Learning through Alternative Pedagogies – Post Class Assignment

Employment Flexibility at Pushkar Hotels

1. Based on the class discussion what are the three most important factors for the argument in favour
of greater employment flexibility at Pushkar? Explain the choice with suitable argument. (10 marks)

A. The three most important factors for the argument in favour of greater employment flexibility in Pushkar are
given below:

1. Cost Reduction: One of the most important factors in favour of greater employment flexibility at
Pushkar Hotels is cost reduction. Considering the Pandemic cost reduction in Pushkar hotels is the need
of the hour as hospitality and the hotel industry is one of the worst hit industries.

 Employee Reduction and Restructuring - In order to cut down the cost, Pushkar hotels can reduce
the number of employees on their payrolls by giving additional responsibilities to existing
employees rather than hiring new ones. In addition to that they can restructure their organization
by shifting employees to third party pay roll hence, exempting it from coverage under some labour
laws that are applicable based on employment of specific minimum number of regular employees.

 Asset Light - This industry comprises of high investments and operating costs. Ownership of land
and property along with the lofty maintenance costs and high guest to employee ratio in high end
hotels meant lower margins. This sector is highly sensitive to the socio-economic conditions with
even one adverse event could lead to fall in travel and tourism and hence the number of guests.
Pushkar hotels being one of the new age hotels must implement greater employment flexibility as it
focuses on reliable infrastructure, comfort, and high responsiveness to customer issues. Pushkar
hotels are often ‘asset light’ meaning they do not own properties but had long lease agreements
with property developers which results in cost reduction to a larger extent.

 Liability - When there are a lesser number of permanent employees in your payroll and more under
third-party vendors there will be lesser liabilities related to workers (in terms of payment of
provident fund and medical insurance ESI or gratuity etc.) at the company’s end, hence further
reducing the expenses of the company.

 Survival - At the end of the day, you want your company to survive in these tough pandemic days so
Pushkar hotels must implement employment flexibility so that the company doesn’t gets dissolved.

2. External pressure: In the Covid-19 most of the company’s plans for expansion of its business had been
halted due to loss of business in the existing properties. The chances of lockdown had increased, and
lack of business was taking its toll on the company. It was evident that the loss would be heavy.

 Pressure from Investors - The investors were ready to support provided the company significantly
reduced its expenses. The government labor laws forbade direct firing of permanent employees,
hence forcing Arvind to push the employees to resign themselves. The investors didn’t want to
compromise on service quality as well, hence ensured to maintain it by hiring from third parties
providing staff that met its benchmarks in delivery.

 External Factors- The rise of pandemic had badly hit various industries and hospitality industry
was one of them. And the recovery of this sector was unknown.

3. Skilful employees: Flexibility in employment provides an opportunity to hire the best of talents.
Their expertise can be used as and when required. Third party payroll not just saves the company of
much of the liabilities but also provides more flexible workforce.
2. In your own view what could be the best way to deter the company from considering the reduction
of regular employees? Explain how you will convince the top management about the efficacy of the
way/option you suggest. (10 marks)

A. In our opinion, the following mentioned points showcase the primary reasons of retaining regular employees -

1. Stability - An organisation's core aspect is its stability. Opting for a flexible work force would hinder the
stability as well as the morale in the organisation. A flexible work force does not always
ensure/guarantee a work force with the same quality or commitment levels as that of a permanent
work force. For a permanent work force its tasks/duties are pre-defined as per their area of expertise.
But when you rope in people from different payrolls their skillsets and manner of performing the
assigned task will vary frequently, which will further lead to inefficiency and deviation of the quality of
task performed hindering the stability factor of an organisation. Division of workforce will in turn create
interdependence and cause further delays in delivery and since Pushkar Hotels are known for their good
hospitality and timely and effective solution to customer problems, it may affect the reputation and the
occupancy rates at the hotels.

2. No Long Commitments - If regular employees were to be reduced, it would instil the feeling of unrest
and show the employees that the company didn’t plan a long-term commitment towards them. The
message this gives out as an employer may lead to further problems while recruiting in the future. In
addition to this, if they were replaced by contract employees, there is no certainty that these contract
employees would perform at the same calibre as that by regular employees (Since there IS a level of
unreliability with employees hired through a contractor). And since most of the control lies with the
contractor, the lack of control in the hands of Pushkar Hotels could lead to further problems.
Moreover, with contract employees, there is no sense of ownership within them for the company,

3. Guest to Employee Ratio - Considering Arvind goes ahead with the company’s plan, the number of
employees in every hotel would decrease. This would lead to increase in the guest to employee ratio,
meaning the number of employees that would cater to a guest would decrease. This could eventually
lead to customer dissatisfaction and hence an overall decrease in quality of service.
The most severely affected branch in a hotel that would be affected by this would be the Food and
Beverages department, which is one of the major reasons for a hotel’s success.

4. No Significant Impact: According to the calculations made by Arvind only 25% and 10-15% could be
saved by replacing the regular executives and workers respectively, with those on third party payrolls.
The average annual expense (cost to company) on an executive/manager was around Rs 12 lakh and on
a regular full-time worker was Rs 6.5 lakh.
In order to reduce the number of employees on the rolls of the company to less than 2500, as discussed
in class, if we assume 4 executives each and 700 workers from the 100 operational properties were to
be replaced, then according to the below calculations Pushkar Hotels would only be able to save
Rs. 18.82 Crores which would not give a major relief from their mounting debt.

Savings on Executives = 4x100x12,00,000x25% = 12 Crore

Savings on Workers =700 X 6,50,000 X 15% = 6.82 Crores
Total Savings = 18.82 Crores

Hence replacing regular employees wouldn’t have had a significant impact financially which was the
core issue of their problems.

Thank You
Submitted by Group Y2 -
Shashwat Khattar - 21F551
Sharvaree Taware - 21F550
Shasth SS - 21F552
Ajay Krishnan K - 21F507
Aakriti Saxena – 21F501