Case Name :      A Zero Wage Increase Again?

Authors :           Karen MacMillan

Source :             Ivey Publishing

Case ID :            W11154

Discipline :        Organizational Behavior

Case Length :    05 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

The owner of a large hardware, furniture and building centre faced a dilemma regarding how to manage the upcoming wage review process. After two consecutive years of frozen wages, employees were impatient for financial progress, but there was no spare money in the budget. It was possible to pump savings from upcoming process improvement initiatives into wage increases. However, the owner had limited motivation to channel hard-won funds to underperforming employees. On the other hand, he was eager to reward the people who added value. A plan that rewarded only some employees could result in an angry backlash. He had to decide whether he wanted to divert the savings into compensation, and if so, he needed an effective distribution plan.