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One of Lisa Cruz’s biggest pay-related concerns is that the Hotel Paris compensations plan
does not link pay to performance in any effective way. Because salaries was historically barely
competitive, supervisors tend to award merit raises across the board. so, employee who
performed well got only about the same the same raise as did those who performed poorly.
Similarly, there was no bonus or incentives plan of any kind aimed at linking employee
performance to strategically relevant employee capabilities and behaviors such as greeting
guest in friendly manner or providing expeditious check ins and checkouts.
Based on their analysis, Lisa Cruz and CFO concluded by any metric, their company’s
incentives plan was inadequate , The percentage of workforce whose merit or incentives pay is
tied to performance is effectively zero, because managers awarded merit pay across the
board.No more than 5 percent of workforce (just the managers) was eligible for incentive pay
and the percentage of difference in incentive pay between low performing and high performing
employee was less than 2%.Lisa Cruz knew from industry studies that in the top firms, more
than 80% of the workforce had merit pay or incentives pay tied to performance. She also knew
that in high performing firms there at least a 5% or 6% difference in incentive pay between low
performing and high performing employee. The CFO authorized Lisa to design new strategy –
oriented incentive plan for The Hotel Paris’s employee. Their Overall aim was to incentivize
the pay plan 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 Paris’s employees must
be eligible for merit increase or incentives pay between a low performing and high
performing employee. Second there must be at least 10% difference in incentives pay
between a low performing and high performing employee .Third the new incentives plan had
to includes specific bonuses and evaluative mechanism that linked employee behaviors in each
job categories 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 their
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.
QUESTIONS
1.Discuss what do you think of the measurable criteria that Lisa and the CFO set for their new incentive
Plan.
2.Given what do you know about the hotel Paris’s strategic goals, List three of four specific behaviors
you would incentivize for each of the following groups of employee ; Front desk Clerk ,Hotel Manager,
Valet, Housekeepers
3.Lay out a complete incentive plan (including long term and short term incentive) for hotel Paris’s Hotel
Manager.
Answer :
1.Criteria that must be measured to differentiate between high performing and low performing
employees could be based on :
c. Delicacy (not only about how fast the service but also include how delicate it was)
e. On Time / On post (measure how on time employee attend to their post after rest or
when their time shift comes)
based on this behavior the manager could look the outcome like :
e. Increasing Eligibility rate of employee so that they could got higher incentive
in order to achieve this goal we must specify behavior for each job that related to this goal like
INCENTIVE PLAN FOR EXECUTIVE EMPLOYEE HOTEL PARIS (Manager and other executive)
Information :
1.Long term payment is stock option, and the plan that I used to determine it’s amount based on
performance achievement plan
2.Short term payment that I used is almost same with annual bonuses but it also depend on how well
they performed their job so I used multiplier approach to determine their incentive.
Multiplier Approach
Individual Performance Company Perfomance (based on number of guest attending’s target)
(Based on appraisal
weight = 0.5)
Excellent Good Fair Poor
To determine the dollar amount of a manager ‘s award multiply the maximum possible (target) to
appropriate factor in matrix
Individual factor above we mixed with our target outcome (it depend on how much we weight it) and
the score we matched with score at multiplier approach and we multiply it with highest possible short
term and long term incentive.in here supervisor rule really important to give objective scoring.
And for Non executive employee I used same method but with different factor at individual
score,plus I use double checked performance not only by supervisor scoring but also I will use a kind of
performance (satisfaction card) that will be filled out by guest.