The Well Paid Receptionist

The Well Paid Receptionist Values, Attitudes and Work Behaviour from Johns, G. & Saks, A. M. (2010). Organizational Behaviour. Pearson Education: Toronto. Case Study The Well-Paid Receptionist Harvey Finley did a quick double take when he caught a glimpse of the figure representing Ms. Brannen’s salary on the year-end printout. A hurried call to payroll confirmed it. Yes, his receptionist had been paid $127 614. 21 for her services last year. As he sat in stunned silence, he had the sudden realization that since his firm was doing so well this year, she would earn at least 10 to 15 percent more money during the current fiscal year. This was a shock, indeed. Background Harvey began his career as a service technician for a major manufacturer of copy machines. He received rather extensive technical training, but his duties were limited to performing routine, on-site maintenance and service for customer. After a year’s experience as a service technician, he asked for and received a promotion to sales representative. In this capacity, he established many favourable contacts in the business community of Troupville and the surrounding towns. He began to think seriously about capitalizing on his success by opening his own business. Then, seven years ago, he decided to take the plunge and start his own firm. He was tired of selling for someone else. When he mentioned his plan to his friends, they all expressed serious doubts; Troupville, a city of approximately 35 000 people located in the Deep South, had just begun to recover from a severe recession. The painful memories of the layoffs, bankruptcies, and plummeting real estate values were too recent and vivid to be forgotten. Undeterred by the skeptics, Harvey was optimistic the Troupville’s slow recovery would soon become a boom. Even though his firm would certainly have to be started on a shoestring, Harvey thought his sales experience and technical competence would enable him to survive what was sure to be a difficult beginning. He was nervous but excited when he signed the lease on the first little building. A lifelong dream was either about to be realized or dashed forever. Troupville Business Systems was born. While he has managed to borrow rent, lease, or subcontract for almost everything that was absolutely necessary, he did need one employee immediately. Of course, he hoped the business would expand rapidly and that he would soon have a complete and competent staff. But until he could be sure that some revenue would be generated, he thought he could get by with one person who would be a combination receptionist/secretary and general assistant. The typical salary for such a position in the area was about $30 000 per year; for Harvey, this was a major expense. Nevertheless, he places what he thought was a well-worked ad in the â€Å"Help Wanted† section of the local newspaper. There were five applicants, four of whom just did not seem quite right for the position he envisioned. The fifth applicant, Ms. Cathy Brannen, was absolutely captivating. Ms. Brannen was 27 years old with one child. Her resume showed that she had graduated from a two-year office administration program at a state university. She had worked for only two employers following graduation, one from five years and the most recent for two years. Since returning to her hometown of Troupville two months ago, following her divorce, she had not been able to find suitable employment. From the moment she sat down for the interview, Harvey and Ms. Brannen seemed to be exactly the same wavelength. She was very articulate, obviously quite bright, and most importantly, very enthusiastic about assisting with the start-up of the new venture. She seemed to be exactly the sort of person Harvey had envisioned when he first begun to think seriously about taking the plunge. He resisted the temptation to offer her the job on the spot, but ended the hour-long interview by telling her that he would check her references and contact her again very soon. Telephone calls to her two former employers convinced Harvey that he had actually underestimated Ms. Brannen’s suitability for the position. Each one said without equivocation that she was the best employee he had ever had in any position. Both former employers concluded the conversation by saying they would rehire her in a minute if she were still available. The only bit of disturbing information gleaned from these two calls was the fact that her annual salary had risen to $32 900 in her last job. Although Harvey thought that the cost of living was probably a bit higher in Houston, where she had last worked, he was not sure she would react favourably to the $30 000 offer he was planning to make. However, he was determined that, somehow, Cathy Brannen would be his first employee. Ms. Brannen seemed quite pleased when Harvey telephoned her at home that same evening. She said she would be delighted to meet him at the office the next morning to discuss the position more fully. Cathy Brannen was obviously very enthusiastic about the job as outlined in the morning. She asked all the right questions, responded quickly and articulately to every query posed to her, and seemed ready to accept the position even before the offer was extended. When Harvey finally got around to mentioning the salary, there was a slight change in Cathy’s eager expression. She stiffened. Since Harvey realized that salary might be a problem, he decided to offer Cathy an incentive of sorts in addition to the $30 000 annual salary. He told her that he realized his salary offer was lower than the amount she has earned on her last job. And he told her he understood that a definite disadvantage of working for a new firm was the complete absence of financial security. Although he was extremely reluctant to guarantee a larger salary because of his own uncertainty regarding the future, he offered her a sales override in the amount of two percent of sales. He explained that she would largely determine the success or failure of the firm. She needed to represent the firm in the finest possible manner to