WAC Assignment Evaluation Template IIMA/PGP I/ PGP ABM I/ FPM I (2013 -14) Peer Evaluation, Assignment 2 Study Group

: Group 11 Report: Keats Overall Comment The group develops an insight in the report. It fairly finds out the lack of logical inferences in SA. More rigour was required in analysing the evaluation of the options. There are a few fair insights in the report which need to be highlighted. The group reflects a good understanding of the parameters of evaluation. The irrelevant/inappropriate comments are highlighted in yellow colour, and fair comments are highlighted in turquoise colour. Grade A

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

[The cover page should contain the institute name at the bottom]

A Zero Wage Increase Again?

A Decision Report on Mark Coglins problem submitted to

Instructors: Prof.M. M. Monipally, Prof.Meenakshi Sharma Academic Associate: Mr Saurabh Shukla

For[In partial] requirement of the course

Written Analysis & Communication I

On July 6, 2013

By Keats Section C

Internal Memo
House, Hearth & Home [Name of company is not needed in Internal memo]

Date: March 1, 2011

To:

Mark Coglin, Owner& CEO [It is not mentioned anywhere in the case that he

is the CEO] From: Keats, Student Intern

Subject: Wage Increase Review for House, Hearth & Home for 2011

The report enclosed herewith contains my analysis, the available options, [and] my recommendation based on specific criteria along with a proposed action plan for managing wage increase for employees of House, Hearth & Home for 2011.

I recommend that we go ahead with implementing a variable performance based increment where all employees receive a lower increment, but with a performance bonus to selected employees.

Enclosure: A Decision Report on Wage Increase Review for House, Hearth & Home for 2011

Executive Summary

House, Hearth & Home is short on budget for implementing full wage increases [The term full wage increase is unclear] to their staff for FY 2011. The company has been paying for non-performers so far, and yet wants to ensure performers are rewarded, but not at the cost of overall morale of its employees. [The idea is unclear. Was the company only paying the non-performers? Too many tone changes in one sentence]

The company must decide on the wage review process, its options ranging from fixed wage increments to variable wage increments, including firing of employees and another zero wage increment.[The options should not be a range; it should be clearly pointed out what are the options within that range]

If variable increments are implemented, the company retains performers and creates competition for non-performers without affecting the morale too much.[It is more of a consideration of an option; hence proper recommendation is missing from executive summary]

(Word Count: 96 words)

Table of Contents
Internal Memo ................................................................................................................ 3 Executive Summary ....................................................................................................... 4 Situation Analysis .......................................................................................................... 6 The Problem ................................................................................................................... 7 The Options .................................................................................................................... 7 Criteria for Evaluation ................................................................................................... 8 Evaluation of Options .................................................................................................... 9 Recommendation ......................................................................................................... 10 Action Plan................................................................................................................... 11

[Internal memo and Executive Summary should not be part of this table of contents]

Situation Analysis
With the global economy reeling from financial crisis, it is common knowledge that House, Hearth & Home has faced a drastic sales drop in last two years. Thus, zero wage increases in FY-2009 and FY-2010 were expected by the staff [Wrong conclusion, no evidence of the employees expecting zero wage increase beforehand during 2009 and 2010], but now in FY-2011, expectations of a salary increment are high based on the general mood of economic recovery. [No evidence from the case to say that the economy is undergoing recovery] Paying raises to the underperformers of the company hurts its interests in the long term, since the security of a basic wage increment inversely affects performance, as is evident from Dougie Suzors dishonesty towards unplanned leaves or Marie and Annes nonchalant behaviour towards customers [Insular thought, as there could be other reasons for the same effect]. However, if raises are not made this year, morale of a more general [The term more general is unclear] population of employees who already dislike the job will fall [There is no absolute surety that the morale will fall; may fall], leading to further underperformances and lack of job commitment, thus completing a vicious cycle. In this environment, reports of theft of inventory from the store by House, Hearth & Home employees must be considered as indications of employee non-satisfaction. [Far-fetched and insular conclusion; the use of word must removes the possibilities of other reasons for the theft] Employees had grown used to consistent wage increases every year [before the downturn], falsely assuming them as a given. But the desperate economic scenario has led to desperate measures, even if it involves theft from the company [Too much focus on only one reason of theft; lack of depth]. Also, the large store and warehouse area limits direct management presence across different floors, making it difficult to not only [should be not only to]constructively criticize employees when they fail to deliver, but also to appreciate and praise employees for job done well.[Wrong conclusion; not necessarily true since it is doubtful that Mark would have criticized and appreciated even if the store would have been small; no consideration of other possibilities for this conclusion, ex: Marks own behaviour and approach] Even if underperforming and disgruntled employees exist in the company, they are only a minority, a little over 15 percent [Mark already knows this fact]. It becomes 6

critical to review the actual performers, not only top management like Aaron, Simon and Wesley [Wesley is not exactly in the top management, he is the yard foreman], but also field staff like Kyle. Recognition of their dedication, sincerity and hard work will go a long way in strengthening their commitment towards the job. Performancebased raises will boost their morale, but might lead to an environment of further division within the organization. [This section tends to bias the reader towards one possible option, and seems an evaluation of option than analysis based on facts] House, Hearth & Home, being a relatively small organization of one hundred employees, needs a tight-knit and dedicated workforce for its operations. Prior to 2009, House, Hearth & Home has [had] followed a non-discriminatory policy in terms of wage increases, based on the healthy sales figures every year. This year, the corpus of funds available must be utilized not only for a basic wage increase, to the tune of 2.5 to 3.0 percent, but also must [Insular thought is reflected by use of words like must as it removes consideration of other options] be allocated for several other workplace development initiatives like increasing security and work on building maintenance.[Wrong interpretation; it is clearly mentioned in the case that the funds can be either allocated to wage increase or to the process improvements; both cannot be done simultaneously] [The analysis doesnt lead up to a specific problem that Mark is facing]

