Thorough examination of the case was done to understand the details. The business scenario and the case problem were examined carefully.
Positive and negative findings of the case were analyzed and various topics such as Employee Pay Programs, Employee Involvement Programs and Motivation Theories were studied to come up with the possible solutions to the problem.“House, Hearth & home,” a large hardware, furniture and building centre, has not been able to earn sufficient profits due to the global downturn. As a result no wage hike has been given to the employees from the last two consecutive years and the employees are getting impatient for financial progress. The owner of the store is faced with the dilemma of managing the upcoming wage review process. He wants to reward the hard working employees out of the pumped up savings from the process improvement initiatives but has limited motivation to pay to the underperforming employees but this preferential treatment in wage hike may result in an angry backlash in the store. Also, he is unsure if he wants to divert the savings into compensation or to re-invest them in the business.
He needs to devise an effective wage distribution plan.The in-depth analysis of the case shows that the business has several factors that contribute to its success and others that hinder its efficiency. The store has pool of certain employees like Simon (Floor Manager), Aaron (Company Controller), The Kitchen Designer, Wesley (The Yard Foreman) and Kyle (Worker) who were dedicated, creative, knowledgeable and self-motivated. These employees are genuinely concerned for the store and strive hard to do their work effectively with utmost sincerity without any incentive and external motivation.On the other hand, there has been lack of motivation from the store owner, Mark Coglin. He expects his employees to outperform without realizing the need of effective motivation.
He is judgmental and has a presumed image of people in his mind. He does not understand the need to appreciate his employees’ efforts at the right time as he missed to congratulate the kitchen designer and thank Aaron for the brilliant work they had done, which even he realizes.Also, no wage increase in the past two years has indirectly cost the store even more as the problem of employee theft has cropped up due to lower morale of the employees.To build the morale of the employees, reduce the employee theft incidents and reward the deserving people, a minimum wage increase must be done for all the employees.
But this increase may be kept different for different employees. For example, there is a scope to give all the employees 2.5% to 3% increase. But instead of opting a uniform increase, a performance based increase system may be adopted.
The high performing managers could be given 3% increase, high performing foreman could be given an increase of 2.5% and so on. The under performers may be given a bare minimum increase of 0.75%-1%. This will compel them to work harder and put in more efforts so as to earn equal to their colleagues who are performing well.Also since the nature of the employees’ work require them to be in direct touch with the customers, who are key to the store’s survival, they should be motivated enough from the owner, Mark Coglin, so that they are able to relate themselves with the store and work in the best of their abilities.
There should be enough incentive plans for them to boost them up so that they channelize their energies efficiently in satisfying customers, operational activities etc. He should start Employee Recognition programs to value the efforts of the hard working employees.
