Translating Strategy into HR Policies and Practices Case*S The accompanying strategy map for the chapter is in Mytanagementlah and the overall map on the inside back cover of thes tent outines the relationships inoved. Improving Performance at the Hotel Paris Lisa and the CFO knew they had to institute a new, strategic com- pensation plan They wanted a plan that improved employee morale, contributed to employee engagement, reduced employee turnover, The New Compensation Plan The Hotel Paris competitive strategy is "To use superior guest service and rewarded (and thus encouraged) the sorts of service-oriented be- to differentiate the Hotel Paris properties, and to thereby increase the haviors that boosted guest satisfaction. After meeting with the com- length of stay and return rate of guests, and thus boost revenues and pany's CEO and the board, the CFO gave Lisa the go-ahead to redesign profitability." HR manager Lisa Cruz must now formulate functional the company's compensation plan, with the overall aim of creating a policies and activities that support this competitive strategy by eliciting new plan that would support the company's strategic aims. the required employee behaviors and competencies Like several other HR systerns at the Hotel Paris, the compensation expert) set numerous new measurable compensation policies for the program was unplanned and unsophisticated. The company has a nar Hotel Paris, and these new policies formed the heart of the new com row target range for what it will pay employees in each job category pensation plan A new job evaluation study provided a more rational (front-desk derk, security guard, and so forth). 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 in- dividual employees' 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 aty are hotel should be paying Rather than jjust paying at the industry average, paying for similar jobs. Lisa knows that pay policies like these may actu- ally run counter to what the company wants to achieve strategically, salaries into the 75th percentile over the next 3 years. in terms of creating an extraordinarily service-oriented workforce How can you hire and retain a top workforce, and channel its behaviors CFO were pleased to learn from feedback from the hotel managers toward high-quality guest services, if you don't somehow link perfor that they were already noting several positive changes. The number of mance and pay? She and her team therefore tun to the task of assess ing and redesigning the company's compensation plan. Even the most casual review by Lisa Cruz and the CFO made it clear that the company's compensation plan wasn't designed to sup- port the firms new strategic goals. For one thing, they knew that they company's compensation plan, perhaps by instituting new bonuses and should pay somewhat more on average than did their competitorsd incentives We will see what she did in Chapter 12. they expected employees to exceed expectations when it came to serv ing guests. Yet their review of a variety of metrics (including the Hotel Pariss salarylcompetitive salary ratios, the total compensation expense per employee, and the target percentile for total compensation) sug- gested that in virtually all job categories the Hotel Paris paid no more than average and, occasionally,. paid somewhat less The current compensation policies had also bred what one hotel manager called an "I don't care" attitude on the part of most em- ployees. What she meant was that most Hotel Paris employees quickly learned that regardless of what their performance was, they always ended up getting paid about the same as employees who performed better and worse than they did. So, the firm's compensation plan actu- ally created a disconnect between pay and performance: 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 her team (which induded a consulting compensation and fair basis upon which the comgany could assign pay rates. A formal compensation survey by the consultant established, for the first time at the Hotel Paris, a clear picture of what competitive hotels and similar businesses were paying in each geographic area, and enabled the Hotel Paris team to more accurately set targets for what each position at the or slightly below, the new policy called for the Hotel Paris to move all its As they instituted the new compensation policies, Lisa and the applicants for each position had increased by over 50% on average, turnover dropped by 80%, and surveys of morale and commitment were producing higher results. Lisa and her team now began to con- sider how to inject more of a "pay for performance" element into the Questions 11-20. Lisa knew little about setting up a new compensation plan. Based on what you leamed here in Dessler Human Resource Management, what would you tell her if she asked, "How do I set up a new compensation plan for the Hotel Paris?" 11-21. Would you suggest that Hotel Paris implement a competency- based pay plan for its nonmanagerial staff? Why or why not? Outline what they need to do for one 11-22. Devise a ranking job evaluation system for the Hotel Paris's nonmanagerial employees (housekeepers, valets, front-desk clerks, phone operators, waitstaff, groundskeepers, and secu- rity guards) and use it to show the worth of these jobs relative to one another. SWriten and capyright by Gary Desler, PhD. CHAPTER 11