Evaluating Incentive Programs in 5 star hotel settings
1 Cover Page Evaluating Incentive programs in a 5 star hotel environmentEvidence-based Consultancy Report, 7002EHR, Evidence-based Practice in HRM Author: Charles Audley
2Contents Page1 Executive Overview2 Aims and Scope3 Research Design4 Research Review5 Findings and Implications6 Conclusions and Recommendations7 ReferencesAppendicesAppendix 1Appendix 2Appendix 3
3 Executive Overview Charles Audley, s2158468. Selected Option: Option 4, Head of HR, Multinational Hotel (5 star).From: Head of HR, Multinational Hotel (5 star)We have been thinking about using incentives to encourage our bar, restaurantand front counter staff to sell more and better products for many years, but neverreally followed it up. What is the “state of the art” on using incentives? I’ve alwaysheard there is “dark side” to incentive rewards; we certainly wouldn’t want that!...but if they’d improve performance, we’d be interested.· context and industry informationI will be investigating luxury hotel incentive strategies, with a focus onMultinational companies that were founded in the USA, such as Marriott andHilton hotel chains. I will discuss the costs in rolling out such incentive strategiesand how this is best considered as a return on investment.· nature of the problemI will be investigating the efficacy of incentive programs and how the can be besttailored to suit employees wants, rather than what managers think their’employees want. I will also discuss how inflexible and poorly time-managedincentive programs are destined to fail.· review of the evidenceI will be analysing the latest peer-reviewed literature on incentive programs,with a focus on food and beverage upselling, but also covering the upselling ofhotel rooms and in-hotel services (spa treatments, valet parking etc.).· analysis of optionsIn this section I will look at evidence-based solutions. I will critically analyse whycertain strategies may or may not translate to improved sales in a multinationalcontext, and provide reasons for my perspective. I will attempt to cover incentiveprograms that have either been validated with a luxury hotel brand or aresuitable candidates.· recommendationsMy recommendations will be based on the most up-to-date information availableand consider factors such as employee demographics, location, age, family status
4etc, to tailor the incentive program effectively. I will also discuss time frames andestimate costs for a typical location/area.Aims and Scope1 To explore incentive programs across sectors2 To identify currently proven incentive programs in hotel setting3 To focus on what’s working in luxury hotel chainsMust make mention on an incentive program which rewards signing up clients toa Loyalty program. This effectively results in a permanent upsell. Include data.
5Research DesignExploratoryResearch ReviewIt is vital that the incentive program is not a replacement to a training need.Training in upselling is critical to the success of any incentive program aimed atincreasing revenue from existing customers (Blumberg, 2005).As part of a compensation strategy for hotel employees, rewards/incentiveprograms are increasingly being used (Fischer, Gross & Freidman, 2003).Similarly, Quain, Sansbury and LeBruto (1999) suggest that increases in revenueare typically not derived from new sources, they come from your existingcustomers.Quain, Sansbury and LeBruto (1999) suggest that rewarding the server is a topten strategy for increasing profits in the restaurant industry.According to Simons and Enz (1995), employees from different departmentsresponded in a different way to the job rewards offered by the organization,suggesting that individual differences and individual-level variables should beconsidered when designing incentive programs (from Maroudas, Kyriakidou &Vacharis (2008).Essentially, the incentive program needs to be something that the employeeswant, not necessarily cash, or what line managers think they want. Ideally, achoice is offered. The time frame is also particularly relevant, with short-termsuperior to long-term. Feedback is vital, and a real-time display is the mosteffective way of maintaining motivation. The desired change in behaviour shouldnot be too difficult to obtain – it should not be a replacement for trainingrequired to carry out the function. Another consideration is how the incentiveprogram is delivered; a massive roll-out will be less effective than a staggered or
6incremental change, and the more that the idea is discussed and explained by alllevels of management, the more likely it will be accepted by the targetemployees. Finally, the program needs to remain fresh, or employees will quicklylose focus. Considerations such as Return On Investment (ROI) are important, aswell as having a clearly defined goal/s. Popular programs currently use giftcertificates, travel/accommodation vouchers, an employee trophy that is passedaround by employees, a points system which corresponds to a gift catalogue,providing opportunities to additional training/workshops, enabling staff tocreate their own roster for a week, a weekly/monthly newsletter - preferablywith pictures, additional paid days off etc. Whatever the staff most wants(employee needs) will be the most effective reward for a given scenario. Maslow(1943)introduced the hierarchy of needs, and then McGregor (1960) introducedTheory X and Theory Y. Essentially, yes employees will become bored if notchallenged on the job, but essentially their lower order needs are mostly beingmet (OH &S, minimum pay etc), so incentive programs should target higherorder needs (MKV, 2008). Also include a few tables rating employee satisfactionwith incentive programs.Useful links:http://www.hvs.com/Jump/?aid=2899http://www.hvs.com/article/5030/why-is-upselling-important-how-can-hotels-improve-revenue/http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1024&context=gradconf_hospitality&sei-redir=1&referer=http%3A%2F%2Fscholar.google.com.au%2Fscholar%3Fhl%3Den%26q%3Dreview%2Bhotel%2Bemployees%2Bincentive%2Bprograms%26btnG%3DSearch%26as_sdt%3D0%252C5%26as_ylo%3D2005%26as_vis%3D0%23search=%22review%20hotel%20employees%20incentive%20programs%22Conclusions and RecommendationsBottom line is, if the rollout of an incentive program is not offset by an increasein revenue, the program is a failure. Unfortunately, measuring the efficacy of anincentive program is not as straightforward as it might be.
7ReferencesBlumberg, S. (2005). Foodservice employee recognition programs. Journal of theAmerican Dietetic Association, 105 (7). 1055-1056.Fischer, K., Gross, S. E. and Friedman, H. M. (2003). Marriott makes the businesscase for an innovative total rewards strategy. Journal of OrganizationalExcellence, 22 (2), 19-24.Quain, B., Sansbury, M. W. and LeBruto, S. M. (1999). Revenue Enhancement, part4. Cornell Hospitality Quarterly, 40 (3), 38-47.Simons, T. and Hinkin, T. (2001). The effect of employee turnover on hotelprofits. Cornell Hotel and Restaurant Administration Quarterly, 42 (4), 65-69.