potential customers who telephoned and to those who walked in the front door. For this reason, the sales override seemed to be an appropriate addition to her straight salary. It would provide her with incentive to take an active interest in the firm. Cathy accepted the offer immediately. Even though she was expecting a salary offer of $32 500, she hoped the sales override might make up the difference. Who knows,† she thought, â€Å"two percent of sales may amount to big money someday. † It did not, however, seem very likely at the time. Troupville Business Systems began as a very small distributor of copy machines. The original business plan was just to sell copy machines and provide routine, on-site service. More extensive on-site service and repairs requiring that a machine be removed from a customer’s premises were to be provided by a regional distributor located in a major city approximately 100 miles from Troupville. Troupville Business Systems did well from the start. Several important changes were made in the services the firm offered during the first year. Harvey soon found that there was a greater demand for the leasing of copy machines, particularly the large expensive models that he originally planned to sell. He also soon discovered that his customers wanted to be able to contract directly with his firm for all their service needs. Merely guaranteeing that he could get the machines serviced was not sufficient in the eyes of potential customers. In attempting to accommodate the market, he developed a complete service facility and began to offer leasing options on all models. These changes in the business all occurred during the first year. Growth during that year was steady, but not spectacular. While sales continued to grow steadily the second year, it was early in the third year that Harvey made what turned out to be his best decision. He entered the computer business. Harvey had purchased a personal computer soon after Troupville Business Systems was founded. The machine and its capabilities fascinated him, although he knew virtually nothing about computers. He was soon a member of a local users club, was subscribing to all the magazines, and was taking evening computer courses at the local university- in short, he became a computer buff. Harvey recognized the business potential of the rapidly growing personal computer market, but he did not believe that his original business was sufficiently stable to introduce a new product line just yet. During his third year of operations, he decided the time was right to enter the computer business. He added to his product line a number of personal computers popular with a small business in the area. This key decision caused a virtual explosion in the growth of his firm. Several key positions were added, including that of a comptroller. By the fourth year of operations, computers produced by several other manufacturers had been added to Harvey’s product line, and he had developed the capability of providing complete service for all products carried. His computer enterprise was not limited to business customers, because he quickly developed a significant walk-in retail trade. Rapid growth continued unabated. During the first seven years of the company’s existence, Cathy Brannen had proven truly indispensable. Her performance exceeded Harvey’s highest expectations. Although her official position remained that of secretary/receptionist, she took it on herself to learn about each new product or service. During the early years, Harvey often thought that she did a better job than he did whenever a potential customer called in his absence. Even after he acquired a qualified sales staff, Harvey had no concerns when Cathy had to field questions from a potential customer because a regular salesperson was not available. The customer never realized that the professional young lady capably handling all inquiries was â€Å"only† the receptionist. Cathy began performing fewer sales functions because of the increased number of professional salespersons, but her secretarial duties had expanded tremendously. She was still Harvey’s secretary, and she continued to answer virtually every telephone call coming into the business. Since her office was in an open area, she still was the first to greet many visitors. Cathy took a word-processing course at a local business school shortly after joining the firm. As she began working with Harvey’s first personal computer, she, too developed into a computer aficionado and became the best computer operator in the firm. The Current Situation Harvey was shaken by the realization that Cathy Brannen had been paid over $127 000 last year. As he wondered what, if anything, should be done about her earnings, he began to reflect on the previous seven years. Success had come almost overnight. It seemed as though Troupville Business Systems could do nothing wrong. The workforce had grown at a rate of approximately 15 percent per year since the third year of operations. Seventeen people were now employed by the firm. While Harvey’s dad acknowledged that some of this success was due to being in the right place at the right time, he also had reason to be proud of the choices he had made. Time had proven that all his major decisions had been correct. He also could not overestimate Cathy’s contribution to the success of the firm. Yes, certainly, one of the most important days in the life of the firm was the day when Cathy responded to his ad in the newspaper. Success had brought with it the ever-increasing demands on his time. He had never worked so hard, but the rewards were certainly forthcoming. First, there was the new Jaguar, then the new home on Country Club Drive, the vacation home on the coast, the European trips†¦Yes, success was wonderful. During these years Cathy, too, had prospered. Harvey had not thought much about it, but he did remember making a joking comment the first day she drove her new Mercedes to work. He also remembered commenting on her mink coat at the company banquet last December, Cathy had been dazzling. Now that Harvey realized what he was paying Cathy, he was greatly disturbed. She was making almost twice as much money as anyone else in the firm with the exception of himself. The best salesman had earned an amount in the low nineties last year. His top managers were paid salaries ranging from the high sixties to the mid-seventies. The average salary in the area for executive secretaries was no probably between $30 000 and $35 000 per year. A good receptionist could be hired for under $28 000, and yet Cathy had been paid $127 614. 