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Pricing Strategy - Case Study

Essay by   •  August 29, 2016  •  Case Study  •  2,123 Words (9 Pages)  •  1,504 Views

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        This paper requires the presentation of an overall strategy to recruit Jane for the post of manager for the North side branch of Clean Car Care.  Jane’s current salary is at the middle of the range of salaries that Arlan pays his managers, at between $28,000 and $35,000 a year, and the other components of Arlan’s package includes a week vacation for year one, two weeks  of vacation for four years after that, and then three weeks a year after that four-year period.  Moreover, his employees get health insurance, but the employees co-pay a fifth of the insurance premium. Work schedules are five-day workweeks, with work on weekends happening during the peak seasons.  In comparison, Jane currently makes $31,500 a year, together with free health insurance that is completely paid for by her employer, and gets a week of vacation every year, due to increase to two weeks at the end of her second year serving her present employer. The caveat is that although Jane works five days a week, she mostly avoids work on weekends, even though she is able to put in time on weekends occasionally.  It is a lifestyle choice.  At bar are three pressing issues that needs careful consideration.  One is what type of offer Arlan should make: a low-ball offer, a competitive offer, or one that can be deemed as a best shot offer.  The second set of issues relates to other aspects of the compensation plan that would serve as enticements for Jane to come on board; that go beyond the other aspects of the compensation already discussed in the case: schedule, vacation, and health insurance details. The third set of recommendations relate to crafting a letter detailing the job offer to Jane, that in essence contains the type of offer, as well as the other enticements mentioned above.  It is understood from the case too, that Jane’s present employer will be sure to lay out a counteroffer to whatever Arlan comes up with, and this impacts the details of any compensation package to be proposed (Judge and Heneman, 2015).

Key and Underlying Issues

At present there is little to induce Jane to move from her organization to Clean Car Care, except for the fact that she has expressed genuine enthusiasm to get the job, pending the actual job offer of course and what Arlan has to offer to Jane.  There are many factors that make for a satisfied employee, and job satisfaction is a complex reality affected by a host of factors, including employee engagement, the fulfillment that the employee derives from the work, considerations relating to lifestyle, and other such factors.  What is working for Arlan is that Jane has expressed a desire to actually take on the work, which is a good thing in terms of being able to get the best out of her, if and when she comes on board (Cook and Wall, 1980).  Job satisfaction and commitment are very fragile realities that are affected by actual work experience, which may be different from the perception of potential employees of what the work is actually like once they get on board and once they come to experience real work.  For Arlan, the problem is that he needs to be able to engage Jane for the long term, in order to prevent losing her in the event that she does not find what she is looking for in the job.  Moreover, it is not clear from her initial response whether or not the job is interesting enough for her even if the salary is potentially lower and she is unable to get a package that is at par or better than what she is currently getting.  The take is that given the complex factors that go into real life job satisfaction, it will help Arlan’s case to make the best shot offer he can come up with, in order to entice Jane to actually make the move.  Here the problem is compounded by the literature telling us that material rewards may not always result in employees sticking with a firm for the long haul, especially when employees are driven by higher-level needs such as job fulfillment and meaning along the continuum of needs as defined in the literature.  To be more specific, the literature tells us that employee engagement, is a factor of several things including fulfilled expectations of the job itself, and in this latter regard monetary and benefits details may be important to start with (Boswell et al., 2009; Wahba and Bridwell, 1976).

The short of it is that while Jane has expressed enthusiasm to come on board, she does have some very pressing needs that are currently met by her present employer.  Moreover, the literature tells us that initial interest and enthusiasm can quickly wane in the absence of compelling reasons to stay, including actual work experience and meeting personal development goals, which are at present unknown.  It is not clear that Arlan and the work will be able to get Jane to stay in the long term.  Her willingness to move is a big sign of her initial commitment, but at present it is still not clear whether she will be able to find the psychological commitment and the psychological factors that will make her stay.  Being able to make a competitive offer sweetens the pot and strengthens the odds that Jane will find it worthwhile to stay with Clean Car Care for the long haul (House and Wigdor, n.d.; Wahba and Bridwell, 1976), however it could ultimately match a counter offer from her current position.

Solutions and Implementation

Given the situation presented in this case, it would seem that Clean Car Care should make a best shot offer to Jane.  There are a number of reasons to justify this decision.  Jane has been an excellent performer at her current job.  Jane is line for a promotion with her current employer.  The case indicated that Jane’s employer will most likely make a counteroffer, if 3Cs offers her the manager job.  Jane will need to be given strong incentives to draw her away from her current employer.  The issue of working on weekends may become a serious obstacle to reaching an agreement between both parties.  3Cs strategy will need to make the best overall job offer to hopefully compensate for the job’s requirements.  A low ball offer would likely be totally uncompetitive with Jane’s current employment situation and Jane doesn’t need a job; she is willing to take a new job if the terms are right.  She has a favorable employment situation and she is due for a promotion soon, already with a competitive salary and receiving good benefits.  A competitive offer would still by unlikely to induce Jane to accept a job offer from 3Cs.  This would be especially true given the work schedule, and the fact that a competitive offer could potentially match her promotion or counteroffer.  

Inducements on top of the basic monetary and benefits package that are to be offered to Jane will have to accommodate her desire to be able to achieve some kind of work and life balance. She has mentioned an emphasis on being able to spend time with family, especially on weekends. This is of course very vital to her sense of self-control and maybe her work satisfaction and happiness too.  The ability to control her time and to plan her week so that she is able to minimize work on weekends would be a very considerable inducement on top of the staple items on her salaries and benefits schedule. Taking a step back, of course, the idea is to match her present pay and benefits package, and to add an additional premium in terms of salary from what she is currently getting, in order to make the offer competitive. Apart from the offer to allow her maximum flexibility in her work schedule, as the store schedule and demands permit of course, Arlan can also sweeten the pot by making the work as interesting and fulfilling to Jane as possible.  This means giving her enough power and responsibility at work to be able to engage her creativity and her passions at work.  This, together with the promise of a working culture that fosters close ties and camaraderie with co-workers, can further boost the chances that Jane will find the work interesting and fulfilling enough psychologically, to be able to stay for the long haul (House and Wigdor, n.d.; Wahba and Bridwell, 1976).  Relocation assistance in the form of paying for moving expenses or providing real estate services would be another incentive to help facilitate the transition from Jane’s existing residence to an area closer to 3Cs.  



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