Compensation and Benefits Strategies Recommendations - Week 3 - Team A Final Draft (3)

Compensation and Benefits Strategies Recommendations

A PROPOSAL TO:Kevin Driggs - Bollman Hotels

May 14, 2014

Team A

New York Dubai

Median Hourly Earnings

Typical Hotel Occupations, May 2014Job Function Level Starting Wage Annual

General Manager 5 $25.76 $49,473 - $101,533Assistant Manager/other management 4 $15.07 $28,987 - $59,492Maintenance and repair workers, general 3 $12.77 $22,188 - $45,539Cooks, restaurant 2 10.39 $18,567 - $38,105Janitors and cleaners, except maids and housekeeping cleaners 2 9.04 $18,567 - $38,105Hotel, motel, and resort desk clerks 1 8.51 $14,212 - $29,168Bartenders 1 7.42 $14,212 - $29,168Dishwashers 1 7.35 $14,212 - $29,168Food servers, non-restaurant 1 7.95 $14,212 - $29,168Maids and housekeeping cleaners 1 8.13 $14,212 - $29,168Dining room and cafeteria attendants and bartender helpers 1 7.10 $14,212 - $29,168Waiters and waitresses 1 7.05 $14,212 - $29,168

Overview

Mr. Driggs,

On behalf of the entire Atwood and Allen team, thank you for choosing to work with us on your company’s expansion to India.

In this report we address three primary areas of employee benefits that best apply to Bollman Hotels; Pay and Compensation, Health Care and Wellness, and Competitive Extras. The information provided throughout this report focuses on your company’s requirements to be comparable to other international hotel chains and to insure that all proposed actions and strategies work for the company’s operations in India. This report maintains consideration for the organizations current workforce and the expected 20% growth associated with the expansion. Finally, the report includes benefit recommendations based on current net revenue of $100 million and the projected 15% annual revenue growth without proposing unnecessary or costly benefits that do not work to grow and improve the organization.

India Employment Laws

In India, as in America, there are government imposed employment laws that must be adhered to by the company. For detailed information on these laws visit the; Ministry of Labour and Employment, Government of India, website:

http://labour.nic.in/content/

Employment Laws Most Applicable:

The Payment of Wages (AMENDMENT) Act, 2005

The Payment of Bonus Act, 1965

The Equal Remuneration Act, 1976

The Employees' Compensation (Amendments) Act, 2000

The Trade Unions (Amendments) Act, 2001

In many ways, Bollman Hotels will comply with or exceed the requirements of India labor laws if the company applies the recommendations of this report and the requirements imposed on the company’s United States operations. However, the company will still need to create a benefits program that addresses India law.

THE LAW

REQUIRED BENEFITS

Social Security

As an employer, you must pay social security taxes at the same rate paid by employees

Unemployment Insurance

Unemployment insurance is mandated at the state level

Workers Compensation

Workers compensation provides benefits to workers disabled by occupational illness or injury

Family and Medical Leave

This provides 12 weeks of job-protected, unpaid leave period to eligible employees for reasons including birth and childcare, immediate family care, or care for the employee’s own health condition.

COBRA Benefits

COBRA provides continuation of health coverage at group rates for former employees, retirees, spouses, former spouses and dependent children.

Introduction

Pay and Compensation

LEAD, MATCH, FOLLOW

When designing any benefits program the question should be, does the company want to lead, match or follow the industry with any one or group of offered benefits?

The value of performance-based incentives is exceedingly important to reduce several factors that plague the travel industry. According to Freedman and Kosova (2010), “A recent survey of hotels in Grand Strand/Myrtle Beach region of South Carolina revealed that the average hotel experienced between four and five thefts perpetrated by employees in the previous two years, with losses ranging from $40 to tens of thousands of dollars.”

In America, employee attrition rates may likely have a large impact on customer loyalty as well as employment retention, the average hotel companies lose nearly half of their employees every four years as well as half of their consumer base every five years (Friend, 2000).

In addition to the wage guidelines provided below, the company may want to consider offering additional compensation methods:

Tuition Assistance Paid Leave or Time Off Holiday Pay

Sabbatical Achievement Bounces Spouse Maternity Leave

Health Care and Wellness

PREPARE, PROTECT

As the fastest growing industry, a new job is added every 2.5 seconds (Eastern Michigan University, 2014). To attract the most productive staff, Bollman Hotels needs to provide the most attractive health benefits. However, practicality dictates that the hotel chain will have to make some concession to benefit plans to maintain operating costs. Health benefits comprise medical, dental, vision, life, short and long term disability insurance, and retirement. Lobby services staff, housekeeping and maintenance, and hotel operations and management are the three basic groups of employees. Health benefits are only provided to fulltime employees. Most of the major hotel chains provide paid time off that is available after 6 months. The company provides the following benefits. A high coverage and low coverage plan is provided.