21 last year. The sales override had certainly enabled Cathy o share in the firm’s success. Yes, indeed. As Harvey thought more and more about the situation, he kept returning to the same conclusion. He felt something had to be done about her compensation. It was just too far out of line with other salaries in the firm. Although Harvey was drawing over $200 000 per year in salary and had built an equity in the business of more than $1 million, these facts did not seem relevant as he pondered what to do. It seemed likely that a number of other employees did know about Cathy’s compensation level. Harvey wondered why no one ever mentioned it. Even the comptroller never mentioned Cathy’s compensation. This did seem quite odd to Harvey, as the comptroller, Frank Bain, knew that Harvey did not even attempt to keep up with the financial details. He relied on Frank to bring important matters to his attention. With no idea of how to approach this problem, Harvey decided to begin by making a list of alternatives. He got out a piece of paper and, as he stared at the blank lines, overheard Cathy’s cheerful exchange with a customer in the next room. The Well Paid Receptionist Analysis of â€Å"The Well Paid Receptionist† Harvey Finley is in quite the predicament. He his company’s net profit should be approximately $107, 614. 21 greater than he expected for this year. The problem is that his secretary/receptionist is making six to seven times the amount of an average â€Å"good† secretary/receptionist in the local market and has been for a few years. There’s a few ways this issue can be addressed. One way would be to talk to Ms. Brannen and advice her that there has been an oversight in her salary over the past few years and for the upcoming year the oversight will be corrected and her salary will be adjusted to $25,000 per year with no percent of sales bonus. Another way to address the issue is to fire the manager who should have reported this oversight to Finley and promote Ms Brannen to his position while adjusting her salary to $55,000 per year and explaining the oversight to her as well. One more solution to this issue would be to let things be the way they are since the company has been doing great and growing the way things currently are. The two most important value drivers to consider in establishing the Value Over Time maximization are â€Å"individual employee values† and â€Å"owner values†. Let’s start identifying the specific aspects of the first value driver, the individual employee values. The facts remain that the reason Finley hired Ms. Brannen was mainly based on her individual values and performance at her two previous jobs. She held a two year office administration degree, she was very articulate, bright and most of all she was enthusiastic about assisting in launching this start-up company with Finley. She also had two extremely positive feedbacks from her previous employers that said â€Å"they would rehire her in a minute if she were still available. † The problems lie with her not being satisfied with the initial salary offer for this position. Salary was the only issue with Ms. Brannen other than that she was perfect for this new position at Troupville Business Systems. A few potential problems with Ms. Brannen would be that she only moved from Houston was because she was going through a divorce. What would happen if she were to get back together with her husband? Another potential problem ith her would be the fact that she has a small child. If the child is sick then she will not be able to come into work. This would be an issue since at the moment she would be the only other employee. Also Ms. Brannen has two very good references and if she accepts this position and continues to look for another position elsewhere that may pay better and she can potentially leave Troup ville Business Systems. The potential positive impacts on Value Over Time for Ms. Brannen is that she will continue to shine and prosper as a great striving employee the company will grow. She is the front line and the first person the customer see’s or speaks to when they make the first contact to Troupville Business Systems. She has already proven herself since the launch of this company as being a key player in the success of this start-up company. A few potential negative impacts maybe that Ms. Brannen gets comfortable at the salary she is at and realizes that in her hiring package the terms and agreement were that she was to receive $14,000 salary plus 2% of sales. There was no clause to when this would be removed and she can just put herself on cruise control and still make six figures. I expect her effect to be a positive one over time since this is the person Ms. Brannen is. You can tell a lot by looking at a person’s past performance history and we know she is a person who not only strives to be the best at her job position but also picks up on other job position duties and can perform them just as well if not better than others. We know she is able to handle sales calls if no sales person is available and the client/customer has never noticed. There are ways to turn something negative into something neutral or even better into a positive effect. In the event that Ms. Brannen was offered a better paying position with another firm, Finley would be able to evaluate her for the time that she was working for him to see if she is worth the difference in salary. He would have also had time to make some sales and see how the potential sales market is doing and instead of offering her 2% in sales which obviously we now know was a bad strategy, can offer her more upfront in salary. A