Introduction
The XYZ Hotel is a premier hospitality provider situated in the heart of Riyadh. It is one of the largest hotels in the city, employing 600 staff members across various departments. The hotel offers a range of services to both corporate and leisure travelers, including accommodations, dining, recreation, and event planning.
The hotel has over 4,000 rooms and a maximum of 10 floors. The hotel is committed to promoting diversity and inclusion within its workforce, with a majority of employees representing diverse backgrounds and nationalities. The average age of employees is 35, with a gender breakdown of approximately 50 percent female and 50 percent male.
Primary services and products include guest accommodations, a spa, fitness facilities, and various leisure activities. The hotel has a robust youth employment program and currently employs over 20 young adults from the local area. The hotel’s organizational structure comprises an executive team, consisting of a General Manager, Chief Financial Officer, Chief Operating Officer, and Chief Human Resources Officer. Each department is managed by a team of managers who report directly to the executive team.
The Human Resources department oversees all aspects of the hotel’s workforce, including recruitment and onboarding, employee relations, and benefits. The HR director is the leader of the HR department and is responsible for all HR-related matters, including staffing, legal compliance, and compensation. The HR department comprises experienced professionals dedicated to fostering a positive and supportive work environment, while upholding the hotel’s diversity and inclusion initiatives. The HR director oversees the HR department and provides strategic and operational guidance to support its operations.
A Critical Appraisal of the Approach to Reward
Grade Pay Structure
A pay structure is a collection of wage groups, bands, or levels associated with specific jobs within a job series. There are different wage grades. For instance, the Grade Pay Structure is a system that divides employees into different groups or “grades” based on their job duties, qualifications, and experience (Brutus & Baronian, 2020). The system can be used at all levels of a hotel, including the HR Director role.
The concept of a grade pay structure is followed at the hotel level because, by implementing a grade pay structure, the hotel can assign a salary range to each grade that reflects the value of each job within the hotel. This system ensures that all employees are paid fairly and equitably for their work (Brutus & Baronian, 2020).
For the HR director role, the grade pay structure provides a structured way to evaluate job performance and determine the appropriate salary for that position. It also enables a more transparent approach to salary increases, as all parties involved are aware of and understand the grades and pay ranges (Diamond et al., 2019). It allows for a higher degree of flexibility and control over the director’s salary, helping to ensure that the director is adequately compensated for their responsibilities (Bucalo, 2018). Therefore, the grade pay structure provides a transparent and easily understandable way to comprehend the salary scale, reflecting the value they bring to the organization.
Having a Grade Pay Structure at the hotel offers the advantage of acknowledging the worth of each position, thereby ensuring fair employee compensation. Accordingly, it creates job security by providing long-term career growth potential and establishing a consistent wage structure that encourages employees to stay with the same employer (Bigus, 2018). Additionally, this system enables the hotel to recruit and retain skilled employees, offering a competitive wage structure that allows potential employees to easily compare the salary ranges of different jobs (Bigus, 2018). This will help to ensure that HR directors work more efficiently and effectively.
Despite having advantages, the Grade Pay structure has demerits. The disadvantages of a Grade Pay Structure for HR directors include reduced flexibility (DeSue, 2021). A grade pay structure can reduce the flexibility of a hotel’s workforce, as it offers fewer opportunities to reward employees for exceptional work and performance. Employees may not be motivated to work harder or take on additional responsibility, as their grade level primarily determines their pay (DeSue, 2021). This can lead to dissatisfaction among the team, as employees feel that their efforts are not being noticed or rewarded.
To ensure the success of a Grade Pay Structure, the hotel must clearly define each job and its associated grade level. The XYZ hotel should regularly assess its position to ensure that the structure meets the needs of both the hotel and its employees (Mick Marchington, 2021). Furthermore, the hotel should strive to create a culture of respect and fairness among its employees. Overall, the Grade Pay Structure is an effective tool for hotels to create a fair and equitable wage structure for their employees (Stone et al., 2020). By recognizing the strengths and weaknesses of this system and clearly outlining each role, the hotel can guarantee equal opportunities for employees’ long-term career advancement.
