Mark Coglin's Store

The global downturn has adversely impacted the sales revenue and profit margins of Mark Coglin's store, "House, Hearth and Home". Because of his strained financial condition, Mark has not been able to increase wages for his employees for the last two years. Though understandable, the wage freeze has led to low morale among Mark's employees and has started affecting the quality of customer service at the store. The wage review process for Mark's employees is to be conducted shortly.

Mark himself is very dedicated to his business and works long hours. He expects commitment from his employees and is appreciative of dedicated people like Simon, Aaron and Wesley who add value to his business. He is strongly inclined towards rewarding such people even though he has limited savings. At the same time, he detests unreliable and incompetent employees. He is unwilling to put in additional efforts and divert his limited resources to increase wages for such employees. In fact, he considers them dispensable and does not mind if they quit their jobs.

Although Mark is unhappy with the conduct of some of his employees, he does not directly reprimand or correct them. As a result, it is possible that the employees are not aware of Mark's frustration and his expectations from them. There is no performance review system in place to systematically grade the performance of the employees or give them feedback and suggestions for improvement. This has created an environment which does not adequately encourage and incentivise the employees to improve and excel at their work. As a result, some employees have become complacent and are neglecting their responsibilities at the store. Over the years, Mark has followed the practice of giving uniform wage increases to all his employees. As the wage increase is not directly linked to the quality of their work, the employees have expectations of getting a wage increase irrespective of their conduct at the store.

Mark wants to invest in building maintenance, security systems and process improvement initiatives which could reduce losses and improve sales over time. Mark is also mindful of the employee theft problem which can worsen if the employees are unhappy about inadequate monetary compensation. Keeping the morale high among the workforce is also important from the viewpoint of ensuring good customer service and managing the business effectively.

Hence, a decision has to be made on how Mark can handle the wage increase process for this year.