Salary Issues in an Organization Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

When Salaries Aren’t Secret

Introduction

In this paper various discussions and analysis have been made regarding the salary issue in organizations. The main question that arises is whether salaries should be disclosed or not in order to ensure the best performance level in an organization. Hence, it should be considered that revealing salaries will provide further motivation and encouragement or it will create a disaster among employees and in an organization (Armstrong, 1998). The CEO of a retail chain specializing company, Hank Anderson offered clothing for youngsters and for women who were interested to adopt fashion on a continuous basis. Hank Anderson was a firm believer of implementing technology and innovations in the business in order to gain competitive advantage in the industry and he heavily invested in it so as to hire top talented professionals belonging to the field of information technology in order to practice and implement advanced technology in the organization. One of the prime examples was the “Killer Website” implementation that already succeeded quite tremendously in the past and won various awards by participating and contributing significantly in the company’s business. According to Hank Anderson, everybody was only concerned about the money not only on individual basis but for other ones as well. Hank Anderson did not support the policy of keeping salaries publicly announced due to various problems, which may adversely affect the organization’s perspective.

Employees in the organization had a lot of concerns and questions regarding the salary issue; they thought that salaries were not based upon the performance instead they depended upon personal relationship with the employer. Discrimination factor was involved in the organization as various individuals were nominated for the best performer though they did not deserve it. In addition, a lot of gossips and discussions were made by employees on the tea break and lunch time regarding this issue. They were focusing on the point that salaries were not revealed to everyone in order to hide the way in which the organization was being operated (Shields, 2002). Another question was that whether employees were paid according to their skills and performance or they were just getting compensation and other benefits without deserving them? These gossips and discussions created a chaos in the organization at all levels (Baron, 1995).

Hank Anderson along with Harriet (CFO) and Charlie (VP Human Resources) discussed these issues in order to get out of this panic situation and to keep employees motivated in order to maintain their focus on working in the best interest of the organization (Bishop, 1987). They were also concerned about the fact that why employees were furious and why everyone was demanding a justification regarding salaries of employees in the organization. Employees thought that they were earning much lesser as compared to their performance and skills and the compensation that was given to other employees was fair with regards to their performance.

Hank Anderson and Charlie argued a lot regarding this issue, Charlie is in a favor of disclosing salaries in the organization in order to keep employees motivated and develop their trust while Hank’s point is that they can never justify to employees that why they are earning less pay as compared to other employees. Moreover, it will waste a lot time of the organization in justifying salaries of each employee in the organization (Murlis, 1991). The CFO, Harriet is also in favor of Hank Anderson; he is saying that they are running a private business and in order to maximize the profit and minimize the cost element, it was necessary to justify salaries as they are not running a government organization or post service office in which employees are promoted on the seniority basis and all the same grade employees get the same compensation; therefore, in a private sector business things are relatively different (Atkinson, 1997). Even though Hank Anderson and Charlie have different point of views but Hank is appreciating positive criticism in order to reach to a conclusion that is in the best interest of the organization. However, he is intending to end the debate by going for Charlie’s ideas, which is no doubt a productive one for the organization but it can also create a panic and rising confusion may affect the performance of the organization in a negative manner.

Analysis

In this paper various discussions have been made regarding the salary issue and it has been discussed that whether salaries of employees should be kept private or not? Some of them are in favor of disclosing salaries while some of them have severely criticized this idea. In the world of today, salaries are kept secret for most organizations so as to handle any kind of mismanagement and panic among employees. If employees are unable to understand the compensation program then they may think that it involves .................

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