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Pay for Performance in Hospitality Management Introduction It has been a long talk, as for the effectiveness of the Pay-for-Performance (PFP) programs for the hospitality service entities. It may be assumed, that PFP is one of the most effective presently used systems of reward in any sphere of business, not only hospitality, but this work will look at both pros and cons of using PFP, as it appears that not always PFP can serve as the best means of motivating employees. With hospitality business being a special area of service industry, where motivation is shown not through the increase of output, but through the better quality and thus higher number of clients, it is necessary to clearly think over, how hospitality management may apply PFP notions for better performance, and how PFP is to be modified in this business sphere. Hospitality business is rapidly changing depending on the market situation and there are no stable conditions for its application to the hospitality management. It is admitted, that PFP is no doubt one of the most important human resource functions in hospitality management, but we have here to research, whether PFP alone may work for the benefit of the hospitality enterprise, and what are the other measures to be combined with PFP application. There is also argument as for the effectiveness of PFP programs, or rather about the ways these programs are applied in the hospitality management.
I would assume that PFP itself cannot serve as the only means of motivating employees and keeping the best of them. In this paper I would like to have a look at PFP statements and notions in general and as applied to hospitality management; I would also see if the literary sources used in the work give the basis for unilateral concluding that PFP is absolutely good or absolutely bad for motivating the employees. It is interesting to note, that several literary sources have already researched the subject of rewards, employee motivation and PFP as one of the best means for this motivation; but on having studied literature deeper, it has been found that this system is far from being perfect, and its success depends on the way it is applied; it appears that without clear understanding of the system it may lead to opposite results. I.
Pay-For-Performance as the means of rewarding employees in hospitality management Many articles have been written on PFP programs for motivating employees. It is important here to consider the means of applying PFP in hospitality sector, and deciding which one will serve as the most effective means of rewarding. First of all, it is necessary to point out, that the PFP system has been designed for resolving the issues of salary-performance correspondence. These are the use of any means of payroll and rewards, when it depends on the differences in how the employee performs; according to the data acquired through the Annual Hewitt Associates Salary Increase report, (Coyle & Dale, 2005) the amount of finances and other means directed at PFP programs ha six times increased among different enterprises. However, it should also be remembered, that in firms dealing with production, the level of employee performance is easier to trace and to control, through the amount of the production he (she) produces, his role in this production and the quality of products.
In hospitality management the level of employee's performance is difficult to trace through the fact, that this level is usually judged through the number of clients served and attracted, the level of customer satisfaction, which also requires special additional research. For the application of PFP programs in hospitality industry, there should be designed special means of evaluating the level of employee performance, and in creating the performance plan for the period, a list of objectives set will certainly be different from the one in any manufacturing industry. Let's have look at the most widely-spread systems of flexible payroll and their application in the hospitality management. 1. Commission fees. This is one of the oldest and the simplest PFP systems.
The core essence of this system is in the fact that the employee receives a percentage of the sum, which is paid by customers to the enterprise in case he sells the goods or provides the service. This system of rewards is not far from being popular. The reason for this is that constantly changing markets make employers invent new systems of motivation of their employees. 'As applied to the hospitality industry, with the clearly developed systems of tips and other customer rewards, commission charges have stopped to serve as the means of employee motivation long ago. ' (Crum, 2003) Using this method in hospitality business appears to be ineffective at present, and employers look for other means of motivating their workers. Various resources make special attention on the fact, that sometimes non-financial methods of rewards become far more beneficial than those of financial character. 2. Financial rewards for the achievement of the set objectives.
River (2004) notes, that this is one of the most widely-spread means of PFP rewarding. He notes that about 61 % of companies using PFP plans prefer this method. These payments are usually performed when the employee conforms to certain criteria, which are set beforehand. Among these criteria there may be those of economic character, quality character, personal evaluation by other employees, etc. Each company sets its own criteria for this, and at times they may be rather unusual. In hospitality management these criteria may vary greatly, and may also be unusual at times.