The Benefits and Challenges of Using Individual Performance-Related Pay
Implementing individual performance-based pay to determine salary progression in a hotel can serve as an effective tool for driving organizational success. By basing pay increases and promotions on individual performance, the hotel can reward staff for their hard work and dedication, thus incentivizing them to strive for excellence and remain loyal to the organization (Lutfullaeva, 2021). Furthermore, by basing pay progression decisions on performance, the hotel can ensure that the most qualified and talented individuals are rewarded for their efforts, leading to increased productivity and improved customer satisfaction (Lutfullaeva, 2021).
However, potential challenges are associated with using individual performance-related pay to guide pay progression decisions in the XYZ hotel (deBarca, 2020). For example, if pay increases are based solely on performance, those who may not have performed well in the past may feel discouraged about their prospects.
Performance-related pay is often linked to the grade pay structure in the hotel industry, as it enables employers to reward employees for achieving specific performance objectives. This is typically achieved by assigning a higher grade to an employee with higher performance, which in turn comes with a higher salary. This can benefit the XYZ hotel organization by encouraging employees to strive for higher performance levels and rewarding them accordingly (Nirmalya & Pillutla, 2022). The HR director plays a crucial role in this process, ensuring a fair and equitable grade pay structure (Nirmalya & Pillutla, 2022). They are also responsible for monitoring performance and ensuring that performance-related pay is distributed appropriately.
Individual performance-related pay is a compensation system that rewards employees based on their performance. This system is based on a bell curve, an evaluation scale that divides performance ratings into three categories: top performers, average performers, and below-average performers (Nirmalya & Pillutla, 2022). The system facilitates budgeting in performance appraisals for annual increments and aligns the HR director’s role with those of other directors during the performance review (Nirmalya & Pillutla, 2022). The primary risk of not linking performance appraisals to pay progression is that employees may become disengaged and require additional motivation to perform at their best (Stone et al., 2020). Without the incentive of pay progression, employees may become disinterested in their work and fail to strive to meet goals or exceed expectations, which leads to lower morale and productivity among staff and a decline in overall job performance.
The Analytical Job Evaluation In the Grade Pay Structure
I follow the analytical job evaluation system outlined in my grade pay structure, which the Human Resources department establishes. I understand the importance of accurately evaluating roles and responsibilities to ensure that the right people are placed in the right roles and that those individuals are rewarded fairly for their work. I am committed to the process and will strive to ensure that job evaluations are conducted in an equitable and transparent manner. The extent to which a ‘total-rewards’ approach has been adopted.
Pay structure is essential for objectively and systematically evaluating a job’s relative worth to the organization and its value in the job market. An analytical job evaluation benefits HR directors by providing a systematic and objective way to assess job roles, duties, and responsibilities. This could lead to higher compensation costs and an inability to attract and retain top talent (Renckly, 2020). Additionally, with job evaluation, employees may feel more valued and appreciated, leading to higher morale and decreased turnover.
The Total Reward System
The Total Reward System is an employee compensation and benefits approach that considers both monetary and non-monetary rewards to attract, motivate, and retain employees. It is based on the idea that employees should be rewarded with financial and non-financial rewards for their performance, skills, and efforts (Beck-Krala, 2020). The HR director at the hotel level offers various rewards, including both monetary and non-monetary incentives, such as pay, bonuses, benefits, work-life balance (flexibility), and mobility (the opportunity to work in another hotel within the same chain). Additionally, HR provides various benefits, including health, dental, vision, life insurance, and paid time off (Beck-Krala, 2020). These rewards and benefits are designed to foster an environment where employees feel valued, appreciated, and motivated to perform at their best.
One potential recommendation for the total reward system for HR directors at the hotel would be to offer a tuition reimbursement program. This could help attract and retain high-level talent by providing financial support for continuing education and professional development benefits. I can structure it to allow my employees to pursue higher learning or certifications related to their field of expertise, which could benefit the hotel in terms of increased knowledge and skill. This could also incentivize employees to stay with the hotel longer since completing the program could provide a sense of accomplishment and increased job satisfaction.
