the


consumer by satisfaction with service

3.Middle Management:– Have time and effort invested into


the company for success

4.Employees:– Largest stakeholder group, attitude reflect


corporate culture set up by upper management
Middle Management
1. Simon (The floor manager):- is a dedicated key employee for Mark who manages
to handle issues in his attention. He also behaves leniently to his employees as
noted by Mark providing a room for them to be absent on duties especially on
mondays.
2. Aaron (The company controller):- He suggested Mark to cut down investment on
advertising and divert it to get better securities, building maintenance to attract
customers and to pay of previous debt.
3. Kyle:- a two month old employee in the company. From surveying the culture
around him combined with two years of frozen wages, it is predicted that Kyle will
transfer to a company that will offer him more pay and opportunities.
4. Wesley (Yard foreman):- He doesn’t prefer any interruption in his work. He prefers
workers like Kyle who have well knowledge of their work and expertise in their
skill. He feels Mark doesnt have those expertise and skills to work along him.
Other Employees

1. Dougie:- He 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.
2. Marie & Anne:- They both were ignorant employees. Both of them ignored
customers as Mark passed by them who than asked them to go to the customer.
SWOT Analysis
Strengths:-
● Self motivated middle managers.
● Business is at a opportunistic state, saving and/or investment
options available.
● Mark has a personable, forthright, and strong connection with this
management team.

Weaknesses:-
● Low employee motivation to perform their duties with the goal of
excellent customer service.
● Mark having a lack of managerial control of company corporate
culture.
Opportunities

● -Competition for motivation of employees can be


researched and implemented by the organization
● -Pursuing the installation of new technologies.

Threats
● -Economic downturn that is affecting businesses
worldwide
● -Employees wages to be set at more competitive rates
which will increase costs
● -Competing organizations
Alternatives:

Alternate 1:-
● House, Hearth & Home will provide monetary raises higher than 3% for select
employees who have continuously demonstrated corporate values
● In addition the company will dismiss unproductive employees from its personnel.

Alternative 2:-
● Home, Hearth, & Home will increase wage rates for all employees and
management by 3% through the reduction of other arenas of expenditures in the
company
● At the same time the organization will create a standard ‘three strike’ demerit
system that will provide negative reinforcement.
Alternative 3
● House, Hearth, & Home will keep all staff wages at their current rates.
● At the same time the company will create a Hybrid Reward Program as a means of
positive reinforcement.

Hybrid Reward Program:

● Incentive program that will provide rewards for individual employee efforts that
strive to excel in the two areas the company most values, hard work and excellent
customer service.
Recommendations

● Mark should go for Alternative 3.


● He should explain the program to management and staff
simultaneously, in an effort of alleviating power distance
within the company.
● First rewards for the hybrid system should be rewarded in
the first month.
● Program will asses all individuals and teams from the
present onwards.
Recommendations
● Employees and managers and subsequent teams will be
qualitatively and quantitatively questioned
● If revisions are needed they should be reviewed on weekly
or monthly bases.
Conclusion

● Hybrid reward approach restores feelings of enjoyment,


value, challenge, and accountability in employees,
ultimately resulting in motivation
● An increase in motivation of employees will increase
overall productivity of the company and its future
financial and managerial stability.
Thank You!

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