Read the case study given below and answer the questions given at the end of the case:

The New Incentive Plan

The Hotel Malaysia's competitive strategy is "To use superior guest service to differentiate the Hote/ Malaysia properties, and to thereby increase the length of stay and return rate of guests, and thus boost revenues and profitability. " HR manager Lisa Wong must now formulate functional policies and activities support this competitive strategy by eliciting the required employee behaviours and competencies.

One of Lisa Wong's biggest pay-related concerns is that the Hotel Malaysia 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 at only about the same raise as did those who performed poorly. Similarty, there was no bonus or incentive plan of any kind aimed at linking employee performance to strategically relevant employee capabilities and behaviours such as greeting guests in a friendly manner or providing expeditious check-ins and checkouts.

Based on their analysis, Lisa Wong and the CFO concluded that by any metric, their company's incentive plan was inadequate. The percentage of the workforce whose merit increase or incentive pay is tied to performance is 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. 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, more than 80%of the workforce had merit pay or incentive pay tied 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 authorised Lisa to design a new strategy-oriented incentive plan for the Hotel Malaysia's employees. Their overall aim was to incentivise the pay plans 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 Malaysia's 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 behaviours in each job category with strategically relevant employee capabilities and behaviours. 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 housecleaning crew was to be evaluated and rewarded in part based on the percentage of room-cleaning infractions.

(Adapted source from Dess/er, G. (2011) "Human Resource Management" 12^1h ed. Pp. 485, Pearson Prentice Hall, New Jersey).

Answer all questions

Question 1

Briefly explain the measurable criteria that Lisa Wong and the CEO could set for their new incentive plan.

(8 marks)

Question 2

Given what you know about the Hotel Malaysia's strategic goals, describe at least THREE (3) specific behaviours you would incentivise for each of the following groups of employees:

Front-desk clerks

Hotel managers

Valets

Housekeepers

(12 marks)