Human Resources Management for the Tourism, Hospitality

and Event Management Industry

Topic: Pay and reward

1
 Table of Contents
Introduction......................................................................................................................................3

Definition of the topic......................................................................................................................3

Current contextual data regarding pay and reward trends within the THEM sector.......................3

Academic theory or process model linked to business practice......................................................6

Example of company practice being used in a THEM organization...............................................8

Key benefits and challenges that any organization could face in addressing the pay and reward
system..............................................................................................................................................9

Implications of Covid-19 pandemic on the pay and reward system within THEM sector............11

Recommendations for mitigating the implications of Covid-19...................................................11

Conclusion.....................................................................................................................................12

Reference.......................................................................................................................................13

2
Introduction
Pay and reward are generic terms for the totality of financial and nonfinancial remuneration paid
to the employees in return for their work and performance in an organization. In a particular
company the pay and reward structure includes all of the benefits, the employees get, provided
by the employer, as a means of employer recognition. The present assignment deals with the
details of pay and reward systems and practices within organizations as well as the analysis of
the implications on the businesses of THEM sector, in the UK market (Jones et al., 2007, p. 11).

Definition of the topic

In any company pay and reward, the strategy should be taken by Human resource management
(Baum 2018, p. 881) of the company. The decision should be made after communicating with the
employees, to make the employees aware of their upcoming payment structure or reward they
may get for any remarkable performance. Pay can be defined as the financial payments given to
the employees, in business contexts, in return for the efforts given by them while reward can be
defined as the benefits, financial or non-financial, to recognize the efforts of the employees and
motivate them. These benefits include various financial benefits like wages, weekly incentives,
and pay-offs as well as special benefits like paid outings flexible working hours, yearly
increment and promotion as well as opportunities to participate in new training and development
programs, for ensuring personal as well as professional development, at no added costs.

Current contextual data regarding pay and reward trends within the THEM sector
According to the report of the UK hospitality and tourism industries since the last few years, 8%
of UK people are working in the hospitality and tourism industries. As per a survey in June 2019,
24% of the people working in the Hospitality and tourism industries in the UK due to their
satisfaction regarding pay and reward trends (Fatima and Elbanna 2020, p. 102656). However,
the remaining employees have expressed their dissatisfaction with the performance appraisal
systems followed within the hospitality, travel as well as event management businesses.
Moreover, gaps in pay and bonus exist in these industries as compared to the other industries in
the UK, which can be exhibited through the graphical representations in the following sections.

3
Hospitality Analysis

Figure1: Pay gap in the Hospitality industry

Source:(Arunachalam and Kumar 2018, p. 13)

In the above diagram, it has been found that pay gaps are lower in the hospitality industry as
compared with the other companies in the UK industry. The median gap is 7% higher for all
companies compared with hospitality companies.

Figure 2: Bonus gap in Hospitality Industry

4
 Source (Kamble et al., 2018, p. 411)

The bonus gap in hospitality industries is near about 23%, which is lower than the other
industries in the UK, which results in lower employee satisfaction within the sector and thus,
lesser retention. The pay gap also aggravates the discrimination based on gender as well as
experience and position of employees, which hampers the organizational cultures in the sector
too, adversely.

Tourism analysis

Figure3: Pay gap in tourism industries

Source: (Ana 2017, p. 501)

Pay gaps are higher in the Tourism industries which is 22% as compared to the other industries
which are 14%, which reflects the reason for lower employee engagement within this sector as
well as the high employee turnover. The pay-gap has aggravated in recent years, owing to the
pandemic as well as political and natural disturbances and instabilities in many parts of the
world, which has mandated the industries to introduce pay-gap, for maintaining the profitability
of the sector

5
 Figure4: Bonus gap in the Tourism industry

Source:(Chan and Ao 2019, p. 211)

Bonus gaps in other industries are in line with the tourism industry. In travel industries, it is 35%
and in other industries, it is 36% since, in travel industries, the bonus is based on quantitative
measures like the number of tourists served and others, which results in easier calculation and
distribution of incentives.

Academic theory or process model linked to business practice

Three theories can help to understand the various components of remuneration (pay and reward)
to the employees.

Expectancy or reinforcement theory: The expectancy and reinforcement system is the theory
used to understand the behavior of the companies within the THEM sector and evaluates the
structure of pay and reward. As per the reinforcement theory, the pay and rewards systems help
in building an environment of healthy competition within the organization and motivates
employees to work dedicatedly, towards organizational development. According to Lloyd and
Mertens, (2018, p. 36), Vroom's expectancy theory is one of the theories which build a link between

6
behavior and rewards. According to the theory, motivation is one of the important outcomes that
is achieved through the implementation of appropriate pay and reward systems within the THEM
business sector. Pay and rewards help in satisfying the employees through positive motivation
and enhance the employee retention rates within the sector, which leads to an increase in the
profitability and productivity of the sector.

Equity theory:

Equity theory was introduced by Adam (Manap 2017, p. 541). According to Adam, the employees
who receive the inequality in the organization regarding pay and rewards, seek to restore equality
again and, in an effort, often seek to switch in employment. This theory shows that management
should distribute the pay equally to all employees without being gender-biased or biased on the
position of employees within the organization as well as any other aspects which are not related
to the performance and merits of the employees.

