Case Study: Wage At Rightnow !

Hank Adamson, the current CEO at the fashion retailer—RightNow!—faces the dilemma of having had all 165 of his employees’ salaries publicly exposed to each other. As a result, conflicts amongst his employees have ensued from dismay at their pay compared to others, not just on a basis of department to department but the realisation and confusion that many employees in the same job roles within the same departments are being paid differently. In some cases the discrepancy is by gender, age and by assertive negotiations. The purpose of this current case study analysis is to determine what Hank should do in regards to the exposed salary information of his employees. The way in which recommendations will be stated is to look towards the evidence of reward management and pay secrecy that will address issues identified in RightNow! such as the lack of pay consistency across roles and departments; the lack of explicit reward/pay frameworks, guidelines and criteria to determine the basis for the individual’s pay; organisational conflict and; the overall lack of communication throughout the organisation as a result of a lack of pay-to-performance structure. Pay secrecy is defined as a restricted limit of information in regards to what others are paid (Colella, Paetzold, Zardkoohi and Wesson, 2007). Specifying this definition down to what has been identified as pay secrecy issues in this case study is the limited pay information available to employees; ranging from the actual scope of what measures are used to define their pay as individuals and what measures are used to define their pay levels in comparison to others that undertake the same job designs (Colella et al., 2007). Hank has previously been utilising pay privacy, and thus has benefited from the lack of problems in levels of satisfaction in employees and ultimately avoided any conflict (Colella et al., 2007). Avoiding conflict between employee’s and employers’, just as much as between employees themselves, becomes a motivator for organisations to utilize pay secrecy policies; in doing so they are able to avoid any negative reactions from individuals, especially those on the lower end of a pay distribution, in association with large pay discrepancies within employee’s reward performance programs (Colella et al., 2007). By avoiding conflict an organisation is able to gain and maintain more control over its company believing it employs a ‘paternalistic’ policy for the betterment of its employees, limiting their autonomy and ability to leave the role and organisation (Colella et al., 2007). Day (2007) adds on to this stating that the best case results of pay secrecy will lead to a reduction in perceived inequality amongst workers, and in the worst case, avoid negatively associated conflicts. But, limits put on employee’s abilities to compare and contrast salaries with other companies on the job market, prevents these employees from recognising other, if not better, opportunities (Colella et al., 2007). Furthermore, while avoiding inter- and intra- departmental conflict, the trust and perceived fairness of employees are diminished, employee motivation and engagement reduces over time and when employees aren’t performing to their highest standard, the question of whether a company is really employing the best individuals is raised (Colella et al., 2007). Organisational distrust can occur from uncertain/unknown environments or perspectives …show more content…
Harriet Duval (CFO) establishes that the exposure of salaries has cast a light on ‘all those differences in pay—they’re the result of stuff you could never talk about out loud…you couldn’t explain them so you wouldn’t try’ (p.4). Effort or performance used to determine pay levels are the fundamentals of the criteria for pay allocation (Colella et al., 2007). Evidently, at RightNow! subjective measurements of pay criteria have been utilised and are unable to justify the decisions made in regards to employee’s pay allocation where assessing an individual’s skills and competencies is difficult in establishing what placates managements’ expectations. However, even if an open pay communication policy was in inception there is still a degree of subjectivity and as such can increase any employee’s perspective of unfairness more so than any perceived unfairness in a closed pay communication policy (Day, 2007). Hence, using as much of an objective criteria for pay allocation as possible would create a more transparent pay-to-performance link where performance can be more justifiable and in turn actually alleviate the effects from the disadvantages of pay secrecy (Collela et al.,