The risk of not having a total rewards system is that attracting and retaining talent can be challenging. Without a reward system, the hotel management will experience decreased employee morale (Saka, 2019). This can lead to decreased motivation, job satisfaction, employee turnover, lower customer satisfaction levels, fewer repeat customers, and decreased revenue. There are increased legal risks because, without a rewards system, the hotel may be exposed to potential legal risks if employees feel they have not been compensated or rewarded fairly.
The primary benefit of implementing a total rewards system in a hotel is that it offers a comprehensive and consistent approach to recognizing and rewarding employees for their contributions, performance, and achievements. Additionally, a total rewards system can help reduce turnover since employees are more likely to stay with a company that offers a comprehensive rewards program (Contributor, 2021). Ultimately, a total rewards system can help attract and retain high-quality employees, as they will likely be drawn to the recognition and rewards it offers.
The Organizational Approach to Base and Contingent Pay
As the HR Director of a hotel, it is essential to understand the role of base pay in attracting and motivating employees. Base pay is a crucial factor in ensuring that employees feel valued and appreciated, and it can have a profoundly positive impact on employee motivation. Using Maslow’s Hierarchy of Needs, base pay can be viewed as a means to satisfy the individual’s basic physiological needs. For instance, employees need a certain base pay level to meet their basic needs (Pierce, 2017). This need is satisfied by providing a competitive salary commensurate with the job role and responsibilities.
Base pay can also satisfy the need for status and recognition. By offering a competitive salary and benefits package, employees will be more likely to feel valued and respected in the workplace (Pierce, 2017). This can be accomplished by ensuring that base pay is commensurate with the job role and responsibilities and aligns with industry standards. The HR Director can also implement recognition and rewards programs to demonstrate employee appreciation.
The base pay can also satisfy self-actualization needs (Pierce, 2017). Competitive base pay can attract more qualified candidates, indicating that the hotel is willing to offer a fair and attractive salary to the right candidate (Peterson, 2019). By tying base pay to Maslow’s Hierarchy of Needs, the HR director can ensure that basic needs are met (Pierce, 2017). By doing this, the HR director can foster a sense of job security and satisfaction, leading to a more productive workforce.
The Contingent Pay Schemes
Individual performance-related pay is a compensation system that ties an employee’s pay to their performance. This type of pay involves bonuses, raises, and other forms of compensation based on predetermined goals or targets that the employee must meet. Generally, the better an employee performs, the higher their pay.
Contingent pay schemes are designed to motivate and reward employees for exceptional performance (Javed et al., 2019). These schemes typically involve awarding employees a bonus or other compensation for achieving specific goals or milestones. Instead, the HR director should focus on creating an overall compensation system that rewards all employees fairly and equitably, regardless of their performance. This should include developing general salary increases, bonus structures, and other long-term compensation plans.
The benefits of Contingent Pay for Employees include increased motivation. Contingent Pay is an incentive-based system that rewards employees for performance and encourages them to reach and exceed their goals. This type of pay can be a powerful motivator, as employees are driven to do their best to earn extra money (Ogbonnaya et al., 2019).
Moreover, there is greater engagement when employees are engaged, fostering a positive working environment (Ogbonnaya et al., 2019). When employees are rewarded for their effort and performance, they are more likely to feel connected to their work and the organization. Some recommendations that can motivate HR include creating a team of “customer service champions” who receive special recognition and awards for their high customer satisfaction scores (Starnley, 2022). Additionally, employees should be provided with access to an online customer satisfaction survey monitoring platform, ensuring they are constantly updated on customer feedback.
Justification of a Reward Strategy for a Specific Job Role
The Fit to Organizational Strategy and Job Climate/Macro Factors
Aligning the reward framework/strategy to the larger organizational context and strategy is essential for meeting the organization’s objectives. By clearly defining the reward framework and strategy, employees are given clear expectations and goals to work towards (Berns, 2022). The HR director at a hotel is responsible for developing and implementing an overall reward strategy that supports the hotel’s objectives. This strategy should include policies and programs that recognize, reward, and motivate employees for their contributions.
