Mark is the CEO of a midsize hospital in the Intermountain West region of the United States. He has worked at the facility for more than five years and has a close relationship with the medical staff and his employees. He has a habit of going into different departments and getting to know the employees personally. He is generally liked by most of the employees and empathetic when he hears stories about their family problems and financial struggles. Mark prides himself on his honesty and integrity.
On the other hand, Mark represents a for-profit company that sets very high goals and financial standards. It has been a trying year, and the hospital is barely meeting its financial targets.
As the hospital was preparing its budget, Mark proposed that all his employees receive a 3.5 percent cost-of-living increase. This request seemed reasonable, considering that employment surveys have found that many of his employees are on the low side of market wages. When it appeared that this increase had been approved, Mark told his employees that they should expect the indicated raise.
The following week, Mark’s regional vice president calls. She informs Mark that his facility is not profitable enough and demands that he rescind the cost-of-living wage increase and allow the budgeted amount (about $1.5 million) to be posted as net profits for the organization. Mark explains that he has already announced the increase and says rescinding it now would damage both employee morale and his credibility. The regional vice president bluntly replies that if Mark will not do it, she will fire him and find someone who will.
Case Questions
Given the circumstances, what would you do?
What are some of the group and individual consequences of following the regional vice president’s directive? Of not following the directive.
What individual, group, and organizational issues are involved in this case?
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