As you read these true-life stories that follow think about how you might react in the same circumstances. Think also about what problems you would have to face if these situations were to occur in your organization and how you would handle the rejection.

Health Care Center

As the competition for registered nurses heated up, the bottom line thinkers at this middle line hospital came up with a cost saving strategy. They proposed to lower the salaries of their staff nurses and, in return, provide 100% health insurance coverage. That way the hospital would come out ahead financially and the nurses would be “tied to the organization for the long term.”

Part two of this scheme included a generous cash sign-up bonus to attract nurses from nearby hospitals. This inducement, coupled with the increased benefits, was supposed to resolve the nursing shortage. It didn’t. Instead, it made the situation worse.

The nurses felt less loyalty to the hospital, and as professional caregivers they strongly resented being treated like a commodity. As the bottom line came into focus, morale declined steadily, and the nursing shortage grew worse.

Service Provider

This non-profit service provider had built a reputation as a top line organization. They had little difficulty attracting talented employees and top-notch managers who willingly accepted lower compensation in exchange for an opportunity to serve their community. That is until the new board president convinced the other board members to set their sights higher.

According to him, the organization had to attract a higher caliber staff and to do so they must pay higher salaries. According to the figures he introduced; this would require an immediate 15% increase. Despite warnings from their accountant the board approved the salary increases.

When the total costs were calculated the board found itself facing a huge deficit. The president looked again to the bottom line for the solution. The board would still raise salaries, but the matching contribution to the employee retirement fund and insurance plans would be cut in half.

The board was delighted with its efficiency. The employees were not. The raise in pay increased their income taxes. Higher taxes coupled with increased insurance premiums resulted in a net loss of take-home pay. The executive director and several key managers resigned in protest. By making salaries and benefits an issue, the board had undermined the staff’s motivation to serve.

According to the departing executive director, “They took away the specialness of working here.” Adding to the chaos several long-term employees were let go for financial reason resulting in multiple lawsuits. Gradually, the pool of volunteers all but disappeared. The greater good of the community no doubt suffered from the misalignment.