When I was appointed Managing Director of Park Avenue Hotel, I already had years of experience managing people. But I was new to the hotel business—and like most newcomers, I initially followed the standard industry practices without question.
One of those practices was the 10% service charge added to all bills. Here’s how it was typically handled:
a. 10% was retained by the hotel for missing items and breakages. This immediately struck me as unfair—there was no proper inventory taken to justify those deductions. Still, I kept quiet at the time.
b. The remaining 90% was shared among the rank and file up to the supervisory level. Executives and managers were excluded. Again, this felt wrong. A guest’s experience is shaped by the entire team, all the way up to the General Manager. Why were some of the most influential contributors not rewarded?
c. Staff on probation received 3 service points; once confirmed, they received 4. But when I asked the General Manager how much those points were actually worth, he didn’t know—and worse, didn’t care!
So, I decided to experiment. I gave 3, 2, and 1 point(s) respectively to executives and managers, with the GM receiving just 1. I thought at the very least, they’d become interested—whether the payout was enough for a beer or just a pack of cigarettes. But even then, apathy lingered.
When I started The Everly Group, I completely overhauled the system.
Here’s how we do it now:
• 80% of the service charge is shared among all employees, from rank and file up to the General Manager.
• Everyone gets 3 points on probation and 4 points once confirmed. That extra point acts as a small “sweetener” upon confirmation.
• This way, everyone is rowing in the same direction—with a shared stake in delivering great service.
The remaining 20% is split into two pools:
1. 10% for an anniversary bonus, shared among staff who complete a year. Simple, fair, and motivational.
2. 10% reserved for breakages and missing items, with a process in place:
o Regular inventories (ideally quarterly).
o If the reserve isn’t fully used, the balance is returned to staff who are still with us.
o Missing or broken items—if not reported that day—are charged against the reserve. If reported immediately, the hotel bears the cost.
For accountability:
• Breakages caused by staff are charged to them up to RM 500; anything beyond that is covered by the reserve.
• This turns every team member into a custodian of shared resources—everyone becomes their own security guard.
We’ve also added a human touch:
• In cases of bereavement, we donate RM 1,800 from the reserve to the affected staff member, showing solidarity and compassion.
• For government fines due to errors or lateness, the responsible person pays a portion, and the rest is covered by the reserve. This protects the team without removing accountability.
• These actions are shared transparently with all staff. Peer pressure now complements policy.
With the recent significant increase in the minimum wage, we’ve adjusted again. To avoid overpaying and significantly adding to costs, we have reduced the service charge from 10% to 5%. Fairness works both ways—for staff and for sustainable business operations.
We didn’t just change the payout. We changed the mindset—toward fairness, accountability, and solidarity.
✅ Are your people policies evolving with the times? Are they fair, transparent, and sustainable—for everyone? Let’s hear your take.
