Aon Hewitt's 7th Annual Rewards Conference
Performance and Pay –
The Changing Curve
High Focus on Culture
Patu Keswani
Chairman and Managing
Director / Chief Executive Officer
Lemon Tree Hotel Company
Q. As an outsider, the hotel industry has always been a glamorous attraction. From a business
perspective, what is the existing paradigm in the hotel industry and do you see it changing?
A. I agree that from the outside the hotel industry might look glamorous but once you enter at
the associate level, it’s a low engagement and highly demanding job. You need to stand on your feet for 10
to 12 hours a day and very few people have achieved it once they cross the age of 30. The job is low in
engagement, low in financial rewards, physically exhausting and is also on a shift basis. So once the person comes
onboard, the biggest challenge is the induction process initially, and in the first year, the expectation of an
employee is purely financial. If they pass that one year period (there is a fair amount of iteration at this
level), then they go into the second level which is ‘where is my career going’. Hotels due to high
attrition have fairly quick growth. There is then, the next level of growth, which is not so much financial,
although they do get rewarded well, but it is related to leadership. If a leadership position need is not met in
five years, then it again leads to attrition. Basically the whole game for the hotel business is initially to meet
the financial aspiration, settle the employee, make them recognize the fact that it is nowhere as glamorous as
they thought and then move them through these three distinct steps to retain them and help them grow.
Q. You have some really interesting policies in your organization. What role is your workforce playing
in defining the culture for the organization?
A. Culture is of the utmost importance, especially to the CEO. The CEO sets the culture. If
he/she does a good job of it, then the culture will be something everybody will feel comfortable in. By
definition, culture is the personality of the organization. It is very important to set the expectations right at
the recruitment level itself, so that when somebody joins the organization they are fully aware of what the
organization stands for even before being fully inducted. Typically, when you have a sufficiently large number of
employees, your CEO is the custodian of the culture, but the culture evolves with the people. You do set your
vision, mission and values in place and after that it evolves with the very large number of young people who work
in the company.
Q. Moving to specifics, what are the key elements of your rewards strategy and what are the key HR
challenges you face currently?
A.Our organization has imbibed fun as an inherent part of the culture. There are things that we
do to create fun. An area where a lot of people have fun is, when you become a supervisor, you grow a ponytail.
So you are doing something which is not encouraged in the Indian society and it’s a mark of success to have
a ponytail. When I look at the employee feedback and the results, a few things come out as popular choices. One
of them is that 10% of our employees are speech and hearing impaired. For them, it is not just a job. So it is the
employee disability scheme that we have, which makes them feel like we are contributing towards social
inclusivity.We believe in excessive communication. A lot of people tell me you spend too much time in
communication and I say, you can never communicate enough. If we do badly in any financial parameters, or if there
are issues relating to the employees or to any stakeholders, or generally how we think the economy is doing, we
try and communicate to ensure whether it is an associate, supervisor or team leader, we are on the same page when
it comes to the awareness about the internal and external environment.Going forward, our biggest challenge will
not be the hotel industry. We produce these young motivated employees, and it is the parallel industries who poach
them. Hotels cannot pay as well as retail banks, or insurance or retail as a business. So we have attrition not
only between hotels but also outside the industry. Those are the real challenges, and which is why you retain with
non-financial systems such as long-term incentives and benefits, etc.
Q. What, according to you, are the key drivers of employee engagement? How important is the role of
Total Rewards in it?
A. Rewards are very important and as much as I would like to believe that the employee feels
it’s a life-long mission to be in the company, it is not so. It is ultimately transactional and the first
question any employee will ask is what is in it for me? We have cut the company into four roles and it is divided
along two axes – what is critical to business and what is critical to customer. Basis these criticalities we have
different pay philosophies defined. We have a long tail method of performance evaluation. We don’t force fit
people into a bell curve. So we try and identify the top 25-30% of the employees, whom we in our mind call the
‘steel spine’. The KRAs to their leaders are directly linked to their attrition rates. We have a Super
High Achiever (SHA) system where we identify people as quickly as possible and help them develop faster. As a fast
growing organization, our ability to promote people is higher than a traditional hotel company so we have three
avenues constantly opening up – replacement hires, growth and promotion. We promote internally as much as possible.
So our intake only is at entry/associate level. Otherwise, as long as an employee is at least 80% as good as the
external candidate, we will take the internal candidate any day. Those are the trade-offs we are happy to make.
"Culture is the personality of the organization. It is very important to set the
expectations right at the recruitment level itself"
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