A good HR director should ensure that the reward strategy is aligned with the hotel’s goals and values, and that it keeps pace with the changing needs of employees and the hotel’s evolving business environment (Belcourt et al., 2019). The HR director should also adjust the reward strategy so it complies with applicable laws and regulations.
A hotel’s overall strategy is closely tied to its reward strategy, ensuring that the benefits offered to guests and employees align with its objectives. Rewards could include discounts on future stays, upgrades, or exceptional amenities like free Wi-Fi or complimentary breakfast. The hotel reinforces its strategy of providing excellent customer service and encouraging guests to return for future visits.
If not linked to your hotel strategy, the total reward strategy risk could lead to a misalignment of employee incentives and objectives, resulting in lower employee engagement and productivity (Mondal, 2022). Performance-related pay is a great way to ensure that employees are paid fairly and that the hotel maximizes productivity. Additionally, the strategy helps motivate employees, as they know their performance will be financially rewarded (Mondal, 2022).
Moreover, performance-related pay and bonuses can help to drive company loyalty and create a competitive atmosphere in the workplace (Mondal, 2022). Thus, it is an effective strategy that benefits the hotel and its employees. Additionally, by tying performance-related pay to individual targets and values, the company can motivate employees (Perryer, 2019) to achieve and reach their goals.
The Advantages and Disadvantages of Individual Performance-Related Pay
The advantages of performance-related pay for HR directors in a hotel include the potential for higher rewards for strong performance, which can help attract and retain top talent. Additionally, performance-related pay can be tailored to an individual’s performance and provide more direct incentives for increased productivity (Perryer, 2019). The disadvantages of performance-related pay for HR Directors in a hotel include the difficulty of objectively measuring performance and the potential for unfair and inequitable rewards (Perryer, 2019). Additionally, performance-related pay can create a culture of competition among employees, leading to reduced collaboration and morale.
Fixed benefits are included in an employee’s compensation package and remain the same regardless of performance or job duties. This will help ensure that employees and their families have access to the medical care they need with minimal out-of-pocket costs (Acko, 2022). Free discount rates for other hotels globally are another significant fixed benefit that can help reduce travel costs for employees and their families, allowing them to explore the world without incurring excessive expenses. There are no flexible benefits to offer to a hotel’s HR.
The employee voice refers to the collective opinions and thoughts of employees. The employee voice also helps HR directors to identify current and potential issues in the workplace, as well as areas for improvement (Mondal, 2022). It can help them address problems before they become more serious and provide valuable feedback on how to improve the organization.
The employee voice is essential to any successful HR director role, as well as to motivating and retaining talent in the hospitality industry. In this context, employee voice is a means for employees to provide input into the HR director’s decisions and strategies, helping to understand the workforce’s needs, concerns, and perspectives (Wong, 2020). However, there are significant risks if an organization fails to provide a voice for its employees.
Legal and International Considerations for Pay and Reward
Saudi labor law is a set of regulations governing employment terms in Saudi Arabia. These laws include the minimum wage, maximum hours of work, overtime pay, and rest periods. Under the minimum wage laws, all private sector employees are entitled to a basic salary of at least 3000 SAR per month. This minimum salary applies to all positions, regardless of the type of work, qualifications, or experience. It also requires employers to ensure employees get at least 24 hours of rest each week.
The Saudi labor law has significantly impacted department localization, particularly evident in last year’s pay increases. Since expatriates are no longer allowed to work in Saudi Arabia and the cost of living has been increasing, this has directly affected the basic pay and other benefits given to HR directors at the hotel level. Last year, taxation was introduced in the country, reducing the available funds for wages and benefits.
