Management Decision, Chapter 1

Making decisions is part of every manager’s job. To give you practice at managerial decision making, each chapter contains a “Management Decision” assignment focused on a particular decision. You’ll need to decide what to do in the given situation and then answer several questions to explain your choices.

Managing Company Perks

You’re in charge of a great company, and you love going to work every day.91 Why wouldn’t you? Your employees get to do work they enjoy because you give them freedom to be creative and let them use whatever software and tools work best for them to be productive. Best of all, though, is being the person who gives out the perks. Your employees are happy overall because they can use flextime and the company daycare, and the insurance and retirement benefits are excellent—onsite access to basic health care doesn’t hurt, either. What’s more, they can get a healthy lunch for free in the company cafeteria or a massage when they’re stressed out, and you’ve made a company-owned four-bedroombeach house available to employees to use on vacations.

When things were going really well, you got to hand each employee $1,000 in cold hard cash, as a bonus. But the economic downturn has hurt your company. You’re not exactly in danger of bankruptcy, but the number of new clients decreased steadily during the last quarter and you’re having a hard time matching employees’ contributions to their retirement funds. It’s your job to figure out how to streamline the company’s expenses and see it through the tough times. Every job has its downsides, but you dread this one. You’re proud of your employees and want to keep them happy and productive. The last thing you want to be is the bad guy who takes away all the perks. So you come in to work early and shut your office door, determined to buy yourself some time to think through how to handle this difficult situation.

You know that morale is important if you want youremployees to be productive and loyal, and these perks are a real morale booster. You know that employees are going to be upset if you take something away. On the other hand, they might not be so upset if they have some say in the process. You’re also worried about how to even break the news that cuts are needed. Will employees worry about the health of the company and the security of their jobs? That would certainly be a productivity-killer. As you think about what perks to cut and what perks to keep, you’re very aware that some—such as health insurance and onsite daycare— are critical for some employees and would really affect their well-being at work, while others—like access to the company BMW for business trips—are more like icing on the cake. So you’re relieved to have some start at sorting out the wheat from the chaff.

But this situation has also made you think more seriously about perks in general. You recognize that perks are generally a great thing for employees and for the company. But have you created a culture of entitlement by giving them to everyone and notdirectly linking at least some of them to performance?

Maybe you can view this difficult situation as an opportunity not just to trim the fat but to actually make your perks system work better for you. You have to make cuts. But what cuts do you make that will keep your bottom line in the black and keep your employees happy?

Questions

  1. How is this decision emblematic of your job as a manager and your transition into that position?
  2. What do you think is the best way to break the news that some perks will have to be cut without causing undue alarm among your employees?
  3. How do you give employees a say in the process of deciding what gets cut? How much of a say do they get? What kind of employee feedback would be most helpful to you in making a decision?
  4. What cuts would you make? Would you replace some perks with less-expensive perks? Would you restructure the perks system to link some to performance? Come up with a new (hypothetical) perks package for your employees. Explain your decisions.