Agency theory:

According to this theory, not only employer and management but also employees are the
stakeholders and pillars of an organization. The remuneration paid to the staff must be the
agency cost. An employee always hopes that the agency cost will be maximum and employers
always try to minimize that. So the theory explains that the remuneration should be decided
considering both party's interests, through proper discussion and setting performance standards
for the employees to follow (Panda and Leepsa 2017, p. 82).

7
 Figure 5: Theories of compensation

Source (Agyei-Boapeah et al., 2019, p. 100285)

Example of company practice being used in a THEM organization

Marriott International is the company that comes under the Hospitality and tourism industry,
which will be investigated herein, regarding the company practices by the pay and rewards
system. According to How and Lee, (2020, p. 4), the pay and rewards system used within
Marriott International is efficient enough for satisfying the employees and retaining them within
the organization. Until before the pandemic, the retention rate for the employees was 87%, of
which, around 76% was for the good pay and reward systems that are used within the
organization, without any discrimination of sorts, depending on the merits of the employees
(Rosner et al., 2019, 110).

The HR department of the organization continuously organizes workshops and small training
sessions with the employees, to help them be aware of the recent demands in services from the
customers and how the same can be catered to. As a measure for rewards, the employees are
given regular incentives based on their efforts as well as weekly announcements for the
'Performer of the week' is made within the department, to help the employees feel motivated for
working as well as creating an aura of positive competition within the organization. Salary
increments are made once every year and financial benefits are provided, in form of appraisals,
twice every year. Arrangements for availing training and developmental activities, for free, are
made by the HR department of Marriott International, to keep the employees positively engaged
within the organization. Proper performance appraisal systems are maintained within the
company, so that transparency is maintained and the employees are increasingly satisfied with
the efforts put in by the organization, for recognizing their efforts.

8
Key benefits and challenges that any organization could face in addressing the pay and
reward system
There are three different benefits and challenges that exist in an established company regarding
pay and rewards to the employees, which can be enlisted as follows:

Benefits exist in pay and reward structure: Payment is the most important factor in an
organization to maintain the management employment relationship. Companies should pay their
employees depending on the law structure and their contract with the employee, which helps the
companies to comply and maintain the individual rights of the employees as well as put forth a
positive brand image of the company within the market

Benefits exist in Pay and reward scale: Companies need to use certain pay scales to identify the
real wage rate for the employees based on their performance, qualification, and skills. Employees
move towards the pay scale by improving their skills, qualification, and performance, which
enhances organizational efficacy and productivity, in the process.

Pay and reward in any company include salary, incentives, and commission.

Salary or wage is considered as a fixed amount of pay an employee gets accordingly mentioned
in their offer letter. According to Ontario employment standard legislation, human resource
management in an organization has to pay the minimum wage in exchange for their service
provided to the company. This fixed pay is beneficial to an employee as they decide their
monthly expenses based on this minimum wage.

There are three types of incentives provided by the management, such as bonuses, profit-
sharing, and stock options. An employee can get a bonus based on their considerable
performance or the basis of the occasions. Profit-sharing is pay that is related to the company's
profit. This is not predetermined, when an organization gets extra payment for some unexpected
deal crack they share a part of their profit to the employees to influence them more. An
employee can purchase a share of the company depending on the selected price for the specified
period. This pay is considered as executive compensation of the management.

9
The commission is something that is paid to the employees based on the sale of the product or
service to influence the employee to give extra effort and dedication towards the job role. The
commission is calculated by the percentage of sales of the product or services. Employees will be
benefited from the commission when they meet the target of selling a particular product and
service to a certain percentage.

The reward is something by which the employees feel engaged towards their job role and
organization and they get motivated to work with more dedication and by balancing team work.

There are some challenges faced by the company’s management to decide and accordingly
provide the pay and reward to their employees.

Challenges in pay structure: Various companies face challenges to set the payment structure for
the employees as they need to set consistent payment options that give value for money to the
company at the time of rewarding the deserving employees, which increases the financial
liabilities of the company.

Challenges in pay scale: Organizations face challenges at a time to select the margin of the pay
scale, as they need to maintain the scale for all employees equally and not be biased towards
gender or anything else. This challenge leads to marring the image of the company and putting
forth an image of partiality and discrimination, thus, ruining the organizational culture.

Pay dispute: Dispute arises about pay arise and when companies do this has a negative impact on
the performance and hence productivity of the employees. Management should make effort to
solve if any dispute arises in the company to avoid further escalation and court cases

Implications of Covid-19 pandemic on the pay and reward system within THEM sector
Covid -19 pandemic has a widespread impact upon individuals and industries. Here the main
focus is the employer-employee relationship, the change in various compensation and benefits
practices focused on ensuring the continuation of the business. The changes held at the time of

10
the pandemic were diverse and unprecedented. The changes held in the hospitality and tourism
industries are different from the changes held in other industries. One major issue was the lack of
liquidity. The hospitality and tourism industry faced heavy expenses compared with the amount
of cash. The companies under THEM try to balance the business continuity and try to give
continuous support to the employees also in challenging times.

