Reward Management at Taj Hotels - Assignment Example

Running Head: report Reward Management at Taj Hotels of the of the of the Question Reward management and strategies in an organization serve as one of the prime motivating factors to let people work to their fullest. In the employment relationship, reward serves as the token of appreciation for the value created and delivered by employees. According to Armstrong (2009, p.733), reward management in organizations fulfills several long term and strategic purposes of which infusing motivation, developing a good psychological contract with employees and retaining the best talent are the prime ones. Other reasons to incorporate reward management is to strike a fair balance between employees’ efforts and treatment, equitable behavior with the staff and aligning the business goals with that of employees and human resource management goals. Understanding the significance and positive implications of reward management, Taj Group of Hotels also embarked upon an organization wide reward system to acknowledge and appreciate the hard efforts of its human assets. Taj Group of Hotels functions under the aegis of Tata Group and has its operations both domestic and outside India. With products and services spanning across Luxury, Business and Leisure hotels, Taj considers its employees the very basic component of its survival and sustenance (Tata n.d). To give more grounds to its people-oriented culture, a separate ‘Taj People Philosophy” (TPP) has been put in place which looks after all the aspects of people- from recruitment to compensation and from reward to retirement (Chandran 2003). Question 2 While reward constituted the meaning of compensation and a healthy working environment till now, it has been revolutionized completely in its understanding and scope. Apart from tangible benefits, total reward strategy now involves intangible aspects of reward also. It is a sum total of intrinsic as well as extrinsic rewards whereby transactional rewards comprises benefits and pay in cash while relational rewards are attached to the work factors and includes learning, development and overall work experience (Jiang 2009). The transactional reward forms the basis for remuneration of the employee (Figure 1). Figure 1 Applying the principles of total reward strategy into reality, Taj Group devised the STARS (Special Thanks And Recognition System) as an attempt to appreciate the excellent performers and making employees happy by recognizing their efforts and contribution made to the organizational success. STARS was more inclined towards fostering a spirit of cooperation, motivation and excellence by introducing more of intrinsic rewards than cash awards. STARS as such, worked as a five-level strategy where employees earned points for their acts of kindness, hospitality and teamwork (Chandran 2003). Based on the accumulated points, employees were put into silver, gold, platinum, etc. grades and were applauded in public. An overview of the nature of reward system and its components at Taj are shown in table 1 below: STARS Level 1 Level 2 Level 3 Level 4 Level 5 Grade Silver Gold Platinum Chief Operating Officer’s Club Managing Director’s Club Points 120 130 250 510 >760 Time limit 3 months Within 3 months of attaining silver grade Within 6 months of attaining gold grade SPECIFIC FEATURES OF STARS Receipts Only recognition, no cash awards Acts Honesty, kindness, leadership, teamwork, etc. Gathering points Positive feedback or appreciation received either from colleagues or customers Rewards Hampers, vouchers, free vacation sponsored by Taj Group, etc. Recognition Award giving ceremony to highest point earners and public display of their photographs. Table 1: Components of STARS at Taj Group The incorporation of STARS fulfills the basic underlying principles of reward management. As Taj Charter says, its people philosophy is orchestrated to make employees feel important and special while working at Taj (Chandran 2003). Its core principle remains to attract, maintain and retain the best of the available talent and STARS helps to achieve these goals by recognizing the value creation and knowledge contribution by its employees. Figure 2 demonstrates the benefits and positive impact of reward management for both individuals and organizations. Employees are the internal customers of an organization and just like an end user expects quality in product and service delivery, employees as internal customers demand quality of working environment, organizational learning, return for their contribution and valuing them as an integral part of business. For Taj Group, the STARS gained widespread popularity and attention across all the branches and conferred many strategic advantages as well. First and foremost result was an unprecedented rise in the service delivery standard of the hotel and customers turning loyal. The hotel won many accreditations for its quality and Human Resource Innovation (Chandran 2003). Even requests were placed to Taj Group for opening its branches in different locations worldwide. From employees’ point of view, they were more satisfied with the human resources policies of the organization and felt that the Group considers them as a partner and not just paid employees. Better coordination, team spirit and creativity were marked in employees’ performance which overall increased the performance standards at Taj Group and garnered it more productivity profits and acclaim. However, employee retention objective cannot be achieved with once-in-a-blue-moon efforts. Employees still attach greater significance to cash benefits as compared to benefits in kind because of urgencies and responsibilities of personal life. Though recognition is an important criterion of social appraisal, yet STARS somewhere lacks the component of improving upon the remuneration side of total reward strategy. Figure 2 Question 3 Hotels operations are characterized by both product and service assortments. Service assortments include customer handling, catering, complaint handling, point-of-sale interaction and other services marketing concepts. Success in hospitality industry depends upon how well customers are treated, quality in service is delivered and gaps between perceived and actual service delivery are minimized. This feat is achieved through employees who are willing to put an extra effort, feel motivated and produce high productivity through their behavior, attitude and loyalty. Like Taj Group of hotels, recruiting the best talent and retaining them is of utmost importance because of the people-oriented operations they deal with. Citing the example of Le Meridian Hotel in Mauritius, measuring the performance of their best talents and rewarding them appropriately form one of the critical human resource strategies. This is grounded by the fact that motivated and happy employees forward the