Assignment task: GMC is a hypothetical Australian hotel chain operating in Australia, New Zealand, Thailand and Indonesia. The company employs 2,510 employees, of which approximately 18 percent are managers including both junior, middle and high level ones. Prior to Covid-19, the company had a very competitive reward system. Some main figures of this system are as follows:
1. Competitive base salary -GMC was paying in the top 25% or higher range in the market.
2. Allowance - generous allowance covering mobile phone fees, work clothes.
3. Incentives and bonus - there was no incentives but bonus was linked to the company's revenues.
4. No share options
5. Benefits - GMC had an attractive benefit scheme including medical insurance, childcare, flexible work schedules, and holidays.
6. Perquisite for executive, including company car including drivers to and from work, convenient parking, financial planning, the use of company hotels for personal travel.
7. Intangible benefits - including working environment, training opportunities both in Australia and overseas, clear career path including fast track opportunities. It goes without saying that during COVID-19, the hospitality industry has been hit hard. Cash flow is thinning and so too are workforces, with GMC undergoing redundancies or taking measures such as pay cuts, forced leave and stand down periods for large parts of their organizations.
Focusing on high managerial positions only, answer the following questions:
Q1. What changes do you recommend making to the above reward system during the Covid19 crisis?
Q2. Currently, GMC's base salary is set on the basis of a combination of skill-based and seniority-based salary. Do you see the need to change to 'pay for performance'? Justify your answer.