Management 14th Edition by Leslie Rue,Lloyd Byars ,Nabil Ibrahim

Exercise 12

Determining Pay Raises
About four months ago, Judy Holcomb was promoted to supervisor of the claims department for a large, eastern insurance company. It is now time for all supervisors to make their annual salary increase recommendations. Judy doesn't feel comfortable in making these recommendations because she has been in her job only a short time. To further complicate the situation, the former supervisor has left the company and is unavailable for consultation.
There are no formal company restrictions on the kind of raises that can be given, but Judy's boss has said the total amount of money available to Judy for raises would be 8 percent of Judy's payroll for the past year. In other words, if the sum total of the salaries for all of Judy's employees was $200,000, then Judy would have $16,000 to allocate for raises. Judy is free to distribute the raises any way she wants, within reason.
Summarized below is the best information on her employees that Judy can find from the files of the former supervisor of the claims department. This information is supplemented by feelings Judy has developed during her short time as supervisor.
John Thompson: John has been with Judy's department for only five months. In fact, he was hired just before Judy was promoted into the supervisor's job. John is single and seems to be a carefree bachelor. His job performance, so far, has been above average, but Judy has received some negative comments about John from his co-workers. Present salary, $28,000.
Carole Wilson: Carole has been on the job for three years. Her previous performance appraisals have indicated superior performance. However, Judy does not believe the previous evaluations are accurate. She thinks Carole's performance is, at best, average. Carole appears to be well liked by all of her co-workers. Just last year, she became widowed and is presently the sole support for her five-year-old child. Present salary: $29,000.
Evelyn Roth: Evelyn has been on the job for four years. Her previous performance appraisals were all average. In addition, she had received below-average increases for the past two years. However, Evelyn recently approached Judy and told her she believes she was discriminated against in the past due to both her age and sex. Judy thinks Evelyn's work so far has been satisfactory but not superior. Most employees don't seem to sympathize with Evelyn's accusations of sex and age discrimination. Present salary: $27,000.
Jane Simmons: As far as Judy can tell, Jane is one of her best employees. Her previous performance appraisals also indicate she is a superior performer. Judy knows Jane badly needs a substantial salary increase because of some personal problems. She appears to be well respected by her co-workers. Present salary: $28,500.
Bob Tyson: Bob has been performing his present job for eight years. The job is very technical, and he would be difficult to replace. However, as far as Judy can discern, Bob is not a good worker. He is irritable and hard to work with. Despite this, Bob has received above-average pay increases for the past two years. Present salary: $23,000.
What criteria did you use in determining the size of the raise?