Salary Adjustments at Chicago Health System: An Unsolved Mystery

Abstract

This case is intended to highlight management problems that can occur when an

organization implements changes to its base salary plan. Maryanne Walker, Director

of Pharmacy Services at Chicago Hospital in suburban Chicago, was caught by

surprise one evening when several of her staff pharmacists called her expressing

their anger regarding salary adjustment letters. The next morning Maryanne sent

an e-mail to her boss concerning the salary letters. Maryanne 's boss called a directors’

meeting to discuss the salary adjustment issue. Maryanne learned that none of

the line managers at the hospital had advance knowledge of the salary adjustment

letters, that the adjustments were not related to performance appraisals, and that

the size and form of the adjustments varied within and across departments. The

following week, the hospital's Vice-President of Human Resources distributed a

memorandum that explained the rationale for the salary adjustments.