please help with question #2

Case to Develop Critical Thinking The State Bank65 The State Bank is located in a Midwestern town of about 50,000 peor by the bank HR Committee during February and are granted to employ ple. It is one of four banks in the area and has the reputation of being ees on March 1 of each year. In addition to granting employees meeltrais. the most progressive. Russell Duncan has been the president of the es, six years ago the bank also began giving cost-of-living raises, Duncan bank for 15 years. Before coming to State Bank, Duncan worked for a had been opposed to this idea originally but saw no alternative to it Targe Detroit bank for 10 years. Duncan has implemented a number of cost-of-living rise is set to equal the local rate of inflation, which is about changes that have earned him a great deal of respect and admiration from both bank employees and townspeople alike. For example, in percent. So, with this system, in recent years the best performers would have received raises of up to 15 percent. response to a growing number of Spanish-speaking people in the aren, This year, another bank in town conducted a wage survey to deter- he hired Latinos to work as loan officers and tellers. He organized and mine the average compensation of bank employees in the city. The staffed the city only agricultural loan center to meet the needs of the management of the State Bank received a copy of the results and was areas forces. In addition, he established the state first "uniline" system surprised to learn that its 23tellers, as a group, were being paid an aver- for handling customers waiting in line for a teller. age of $35 per week more than were tellers at other banks. The survey Perlups more than anything else, Duncan is known for establishing also showed that employees holding other positions in the bank (eg, progressive personnel practices. He strongly believes that the banks branch managers, loan officers, and file clerta) were being paid wages employees are its most important asset and continually searches for ways similar to those paid by other banlos. Only the tellers made more. to increase both employee satisfaction and productivity. He feels that all After receiving the report, the HR Committee of the bank met to employees should strive to continually improve their skills and abilities determine what should be done regarding the tellers' raises. They knew hence, he cross-trains employees and sends many of them to courses and that none of the tellers had been told how much their raises would be conferences sponsored by banking groups such as the American Institute but that they were all expecting roles. They also realized that, if other of Banking employees learned that the tellers were being overpaid, friction could With regard to employee compensation, Duncan firmly believes that develop and morale might suffer. They knew that it was costing the employees should be paid according to their contribution to organization - bank more than $40,000 extra to pay the tellers more than competitors al success. Ten years ago, he implemented a performance-based pay sys. were paying. Finally, they knew that as a group the bankstellers were ten under which employees could eam raises from 0 to 12 percent each highly competent, and they did not want to lose any of them year, depending on their job performance. Raises are typically determined Questions 1. Should State Bank give the tellers raises using criteria similar to that used in past years? Why or why not? 2. If State Bank wants to reduce its compensation costs for tellers, what are their options? Is there any way to reduce these costs and still give their "normal" pay raises? 3. Suppose you were one of the banks top-performing tellers. You learn that the bank will be giving smaller raises this year because it believes tellers are overpaid. How would you respond