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    Case 10

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    duyenmap07
    BNY Mellon chose to share its increased profits from corporate tax cuts between employees and investments to grow the company. It raised entry-level pay to $15 per hour, affecting about 1,000 employees. While this disappointed investors seeking higher dividends, it demonstrated a concern for employees at all levels. The CEO described it as sharing the tax benefit and investing for long-term success serving clients, communities, and shareholders. Raising baseline pay provides sustainable income gains over one-time bonuses and supports attracting and retaining entry-level talent.

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    Case 10

    Uploaded by

    duyenmap07
    17 views2 pages
    BNY Mellon chose to share its increased profits from corporate tax cuts between employees and investments to grow the company. It raised entry-level pay to $15 per hour, affecting about 1,000 employees. While this disappointed investors seeking higher dividends, it demonstrated a concern for employees at all levels. The CEO described it as sharing the tax benefit and investing for long-term success serving clients, communities, and shareholders. Raising baseline pay provides sustainable income gains over one-time bonuses and supports attracting and retaining entry-level talent.

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    BNY Mellon chose to share its increased profits from corporate tax cuts between employees and investments to grow the company. It raised entry-level pay to $15 per hour, affecting about 1,000 employees. While this disappointed investors seeking higher dividends, it demonstrated a concern for employees at all levels. The CEO described it as sharing the tax benefit and investing for long-term success serving clients, communities, and shareholders. Raising baseline pay provides sustainable income gains over one-time bonuses and supports attracting and retaining entry-level talent.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    17 views2 pages

    Case 10

    Uploaded by

    duyenmap07
    BNY Mellon chose to share its increased profits from corporate tax cuts between employees and investments to grow the company. It raised entry-level pay to $15 per hour, affecting about 1,000 employees. While this disappointed investors seeking higher dividends, it demonstrated a concern for employees at all levels. The CEO described it as sharing the tax benefit and investing for long-term success serving clients, communities, and shareholders. Raising baseline pay provides sustainable income gains over one-time bonuses and supports attracting and retaining entry-level talent.

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    © All Rights Reserved
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    Chapter 13: BNY Mellon Shares the Wealth with Employees

    When Congress passed a corporate tax cut that took effect in 2018, employees and
    economists alike speculated about where the increase to companies’ bottom lines would
    be directed. Would more wealth flow to employees in the form of pay increases or to
    investors in the form of dividends paid out or investments aimed at increasing
    companies’ value? And would any money directed to employees go mainly to
    executives or be shared with employees at all levels?
    Bank of New York Mellon Corporation chose a path that demonstrated concern for
    multiple stakeholders. The bank - which focuses on serving large banks, mutual funds,
    and other big investors - announced that the tax reduction would add more than $400
    million to income of $1.13 billion. Most of the additional after-tax income would be split
    between increasing corporate value and paying employees more. CEO Charles Scharf,
    in a memo to employees, described the decision in terms of social responsibility: “We
    strongly believe in our responsibility to our employees to share the tax benefit from a
    lower tax rate, as well as to invest as much as we intelligently can to build the company
    for the future so we can serve our clients, communities and shareholders for the long
    term.”
    On the corporate-value side, BNY Mellon said it would add more to its planned
    investments in technology projects aimed at improving the company’s future
    performance. Investors who had hoped the company would provide them with a more
    immediate benefit such as bigger dividends were disappointed, as evidenced by a dip in
    the bank’s stock price. Other banks, including Bank of America and U.S. Bancorp, had
    announced they would use most of their additional income to improve returns for
    stockholders. However, as BNY Mellon moved into the next year with a strong financial
    performance, stock prices recovered and rose.
    BNY Mellon’s additional spending on employees took the form of an increase in entry-
    level pay to $15 per hour. The increase mainly affected about 1,000 employees in the
    operations unit out of 52,500 employees overall. The plan was in noticeable contrast to
    many employers’ decisions to pay one-time bonuses rather than raising pay levels.
    BNY Mellon also indicated that it would continue with plans made before the tax cut.
    These included cost-saving efforts that would reduce the size of the workforce and
    consolidate it in a smaller headquarters. The company also had planned to pay
    dividends and buy back stock, transferring some of its value to investors.

    Questions
    1. BNY Mellon used its additional profits to increase entry-level pay levels rather
    than offering incentive pay such as merit increases or bonuses. What
    advantages of incentive pay was the bank forgoing?
     Advantage of incentive pay
    o Higher performance
    o Individual/ group- team work/ organization

    2. What HR-related goal might the bank meet by raising entry-level pay instead of
    paying a one-time bonus?
     Entry-level pay is increased-> sustainable income:
    o Attract more employees
    o Reduce turn over( more satisfied)
    o

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