Quiz 3

Nama : Yudha Ananta Putra
NIM : 02019012
Prodi : Manajemen
In his new position at hathway manufacturing, one of the first thiungs

Sandy Caldwell wanted to do was improve productivity through teamwork at
every level of the firm. As the new human resources manager for the
suburban plant, sandy set out to change the culture to accommodate the team
based approach he had become so eunthusiastic about in his most recent
position. Sandy started by installing the concept of team management at the
highest level, to oversee the operations of the entire plant. The new
management team consisted of manufacturing, distribution, planning, technical,
and human resource plant managers. Together they developed a new vision for
the 500-employee facility, which they expressed in the simple phrase
Excellence Together. They drafted a new mission statement for the firm that
focused on becoming customer driven and team based, and that called upon
employees to raise their level of commitment and begin acting as
owners of the firm.
The next step was to convey the team message to employees throughout
the company. The communication process went surprisingly well, and Sandy was
happy to see his idea of a workforce of owners begin to take shape. Teams
trained together, developed production plans together, and embraced the
technique of 360-degree feedback, in which an employee s performance
evaluation is obtained from supervisors, subordinates, peers, and internal or
external customers. Performance and morale improved, and productivity began
to tick upward. The company even sponsored occasional celebrations to reward
team achievements, and the team structure seemed firmly in place.
Sandy decided to change one more thing. Hathaway s long-standing policy had
been to give all employees the same annual pay increase. But Sandy felt that
in the new team environment, outstanding performance should be the criterion
for pay raises. After consulting with CEO Regina Cioffi, Sandy sent a memo to
all employees announcing the change to team-based pay for performance.
The reaction was immediate and 100% negative.None of the employees
was happy with the change, and among their complaints, two stood out. First,
because the 360-degree feedback system made everyone responsible in part
for someone else s performance evaluation, no one was comfortable with the
idea that pay raises might also be linked to peer input. Second, there was a
widespread perception that the way the change was decided upon, and the
way it was announced, put the firms commitment to team effort in doubt.
Simply put, employees felt left out of the decision process. Sandy and Regina
arranged a meeting for early the next morning. Sitting in her office, they
began a painful debate. Should the new policy be rescinded as quickly as it
was adopted, or should it be allowed to stand?
Questions
1. Does the pay-for-performance plan seem like a good idea? Why or why
not?
2. What advice would you give Regina and Sandy as they consider their
decision?
3. What mistakes did they make in adopting and communicating the new salary
plan? How might Sandy have approached this major compensation change a
little differently?
4. Assuming the new pay plan is eventually accepted, how would you address
the fact that in the new performance evaluation system, employees input
affects their peers pay levels?
THE HOTEL PARIS CASE

The New Incentive Plan The Hotel Paris s 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 this competitive strategy by
eliciting the required employee behaviors and competencies.
One of Lisa Cruz s 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 raise 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 checkouts.
Based on their analysis, Lisa Cruz and the CFO concluded that by any
metric, their company sincentive 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. 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, more than 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
employee. The CFO authorized Lisa to design a new strategy oriented incentive
plan for the Hotel Paris s employees. Their overall aim was to incentivize 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 tomeet. First, at least 90% (and preferably all) of the
Hotel Paris 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 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 check-ins and checkouts, and the housecleaning crew was to be
evaluated and rewarded in part based on the percentage of room-cleaning
infractions.
Questions
1. Discuss what you think of the measurable criteria that Lisa and the CFO
set for their new incentive plan.
2. Given what you know about the Hotel Paris s strategic goals, list three or
four specific behaviors you would incentivize for each of the following groups
of employees: front-desk clerks, hotel managers, valets, housekeepers.
3. Lay out a complete incentive plan (including all long and short-term
incentives) for the Hotel Paris’s hotel managers.

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What challenges did Sandy face in implementing team-based management and compensation?

What mistakes did Sandy and Regina make in communicating the new pay plan?

Nama : Yudha Ananta Putra

In his new position at hathway manufacturing, one of the first thiungs

THE HOTEL PARIS CASE

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