We often hear about the problems which surface as a result of underpaying employees, yet overpaying employees can create serious problems as well. This case suggests that organizations may find it advantageous to conduct wage surveys on a regular basis. By doing sothe problems that result from either underpaying or overpaying employees can be minimized.

OBJECTIVES:

To familiarize students with the problems that can develop when employees are overpaid.

To provide a catalyst for discussing how wage surveys are conducted, the pitfalls associated with them, and whether the results should be made public.

To make students aware of the pros and cons of giving merit raises and cost of living raises.

Answer the case questions:

If you were on the HR Committee of State Bank, what decisions would you suggest regarding raises for tellers?

How much faith should the HR Committee place in the accuracy of the wage survey?

Critique the bank\'s policy of giving costofliving raises. Do you think they should be eliminated?