What Levels of Pay and Benefits Should You Offer? An important element of the human resource function is the determination and administration of pay and benefits. Pay includes employees’ base salaries, pay raises, and bonuses, and is determined by a number of factors such as characteristics of the organization and the job and levels of performance. Employee benefits are based on membership in an organization (and not necessarily on the particular job held) and include sick days, vacation days, and medical and life insurance. It is important to link pay to behaviors or results that contribute to organizational effectiveness.You are about to read a case concerning one of the leading hotel chains in the world, the Four Seasons Hotels and Resorts. The Four Seasons has an excellent reputation for customer service and also for employee satisfaction. You are about to explore the reasons behind this reputation.Four Seasons Hotels and Resorts is one of only around a dozen companies to be ranked one of the “100 Best Companies to Work For” every year since Fortune magazine started this annual ranking of companies (from 1998 to 2016). And the Four Seasons often receives other awards and recognition such as having some of its properties included on the Condé Nast Traveler Gold List, the Travel + Leisure T + L 500 list, and Robb Report’s World’s Top 100 Hotels. In an industry in which annual turnover rates are relatively high, the Four Seasons’s turnover rate for full-time employees is 15 percent, which is among the lowest in the industry. Evidently, employees and customers alike are satisfied with how they are treated at the Four Seasons. Understanding that the two are causally linked is perhaps the key to the Four Seasons’s success. As the Four Seasons’s founder and chairman of the board Isadore Sharp suggested, “How you treat your employees is how you expect them to treat the customer.”The Four Seasons was founded by Sharp in 1961 when he opened his first hotel called the Four Seasons Motor Hotel in a less-than-desirable area outside downtown Toronto. Whereas his first hotel had 125 inexpensively priced rooms appealing to the individual traveler, his fourth hotel was built to appeal to business travelers and conventions with 1,600 rooms, conference facilities, several restaurants, banquet halls, and shops in an arcade. Both these hotels were successful, but Sharp decided he could provide customers with a different kind of hotel experience by combining the best features of both kinds of hotel experiences—the sense of closeness and personal attention that a small hotel brings with the amenities of a big hotel to suit the needs of business travelers.Sharp sought to provide the kind of personal service that would really help business travelers on the road— giving them the amenities they have at home and in the office and miss when traveling on business. Thus the Four Seasons was the first hotel chain to provide bathrobes, shampoo, round-the-clock room service, laundry and dry cleaning services, large desks in every room, two-line phones, and round-the-clock secretarial assistance. While these are relatively concrete ways of personalizing the hotel experience, Sharp realized that how employees treat customers is just as, or perhaps even more, important. When employees view each customer as an individual with his or her own needs and desires, and empathetically try to meet these needs and desires, and help customers both overcome any problems or challenges they face and truly enjoy their hotel experience, a hotel can indeed serve the purposes of a home away from home (and an office away from office), and customers are likely to be both loyal and highly satisfied.Sharp has always realized that for employees to treat customers well, the Four Seasons needs to treat its employees well. Salaries are relatively high at the Four Seasons by industry standards (between the 75th and 90th percentiles); employees participate in a profit-sharing plan; and the company contributes to their 401(k) plans. Four Seasons pays 78 percent of employees’ health insurance premiums and provides free dental insurance. All employees get free meals in the hotel cafeteria, have access to staff showers and a locker room, and receive an additional highly attractive benefit—once a new employee has worked for the Four Seasons for six months, he or she can stay for three nights free at any Four Seasons hotel or resort in the world. After a year of employment, this benefit increases to six free nights, and it continues to grow as tenure with the company increases. Employees like waitress Michelle De Rochemont love this benefit. As she indicates, “You’re never treated like just an employee. You’re a guest…You come back from those trips on fire. You want to do so much for the guest.”The Four Seasons also tends to promote from within. For example, while recent college graduates may start out as assistant managers, those who do well and have high aspirations could potentially become general managers in less than 15 years. This helps to ensure that managers have empathy and respect for those in lower-level positions as well as the ingrained ethos of treating others (employees, subordinates, coworkers, and customers) as they would like to be treated. All in all, treating employees well leads to satisfied customers at the Four Seasons.

1. The high job satisfaction rate expressed by employees at the Four Seasons can be causally linked to

A. extremely high performance expectations.

B. infrequent performance reviews.

C. an extremely low voluntary turnover rate.

D. high turnover among top management.

E. extremely long vacations.

2. The profit-sharing plan at the Four Seasons is considered  

A. a benefit required by federal law.

B. a form of Social Security benefit.

C. a part of an employee’s regular salary.

D. a benefit voluntarily offered by the company.

E. a type of cafeteria plan.

3. When recruiting for top management jobs, the Four Seasons uses

A. an external recruiting source.

B. unrealistic job previews.

C. an internal recruiting source.

D. a public recruiting source.

E. employment agencies.

4. The pay level at the Four Seasons is  

A. lower than the industry average.

B. the highest in the hotel industry.

C. at the midrange of the hotel industry.

D. unrelated to employee satisfaction.

E. higher than the industry average.

5. Pay, benefits, and training at the Four Seasons are all intended to ________ in order to increase customer satisfaction.

A. increase employee performance and job satisfaction

B. decrease the need for high levels of voluntary benefits

C. decrease the need for performance feedback

D. increase the amount of external recruiting for managerial positions

E. reduce the need for external training

6. Employees can stay free at any Four Seasons resort for six nights after one year of employment, and this length of stay goes up with the length of employment. This benefit

A. motivates workers to work even harder to satisfy customers.

B. enables the Four Seasons to lower annual pay.

C. replaces a normal vacation benefit where you can do anything you want.

D. costs too much for other hotels to offer it.

E. is a form of formal training.

7. Some of the metrics used at the Four Seasons to appraise employee performance include the number of customer complaints and commendations, speed of task completion, and number of hours of training per year. These would be considered

A. subjective appraisals.

B. peer appraisals.

C. 360-degree feedback.

D. trait appraisals.

E. objective appraisals.