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Reward strategies in the tourism and hospitality industry - Coggle Diagram
Reward strategies in the tourism and hospitality industry
Compensation
Definitions of compensation
Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.
The function of compensation is defined as the adequate and equitable remuneration of personnel for their contributions to the organizational objectives
Compensation is the value of work of the employees according to the agreement between employer and employee.
Objectives of compensation planning
The objectives of compensation management are to attract, engage, and retain employees through competitive compensation plans that align with the company budget, corresponding job-market, and government regulations.
Factors affecting compensation planning
Productivity of workers: to get the best results from the employees and to increase the productivity compensation has to be productivity based.
Ability to pay: it depends upon the employer’s ability to pay wages to the workers. This depends upon the profitability of the firm.
Government: government has also fixed the rules for protecting the interest of the employees. The organizations are liable to pay as per the government instructions. Wages can not be fixed below the level prescribed by the government.
Labor union: labor union also helps in paying better wages to the workers. Higher wages have to be paid by the firm to its workers under the pressure of the trade unions.
Cost of living: wages depends upon the cost of living if it is high wages will also hike.
Demand and supply of labor: it is one of the important factors affecting wages. If the demand of labor is more they will be paid high wages otherwise vice versa
Prevailing wage rate: wages also depends upon the prevailing wage rate as the organizations have to pay accordingly to keep the employees with them.
Various modes of compensation
Base Pay
Commissions
Overtime Pay
Bonuses, Profit Sharing, Merit Pay
Stock Options
Travel/Meal/Housing Allowance
Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes...
Employee motivation
Definitions of motivation
Motivation is the most essential part of the work life of an employee. It inspires individuals for putting in their efforts towards the attainment of the organizational goals.
Employee motivation is the enthusiasm, energy level, commitment, and amount of creativity that an employee brings to the organization on a daily basis
Theories of motivation
Content Theories
Maslow’s Hierarchy of Needs
Physiological needs: such as food and water.
Safety needs: such as being free from war, natural disasters, and having job security.
Social needs: such as having relationships and belonging to groups.
Esteem needs: such as receiving praise, recognition, and status.
Self-actualization needs: such as wanted to be the best we can be.
Herzberg’s Two Factor Theory
Motivators: these encourage employees to work harder if present.
Hygiene factors: These don’t encourage employees to work harder, but they will cause them to become unmotivated if they are not present.
McClelland’s Three Needs Theory
Need for achievement: for example if you are motivated by setting a new record, or by the opportunity to get promoted
Need for affiliation: for example if you are motivated by collaborating with others or being accepted as part of a group.
Need for power: for example if you are motivated by being in charge of others, or if you are motivated by having high status.
McGregor’s Theory X and Theory Y
Theory X
Theory Y
Alderfer’s ERG Theory
Existence needs: These needs concern your physical well being
Relatedness needs: These needs concern your need to relate to other people
Growth needs: These needs refer to our personal development needs and desire to perform meaningful work
Mayo’s Motivation Theory
Clarity: To be motivating a goal must be clear.
Challenge: To be motivating a goal must be challenging but not too challenging.
Commitment: To be motivating, you must be committed to achieving your goal.
Feedback: You must receive regular feedback or a goal will not continue to motivate you over the long term
Task complexity: To motivate you, a goal must not be too complicated.
Content Theories
Adam’s Equity Theory
Adam’s Equity Theory of Motivation proposes that high levels of employee motivation in the workplace can only be achieved when each employee perceives their treatment to be fair relative to others.
Vroom’s Expectancy Theory
Expectancy: The belief that if you put the effort in it will be possible for you to hit your targets.
Instrumentality: The belief that you will receive a reward if you hit your targets.
Valence: You must value and want the prize on offer.
Taylor’s Motivation Theory
Bandura’s Self-Efficacy Theory of Motivation
Experience: If you have performed a similar job previously, then you are more likely to be confident in your ability next time.
Vicarious experience: You can develop self-efficacy by watching others complete a task.
Social persuasion: Encouragement from others will increase your self-efficacy. Discouragement from others will have the opposite effect.
Physiological feedback: When you perform a task, your body will provide physiological feedback.
Skinner’s Reinforcement Theory of Motivation
Positive reinforcement: is a reward you give an employee when they exhibit the desired behavior.
Negative reinforcement: is a reward you provide an employee by removing something negative from their environment.
Punishment: Is when you use the threat of negative consequences to stop undesirable behavior.
Extinction: Extinction refers to stopping someone’s learned behavior. You can extinguish a behavior by withholding the positive reinforcement that led to that behavior in the first place.
Locke’s Goal Setting Theory
Clarity: To be motivating a goal must be clear.
Challenge: To be motivating a goal must be challenging but not too challenging.
Commitment: To be motivating, you must be committed to achieving your goal.
Feedback: You must receive regular feedback or a goal will not continue to motivate you over the long term
Task complexity: To motivate you, a goal must not be too complicated.
Incentives
Definitions of incentives
An employee incentive is a reward that an employer gives to employees for results achieved by the company as a whole.
Incentives refer to rewards given to employees in monetary on non-monetary form in order to motivate them to work more efficiently.
Various kinds of incentives
Financial incentives
Some extra cash is offered for extra efficiency. For example, profit sharing plan and group incentive plans
Non-financial incentives
When rewards or prizes are provided by the organization to motivate the employees it is known as non-financial incentives.
Monetary and non-monetary incentives
Many times, employees are rewarded with monetary and non-monetary incentives that include promotion, seniority, recognition for merits, or even designation as permanent employee.
Fringe benefits
Fringe benefits are non monetary incentive to motivate employees apart from normal salary.
Good fringe benefits attract fresh talent people to the organization
The fringe benefits are more popular among the business right now. Compare to monetary terms most of the fringe benefits are inexpensive