Question

What levels of pay and benefits should you offer?

An important element of the human resource function is the determination and administration of pay and benefits. Pay includes employees' base salaries, pay raises, and bonuses, and is determined by a number of factors such as characteristics of the organization, the nature of the job, and levels of performance. Employee benefits are based on membership in an organization (and not necessarily on the particular job held) and include sick days, vacation days, and medical and life insurance. It is important to link pay to behaviors or results that contribute to organizational effectiveness.

Read the case concerning one of the leading hotel chains in the world, The Four Seasons Hotels and Resorts. The Four Seasons has an excellent reputation for customer service and also for employee satisfaction. Afterwards, analyze the reasons behind this reputation.

In 2015, Four Seasons Hotels and Resorts was one of only 12 companies to be ranked one of the "100 Best Companies to Work For" every year since Fortune magazine started this annual list. The Four Seasons often receives other awards and recognition such as being named the "Best Hotel Group Worldwide" by Gallivanter's Guide and dominating Travel & Leisure's World's Best Awards Readers' Poll and Condé Nast Traveler's Readers' Choice Awards based on customers' responses. In an industry in which annual turnover rates are over 35%, the Four Seasons' is around 13%. Evidently, employees and customers alike are satisfied with how they are treated at the Four Seasons. Understanding that the two are causally linked is perhaps the key to the Four Seasons' success. As the Four Seasons' founder, Isadore Sharp said, "How you treat your employees is how you expect them to treat the customer."

The Four Seasons was founded by Sharp in 1961 when he opened his first hotel. It was called the Four Seasons Motor Hotel, located in a less-than-desirable area outside downtown Toronto. Whereas his first hotel had 125 inexpensively priced rooms appealing to the individual traveler, his fourth hotel was built to appeal to business travelers and conventions. It had 1,600 rooms, conference facilities, several restaurants and banquet halls, and an arcade of shops. Both styles of hotels were successful, but Sharp decided he could provide customers with a different kind of hotel experience by combining the best features of both kinds of hotel experiences—the sense of closeness and personal attention that a small hotel brings with the amenities of a big hotel to suit the needs of business travelers.

Sharp sought to provide the kind of personal service that would really help business travelers on the road—giving them the amenities they have at home and in the office, amenities they miss when traveling on business. The Four Seasons was the first hotel chain to provide bathrobes, shampoo, around-the-clock room service, laundry and dry cleaning services, large desks in every room, two-line phones, and around-the-clock secretarial assistance. While these are relatively concrete ways of personalizing the hotel experience, Sharp realized that how employees treat customers is just as, or perhaps even more, important. When employees view each customer as a unique individual with his or her own needs and desires, and empathetically try to meet these needs and desires and help customers overcome any problems or challenges they face and truly enjoy their hotel experience, a hotel can indeed serve the purpose of a home away from home (and an office away from office), and customers are likely to be loyal and highly-satisfied.

Sharp realized that for employees to treat customers well, the Four Seasons needed to treat its employees well. Salaries are relatively high at the Four Seasons by industry standards. Employees participate in a profit sharing plan, and the company contributes to their 401(k) plans. Four Seasons provides medical and dental insurance. All employees get free meals in the hotel cafeteria, have access to staff showers and a locker room, and receive an additional highly attractive benefit—once a new employee has worked for the Four Seasons for six months, he or she can stay for three nights free at any Four Seasons hotel or resort in the world. After a year of employment, this benefit increases to six free nights, and it continues to grow as tenure with the company increases. Employees like waitress Michelle De Rochemont love this benefit. As she said, "You're never treated like just an employee. You're a guest . . . You come back from those trips on fire. You want to do so much for the guest." The Four Seasons also tends to promote from within. For example, while recent college graduates may start out as assistant managers, those who do well and have high aspirations could potentially become general managers in fewer than 15 years. This promotion system helps to ensure that managers have empathy and respect for those in lower-level positions as well as the ingrained ethos of treating others (employees, subordinates, coworkers, and customers) as they would like to be treated. All in all, treating employees well leads to satisfied customers at the Four Seasons.

1.The Four Seasons Hotel and Resorts can causally link its ____________ to its customers’ satisfaction and the many awards it has received including being one of the “100 Best Companies to Work For.”

A.use of programmed decision making

B.high turnover rate

C.high levels of pay and benefits

D.use of strict supervision over its employees

E.cost cutting measures

2.The Four Seasons uses ________ to motivate superior customer service.

A.high levels of pay and benefits

B.high pay levels with low levels of benefits

C.average pay levels with average benefits

D.average pay levels with high levels of benefits

E.high pay combined with average benefits

3.Which of the following does the Four Seasons have to offer by law?

A.matching contributions to 401(k) plans

B.high salaries

C.profit sharing plans

D.free meals in the cafeteria

E.Social Security insurance

4.Why does the Four Seasons continue to offer such extremely expensive benefits to its employees?

A.The Four Seasons focuses only on long-term costs, and these are short-term costs.

B.The workers’ union negotiated them.

C.The benefits offered by the Four Seasons are actually normal in the luxury hotel market.

D.It can write them off on the corporation’s income taxes.

E. The value gained in worker motivation outweighs the cost of the benefits in the long run.

5.The Four Seasons pays high salaries and provides expensive benefits. This suggests they are not following a(n) ______ strategy.

A.cafeteria plan

B.low-cost

C.employee satisfaction

D.high-performance

E.customer service focused

6.The Four seasons provides some unusual benefits. As described in the case, which of the following is NOT one of the benefits that sets the Four Seasons apart from other hotel chains?

A.high levels of health and dental insurance

B.free vacations at company-owned resorts

C.accrued vacation and sick leave days

D.free meals in the hotel cafeteria

E.access to staff showers and locker rooms

7.The Four Seasons offers _____ to its employees. Employees say this benefit lets them know what the guests feel like and makes them want to do even more for guests.

A.locker rooms and employee showers

B.free stays as guests at any of the company’s properties

C.high pay levels

D.matching 401(k) programs

E.company products such as robes and shampoos

Answer 1

1.

In this case, it is provided that the annual turnover in the hotel industry is around 35% and the hotel FS earns around 13% of the turnover. This is because, the hotel wants to treat the customers well by treating its employees well. Thus, by providing the employees a better working environment and good pay, the hotel is ranked among the top 100 companies to work.

Thus, the correct answer is option C. high pay levels and benefits.

2.

The hotel FS has maintained such a great position among the top 100 companies by providing the services to its best to the customers. To make this happen, the hotel focused over its employees, making them happy and satisfied by providing them with high salaries and optimum level of benefits.

Thus, the correct answer is option A. high pay level and benefits.

3.

As per the law, the hotel should provide a savings plan to the employees. The employer should offer certain salary saving plans for the employees for their future. Here, plan is known as the 401(k)-contribution plan.

Thus, the correct answer is option A. 401(k) matching contribution plans.

4.

The Hotel FS offers the benefits to its employees with the goal to satisfy the customers. the motto of the hotel company was to take care of the employees so they take care of the customers. This act of the hotel took it to the top 100 companies to work for.

Hence, the correct answer is option E. Benefits earned in the long run by motivating the workforce.