The Problem
To manage the wage review process for FY-2011 for the employees of House, Hearth and Home based on limited finances available for the same. [Too broad a problem; As Mark I am still not clear as to what is the root problem]

The Options
Implement a fixed wage increment for all employees: All employees receive 2.5 to 3.0 percent increment. Implement a variable performance based increment: All employees receive a lower increment, but with a performance bonus to selected employees. Fire non-performers and implement a fixed wage increment for all: All employees receive a better fixed increment. Dont increase wages, but focus on process improvement initiatives: Improve security systems and building maintenance among other tasks.

Criteria for Evaluation

In decreasing order of importance, Mark should keep the following in mind: 1. Impact on overall employee morale 2. Recognition for performers and retaining them. 3. Discouraging non-performers 4. Prevent financial losses through theft, arson [far-fetched use of word; how arson will take place is not mentioned in situation analysis] etc.

Evaluation of Options
1. Implement a fixed wage increment for all employees Since employees have not seen any increment at all for the last two years, the salary increase comes as a welcome change, improving the employee morale. It maintains a status quo for all in terms of monetary benefits, and does not create divisions in the company. However, the high-performers of the company tend to get ignored in the process, and in due course of time, the newly joined, like Kyle, will need further motivation to perform their best, failing which the overall company performance will drop. The non-performers will go scot-free, since they will continue to enjoy the hard earned benefits provided by the company in spite of their noncontributions. Theft rates should drop since the root-cause [No evidence to show that this is the root cause; already pointed out in the situation analysis] i.e. lack of raises has been addressed.

2. Implement a variable performance based increment [The financial aspect has not been considered in this evaluation] With a very basic fixed wage increment for all, and variable component implemented on the basis of performance, the performers will get their due rewards. This will also help the company to retain them, and continue to work with greater levels of loyalty and dedication. General employee morale is not affected too much, since everyone does receive a minimum wage increase. This may be less than the inflation levels, but at least it is a step in the right direction. Non-performers will realize from this that one cannot free-ride with the company.[Wrong interpretation; the non-performers still got the wage increase, so it is a type of free-ride]

This will create differences among the staff, but if managed efficiently can lead to healthy competition among the employees.

3. Fire non-performers and implement a fixed wage increment for all Firing non-performers creates additional funds for the company from their salaries, which could be allocated to greater wage increases for all. Firing of employees creates an atmosphere of fear and anguish against the management, leading to overall low morale. This may lead to greater levels of disgruntled employees, leading to more thefts. [Wrong interpretation; the remaining employees are supposed to be performers and happy with the preferential wage increase, then why would the levels of anguish increase? Further, it is assumed that disgruntled employees show their discontent only by stealing] No incentives or recognition are provided to the performers here.

4. Dont increase wages, but focus on process improvement initiatives [Discourage non-performers criteria is not evaluated here] Increasing security or investing in building maintenance will lead to operational improvements for the company. However, overall employee morale takes a hit since the expected wage increase does not come through for the third year. As employees become desperate, attempts at theft will increase in spite of increasing security. Performers of the company do not receive any monetary recognition again, and will lose faith in the growth of the company that they are contributing towards. [The performers anyway didnt receive any special recognition beforehand, but still they were very much inclined to work]

Recommendation
The company should implement a variable performance based increment. All

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employees receive a lower increment, but with a performance bonus to selected employees.

Action Plan
1. Collect performance data for all employees from their immediate managers.[The hierarchy of the store is not clear, so the term immediate managers is not clear] 2. Collate and analyse the data to formalize the increment distribution.[Timeline and effort distribution missing in the plan] 3. Draft salary increments for all employees, with a base increment common for all, and a variable increment for each one. 4. Announce handover of salary increment and bonus payout letters to all employees. 5. Instruct all line managers [Hierarchy of the store is not clear and not mentioned] to personally handover each salary increment letter to their subordinates, discussing and addressing all issues that the employee may raise. 6. All line managers must review performance of their teams [It is not clear if they work in teams under a particular manager] in a continuous manner, recognizing successes and teaching from failures.

(Word Count: 1089 words)

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WAC Assignment Evaluation Template IIMA/PGP I/ PGP ABM I/ FPM I (2013 -14) Peer Evaluation Template
Case Study Group : A Zero Wage Increase Again? : C11

Evaluation Parameters Selection of relevant data (15%)

Comments Most of the relevant data has been collected. But in situational analysis, some data has either been misinterpreted or assumed by the author (10/15) The flow from situation analysis to the problem statement is missing. In evaluation of options, the logical inferences are faulty at times. (7/15) The author is constrained in the thought process and is biased towards a particular option. There are instances of direct recommendations in situation analysis. The problem statement is very broad and lacks specificity(5/20) Most of the report is coherent in terms of language (10/15) Throughout the report, the author seems to favour a particular option, hence portrays a biased tone (6/10) The report is concise but the context and reasoning is not clear or missing in situation analysis and evaluation of options (6/10) The language used is fairly good, with spellings, few grammatical mistakes in situational analysis. There are few mistakes in the format of cover page and internal memo (12/15) C (56/100)

Logical rigour (15%)

Content

Quality and depth of analysis (20%)

Coherence and unity (15%) Reader orientation and tone (10%)

Language and Presentation

Conciseness and clarity (10%)

Language mechanics (Grammar, punctuation) (15%) Grade

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