The hotel Paris’s competitive strategy is “To use superior guest service to differentiate the Hotel Paris properties, and to thereby increase the length of stay and return rate of guests, and thus boost revenues and profitability”. HR manager Lisa Cruz must now formulate functional policies and activities that support this competitive strategy by eliciting the required employee behaviors and competencies.
The compensation program of HR systems at the Hotel Paris, was unplanned and unsophisticated. The company has a narrow target range for what it will pay employees in each job category (front-desk clerk, security guard, valet, etc). Each hotel manager decides where to start a new employee within that narrow pay range. The company has given little thought to tying general pay levels or individual employee’s pay to the company’s strategic goals. For example, the firm’s policy is simply to pay its employees a “competitive salary,” by which it means about average for what other hotels in the city are paying for similar jobs. Lisa knows that pay policies like these may actually run counter to what the company wants to achieve strategically, in terms of creating an extraordinarily service-oriented workforce. How can you hire and retain a top workforce, and channel their behaviors toward high-quality guest services, if you don’t somehow link performance and pay? She and her team therefore turn to the task of assessing and redesigning the company’s compensation plan.
Even a casual review by Lisa and the CFO made it clear that the company’s compensation plan wasn’t designed to support the firm’s new strategic goals. For one thing, they knew that they should pay somewhat more, on average, than did their competitors if they expected employees to consistently exceed expectations when it came to serving guests. Yet their review of a variety of metrics (including the Hotel Paris’s salary/competitive salary ratios, the total compensation expense per employee, and the target percentile for total compensation) suggested that in virtually all job categories the Hotel Paris paid no more than average, and, occasionally, paid somewhat less.
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The current compensation policies had also bred what one hotel manager called an “I don’t care” attitude on the part of most employees. What she meant was that most hotel Paris employees quickly learned that regardless of what their performance was, they always ended up paid about the same as employees who performed better and worse than they did. The firm’s compensation plan actually was dysfunctional: It was not channeling employees’ behaviors toward those required to achieve the company’s goals. In some ways, it was doing the opposite.
Lisa and the CFO knew they had to institute a new strategic compensation plan. They wanted a plan that improved employee morale, contributed to employee commitment, reduced employee turnover, and rewarded (and thus encouraged) the sorts of service-oriented behaviors that boosted guest satisfaction. After meeting with the company’s CEO and the board, the CFO gave Lisa the go ahead to redesign the company’s compensation plan, with the overall aim of creating a new plan that would support the company’s strategic aims.

Answer the following:
a. In determining internal equity, what are some of the factors that should be considered when conducting job evaluation? That is, what would you weight more heavily if you were charged with developing a job evaluation program? How would you go about ranking positions within the hotel, from housecleaning and front desk up to general manager?
(15 Marks)
b. What compensation strategy Hotel Paris should follow to influence employee performance? It can be different for different levels within the organization. Support your decision by highlighting the benefits of the plan you choose and disadvantages to the plan you don’t.
(15 Marks)
c. What other benefits could be implemented to further incentivize employees toward the desired behaviors? Keep in mind the cost of benefit programs, so offering a wide assortment of new benefits may not be the best solution. How do you get return on your benefits investment? (10 Marks)

Answer rating: 100% (QA)

In determining internal equity what are some of the factors that should be considered when conducting job evaluation That is what would you weight more heavily if you were charged with developing a jo... View the full answer