By Mike Malley - H&MM Editor
The general manager put on his best suit, checked the shine on his shoes, tucked the latest salary survey into his briefcase and then marched into his boss' office. He was confident this time his boss could not refuse a merit increase, especially in light of a comparative salary study validating his poverty status.
Experts agree that when negotiating for a raise, it is always good to have comparative figures to benchmark compensation against. Don't be misled - management has those same surveys, but not necessarily to help them negotiate out of increased merit requests.
In the competitive job market and shrinking labor pool, many firms know that to attract the best and the brightest, they have to know what to pay, and what the competition is paying.
According to Keith Kefgen, president of the Mineola, N.Y. based HVS Executive Search, it is not uncommon for companies to take the data his firm produces and put together bonus plans or compensation packages. Kefgen's research covers pay for performance models as well as the Hospitality Compensation Exchange that covers the lodging, gaming and restaurant industries. The annual HCE surveys encompass corporate and property level positions.
Kefgen developed an interest in the subject as a way to look at calculating
and developing pay scale models in relation to who was bringing value to
shareholders. That's the real issue, according to Kefgen, not to chastise
executives for their salary and benefits packages, which some may think are exorbitant.
"I don't care about the size of the paycheck," said Kefgen, who has been conducting c.e.o. salary surveys since 1993. "It's the rationale behind how you get paid-that's what really matters."
According to Kefgen, there is not an organization that does not grapple and struggle with issues of fair compensation.
"Everyone says it's an important issue," he said. "Some do a lot more to get wise on issues than others."
The wave of mergers and acquisitions sweeping the industry during the
past year makes compensation issues an interesting piece of the puzzle,
once the integration takes place. There are significant issues that need
to be resolved that are related to compensation once a company has been
acquired, according to Kefgen.
When several companies merge (for example Starwood, Westin and ITT), a clash of cultures is bound to happen, he said.
There will be people in the respective organizations with different views on compensation. Some will favor incentives, while others may believe just the opposite. Still another company may want to have several weighted qualitative factors tied to compensation.
Everyone can, and usually does, have a different philosophy not only about what to pay people-but how to pay them, Kefgen said.
"It is extremely important to have competitive data," Kefgen said. "Otherwise, you are out there blind - paying people whatever they want."
Though Kefgen advocates using available compensation data, he is just as quick to advise caution with statistics. Surveys shouldn't be treated as the gospel; they are, after all, just surveys, he said.
"It is giving you a general look at your competition-use the data to get smart, and start to implement your strategies using the data," he said.
Other companies publish surveys to fit other needs of the hospitality industry.
For example, Atlanta based - PKF Consulting conducts annual surveys that are issue specific for its Trends in the Hotel Industry publication.
In 1996, according to Robert Mandelbaum, director of research, PKF decided to review human resource issues after examining inquiries from the information center at the American Hotel & Motel Assn. AH&MA members overwhelmingly sought help concerning human resource issues and related information. The organization's primary focus, however, is on monthly rate and occupancy reports, and generating financial performance and investment criteria, primarily the areas of PKF's consultant work. According to Mandelbaum, topics that are important to their clients, such as the 1996 human resource study, will be surveyed.
After interviewing human resource directors to design the questionnaire,
Mandelbaum said diversity, recruitment, multilingual staffs and reward
incentives were what people wanted to know more about. The PKF 1996 Human
Resource Survey found that of the respondents, more than half offer bonus
programs to hourly employees and favor merit over structured adjustments
to compensation. In addition, an overwhelming majority offers special recognition
and rewards programs. For 1997, PKF examined sales and marketing, and completed
an Internet survey in conjunction with the Hospitality Information Technology
Assn. (See H&MM's "Getting Connected" Technology Supplement, March
2, Page 43.).
||More limited - service hotels than full - service hotels prefer merit - based adjustments to compensation|
|Full Service Hotels||53.0%||89.0%||53.9%||46.1%|
|Limited Service Hotels||55.0%||69.0%||61.7%||38.3%|
Another study that examined this issue was the 1997 Hospitality Compensation and Benefits Survey by the AH&MA and Coopers & Lybrand. This survey of 350 U.S. lodging properties found that more and more hourly workers are eligible for incentive compensation programs. This survey is not statistical in nature, but it is another instrument to aid hospitality and human resource professionals in making fair and equitable compensation decisions for employees. The timeliness of this survey parallels the importance hoteliers will place on operational efficiencies to achieve even higher levels of profitability. The industry needs quality employees.
Bjorn Hanson, chairman of lodging and gaming at Coopers & Lybrand, said creating incentives for hourly workers to excel in their roles often leads to more satisfied guests.
In 1997, more than half of all properties surveyed included hourly workers in incentive programs, up from 45 percent two years ago. Among first-class hotels, half now include hourly workers in incentive plans, up from 40.8 percent in 1995.
The survey said the average budget increase for 1996 was 4.7 percent
for management positions and 4.4 percent for non-management posts. The
average projected salary increase budget for 1997 is expected to be lower,
percent for management and 4.2 percent for non-management positions.
|Recognition Ceremony / Party||24.2%||15.0%||3.6%||17.9%|
|Items (Watches, Plaques, etc)||13.3%||8.0%||-||10.3%|
|Personal Time Off||7.5%||8.8%||-||7.7%|
|Stock Awards / Options||4.2%||2.7%||3.6%||3.2%|
|Recognition Ceremony / Party||27.5%||15.9%||-||19.9%|
|Items (Watches, Plaques, etc)||20.0%||12.4%||3.6%||12.2%|
|Personal Time Off||8.3%||8.0%||-||8.3%|
|Stock Awards / Options||-||0.9%||-||0.6%|
|Recognition Ceremony / Party||49.2%||38.1%||14.3%||40.1%|
|Items (Watches, Plaques, etc)||38.3%||33.6%||21.4%||36.2%|
|Personal Time Off||19.2%||14.2%||10.7%||15.7%|
|Stock Awards / Options||2.5%||0.9%||-||1.6%|
Whether it is to retain and motivate the staff or offer competitive wages, surveys can help in that process. Payroll is a large chunk of any company's profit and loss statement.
Knowing the competitive pay scales is just good business, Kefgen said.
"If you don't know, it's a very poor way of managing your business," he