The hospitality industry strongly emphasizes providing exceptional guest experiences, with service excellence crucial for success. Pay-for-performance (PFP) has emerged as a powerful tool to motivate and engage employees and drive overall organizational growth (Rosenthal et al., 2005). As the hospitality landscape evolves in response to changing consumer preferences and market dynamics, it becomes increasingly vital for hospitality organizations to cultivate a skilled, highly motivated workforce committed to delivering unparalleled service. Mystic Lake Casino’s Food and Beverage department intends to enhance employees’ motivation through structured plans. Despite having disadvantages, pay-for-performance is a strategy for merit-based pay increases, guest satisfaction bonuses, and discretionary bonus programs that should be implemented in the institution for growth and sustainability.
Background of the organization and industry
Shakopee Mdewakanton Sioux Community (SMSC), a federally recognized and sovereign Indian tribe, owns and operates Mystic Lake Casino Hotel. Following the passage of the federal Indian Gaming Regulatory Act of 1988 and the signing of a gaming compact between the SMSC and the State of Minnesota, Little Six Bingo became Little Six Casino in 1990. The SMSC and other tribes from Minnesota were the first in the United States to negotiate and sign gaming-related tribal-state compacts with a state government. The Mystic Lake Casino Hotel opened on May 12, 1992 (Mystic Lake, 2023). It derives its name from a nearby lake with the same name. From the 1990s to now, its success has helped fund SMSC goals, such as economic diversification and improvements to tribal infrastructure and services. The hospitality program at SMSC includes an extensive food and beverage department and a hotel operations team (Mystic Lake, 2023). Within the food and beverage department are 150 hourly employees, ten chefs, eighteen sous chefs, seven restaurant managers, twelve assistant managers, and one director of food and beverage in charge. Over the past three years, retail sales have averaged 47 million (Mystic Lake, 2023). The Food and Beverage program at SMSC is the biggest in the state and holds the title of the most extensive Indian Food and Beverage program in Minnesota based on retail sales.
Plants to be Considered
One possible approach to increase employee motivation in Mystic Lake Casino’s Food and Beverage department is using merit-based pay increases, discretionary bonus programs, guest satisfaction bonuses, and mystery shopper rewards performance pay. All the plans above are pay-for-performance approaches that compensate employees based on their individual and collective contributions toward customer service and financial department goals (Ren et al., 2017). By researching and implementing a comprehensive PFP strategy in Mystic Lake Casino’s Food and Beverage department, the result will be improved employee motivation, enhanced service excellence, improved financial performance, and increased overall organizational growth. Furthermore, by analyzing both the advantages and disadvantages of the PFP plan from the perspective of employees and employers, the proposed PFP will provide insights into the potential trade-offs and considerations associated with implementing such programs in the Mystic Lake Casino hospitality department.
How the Organization Measures the Effectiveness of the Plans
Mystic Lake Casino is grappling with significant challenges stemming from widespread staffing shortages. This problem, exacerbated by several factors, has cast a shadow over Mystic Lake’s Casino Food and Beverage department’s ability to consistently provide the exceptional guest experiences for which it is renowned. The shortage of skilled personnel has been exacerbated by factors such as shifting work preferences and migration of workers to other industries. This shortage has resulted in increased workloads for existing employees, longer wait times, shortened business hours, and even the closure of some businesses. The staffing shortage highlights the urgent need for innovative strategies, competitive compensation packages, and comprehensive workforce development initiatives to attract and retain talent. The staffing ensures that the casino’s hospitality department can continue thriving and providing exceptional guest experiences despite ongoing challenges. Therefore, the firm believes that implementing PFP has a psychological and economic impact on the available employees. The plans intend to ease the burden through motivation based on performance and talents.
Employees’ perspective – advantages and disadvantages of PFP
Employees’ motivation and morale form the first advantage of PFP from the employees’ perspective. PFP makes an employer reward hardworking and talented employees based on their productivity, motivating them (Scott et al., 2008). The rewarded employees have a high working spirit since they feel economically and psychologically satisfied. Additionally, employees become more productive when PFP is practised in an organization (Han et al., 2015). PFP tightens the performance of employees since they are energized by the incentives they obtain. As a result, their productivity increases, leading to individual satisfaction. The third advantage of PFP, based on employees’ perspectives, is a cordial relationship with the employer. Employees who receive benefits and rewards based on performance, delivery, and talent are more attached to their employers since they feel catered to (Ren et al., 2017). PFP moulds employees’ behaviours as they become more aggressive towards work and with fewer complaints. Thus, they build a good relationship with their employers. PFP enhances healthy competition among employees. Since they understand that one is rewarded based on productivity, they strive to outdo one another. Employees become more eager to take on more responsibilities, boosting their performance.
Nonetheless, PFP does not work for all employees. It can be selective to reward only talented employees while ignoring non-talented and slow learners. Such a system creates a bad work culture where others are demoralized while others are not, leading to an imbalance (Ren et al., 2017). Moreover, PFP destroys employees since they now compete against each other instead of focusing on the main goals of the entity. Employees become more self-centred and abandon team spirit, losing direction (Ren et al., 2017). The other disadvantage of PFP is that it can cause stress to employees who pile more work on them for additional earnings. Competition can lead to a workload on employees, burdening and stressing them.
