In an era of rising inflation and a fiercely competitive job market, organisations face immense pressure to reassess their salary structures and total rewards strategies. As companies navigate 2024, focusing on aligning pay with performance, introducing flexible work arrangements, and enhancing benefits has become a pivotal strategy for retaining top talent. At the heart of these challenges lies a fundamental question: How can organisations remain financially sustainable while creating an environment that motivates and supports their workforce?

Lemon Tree Hotels is one company reimagining its approach to talent, pay, and performance. Patanjali Govind Keswani, Chairman & MD of the hotel chain, shared his insights during the keynote on The Human Equation: People, Pay & Performance at the People Matters Total Rewards & Wellbeing Conference 2024. Keswani’s unconventional approach to talent management has become a hallmark of the company’s success.

Reimagining Talent Acquisition and Development

“Tapping onto the talent pool is a challenge,” Keswani noted during his keynote. “Therefore, changing the approach — going for a non-traditional talent pool, making talent employable, is the best alternative.” This innovative strategy is central to Lemon Tree Hotels’ human capital philosophy, which focuses on accessing untapped potential from within society. These non-traditional talent pools include people with disabilities and those from economically and socially marginalised backgrounds.

Keswani recalled a pivotal moment that ignited this transformative journey: “A mother of a disabled child met with me and thanked me for the opportunity I had provided her son, which has now given him the chance to live a normal life.” Inspired by this heartfelt encounter, he said, “I decided to set a goal of reaching 100 people in five years. What started as a modest, unintentional target soon grew into something far more significant—surpassing our initial expectations as it expanded from 100 to 500, then to 1,000, and it just kept growing.”

Lemon Tree Hotels has since pioneered a model that prioritises inclusivity, actively partnering with relevant NGOs and redefining recruitment processes to hire for attitude and train for skills. "We recruit purely for attitude and then train people... redefine roles fundamentally so that disabilities become irrelevant in the work context,” Keswani explained.

Overcoming Challenges: The Road to Inclusivity and Integration

Keswani illustrated the company’s gradual yet impactful growth, stating, “We took the slow route, but today, I can very honestly say we are the most inclusive organisation in the world.” The company’s dedication to fostering an environment where all employees could thrive — regardless of disabilities or socio-economic backgrounds — became the cornerstone of its success.

Interestingly, Lemon Tree Hotels achieved this while maintaining cost efficiency. Keswani shared, “Our cost per employee is 70% of the industry average, and our employee per room ratio is 1.7 times the industry average. Therefore, our overall cost per employee is just 50% of the industry average.”

The Emotional and Social Contract with Employees

Despite being in the bottom 50% of salaries in the hotel sector, Lemon Tree Hotels boasts of some of the highest engagement levels in the industry. Keswani attributes this high engagement to the company’s emphasis on providing skills and opportunities, even if employees eventually leave for higher-paying jobs elsewhere. “We provide skilling. You will work with me critically for two or three years, and then you will leave because you will get double the salary... Nothing pleases me more,” Keswani chirped, sharing his pride in seeing former employees succeed in prestigious organisations like other hotel chains and airlines.

This culture of learning and mutual respect fosters strong camaraderie and teamwork, which Keswani believes is key to the company’s success. Remarkably, about 20% of those who leave for higher salaries eventually return, drawn back by the company’s strong culture and supportive environment.

Resilience during the COVID-19 crisis

The resilience of Lemon Tree Hotels’ workforce was tested during the COVID-19 pandemic. Keswani shared how the company’s top earners, including himself, took significant pay cuts to protect jobs: “The top 10% of our company accounted for 50% of our wage bill... starting from me, who took a 100% cut, others took a 75% pay cut... 10% took massive pay cuts, the other 90% took small cuts, which means we didn’t lay off a single person.”

This approach underscored the strength of the organisation's culture and the sense of solidarity among its employees.

A Broader Perspective: The Role of Purpose in Talent Strategy

In his keynote, Keswani also delved into the broader role of purpose in business, reflecting on the interplay between need and opportunity. Through various anecdotes, he emphasised his belief in the critical roles of luck and timing in achieving success. Quoting Warren Buffett, he noted, “I’m a winner of the Bulgarian lottery. I was born to the right parents, in the right place at the right time, so I got opportunities.” Keswani then posed a thought-provoking question: “How many people in India arrange their lives, and how many, due to sheer bad luck, miss out on opportunities?”

He also cited the inspiring story of mathematician Ramanujan, whose success was also shaped by a series of serendipitous events — a reminder that success often hinges on being in the right place at the right time, but also on seizing the opportunities when they arise.

Sustainable Strategies for Total Rewards

In his closing remarks, Keswani challenged the audience to rethink their reward strategies. He noted that, while economic pressures may force organisations to reconsider certain benefits, the priority should always remain on sustainability—both in terms of business growth and employee engagement.

He concluded the session by stressing that the best reward strategies are those that align with long-term business goals and take into account the individual needs of employees. By finding the right balance, organisations can ensure that their employees remain engaged, motivated, and committed to the company’s mission.

“When people thrive, organisations thrive,” Keswani said, summing up the essence of his message. The human element is, after all, the most powerful driver of business success.

As businesses continue to face the dual challenges of a fluctuating economy and a highly competitive job market, Keswani’s session at the People Matters TRWC 2024 event provided invaluable insights into how companies can rethink their compensation and benefits models. By aligning pay with performance, embracing flexibility, and investing in employee well-being, businesses can navigate the complexities of 2024 and beyond, all while fostering a thriving, engaged workforce.

Lemon Tree Hotels has set a new benchmark for inclusivity in the corporate world, demonstrating that when businesses focus on people, pay, and performance, they can not only foster a culture of mutual respect and camaraderie but also achieve extraordinary results — both culturally and financially.