In Saudi Arabia, medical insurance is a crucial benefit provided by the labor law to cover all family members. Employers must provide coverage for all family members, including spouses and children. The medical insurance provided by employers in Saudi Arabia is typically comprehensive, covering a wide range of services (STA Law Firm, 2019). In addition to primary healthcare and preventive care, it can also cover medications
With a recognition calendar that includes all religious celebrations and other international events, there is a risk of alienating certain employees and communities that may feel their beliefs and traditions need to be respected (King, 2019). This could lead to decreased morale, productivity, and a lack of team unity. Celebrations and acknowledgments are excellent ways to show appreciation for all employees and recognize their hard work.
Equity, Transparency, and Fairness Considerations
Potential ethical issues of contingent rewards can arise when organizations must adequately address the criticality of explicit criteria, ensuring objectivity in performance and skill measures. Clear performance objectives for increment pay and bonuses are essential to ensure fairness and equity in the workplace (Bucalo, 2020). Employees may be subject to subjective evaluation and favoritism without clear performance objectives, leading to reward inequity. Contingent leadership is effective in many business environments where creating genuine motivation, inspiration, and employee engagement can be challenging.
There are many jobs where people are employed solely to earn a living, rather than for passion or a sense of purpose. In such situations, adding a contingent reward system can significantly increase all aspects of productivity (Abd Alraouf, 2020). The key to a good leadership approach with conditional rewards is clarity. Employees can be motivated to work faster if they know exactly what they will get if they meet the conditions. Conversely, ambiguity is not a good incentive because people may not know what to expect in terms of rewards or what is expected of them.
The Merits and Impact of Transparency and Fairness
Transparency and fairness are essential components of an effective total rewards system. Transparency ensures that employees understand the system and its rules, and that these rules are applied fairly (Glassdoor, 2019). Employees who understand their rewards are more engaged and motivated to do their best work. Transparency and fairness also have a positive impact on employee well-being (Valentine et al., 2020).
When employees perceive that their rewards are fair and treated with respect, they are more likely to feel valued and appreciated (Glassdoor, 2019). The process enhances employee morale and satisfaction, fostering a positive work environment and contributing to higher levels of job satisfaction (Cascio, 2019). Transparency and fairness also promote greater diversity and inclusiveness in the workplace. When rewards are based on merit rather than biases or prejudices, employees from diverse backgrounds and experiences are more likely to receive recognition for their work (Glassdoor, 2019). Rewards help to create an inclusive environment where everyone’s contributions are recognized and rewarded.
Recommendations
Some recommendations for enhancing equity, transparency, and fairness presuppose that organizations should regularly review their policies and procedures to ensure they are equitable and transparent. Organizations should strive to create an environment of fairness by providing equal access to resources and opportunities (Glassdoor, 2019). Organizations should ensure that all stakeholders have a voice in decision-making and that their input is considered.
Project Plan
Table 1. Project Plan
Conclusion
XYZ Hotel is a leading hotel company located in the heart of Riyadh. With 600 employees in various departments, it is one of the largest hotels in the city. The hotel offers a range of services to both business and leisure travelers, including accommodations, catering, leisure activities, and event hosting.
The pay structure is an effective tool that hotels use to create a fair and equitable compensation system for their employees. By identifying the system’s strengths and weaknesses and clearly defining each role, the hotel ensures that all employees have fair opportunities for long-term career growth. The importance of a pay structure lies in its ability to objectively and systematically evaluate the relative value of a position to the organisation and its value in the labour market.
Analytical performance appraisal helps HR directors by offering a structured and impartial approach to assess employees’ duties, responsibilities, and accountability. A total rewards system helps to increase employee engagement and loyalty. Employers can foster a culture of appreciation by offering their employees financial incentives, recognition, and other rewards.
The hotel’s overall strategy aligns with its rewards strategy, ensuring that the incentives provided to staff and employees reflect its broader objectives. The voice of employees is essential to the success of the HR director’s role and to encouraging and retaining talent in the hospitality industry. Potential ethical problems with contingent rewards can arise if the organisation needs to properly reflect on the importance of clear standards and ensure objectivity in evaluating performance and skills. Clear goals for promotion and rewards are necessary to ensure fairness and equality in the workplace.
References
Abd Alraouf, G. (2020). Measuring Human Resources Value Using Human Resources Accounting Methods And Models. Theoretical Study. Web.
