Zero Wage Increase Case Study Answers

In this case, the store owner Mark got into a dilemma, on the one hand, all the employees in his company got frozen wages for two years, and based on the current situation, there is still a huge possibility that this “zero wage increase” phenomenon will continue to the third year. Mark is afraid that his employees will got mad and the company may experience a mass exodus or a mutiny. However, on the other hand, he did not have so much spare money to increase everyone’s wage. Based on his own observation, he thinks that some of them who did not work hard do not deserve a raise, while some of them who worked extremely hard and efficiently should get paid even more. But he also believed that if he only gives an increase to part of his employees, …show more content…
In the other word, his goal is to maximize the productivity of individual employees by increasing their job satisfaction, and based on the value-percept theory, pay satisfaction is one of the important elements in calculating the overall job satisfaction. If the wage increase for the employees is still zero in the third year, the job satisfaction for them will decrease, and even if they decide to tolerate this fact and stay in the company, their working efficiency will definitely decrease as well. For those good employees, they may feel like that the company did not value their hard-working, they may lose faith and expectation about this company. As for the employees who is dishonest and lazy like Dougie, they may think that even if they keep being incompetent and unreliable, the company will still tolerate them, and since their wage has never been raised for three years, they do not need to become a hard-working employee for a company like that. It is like that both the company and the employees are trapped in an endless circle: the company are not capable of increasing employees’ wages, employees lose enthusiasm and work less hard, the company make less profit and do not have enough money to increase employees’ wages in the next year, etc. The best to way to stop the endless circle is to break one …show more content…
According to the equity theory, employees will compare their outcomes-to-inputs ratio to the ratio of a comparison other, and their motivations depend on what happens to other people. If after the comparison, they find that they are experiencing an underreward inequity or overreward inequity, they may adjust their outcomes or inputs. In this case, the company cannot increase their wages, which means that it is hard for them to change the outcomes they received, so they may just steal from the company, leave the company, or change their inputs by working less hard. Based on the analysis above, distributive and procedural justice is extremely important. On the one hand, for the distributive justice, I do not think the employees in this case are in team-based work, so the proper norm is equity, with more outcomes allocated to those who contribute more inputs, so it is important to let the employees decide if outcomes are allocated fairly, and in this case, the outcome is the wage increase. On the other hand, as for the procedural justice, because in this case, the outcome (the wage) is already bad, so the procedural justice becomes even more important. In order to increase employees’ job satisfaction, it is essential to carefully listen to their voice and give them a chance to request an appeal. Overall, as I mentioned before, the employees may feel