You are the ceo of a widget manufacturing company. the company is experiencing financial trouble, and needs to produce more widgets in order to stay in operation. in order to encourage your employees, you declare at a meeting that "if everyone works really hard this year and we meet production standards, i'll give every employee $100." employees work unusually hard in response and by the end of the year the firm meets the expected standards. it is also in much better financial condition. considering both the legal and business implications, evaluate whether or not you should make the payments.

Question

03-04-2018
Business

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You are the ceo of a widget manufacturing company. the company is experiencing financial trouble, and needs to produce more widgets in order to stay in operation. in order to encourage your employees, you declare at a meeting that "if everyone works really hard this year and we meet production standards, i'll give every employee $100." employees work unusually hard in response and by the end of the year the firm meets the expected standards. it is also in much better financial condition. considering both the legal and business implications, evaluate whether or not you should make the payments.

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Erudite1 Erudite1 · Answer 1 · 2018-04-12T15:11:53+02:00

IT WILL BE MUCH MORE BETTER TO MAKE THE PAYMENT.
Legal implication: You made the pronouncement to pay every employee a sum of $100 each at an official meeting of the company, thus, it is a kind of formal agreement which can be taken to court, if the employees decide to do so. This will have negative impacts on the company and also cost you money.
Business implication: Your employees will lose trust in you. This will affect the manner they handle their works and ultimately lead to a reduction in the standard they have achieved before. This will mean less quality for your products, less profits and dissatisfied employees.
Keeping your promise to the employees have the power to drive them even to achieve more.

fatimakincsem fatimakincsem · Answer 2 · 2019-03-14T15:27:27+01:00

Being the CEO of the company, I promised my employees to give them incentive if we meet the yearly target. Employees worked so hard to finish the meet the target. Now we have achieved the target and the company is out of crisis, its my utmost duty to fulfill my promise that i did with my employees.

Because it was the word of mouth by the CEO, and was promised in a meeting, and was said to encourage the employees, it won't have any legal implication if the promised amount is not given to the employees.

But it definitely would have the business implications, which are severe than the legal ones because such implications involve employees's trust. And if you won't fulfill your promise, they won't trust you again, and eventually their moral will fall