Fixed Benefit Health Insurance Plan – Pros and Cons. (2022). Acko General Insurance. Web.
The Biggest Risks in Your Contingent Workforce Program (and How to Mitigate Them). (n.d.). Web.
6 business benefits of pay structures : Innecto Reward Consulting. (n.d.). Web.
Barinua, V., & Chinda, M. H. (2022). Pay dispersion and firm productivity. International Journal of Advanced Academic Research, 8(4). Web.
Beck-Krala, E. (2020). Total Rewards. Encyclopedia of Sustainable Management, 1–9. Web.
Belcourt, M., Snell, S., Singh, P., & Morris, S. (2019). Managing human resources (9th ed.). Nelson.
Berns, S. (2022). What is strategic reward management and why is it important? | News. Centric HR. Web.
Brutus, S., & Baronian, N. (2020). 6.3 Types of Pay Systems. Opentextbooks.concordia.ca. Web.
Bucalo, J. (2018). Fair and Equitable compensation: the foundation for HR programs. Web.
Cascio, W. F. (2019). Managing human resources : productivity, quality of work life, profits. Mcgraw-Hill Education.
Contributor, C. (2021). Advantages of total rewards in organization. Web.
The Disadvantages of Job-Based Pay | Sapling. (2011). Web.
Diamond, A., Lee, C., Senften, P., Lam, A., & Abbott, D. (2019). Randomized control trial of Tools of the Mind: Marked benefits to kindergarten children and their teachers. PloS one, 14(9). Web.
Glassdoor Team. (2019). Transparency in the Workplace: Why It Matters and How to Practice It – Glassdoor for Employers. Glassdoor for Employers. Web.
King, P. E. (2019). Religion and identity: The role of ideological, social, and spiritual contexts. In Beyond the Self (pp. 197-204). Routledge.
Lutfullaeva, N. (2021). Critical Evaluation of the Individual Performance Related Pay (IPRP). SCIENTISTs, 79. Web.
Javed, S., Javed, R., Ahmed, N., & Anjum, D. (2019). Human resource management practices and its impact on job satisfaction among employees in higher education sector. International Journal of Marketing & Human Resource Management, 10(2). Web.
Mick Marchington. (2021). Human resource management at work: The definitive guide. Kogan Page.
Mondal, D. (2022). Human Resource Management: Role, Importance and Challenges. Web.
Nirmalya, K., & Pillutla, M. (2022). Pay for Performance: When Does it Fail. Web.
Ogbonnaya, C., Daniels, K. and Nielsen, K.M. (2017) Does contingent pay encourage positive employee attitudes and intensify work? Human Resource Management Journal, 27 (1). pp. 94-112. Web.
Peterson, L. (2019). Advantages and Disadvantages of Pay-For-Performance Policies. Web.
Perryer, S. Performance Related Pay: Everything You Need to Know. Web.
Picuncu, A. (2020). What Happens if an Organization Does not Conduct Job Analysis. Web.
Pierce, V. (2017). Maslow’s Hierarchy of Needs: Why we Need to Pay Without Pay Check. Web.
Renckly, R. G. (2020). Human resources. Barron’s Educational Series.
Saks, A. M. (2019). Antecedents and consequences of employee engagement revisited. Journal of Organizational Effectiveness: People and Performance. Web.
STA Law firm. (2019). United Arabic Emirates. Extensive Guide Unemployment Law in Saudi Arabia. Web.
Starnley, N. (2022). Strategies for Motivating Employees. Web.
Stone, R. J., Cox, A., & Gavin, M. (2020). Human Resource Management. John Wiley & Sons.
Tran, H. (2020). The Journal of Education Human Resources Sets the Stage to Advance Education HR Scholarship and Practice. Journal of Education Human Resources, 38(3), 287–289. Web.
Valentine, S., Mathis, R. L., Jackson, J. H., & Meglich, P. A. (2020). Human resource management (16th ed.). Cengage Learning.
Wong, K. (2020). Employee voice and importance. Web.