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Incentive Plans Case study Hotel Paris

Human Resources (Amity University Dubai)

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The Hotel Paris

Case Study Solutions

Translating Strategy into HR Policies and Practices Case Study

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Table of Contents
Case: The Hotel Paris: Translating Strategy into HR Policies and Practices Case Study ................... 3
Question 01: Discuss what do you think of the measurable criteria that Fred and the CFO set for
the new incentive plan........................................................................................................................ 6
Solution:............................................................................................................................................... 6
Question 02: Given what you know about the hotel's strategic goals list three to four specific
behaviors that you would incentivize for each of the following groups of employees. .................. 8
-Front Desk clerks ................................................................................................................................ 8
- Hotel managers ................................................................................................................................. 8
- Valets and housekeepers .................................................................................................................. 8
Solution:............................................................................................................................................... 8
Front desk clerk: ............................................................................................................................ 8
Hotel manager: ............................................................................................................................... 9
Valets and housekeepers: ............................................................................................................ 10
Question 03: Lay out a comprehensive incentive plan, including all long-term and short-term
incentives for the hotel's managers. ................................................................................................ 11
Solution:............................................................................................................................................. 11
Short-term incentives.................................................................................................................... 11
Long-term incentives:.................................................................................................................... 11
References ......................................................................................................................................... 13

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Case: The Hotel Paris: Translating Strategy into HR Policies and Practices
Case Study
The Hotel Paris’s competitive strategy is "To use superior guest service to differentiate the Hotel

Paris’s properties, and thereby increase the length of stay and return rate of guests,

and does boost revenues and profitability."

HR manager Lisa must now formulate the functional policies and activities that support this

competitive strategy, by eliciting the required employee behaviors and competencies.

One of Lisa’s biggest pay related concerns is that the Hotel Paris compensation plans do not link pay

to performance in any effective way. Because salaries were historically barely competitive,

supervisors tended to award merit raises across the board. So, employees who performed well, got

only about the same raises as did those who performed poorly.

Similarly, there was no bonus or incentive plan of any kind, aimed at linking employee performance

to strategically relevant employee capabilities and behaviors such as greeting guests in a friendly

manner, or providing expeditious check-ins and checkouts.

Based on their analysis, Lisa and the CFO concluded that by any metric, the company's incentive plan

was totally inadequate.

The percentage of the workforce whose merit increase or incentive pay is tied to performance is

effectively zero because managers awarded merit pay across the board.

No more than 5% of the workforce (just the managers) was eligible for incentive pay.

And the percentage of difference in incentive pay between a low performing and a high performing

employee was less than 2%.

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Lisa knew from industry studies that in top firms, over 80% of the workforce had merit pay or

incentive pay tied to performance.

She also knew that in high performing firms, there was at least a 5% or 6% difference in incentive

pay between a low performing and a high performing employee.

The CFO authorized Lisa to design a new strategy-oriented incentive plan for the Hotel Paris’s

employees, their overall aim was to incentivize the pay plans of just about all the company's

employees.

Lisa and the company's CFO laid out three measurable criteria that the new incentive plan had to

meet.

First at least 90%, and preferably all of the hotel's employees must be eligible for a merit increase or

incentive pay that is tied to performance.

Second, there must be at least a 10% difference in incentive pay between a low performing and high

performing employee.

Third, the new incentive plan had to increase include specific bonuses and evaluative mechanisms

that linked employee behaviors in each job category, with strategically relevant employee capabilities

and behaviors.

For example, front desk clerks, were to be rewarded in part based on the friendliness and speed of the

check ins and checkouts, and the house cleaning crew was to be evaluated and rewarded in part, based

on the percentage of room cleaning infractions.

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Questions:

Question 1: Discuss what do you think of the measurable criteria that Lisa and the CFO set for the

new incentive plan.

Question 2: Given what you know about the hotel's strategic goals list three to four specific behaviors

that you would incentivize for each of the following groups of employees.

-Front Desk clerks

-Hotel managers

-Valets and housekeepers

Question 3. Lay out a comprehensive incentive plan, including all long-term and short-term

incentives for the hotel's managers.

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Question 01: Discuss what do you think of the measurable criteria that
Fred and the CFO set for the new incentive plan.

Solution:

According to the criteria put forward by the HR Manager Fred and the CFO of ........, this new
incentive plan should be designed to cover almost at least 90 percent, and preferably, all of the
employees.

The absence of a proper incentive plan that adequately rewards employee capabilities and
performance bring to the fore, an immediate need to revamp and restructure incentive and
compensation systems that would commensurate with the performance of all employees.

The implementation of such an incentivized reward system would ensure that high-performing
achievers would be sufficiently motivated to maintain their levels of performance.

Secondly, this new incentive plan seeks to ensure that pay raises or bonuses would be effectively
linked to employee capabilities, behaviours, and overall performance levels.

This means that employees with higher performance values or ratings would receive a higher
percentage incentive through this new plan.

Such incentives are by way of appreciation of an employee's trust, loyalty, and service excellence to
the organization. Not only that, such measures are proven to increase the job satisfaction of those
employees.

For that reason, this appreciation helps to further enhance their performance. On the other hand, high-
performing employees receive a higher incentive, which gives lower-performing employees the
motivation and desire to do their job well.

Through it, employees with low-performance levels are also motivated to increase their performance
to a higher level. Therefore, this, in effect, will increase the performance level of the staff in the entire
organization.

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Thirdly, the new incentive plan should be tailored to and commensurate with the nature of the role
and the adherence to acceptable work behaviours and standards.

Accordingly, the incentive should be planned to be paid according to each function in the
organization, and also considering how successfully the employee executes his duties and
responsibilities on the job.

