Problems with Marilyn's Current Compensation Program:

Lack of differentiation: Marilyn pays all her employees the same base salary of $$14$ per hour without considering their skills, experience, and job responsibilities. This approach does not recognize and reward high$-$performing employees and can demotivate them.

No benefits: The absence of any benefits like health insurance, retirement plans, or paid time off can demotivate employees and lead to a high turnover rate.

Customer complaints: The increase in customer complaints about unfriendly service indicates that employees may not be motivated to provide excellent customer service, possibly due to the lack of incentives or recognition for doing so$.$

Employee threat to leave: The three long$-$standing employees threatening to leave indicates that they are dissatisfied with their current compensation and are seeking better compensation and benefits elsewhere.

Step $2$

Impact on the Business:

The current compensation program can have several negative impacts on the business, such as:

High turnover rate: The absence of benefits and low pay can lead to a high turnover rate, which can impact the quality of service provided to customers and the overall reputation of the business.

Lower employee morale: A lack of recognition and incentives can lead to lower employee morale, which can translate into lower productivity and poor customer service.

Reduced profitability: High employee turnover, poor customer service, and negative reviews can reduce the business's profitability, which can impact its growth and sustainability.

Step $3$

Compensation Strategy:

Based on the problems identified, Marilyn needs to adopt a lead compensation strategy. She needs to offer competitive pay and benefits to attract and retain high$-$performing employees. This will enable her to provide better customer service, resulting in higher customer satisfaction and profitability.

Incentives:

To motivate employees and improve the quality of customer service, Marilyn can consider the following incentives:

Performance$-$based pay: Marilyn can tie a portion of the employee's pay to their performance. This will motivate employees to provide better service and improve their productivity.

Health insurance and retirement plans: Offering health insurance and retirement plans can attract and retain high$-$performing employees who value long$-$term job security and benefits.

Recognition and rewards: Marilyn can offer recognition and rewards to employees who consistently provide excellent customer service. This can be in the form of bonuses, gift cards, or additional time off.

Answer

In conclusion, by adopting a lead compensation strategy and offering incentives that motivate employees, Marilyn can address the problems with her current compensation program and improve the quality of customer service, resulting in higher customer satisfaction and profitability