THE HOTEL PARIS CASE

(The New Compensation Plan)

The Hotel Paris’s competitive strategy
• To use superior guest service to differentiate
the Hotel Paris properties
• Increase the length of stay and return rate of
guests
• Boost revenues and profitability.
Prevailing HR process and practices
• Compensation program was unplanned and
unsophisticated.
• Firm’s policy is to simply pay its employees a
‘competitive Salary’- paying above average for
what other hotels in the city are paying for
similar jobs.
• According to employee’s perception , firm has “I
don’t care attitude” which means regardless of
what their performance was they always ended
up being paid about the same as employees who
performed better and worst than they did.
Prevailing HR process and practices
• HR and CFO of the company wanted to new
strategic compensation plan.
• HR need to review a variety of metrics such as
total compensation expense per employee,
target percentile for total compensation etc.
• They wanted a plan that improved employee
morale and commitment , reduced employee
turnover and reward and encourage the sort of
service oriented behaviors that boosted guest
satisfaction.
 Questions
1. Draw a diagram how compensation at Hotel Paris should
influence employee performance which in turn influence
Hotel Paris performance. Relate at each level
compensation policy, employee behavior and Hotel Paris
Outcomes.
2. Would you suggest Hotel Paris should implement a
competency based pay plan for its non- managerial staff –
why or why not?

3. Create a job evaluation system for non- managerial

employees(housekeepers, Valets, front desk clerks, phone
operators, waitstaff, ground keepers and security guards)
and use it to show the worth of these jobs relative to other.
 Yes, Hotel Paris should implement a competency-
based pay plan for its non-managerial staff
because –
1. as it would help to achieve its competitive
strategy through improving individual efforts and
consequently, organizational performance.
2. help the company to hire and retain a top
workforce which will lead as the end to improve
the achievement of superior guest service.
 Job Ranking List
Job Ranking Job Title

1 Front Desk Clerks

2 Valets

3 House Keepers

4 Phone Operators

5 Waitstaff

6 Security Guards

7 Groundskeepers
Factors
Rate/
    scale     Front Office
Amount
 Wages in 1
thousand 5 4 3 2
Mental Pressure 4
7 6 5 3 2 6

Responsibility 5
6 5 4 3 2 6
Initiative
3
5 4 3 3 2
3
Physical efforts
5 4 3 2 1 1
Supervisory 1
responsibility 5
6
6 5 4 3 2
Working 1 2
Conditions 5 4 3 3 2
6
Confidential 5
Factors
Rate/
    scale     Housekeeping
Amount
 Wages in 1
thousand 5 4 3 2
Mental Pressure 2
7 6 5 3 2 3

Responsibility 3
6 5 4 3 2 4
Initiative
2
5 4 3 3 2
3
Physical efforts
5 4 3 2 1 5
Supervisory 5
responsibility 2
3
6 5 4 3 2
Working 3 3
Conditions 5 4 3 3 2
2
Confidential 1