It should also take into account how the employee exhibits the desired behavior of the organization.
The incentive for employees in those positions will increase as the organization achieves the desired
results from each position.

Employees are motivated to maintain their behavior and perform their duties to achieve strategic and
business outcomes as laid down by the company. The company strategically directs its employees to
achieve organizational goals.

According to Maslow's hierarchy of needs, financial incentives meet only basic needs. Because of
this, over time, financial incentives alone will not motivate staff. Therefore, it is necessary to evaluate
the high performance of employees through non-financial incentives as well. This ensures the
fulfilment of emotional and complementary needs, which are key to maintain high levels of
motivation.

As the case does not mention non-financial allowances, it is not possible to get an idea of the status
quo in the organization.

However, that said, it is important to have a balanced financial and non-financial incentive plan to
maintain high-performance levels and keep employees motivated.

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Question 02: Given what you know about the hotel's strategic goals list
three to four specific behaviors that you would incentivize for each of
the following groups of employees.

-Front Desk clerks

- Hotel managers

- Valets and housekeepers

Solution:

The strategy of the organization is to increase the stay time of guests and increase the rate of return
through a superior hospitality service.

To provide a unique experience to the customer through a superior hospitality service, the employees
must provide superior service to the customer. This is primarily dependent on staff training and
attitudes.

It is also important to perform the tasks assigned to each position properly and to maintain a
professional code of conduct at all times.

Front desk clerk:

Speed and accuracy:

The speed with which the officer performs the check-in and check-out procedures is important. The
accuracy with which the same is performed is crucial.

It is also important to do it in a way that meets the specific needs of the customer.

Make a good first impression:

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Since he is the first employee to meet any customer, this employee should be able to give the customer
a warm welcome and make the first impression a positive experience.

Be an active listener:
The ability to listen well and address the needs of the customer appropriately and timely is important.

Friendly and polite mannerisms:

Politeness and friendliness are essential in the hospitality industry. Every employee should strive to
make his/her guests feel at home.

Hotel manager:

Efficient handling of staff:

The hotel manager has a responsibility to manage his staff efficiently. The manager is also the point-
of-contact officer who needs to be consulted immediately if a customer does not receive a proper
solution to a problem.

Self-control:
The manager needs enough self-control to be friendly and patient with a difficult customer.

Good communication skills:

It is important to demonstrate good intercommunication skills at a level that will maintain the
motivation and performance of the staff at a high level.

Demonstrate leadership:
The managers also need to demonstrate leadership qualities, as will enable them to achieve the goals
of the organization through the efficient management of their staff.

High repeat guest rates:

Sections within the hotel must be able to maintain a high average of the probability of a customer's
return and the average of a customer's stay in the hotel by enabling them to remain functional in an
intended manner.

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Ensure compliance with industry regulations and service standards:

It is also the responsibility of the manager to maintain the organization in accordance with the state,
international, and the obtained certification standard laws and regulations applicable to the operation
of the institution.

Valets and housekeepers:

Excellent service:
If a customer is to return or prolong their stay, the care they receive must be of a very high standard.
For that to happen, the service of housekeeping staff must be at a high level.

Immediate redressal:
The primary function of the employees in this position is to effectively address the needs of the guests
of the institution. High waiting times can create a negative impression.

Demonstrate polite behaviour:

The company is expected to treat visitors with empathy and provide services by valet and
housekeeping staff.
The valets and housekeeping staff need to do most of the day-to-day cleaning and other duties in less
time.

Active participation:
There is also a need to address the responsibilities and duties associated with the position of
housekeeper in a greater capacity and to address those needs through self-determination in case of an
emergency.

It is also important to make an active contribution to ensuring the safety of the lives and property of
visitors.

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Question 03: Lay out a comprehensive incentive plan, including all long-
term and short-term incentives for the hotel's managers.

Solution:

Incentives for hotel managers are based on the hotel's monthly & annual income and profit.

Short-term incentives

• If the monthly hotel revenue target is met, an allowance of 10% of the monthly salary will be

paid.

• An incentive allowance of Rs. 10,000 will be paid for positive feedback received through the

company's customer feedback analysis.

• An additional 3% will be paid if the monthly revenue target is reached and the hotel's highest

revenue is achieved.

Long-term incentives:

• An annual bonus is paid relative to the hotel's annual revenue growth based on annual

income. Its size is a minimum of one month's salary. It is paid based on the decision of the

Board of Directors.

• Based on the hotel's annual customer analysis, an additional bonus of Rs. 100000 will be paid.

• An additional 3% will be added to the annual salary increment if the hotel manager abled to

maintain the brand and quality of care, as well as the performance level of more than 90%

of employees over the average of 95%.

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References
Alqusayer, A. (2016). Drivers of Hotel Employee Motivation, Satisfaction and Engagement in
Riyadh, the Kingdom of Saudi Arabia. Riyadh: Rochester Institute of Technology.
Barbosa-McCoy, V. L. (2016). Hotel Managers' Motivational Strategies for Enhancing Employee
Performance. Walden University.
Bohlander, G. W., & Snell, S. A. (2013). Principles of Human Resource Management, 16th Edition.
Andover: Centage Learning.
Ionita, M. E. (2016). An analysis of the success techniques of the employee motivation in use in the
Maldron Hotels Chain. Dublin: Dublin Business School.
Lee, F.-H., Lee, T.-Z., & Wu, W.-Y. (2010). The relationship between human resource management
practices, business strategy and firm performance: Evidence from steel industry in Taiwan.
The International Journal of Human Resource Management, 1351–1372.
McCoy, T. J. (1992). Compensation and Motivation. New York: AMACOM.
Stoner, J. A., Freeman, R. E., & Gilbert, D. R. (2004). Management - Sixth Edition. New Jersey:
Prentice-Hall Inc.

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