Benefit High Plan Low PlanMedical Monthly Cost (family) $471 $333In network/ Out of network out of pocket 10%/30% 20%/40%Dental (PPO) $150 $150Dental Annual maximum $1,500 $1,500Vision $5.00 $3.50Glasses/Contacts Annual maximum $120 $100Basic Life (employer paid) Employer paid Employer paidCoverage 1 x employee salary 1 x employee salaryShort Term Disability 60% of salary up to $1,000/week (employer paid)

Employer paid Employer paid

Duration maximum 13 weeks 13 weeksLong Term Disability 60% of monthly earnings up to $6,000 (employer paid)

Employer paid Employer paid

Duration After 90 days up to age 65 After 90 days up to age 65401KOffered, but no matching. IRS limits to $17,500 annually

- -

Paid Time off 2 weeks annually 2 weeks annuallyEmployee Assistance and Wellness Employer paid Employer paid

The company currently provides very competitive benefits. It is recommended that the company modify the 401K contribution plan. However, to minimize the 401K administrative costs it is recommended that a graduated scale of matching to be implemented that rewards employee longevity. The following table shows a proposed 401K matching scale based on employee longevity. 401K matching provides an incentive for good employees to stay with the company.

Though there have been requests for part time employees to receive benefits, it is recommended that they not be given at this time. The cost is too great to provide at a part time salary.

Quote

Coming together is a beginning; keeping together is progress; working together is success.

-- Henry Ford --

Proposed 401K Employee Matching

Scale

Less than 2 years 0%

2 years 20%

3 years 40%

4 years 60%

5 years 80%

6 years 100%

Competitive Extras

INDUSTRY LEADERS

After analyzing five of top rated hotel and resort operations companies; Ritz-Carlton by Marriott, Hyatt, Four Seasons, Dolce Hotels and Resorts, and Benchmark Hospitality, several industry standard employee offerings became clear.

Common Extra Benefits:

Complimentary or Discounted Hotel Stay

Complimentary or Low-Cost Meals

Growth and Travel Opportunities

Job and Advancement Training

Unique Extra Benefits:

Adoption Assistance – Dolce

Family Discount Stay and Meals – Hyatt

Corporate Vendor Discounts – Ritz-Carlton

Each of the companies researched have operations in India and around the world and offer the same or similar benefits to most of their employees. Keep in mind, however, that these benefits are offered by Bollman Hotels greatest competitors and may not necessarily be the best fit for the organization. Consider each of the benefits carefully as they may be crucial to attracting prime talent during the expansion.

STAND OUT FROM THE CROUD

It is one thing to copy the competition, it is another to stand out. It is recommended that Bollman Hotels consider offering benefits that attract quality talent while also enhancing the name of the organization. In order for Bollman to stand out, consideration must be given to the people that will find value in the benefit, rather than the market ability of the benefit.

Stand Out Benefits:

Job Shadowing – Send employees to other locations to train and travel. Consider allowing family to join.

VIP Invitation – Send employees to special events held in company hotels to gain guest perspective.

Quote

”Every single employee is someone’s son or someone’s daughter. Like a parent, a leader of a company is responsible for their precious lives.”

--Simon Sinek--

5555 N. Main Street, Salt Lake City, UT 84053 | ph 801.555.5555 | fx 801.555.5556

www.AtwoodandAllen.com | [email protected]

Conclusion

INVEST IN PEOPLE

Successful employee benefit programs contain three primary categories, Pay and Compensation, Health Care and Wellness, and Competitive Extras. It is not necessary that the program use these names but it is important that the program works to achieve their goals. As you work through our recommendations to find the right benefits to offer Bollman Hotels employees’, remember to select benefits that; one, work within each category, two, compliment selections from other categories, and three, work to serve the unique employees of your organization. Regardless of the benefits that Bollman Hotels ultimately incorporates into its program, we at Atwood and Allen hope that the information provided in this report addresses the most relevant information and simplifies the complex task of designing a competitive and strategic employee benefits program.

Sincerely,

Team A

Atwood and Allen Consulting, LLC.

References

Benefits (2013). Four Seasons Hotels and Resorts. Retrieved from

http://jobs.fourseasons.com/workingatfourseasons/benefits/Pages/fsbenefits.aspx

Benefits (n.d). Benchmark Hospitality. Retrieved from http://www.benchmarkinwestlake.com/benefits

Cascio 9ed [VitalSource Bookshelf version] (2013). Retrieved from

http://online.vitalsource.com/books/9781121903814

Eastern Michigan University. (2014, May). Hospitality Industry Statistics. Retrieved from

http://www.emich.edu/sts/hrm/hospitality.htm

Employee Benefits (2014). Ritz-Carlton by Marriott. Retrieved from

http://www.marriott.com/ritz-carlton-careers/company-information/benefits.mi

Employee Rewards (n.d). Hyatt Hotels. Retrieved from http://www.hyatt.jobs/#pg=3&section=20

Freedman, M., & Kosova, R. (2010). Agency and Compensation: Evidence from the Hotel Industry. Retrieved

from http://elr.sagepub.com.ezproxy.apollolibrary.com/content/25/1/81

Friend, K. (2000). Incentive Programs. Retrieved from

http://www.customerservicegroup.com/pdf/IncentiveProgram.pdf

Work/Life Benefits (n.d). Dolce Hotels and Resorts. Retrieved from http://www.dolce.com/careers/what-we-offer/