Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 9

Why Pay Is Growing Slowly at ProLawnPlus
ProLawnPlus provides lawn and tree care to homeowners in Maryland. The current owner, Mark Schlossberg, became interested in environmental issues when he started working there, and he has developed his employees' skill in building healthy lawns with minimal use of pesticides and fertilizers. Along with Schlossberg's focus on naturally healthy lawns, he emphasizes training in customer service to build long-term client relationships. When customers sign up for service, they get the cell phone numbers of Schlossberg and his managers, so they can call anytime if they have questions or concerns.
This concern for quality has helped the company weather the recent recession. In the year following the 2008 financial crisis and collapsing housing market, homeowners looked to cut costs and lawn care services were an easy target. ProLawnPlus saw its sales dip 10%. Still, half the customers were back a year later. In addition, a deal to buy accounts from another company in an adjoining region helped the company grow ahead of the economic recovery. The customer retention and growth from the acquisition enabled the company to stay afloat without major price increases. That ability is especially important for a high-quality firm such as Schlossberg's, which tends to charge near the upper end of prices in the industry.
The economic downturn and its impact on the lawn care industry provide a difficult context for making decisions about pay. Schlossberg found that when the recession was hurting sales, employees understood the situation and did not expect their pay to rise. As ProLawnPlus begins taking on more clients and sales volume grows, employees anticipate that the improved business environment will translate into higher pay. At the same time, recent increases in fuel costs are requiring some difficult choices in managing higher expenses for both fuel and payroll. Schlossberg's initial response is to find ways to pay employees more without raising pay rates. For example, employees have begun putting in more overtime. ProLawnPlus has also offered incentive pay for meeting specific goals. Still, Schlossberg expects that within months, employees who are not already at the top of their pay range will get a raise.
How can ProLawnPlus ensure that it is meeting legal requirements for its pay policies?