Taking Marriott international as an example of the THEM sector, the impact of covid on the pay
and reward system can be discussed.

Compensation of Marriott international during pandemic reflects the effect on the business. The
management of the industry did not adjust any annual or long-term performance bonuses which
shows the impact of the pandemic and the NEOs received zero annual bonuses for 2020(How
and Lee 2020, p. 5). The management team of Marriot decided to adjust the senior executive
compensation considering as a part of the company's initiative to overcome the negative financial
impact of covid 19. The company also decided on no annual incentive payout for the year of
pandemic. In February 2020, the management has decided the rewards with the same values as
2019 for the executives and no extra expenses regarding that have been held.

Recommendations for mitigating the implications of Covid-19

Management of THEM has decided to take some effective implication which may help to
balance the minimum possible work for the companies without being affected by the pandemic
as well as to avoid the minimum loss of pay as the company was going through the shortage of
cash during that time.

Remote working:

Remote working played a significant part and is an example of new normal after all of the
employees face covid 19. When there are so many companies that start to sack their employees
and also reduce the base salary of the employees there are some of the companies that come
under THEM have to pay for working their best staying at home during a pandemic.

11
Staff cost containment: the management of the companies should start cost containment during
a pandemic depending on the people who can no longer work from home or for any other
reasons.

Revision of Variable Pay Schemes –

The company should use relative strategies rather than using the absolute strategies. For long-
term incentive achievement, the company needs to increase the time provided by them to the
employees, and cancellation of the pre-existing rewards leads to accelerate the cost of further
expenses of the companies.

Cut off pay for senior executive personnel: the management system should cut off the payment
o and rewards decided for the senior executive as their payment includes the payment for 4-5
employees

Hazard Pay – The employees who are essential service provided especially in police force,
hospitals, and banks, and other industries can not work from the home company should decide to
give them an incentive or premium reward.

Conclusion
THEM is considered a difficult and complicated industry among other industries. After
discussion of the above topic, a conclusion can be made. This paper presented the pay-reward
structure created by the existing management system and hence the effect on the employees. The
human resource management system plays a crucial role to deliver the process of hospitality and
tourism products and services. The concept internally shows how the employees' working
progress and the external considered their pay and rewards structure and their satisfaction.

12
Reference
Jones, P., Hillier, D. and Comfort, D., 2017. The sustainable development goals and the tourism
and hospitality industry. Athens Journal of Tourism, 4(1), pp.7-18.

Baum, T., 2018. Sustainable human resource management as a driver in tourism policy and
planning: a serious sin of omission?. Journal of Sustainable Tourism, 26(6), pp.873-889.

Fatima, T. and Elbanna, S., 2020. Balanced scorecard in the hospitality and tourism industry:
Past, present, and future. International Journal of Hospitality Management, 91, p.102656.

Arunachalam, D. and Kumar, N., 2018. Benefit-based consumer segmentation and performance
evaluation of clustering approach: An evidence of data-driven decision-making. Expert Systems
with Applications, 111, pp.11-34

Kamble, S.S., Gunasekaran, A. and Gawankar, S.A., 2018. Sustainable Industry 4.0 framework:
A systematic literature review identifying the current trends and future perspectives. Process
Safety and Environmental Protection, 117, pp.408-425.

Ana, M.I., 2017, July. Tourism industry in the new Europe: trends, policies and challenges. In
Proceedings of the International Conference on Business Excellence (Vol. 11, No. 1, pp. 493-
503). Sciendo.

Chan, S.H.J. and Ao, C.T.D., 2019. The mediating effects of job satisfaction and organizational
commitment on turnover intention, in the relationships between pay satisfaction and work–
family conflict of casino employees. Journal of Quality Assurance in Hospitality & Tourism,
20(2), pp.206-229.

Lloyd, R. and Mertens, D., 2018. Expecting more out of expectancy theory: History urges
inclusion of the social context. International Management Review, 14(1), pp.28-43.

Manap, R., 2017. Job satisfaction and organizational commitment among employees. In
Proceedings of the 4th International Conference on Management and Muamalah (pp. 539-547).

Panda, B. and Leepsa, N.M., 2017. Agency theory: Review of theory and evidence on problems
and perspectives. Indian Journal of Corporate Governance, 10(1), pp.74-95.

13
Agyei-Boapeah, H., Ntim, C.G. and Fosu, S., 2019. Governance structures and the compensation
of powerful corporate leaders in financial firms during M&As. Journal of International
Accounting, Auditing and Taxation, 37, p.100285.

How, S.M. and Lee, C.G., 2020. Customer satisfaction and financial performance-linear or non-
linear relationship: a case study of Marriot International. Current Issues in Tourism, pp.1-6.

Rosner, J., Urdaneta, C. and Yepes, M., 2019. Marriott International: Exploring and
Understanding Disruption in the Hospitality Industry in South Florida Jose Darsin. Journal of
Multidisciplinary Research, 11(1), pp.99-117.

14