person that likes the job they are doing will not leave for one or two thousand dollars more. So Finley can be true to her and make a counter offer in hopes that she would accept and stay. As for the other negative aspect of her getting back together with her husband in Houston and move back there, Finley would either have to offer her a significant more salary or find her husband a position at Troupville Business Systems. The other important value driver to consider in establishing the Value Over Time maximization is â€Å"owner values†. As the owner Finley’s main concern is to keep his business running. Another concern is to make more and more profit each year. Owners need to worry about reputation risk as well and the well being of each of their employees. Some problems Finley is facing with his company, Troupville Business Systems, is that he is paying his secretary more than double what his highest paid manager is making. The problem Finley is facing is not knowing what should be done about this or how to approach the issue. The potential problems that may arise if the current situation is not addressed is that it will cause an up roar with the manager & salesman to find out that a secretary/receptionist is making much more than they are. Managers as well as other employees not knowing her hiring benefits will demand a raise. Another potential problem is that rumors will most likely be started that they are having relations and that’s why a secretary is making six figures. A potential positive impact would be that other employees will see that being a hard worker and sticking through the highs and lows of a business really pays off. This may motivate all other employees to be outstanding or above average performers. The employees have witnessed the value over time with Ms. Brannen and have seen the long-term effects on her salary. A negative impact would be that employees who have already been at Troupville Business Systems and have not seen the value over time in the bonus or benefits will demand a raise or quit. Salary is always a delicate situation to deal with and this is why it is not considered acceptable talk in the office. Another negative impact is over time if the company grows and does not have an increase in sales then Ms. Brannen will still be making more than Finley since he has more overhead to pay for. There are steps that can be taken to negate a potential negative effect. First of all no one should be discussing compensation at all inside or outside the office. Second in case it does get out then there should be a one on one sit down with each employee to discuss their performance, not Ms. Brannen’s. Finley does not need to justify his actions to his employees; he only needs to treat them fairly. Now let’s evaluate the case where the company’s expense gets higher and the sales stay the same and Ms. Brannen is making more than Finley. In this case Finley will have to renegotiate Ms. Brannen’s contract to reflect expenses as well if he does not decided to give her a base salary and no bonus that is. I believe the interactive effect these value drivers will have over time will be positive. During the maturity of Troupville Business Systems we can seen that Finley is a successful leader and Ms. Brannen is an outstanding employee who goes above and beyond her expected duties. These two make a good successful team. Over the years you can see that she has proven herself and should be promoted to a higher ranked position. She deserves the 2% sales bonus because she was with this company from the start and has stuck through the toughest times thus far. The best alternative solution for both effects would be for both Finley and Ms. Brannen sit down and review her contract, salary and bonus and come to an agreement on a fair salary and a possible promotion since she and proven her loyalty and performance to Troupville Business Systems. I’m sure Ms. Brannen realized that this day would come. And as long as the compensation is fair she will not leave since she is so invested in the company. In conclusion I would consider the best course of action would be to offer Ms. Brannen a managerial position within Troupville Business Systems. This will make her happy to get a respectable and long overdue promotion as well as a fair competitive salary of $60,000 a year with no percent bonus in sales. And if she is more motivated by a percent in sales then offer her $50,000 plus 1% of sales with a minimum of $5,000 annual or $20,000 maximum cap. This is fair for both value drivers for Finley as the owner and Ms. Brannen as the Individual employee. If I were Finley the first step would be for me to evaluate her performance and hard work since the start of Troupville Business Systems. I would bring her into my office and have a one on one with her. I would start off by saying how much off an asset she is to the company and how much appreciate her hard work is and has paid off in the success of the company. Then I would proceed by offering her a managerial position within the company. I would advise her that she will need to be trained for managerial duties and will be on an evaluation period as a manager for 3 months. Depending on the decisions made by her and how well she can manage a team she will be offered the permanent position. After she is given the formal offer she will have to decide whether she prefers being a secretary/receptionist or taking on new exciting role as a manager with Troupville Business Systems. Now the difficult part, this is where Finley should bring up the current compensation and offer Ms. Brannen a new compensation package. Advise her that the old compensation will be reduced to an above average rate for a secretary/receptionist and that this new opportunity will be a much better move for her career path. He will need to talk her up a bit like saying that she is management material and how good this is for her career path. Most likely she has been expecting this day to come and will choose to be a manger rather than go with a different company as a secretary. It’s a win/win move on parts of both parties.