THE HOTEL PARIS CASE

(The New Compensation Plan)

The Hotel Paris’s competitive strategy
• To use superior guest service to differentiate
the Hotel Paris properties
• Increase the length of stay and return rate of
guests
• Boost revenues and profitability.
Prevailing HR process and practices
• Compensation program was unplanned and
unsophisticated.
• Firm’s policy is to simply pay its employees a
‘competitive Salary’- paying above average for
what other hotels in the city are paying for similar
jobs.
• According to employee’s perception , firm has “I
don’t care attitude” which means regardless of
what their performance was they always ended
up being paid about the same as employees who
performed better and worst than they did.
Prevailing HR process and practices
• HR and CFO of the company wanted to new
strategic compensation plan.
• HR need to review a variety of metrics such as
total compensation expense per employee, target
percentile for total compensation etc.
• They wanted a plan that improved employee
morale and commitment , reduced employee
turnover and reward and encourage the sort of
service oriented behaviors that boosted guest
satisfaction.
 Questions
1. Draw a diagram how compensation at Hotel Paris should
influence employee performance which in turn influence
Hotel Paris performance. Relate at each level
compensation policy, employee behavior and Hotel Paris
Outcomes.
2. Would you suggest Hotel Paris should implement a
competency based pay plan for its non- managerial staff –
why or why not?

3. Create a job evaluation system for non- managerial

employees(housekeepers, Valets, front desk clerks, phone
operators, waitstaff, ground keepers and security guards)
and use it to show the worth of these jobs relative to other.
 Compensation Policy

Employee Incentive Pay for Perfomance Merit Pay Competency-based Pay

Employee Behavior
Enhanced employee understanding
Improved employee satisfaction Greater employee commitment
of organizational “big picture”

Hotel Paris Outcome

Increased worker output Fewer bottlenecks in Increase return rate of
Increased length of stay
per hour workflow guests
 Yes, Hotel Paris should implement a competency-
based pay plan for its non-managerial staff
because –
1. as it would help to achieve its competitive
strategy through improving individual efforts
and consequently, organizational performance.
2. help the company to hire and retain a top
workforce which will lead as the end to improve
the achievement of superior guest service.
 Job Ranking List
Job Ranking Job Title

1 Front Desk Clerks

2 Valets

3 House Keepers

4 Phone Operators

5 Waitstaff

6 Security Guards

7 Groundskeepers
Factors
Rate/
scale Front Office
Amount
1
Wages in
thousand 5 4 3 2
4
Mental Pressure
7 6 5 3 2 6
Responsibility 5
6 5 4 3 2 6
Initiative
3
5 4 3 3 2
3
Physical efforts
5 4 3 2 1 1
Supervisory 1
responsibility 5
6
6 5 4 3 2
Working 1 2
Conditions 5 4 3 3 2
6
Confidential 5
Factors
Rate/
scale Housekeeping
Amount
1
Wages in
thousand 5 4 3 2
2
Mental Pressure
7 6 5 3 2 3
Responsibility 3
6 5 4 3 2 4
Initiative
2
5 4 3 3 2
3
Physical efforts
5 4 3 2 1 5
Supervisory 5
responsibility 2
3
6 5 4 3 2
Working 3 3
Conditions 5 4 3 3 2
2
Confidential 1