Reference no: EM132159124
Case: Human Resorces in Small Business David Versus Goliath: Compensation in Small Versus Large Firms
Most small businesses cannot pay high salaries to attract, retain, and motivate employees. One way to compete in the labor market is for small businesses to be thought of as a great place to work. Hence employees may be willing to sacrifice high pay elsewhere in order to work there. Consider the following examples:
*Like many marketing agencies, Dixon Schwab (85 employees) has followed the trend of creating a more nontraditional work environment for its staff. Based in Rochester, New York, the company built its $ 3.5 million office from the ground up, incorporating design ideas from a survey of employees who were given 72 hours to come up with a wish list for their ideal work environment. The result is a space that features a koi pond, a pair of waterfalls, a slide that employees can take from floor to floor instead of the stairwell, a fireplace, faux- finish walls covered in quirky artwork, contemporary furniture, and a padded primal scream room. But what struck founder and CEO Lauren Dixon the most about her employees’ request were the little things. “You’d be surprised by how many people said that they simply wanted windows that they could open, nontraditional lighting or even just walls that aren’t painted white,” Dixon says.
* Radio Flyer (55 employees) has been one of America’s most beloved brands of children’s toys for almost a century. Senior management attributes its success to the company’s “forever young” philosophy toward the work environment. Employees at the Chicago- based company are reminded of that philosophy every morning as they pass by the World’s Largest Wagon on their way to the front door. “We allow our people to play at work,” human resources director Amy Bastuga says. “We like to warn people in interviews that if you’re going to get annoyed by people shooting Nerf guns over your head, then this probably isn’t the place for you.”
* Located a few blocks from Rice University in a non-descript, low- rise office building, Bridgeway Capital Management (33 employees) is in many ways the antithesis of the modern stereotype of financial investors. That’s due in no small part to the fact that the company gives 50 percent of its net profits to charity. “We keep a close watch on expenses, and since half our profits go to Torch Technologies (60 employees) established Torch Helps, a philanthropic program that is employee- funded and employee- administered. Most donations come through pay-roll deductions, and about 70 percent of staff member’s contribute. Employees nominate the charities, which are invited to submit detailed applications.
A charity review committee then kicks each applicant’s tires using the Better Business Bureau’s standards of accountability. Every quarter, Torch Helps posts summaries of qualifying applications on its Web site and encourages all employees who contributed time and money to vote for their favorite. The winning organization receives a $ 10,000 grant, presented at a formal luncheon. Recent recipients include a service that outfits homes with handrails and wheelchair ramps for the elderly and one that helps ease wounded soldiers back into the community. Torch helps also doles out grants of $ 500 or less throughout the year and coordinates employee volunteer opportunities, such as construction work for Habitat for Humanity and gift deliveries to the homebound at Christmas. Patagonia (110 employees), a clothing company based in Ventura, California, is legendary for its environmental focus. It is beloved by its employees, who enjoy an almost unparalleled degree of autonomy and flexibility.
According to its CEO Yvon Chouinard, for every opening at Patagonia, the company has an average of 900 applicants. With a high percentage of women employees, the company tries to offer perks that are particularly attractive to working women. In the words of Chouinard, “One gets pregnant, I can’t afford to lose her. The average cost to replace an employee is $ 50,000, including headhunter fees, lost productivity, and training. So I say, put in child care. Give people flextime. Let my people go breastfeeding, for God’s sake. Before we had a child care center, employees came to work with their babies and kept them on their desks in cardboard boxes.”
Answer:
a. Do you think companies provide paid voluntary opportunities for employees for altruistic reasons? Do you see this as a trend? Explain.
b Do you think employees who choose to work for a smaller firm in the long term sacrifice a substantial amount of pay (as compared to getting a job at a larger company)? Explain.
c. If you had a choice of working for a firm that offers you a higher wage but little in the way of nonmonetary rewards versus a firm that offers you a lower wage but many opportunities to draw nonmonetary rewards, which one would you pick and why? Explain.