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Case study: Banyan Tree Hotels & Resorts

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Timothy Cheong, group HR director at Banyan Tree Hotels & Resorts, shares the challenges in providing incentives and recognition in the hospitality industry. By Sabrina Zolkifi.

For Timothy Cheong, group HR director at Banyan Tree Hotels & Resorts, there is a clear difference between providing incentives and recognition.

“Incentives, for me, is predominantly cash-related, where you get rewarded for what you’re doing, and for doing it right. Recognition is a lot on the heart part,” he says.

However, while those two are easy enough to tell apart, the challenges that come with providing both incentives and recognition in the hospitality industries are more complex.

Cheong admits it is easier to recognise staff working at the ground level of the resorts and hotels because “front end staff get immediate feedback and their work is more identifiable”.

“Corporate office work tends to be behind the scenes, and it has a longer gestation time before you see the outcome. In a way, that is where it is harder to have real-time recognition.”

But that hasn’t stopped Banyan Tree putting in an effort to recognise the staff in its corporate offices.

The company has an internal magazine called MAD, which stands for “Make a Difference”, and it publishes awards that have been given out and highlights great guest experiences.

MAD, whose internal editor works in the company’s marketing team, is produced about three times a week and helps increase recognition efforts in the organisation.

It is also an attempt to make recognition a more spontaneous activity, something Cheong says front end managers have mastered, but not those in corporate settings.

“Why wait until the magazine comes out?"

A line manager should learn to give recognition when it’s due; just a simple lunch or a pat on the back works.
“Recognition should be as spontaneous as possible so that it is immediate. It should not be too institutionalised, whereas incentives can be.”

When it comes to employee incentives, Banyan Tree has implemented a structure which comprises of three components, and is separate from the company’s bonus scheme.

Employee bonuses are often rolled out at the end of the year, and the amount fluctuates because it is linked directly to overall performance of the full group of companies.

The monetary incentives are then given out in March once the Fiscal year closes and all the statutory numbers and business KPIs have been reviewed.

However, the breakdown doesn’t end there, as the incentives portion is broken again into two parts - there’s an incentive for the business, as well as for the individual.

“For example, if a business is supposed to make $10 million, the incentive will correlate to that. There’s a mathematical way of calculating the percentage of monetary incentive the employee will get based on those KPIs,” Cheong says.

Therefore, he says it is important the company sits down at the beginning of every year and define the business objectives.

“If we hit that, employees get X amount. Then there is the individual performance we look at, which will be the Y amount in individual monetary incentives. Lastly, there is a component linked to the soft skills – things you do that you no one else can do better - and that makes up Z. So X, plus Y, plus Z becomes the total monetary incentives the employee receives.”

Cheong admits even though the Z component is harder to quantify than X and Y because the latter two are linked to solid KPIs, the company saw the importance in rewarding employees for their soft skills.

“Having it as a component in the process helps employees keep in mind that they are still being graded based on their soft skills like teamwork, compassion and leadership skills.”

He also emphasises the importance of performance reviews, which the company does twice a year, despite bonuses being only doled out annually.
“Mid-year performance reviews is a time to re-tweak some of the KPIs you initially set because the things have changed. Secondly, it’s also a reality check for the employee in the sense that they realise this isn’t the place for them and that it’s time to go,” Cheong says.

The corporate office also has a programme called Associate Recognition Events, or ARE, which is usually carried out during Chinese New Year.

“Everyone is invited to KP’s (Ho Kwon Ping, Banyan Tree’s executive chairman) house and we have a good time recognising everyone for their good job.

“It’s more than just giving out long service awards – we also recognise people who are nearby, like those in Bintan who come to Singapore, and I think that gives them a sense of belonging.”

The ARE is also carried out at the hotels and resorts where the company recognises long service staff, and give out awards like Best Chef and Best Bellboy.

“Of course for them, we give them a cash reward, but it’s nothing like standing on stage with the chief executive or executive chairman, who always makes it a point to be there, and personally receive their awards,” he says.

Regardless of whether the employee is working in the hotel or in the corporate office, Cheong says “it’s really important staff feel recognised”.

He adds recognition efforts like the ARE complements monetary incentives. From a hospitality point of view, many of the staff are not highly paid, so they do appreciate the monetary rewards.

“The other thing is you also have to give them face value, especially in an Asian culture, which is where the ARE comes in. It’s important, especially in our industry to give them both money and face recognition.”

Banyan Tree may have also have found the balance between providing both monetary incentives and recognition for the front-end staff, in the form of making sure all service charge goes back to the workers.

That is one thing we’re very proud of at Banyan Tree. It is not always true that service charge goes to the staff, but we stand among a crowd that believes the company should get zero service charge.

“That, to us, is a form of incentives and recognition for quality service which is probably not known to many people, and one that I think a lot of people have forgotten about,” he says.

“When we ventured into China and other countries, some of these hotel owners fought tooth and nail with us to keep their service charge. Whenever we write a new agreement with owners, we include this clause where all service charge will go to the employees,” Cheong says.

“If they can’t agree, we’ll walk away from the agreement.”

As the company continues to grow and move into more city areas “where the cash element takes precedence”, Cheong says providing monetary incentives will begin to pose a challenge “because we want to be as egalitarian as possible”.

He adds he is not yet sure how the situation will develop, but says he often tells himself to “really try and emphasise more on recognition; not because you want to save money, but because things that hit the heart are more sustaining than things that hit the pocket”.

“Things that hit the pocket will soon be forgotten but things that hit the heart will always be remembered. If you talk about engagement, that’s the best way to engage staff, and obviously you mustn’t underpay them but you don’t always have to pay top-end.”

He adds it is also important such recognition efforts come from the heart and are genuine.

“It doesn’t have to be something fanciful, but a simple act is enough to convince people we do value our employees.”

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