organizational objectives through quality service delivery and work in the organization just like they are working at home. Le Meridian Hotel too provides a host of performance based pay and recognition programmes like insurance benefits, community service programs, subsidized family care, etc (Vencatachellum & Mathuvirin 2010). These plans and programmes in action help bridge the gap in service quality framework by making employees feel valued, prized and creating a family like ambience at work. Individuals posses their own goals while working in an organization. Applications of reward management strategies help align their personal objectives with that of corporate objectives because they are able to transform their motivation, happiness and energy in their behavior and delivery towards customers. Reward management facilitate employees remain stuck to the organization’s vision of quality, responsiveness and assurance. Cross-functional teams which are the talk of the town also perform well when total rewards strategy is put in place. Reward management even establishes a sense of equity amongst employees whereby they feel that efforts of every single person are appreciated proportionately (Drafke & Kossen 2002). Maslow’s Need Hierarchy Theory, ERG theory, equity theory, expectancy theory; all emphasize upon the fact that to improve upon the performance of employees and keep them motivated, their work related needs should be fulfilled. They should be made to believe that organization is going to return them for what all they are providing as input for organization’s growth and sustenance. As such, total rewards strategy serve not only as a fair treatment tool but also as the pre-requisite to developing performance management systems, job evaluations and control and support systems. The research conducted on Le Meridian’s Hotel of practicing reward management as one of its core HR strategy put forth many positive findings, major of which was employees ranking high on their health and energy aspect. Feelings of discrimination, non-equitable behavior and conflicts were also found to be at their minimal level (Vencatachellum & Mathuvirin 2010). This was achieved because not only the employees, but also their families were respected and recognized at Hotel functions for good work put in by the employees. Overall result was decreasing gap between actual and perceived service quality levels, expanding loyal customer base and even best talent sticking to the organization and contributing to organization’s success through its knowledge. This was the same which was attained and enjoyed by Taj Group in the form of happy employees and satisfied customers. The ingrained philosophy of ‘happy employees lead to happy customers’ had been realized in actual with the incorporation of STARS and total reward strategy by Taj and Le Meridian. This applies in entirety to all other hotels and hospitality sector in general which they are driven by competencies of their workforce. If their employees are happy, their service will be excellent and direct results would be enhanced productivity and growth. People-oriented culture at Taj Group is now their competitive advantage to lead the sector and remain a respected name. Conclusion Taj Group has no doubt innovated in its human resource adaptations and aligning its business objectives with that of people objectives. It thrusts on people-oriented culture rather than work or profit oriented one. This is the reason behind its immense success and expansion spree worldwide. Same feat is replicated by Le Meridian Hotel in Mauritius which is also known for its top class quality and service delivery. The commonality between both remains their people strategy and inclusion of a total reward component in their HR dimension to retain their best talent. Both these hospitality giants present an example of how recognizing and appreciating the efforts of people can garner unimaginable benefits and growth prospects to a service business. Though sustaining on such philosophies and making them happen against set standards remain risky, yet what these two have done is commendable and should be followed by others in the industry. Part 2 Nortel operates in an industry which is characterized by expertise, knowledge and skills of its workforce. It has constantly strived to foster learning, development and enhanced skills set in its employees by means of web-enables self-directed learning and training modules. Nortel cares for career planning aspects of its employees which is visible in its ‘Investors in People’ certification and providing early retirement offers to its employees as an endeavor to carry out its staff reduction plans. Generally, when a company adopts the route of laying off employees to cutting on its workforce due to recessionary trends, there is increasing uproar in the employee fraternity. However, even the remaining employees at Nortel are in high spirits and willing to work with the company. It depicts how strategically Nortel manages its human resource affairs that even at times of cuts; employees have positive thinking about the company. Nortel does not bind its employees with static job descriptions but allows them to work under cross-functional teams and expand their creativity and innovation horizons. Operations managers are no longer restricted to operations but to fulfill supply chain objectives. Outsourced projects have also skilled and competent Nortel employees assigned which shows the marvel of training and learning environment infused at Nortel. To catch up with increased competition, Nortel took the way of developing its existing talent as contrasted to recruiting extra personnel and adding on to the organizational costs. This demonstrates the linkage of Nortel’s business strategy with that of its human resource strategy where every HR move is aligned with organizational objectives of innovation, cost effectiveness and sustained competitive advantage. References Armstrong, M. (2009). Armstrong’s handbook of human resource management practice. 11th Ed. London: Kogan Page. Chandran, P.M. (2003). The Taj’s people philosophy and Star system. Retrieved 16 March 2011 from http://www.icmrindia.org/ Drafke, M. W. & Kossen, S. (2002). The human side of organizations, 8th Edition, pp. 287. Jiang, Z. (2009). “Total Reward Strategy: A Human Resources Management Strategy going with the trend of times” International Journal of Business and Management, vol.4, no.11, pp. 177-183. Tata. (n.d). The Taj’s ‘Stars’ Shine Bright. Retrieved 16 March 2011 from http://www.tata.com Vencatachellum, I & Mathuvirin, N. (2010). Investigating HRM practices role towards customer service excellence in the Mauritian Hotel Industry. International Research Symposium in Service Management. Retrieved 16 March 2011 from http://www.uom.ac.mu/sites/irssm/papers/Vencatachellum%20%20&%20Mathuvirin%20~%2072.pdf Read More