For example, it is possible to define one of the criteria for rewarding the senior management through the level of their employee satisfaction with their services. On the other hand, as the level of customer satisfaction is the crucial criterion for any hospitality business, this satisfaction may be measured either through the independent audit, or through the applications, which each customer would fill on visiting a hospitality entity with notification of the employee's name that provided the customer with this or that service. This means may serve as very effective method of rewarding the employees in hospitality sector. However, in this relation another question arises as the characters, demands and requirements of customers vary greatly, and the level of their personal attitude displayed in the application suggested, is not always the true reflection of the service provided should this method be used in combination with the independent monitoring, and will the expenses for this monitoring pay off? 'Last year in Portland, Oregon, president and CEO Jane Shaw discontinued a bonus program for the 150 employees at Portland Marriott City Center. The managers, Shaw states, begged her to discontinue the program because employees were letting down other employees to meet quotas, and to achieve bonuses. ' (Star, 2004) What are the guarantees that employees won't let each other down in their personal striving for better performance? What are the guarantees that instead of using personal growth for acquiring better rewards the employee won't use illegal methods of creating negative impression about other workers?
This is one of the so-called 'slippery slopes' of the PFP in hospitality industry. Hospitality management may look at PFP as the basis for creating a special system of motivating workers, and not use it blindly without any changes. The requirements for the level of service in hospitality management constantly changes, and thus the PFP requirements must follow these changes. This is essential for the success of this program of rewards. The word 'hospitality's peaks for itself, and the client's demands towards hospitality grow every day. 3. One of the leading CEO sates, that 'longevity should not be underestimated'.
One of the popular means of rewarding the employees is using the PFP reward for the value of this or that employee, displayed through the number of years he has worked for the hospitality entity. However, another question here becomes evident in the hospitality management, where novelty of services often becomes the decisive factor of popularity and profitability of the enterprise, is it really worth rewarding the worker for having spent a number of years in the hospitality enterprise without providing it with any novelties or breakthroughs in performance? I guess, for the hospitality industry, this means is not to be used separately, but in combination with other important factors longevity alone does not work, as I assume and thus it is to be used with, for example, improvements brought by the employee into the customer service provision, etc. On the other hand, there also exists a psychological factor customer often choose 'their favorites' among the personnel, and thus the level of their satisfaction depends on the presence or absence of this or that employee. The rewards designed for the employees, who are very much desired to stay, may become the means of attracting and supporting repeated customs and thus gaining higher profits through the higher level of their satisfaction.
These are the two sides of one issue, and it is difficult to make the exact measurement and borderline between them. This is another proof for the assumption, that PFP plans are not to be used separately in hospitality management they are to be applied in combination with other means of rewards; depending on the exact way the enterprise works. If longevity is stated to be the measure of performance, (Hyde, 2005) I should assume, that in hospitality business it works only partially. Longevity is only one of the sides of performance, and must be looked at through the prism of employee incentives, achievements and inventions. 4. Profit-sharing may be looked at from the two different viewpoints on the one hand, the percentage which the employees acquire may be equal, not depending on the salaries and personal contributions. On the other hand, the profit percentage may directly depend on the employee performance through the certain period (quarter or year), and thus give him (her) additional basis for striving towards perfection.
On the one hand, equal profit shares between employees give them equal strivings for cost-reduction and thus higher profits, not depending on the amount of fixed salary they usually get; on the other hand the higher the profit share, the higher may be the striving of the employee towards better performance. In relation to the hospitality management, it is well-known that it is a highly-profitable business, but 'still, it's only a theory -- and one that a number of CEOs and human resources managers believe is no more valid than the notion that dispensing food to a rooster every time he pecks the piano guarantees he " ll soon play Beethoven. In fact, no one out there really knows if incentive programs truly work and a number of you are convinced they can cause significant harm. ' (Gratis, 2006) Thus, it is difficult to decide which of the profit-share programs would be better to use, but it is no doubt that such programs fulfill essential function in motivating employees and thus driving the hospitality enterprise to the higher layers of business...
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Research essay sample on Pay For Performance In Hospitality Part 1
