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The Hotel Pariss competitive strategy is To use superior guest service to differentiate the Hotel Paris properties, and to thereby increase the

The Hotel Pariss 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 his competitive strategy, by eliciting the required employee behaviors and competencies One of Lisa Cruzs biggest pay-related concerns is that the Hotel Paris compensation plan does 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 check-outs. Based on their analysis, Lisa Cruz and the CFO concluded that by any metric, their companys incentive plan was totally inadequate. The percentage of the workforce whose merit increase or incentive pay is tied to performance in 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%. 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 Pariss employees. Their overall aim was to incentivize the pay plans of just about all the companys employees. Lisa and the companys CFO laid out three measurable criteria that the new incentive plan had to meet. First, at least 90% (and preferably all) of the Hotel Pariss 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 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 their checkins and checkouts, and the housekeeping crew was to be evaluated and rewarded in part based on the % of room cleaning infractions. Q1. Discuss what you think of the measurable criteria that Lisa and the CFO set for their new incentive plan?

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