1
Introduction
➢ No salary or wage increases for two consecutive years, employees are anxious to see
financial gain for their work.
➢ No spare money in budget, but adjustments can be made to find up to a 3% raise.
➢ Need to decide how to give raises to staff, as there is a wide array of employees.
➢ Need to access the needs and wants of the company and employees to ensure the
recommendations match the employees.
2
➢ Don’t want to reward employees who are not working as hard.
Alternatives
Option 1:
➢ Wage increase to all employees both full-time and part-time.
Summary
In order for this alternative to work, Mark would need to be able to balance the sunk cost of
the raise with an increase in sales. Developing more successful in-store promotions like the
kitchen display may help increase customer’s interest in their products. Also, designing a
system that discourages employees from not showing up to work could help in utilizing this
raise more effectively. Encouraging employees to take on more responsibilities as a
repercussion of the raise may also mitigate the sunk cost by creating a more productive
atmosphere.
The raise would work across all generations, however, there would need to be more in order to
keep all the generations happy. All generations like to see rewards for hard work and if they
just give the bonus to everyone, it does not encourage them to do better. By doing this
approach, you could potentially lose staff as they will feel as though their hard work doesn’t
lead to rewards, it is just given.
Pros
Cons
Boost morale for all employees equally
Mark’s business immediately assumes a sunk
cost into wages
Could motivate disgruntled employees to
come into work
Motivation based off of wage increase is
mostly disproven in literature
Could help with employee retention.
No one is recognized for outstanding work
that goes above the bare minimum required
of a position. (Why excel?)
Make sure you stay competitive as an
employer & retain your best employees.
May hurt morale & lead to loss of inspiration
to those employees that go the extra mile.
Can act as a demotivator if automatic pay
raise is seen as unfair if even poor
performers receive a raise.
Keeps long term employee pay at
appropriate levels in comparison to new
hires.
Sets a precedent where employees expect a
raise which may not happen every year and
cause future resentment.
Raises can mean employees have less
incentive to look for another job.
Without being tied to performance, possible
any productivity gain will be short-lived since
the employee did not have to meet any
performance criteria for the extra money.
Option 2
➢ Wage increase to the deserving minority who are full-time.
Summary
In order for this alternative to work, the employees who are given the bonus should be
acknowledged for the work that they put in and are made examples of. Installing security
Makes the most valuable employees
happy. Boosts morale.
May cause unaffected workers to be animus
towards the business and/or Mark, creating
disgruntled employees
Employees expect that pay will increase
over time. By meeting this expectation,
can influence retention rates.
May increase theft as a response from
disgruntled workers
