Incentive Pay Plan

Sea Spray Resorts Incentive Pay Plan

Sea Spray Resorts, a Spa management company, has recently won the contract to provide SPA and other Leisure Services at the Hyatt Hotel on the Port of Spain Waterfront. In an effort to improve the quality of the service delivery in preparation for two major international events scheduled for 2009, Sea Spray Resorts is considering adopting an incentive pay program.

In no more than 300 words, list the factors that Sea Spray must consider in the adoption of such a program to ensure its success i.e. to ensure that the program is beneficial to both the employees and the company.
Marking Guidelines:
Your responses will be evaluated, and points awarded, based on the following criteria
• 2 marks will be awarded to all students who submit the assignment.
• 8 marks will be awarded for the quality of your answer. It is expected that you will use evidence to support your points and that you will state:
a. Whether and why the Plan should be group based or individual based (1 mark)
b. The quantum of risk employees will be prepared to accept in their total package i.e. the quantum of incentive pay to total compensation (2 marks)
c. Whether incentive pay should replace traditional pay (1mark)
d. The criteria by which performance will be judged (2 marks)
e. The time horizon of goals, i.e. whether short or long term. Note that usually, for front line employees, the time frame is short term (2 marks)
a. The incentive pay plan should be group based because:
1. In complex organizations is often impossible to relate output to an individual's efforts
2. Cooperation, teamwork, and coordination of activities is required to produce the desired output
3. In this organization it is difficult to define and monitor performance standards and measures objectively
4. Individual plans are more suited to situations in which piecework is produced and the individual controls the rate of production e.g. in manufacturing; also they tend to...