Employer’s perspective – advantages and disadvantages of PFP
PFP is a recipe for employee productivity,s which in turn leads to the general output of the firm. Employers are likely to witness a boom in productivity, making their firms more profitable and productive. Employees who are compensated based on performance are motivated to work, and they reduce laxity due to satisfaction (Han et al., 2015). Ultimately, the employers perceive this as an advantage on their side. The second advantage is an enhanced relationship with employees. Satisfaction clears bad relationships caused by psychological dissatisfaction and economic burdens. Employees with enhanced self-esteem do not feel exploited by employers and develop mutual relationships with them. On the other hand, employers feel safer with employees who have developed respect and mutuality with them, leading to a better work environment.
PFP institutes a good work culture and ethics. Satisfaction causes a conducive environment dominated by care, love, harmony, and peace. As a result, a conducive environment of respect and love is built in an institution with an influential culture. Also, love, care, and respect are ethical requirements in any institution that wants to perform well. An employer must ensure that communication channels enhance a sense of mutuality and harmony to motivate all stakeholders. The other advantage of PFP to an employer is that it enables them to create company values for a firm. Ethical guidelines that inform working relationships, such as peace and mutuality, promote values in a company. Employers become advantaged when such cultures are built in their entities since they form values that the firm is recognized for promoting.
On the other hand, PFP may create imperfect competition to the employer’s disadvantage. Employees may turn their focus on individual performance and need to pay more attention to teamwork. Due to additional payment based on delivery, they stop assisting others as they become self-centred to outdo others they consider competitors (Ren et al., 2017). Accordingly, the employers lose since their entities fail to promote a teamwork culture for productivity. Also, PFP is costly since it requires additional incentives to operationalize it. Costs such as training will be transferred to the employers making the plan expensive in the long run (Woodhams et al., 2015). PFP offers employees more control making the employers less potent in controlling their activities. Reduced control from the employer may lead to poor output. Furthermore, PFP is subject to managerial favouritism (Woodhams et al., 2015). Managers may reward individuals they prefer at the expense of hardworking ones.
Recommendations
Considering the advantages and disadvantages of PFP from employees’ and employers’ perspectives, I recommend that Mystic Lake Casino implements merit-based pay increases, discretionary bonus programs, guest satisfaction bonuses, and mystery shopper rewards performance pay despite hitches associated with their application.
Since PFP is associated with enhanced productivity and performance of employees, the firm should incorporate merit-based pay raises to motivate employees who perform well and meet the set goals. Discretionary bonuses should also accompany a merited-pay rise to motivate those doing well and to encourage others to work harder.
As a hospitality firm, guest satisfaction bonuses should be included in the plan to challenge employees. Employees must treat clients well and administer a culture based on ethics. Also, mystery shopper reward performance effectively evaluates employees’ performance. It should be incorporated into the plan to ensure that employees treat customers fairly and to enable the firm to build its image as a measure of competitive advantage.
The firm should adopt an effective managerial system to reduce favouritism that may lead to biased rewards, making non-deserving employees benefit at the expense of the hardworking ones. Employees will be more motivated when they get what belongs to them, while those who do not get it will be challenged to work for the benefits they miss.
The firm should ensure it educates and trains employees on the effectiveness of PFP and its demerits to reduce the disadvantages associated with poor work culture and unhealthy competition. Employees should be guided to work spearhead teamwork as a culture that enhances productivity alongside PFP to ensure the company keeps focus and ideals.
Conclusion
PFP plans of merit-based pay increases, discretionary bonus programs, guest satisfaction bonuses, and mystery shopper rewards performance pay are potent tools to motivate and engage employees and drive overall organizational growth. The plans can contribute to exceptional performance in an organization. The plans will advantage Mystic Lake Casino through careful implementation that eradicates the demerits associated with PFP. The firm can effectively develop a skilled and highly motivated workforce committed to delivering services based on its goals and objectives. Discretionary bonus suits the identification of top performers by the employer. At the same time, mystery shopper rebuilds a culture of attention and performance at any time where employees are to treat every client with dignity. Guest satisfaction bonuses ensure customer retention and favourable treatment of all guests. The meri-based pay rise will lead to determination and commitment as employees seek rewards based on what they deliver.
References
Han, J. H., Bartol, K. M., & Kim, S. (2015). Tightening the performance–pay linkage: Roles of contingent reward leadership and profit-sharing in the cross-level influence of individual pay-for-performance. Journal of Applied Psychology, 100(2), 417–430. https://doi.org/10.1037/a0038282
Mystic Lake. (2023). The Mystic Lake Casino. https://mysticlake.com/hotel
Ren, T., Fang, R., & Yang, Z. (2017, October 9). The impact of pay-for-performance perception and pay level satisfaction on employee work attitudes and extra-role behaviours. Journal of Chinese Human Resource Management, 8(2), 94–113. https://doi.org/10.1108/jchrm-06-2015-0012
Rosenthal, M. B., Frank, R. G., Li, Z., & Epstein, A. M. (2005, October 12). Early Experience With Pay-for-Performance. JAMA, 294(14). https://doi.org/10.1001/jama.294.14.1788
Scott, K. L., Shaw, J. D., & Duffy, M. K. (2008, October). Merit pay raises and organization-based self-esteem. Journal of Organizational Behavior, 29(7), 967–980. https://doi.org/10.1002/job.539
Woodhams, C., Lupton, B., & Cowling, M. (2015). The snowballing penalty effect: multiple disadvantages and pay. British Journal of Management, 26(1), 63–77. https://doi.org/10.1111/1467-8551.12032
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