Group 3: Le Thi Minh Anh

Pham Thanh Binh

Vo Dang Phuc Duyen
Nguyen Tran Phuong Khue
Nguyen Thi Cam Tu
Issue

Case study

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CSR Connection: This issue reflects the importance of
wages as a highly tangible component of a firm’s
relationship with one of its key organizational
stakeholders, its employees.

Stakeholders: Employees

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• Employees are treated as a means to an end, rather
than being a valued partner:

 The companies cut the labour costs to improve their

quarterly and their profit margins for shareholder value.

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• Whatever the term is, getting rid of employees can be a necessary and beneficial
strategic move for companies to make.

• However, it is only beneficial if it is done in a constructive and meaningful manner.

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• Unfortunately, many companies rely on a
straightforward forced ranking process that lists
employees from best to worst and then firing a certain
percentage at the bottom of the list.

 This process is easy, but unproductive.

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• This
method, sometimes called “rank and yank”, was
pioneered by Jack Welch when he ran General
Electric Co. From 1981 to 2001.

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• The
same workers who’ve been let go are the same
people who have consumed the goods and services.
 Employees in Production = Consumers in Sales
 In fact, the employees whose wages they squeeze
can also be the customers on whom they rely for sales.

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• Firms need to consider the reputation implications of cutting jobs,
as well as the damage to morale of those remaining employees
and what effects that has on future productivity.

• Example: Circuit City cut 3,400 jobs (7% of the firm’s workforce).
The rationale behind the “wage management initiative” was that
the fired employees were overpaid, so the firm immediately re-
advertised their jobs at a lower wage.

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• Fromdifferent perspective, employees should be treated
as an asset, rather than a cost.
• Inthis view, employees will grow and improve with
investment. In other words, they are respected as a core
component of the firm’s mission that can assist the
organization achieve its goals.

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• For example, Costco’s CFO – Richard Galanti :

“...if we pay better than average,

provide a salary people can live
on, have a positive environment
& good benefits, we’ll be able to
hire better people, they’ll stay
longer & be more efficient.”

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 • For example, Zappos Companies,
after weeks of intensive training,
new call-center employees are
offered $2,000 on top of what they
have already earned to that point if
they want to quit.

 Employees commitment is their priority.

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• Although there are many components of employees
satisfaction, the rate of pay is one of the most
important and contentious.

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• Example: Whole Foods Market is ranked as one of the Fortune Magazine’s
100 Best Companies to Work For.

+ The pay for every employee is known.

+ Senior executives received no more than 19 times the average wage.

+ Every four-week new recruitments.

 Prevent large disparity between senior executives and junior employees

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Acceptable wage rate:
• Minimum wage (by Government)
• Average wage (by Market)
• A living wage (by the nonprofits & NGOs)

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Case Study

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• McDonald’s is a huge multinational company, worldwide recognized brand.
• McDonald’s position deserves some sympathy due to its reputation as a good
employer and its serious training and development.

McDonald embraces the McJob instead of continuing its reaction to the Mc.Job
label by trying to refute and disown.

Become a dominant player in an industry, McDonald limited in its ability to

improve conditions for its employee by the nature of the product that it produces
and the strategy of keeping food prices low so labor costs have to be kept low, too.

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(BMPH)
2.5

2.2
2

1.5
1.2
1
0.8
0.6
0.4
0.5

0
Western Europe or Canada Russia Eastern Europe and Africa China Latin America and India

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 In a developed country like
Australia, Mc.Donald’s food is
considered low-cost fast-food.
In a developing country, like
India, however, Mc.Donald’s is
more exotic, more expensive.
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• Low wage jobs that are transferable (manufacturing) are being outsourced,
replaced by machines or rendered obsolete.

• Low wage jobs that are non-transferable (service jobs: gardening or

waitressing) are stuck in a low-skill, low-wage cycle.

• Mc.Job: a low-paying job requires little skill, little opportunity for

advancement (Oxford English Dictionary 11th edition)

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• Firms that invest in in employee development have our performed the stock
market. Happy workers are the best workers.

• Company suck as Mc Donald’s can afford to increase their minimum wage

slightly to benefit their employees and should strictly pursue labor violators.

• For employees – work on improving your job skills and professionalism. As

your raise your value to potential employers, you raise your job prospects and
takehome a good pay.

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