HR Management Research Paper on Compensation

Executive summary

            Compensation program involves the methods of payment that a company utilizes in awarding its employees. The compensation program in Emirates Group is guided by labor laws and is leveled with other global airlines. On the cash elements section, employees’ basic salary is free from taxation. The company awards it employees profits share whenever it achieves its goal and pay for employees’ accommodation in their residential area. Upon leaving the job, each employee receives certain amount of money as a token form the company.

On non-cash compensation, all employees enjoy an annual leave, which takes a minimum of 30 days. The company also offers workers’ compensation insurance in case they are injured while on duty, in addition to medical coverage. Besides, workers can take a free journey several destinations that the airline covers. Workers who possess the company’s credit cards enjoy discount in numerous stores that accept the card. However, the program has several limitations, which require a revision. A research should be conducted from the employees to accumulate data that can help in reviewing the program.

Compensation

Compensation has always been a fundamental element of human resource management. It involves rewarding the employees in the company in order to motivate them. A compensation program incorporates the methods of payment that a company utilizes in awarding its employees. Its function also influences the planning, staffing, as well as employees’ development of professionalism. An effective compensation program should be simple and accommodating, in addition to reflecting the company’s culture. The remuneration packages in Emirates Group are guided by labor laws and are leveled with other global airlines. This study will focus on the compensation program of Emirates Group in United Arabs Emirates.

Compensation Program of Emirates Airlines

Emirates Group’s compensation program incorporates cash elements, non-cash elements, as well as other information concerning the employees’ compensation. On the cash elements section, employees are deemed to benefit from a basic salary, which is free from taxation. All employees are entitled to a fixed monthly salary, which depends on the employee’s position and familiarity of the position. Employees also tend to benefit from bringing new knowledge to their roles. All employees are allowed to accommodation allowance. Accommodation allowance covers for the employees’ house rent and any other accommodation outside their residents whenever they are on official duty. The company also caters for transport for all its employees, as none of the employee lives within the company’s compound.

The company offers all eligible employees a profit share, which depends on the company’s performance. A profit share is usually indicated in the Profit Share Scheme, which evaluates the company’s performance throughout a financial year before awarding this share. This share ranges from two weeks to fourteen weeks of their basic earnings. Half of the employees’ basic salary is usually cushioned from unfavorable exchange rate fluctuations when an employee opt to exchange the UAE Dirham to his/her preferred currency. However, this offer is not applicable to currencies that are restricted against the US Dollar. Professionalism is awarded through an additional allowance.

In non-cash section, all permanent employees are entitled to 30 days’ annual leave. This is the minimum days that an employee can have for a leave while ten days of public holidays are excluded from this leave. Employees in senior positions are entitled for a longer annual leave. According to UAE Labor Law, an employee should be accorded an End-of-Service Gratuity, which is payment made when leaving the company. This calculation is carried out based on the time that the employees have stayed in the company. An employee should be paid for 21 days wage for every year that he/she has worked in the company for the initial five years, and if the employee has worked beyond five years, he/she can receive 30 days wage for every extra year of his/her service up to two years (The Report: Dubai 242).

Other compensation benefits that employees of Emirates Group receive include Leave Tickets, where employees, together with their eligible dependants, can enjoy their leave on behalf of the company. The company also provides financial support to senior staffs who wish to extend their studies. This support is meant to cover the expenses that employees incur while educating their children. The company also values its employees’ lives in case of any accident while on duty. In this connection, the company provides for Personal Life, as well as Accident Insurance cover to all its employees, regardless of their health status. Workmen’s Compensation Insurance aims at compensating workers whenever they suffer while at work.

When an employee of Emirates Group fell sick, either at work or at home, he/she can claim for a medical cover. Each employee is issued with a Government Health Card, which assist employees to access government hospitals with ease and at affordable cost. Employees are also entitled to dental cover in case they lose their teeth while working. In addition, all citizens of UAE are supposed to register with the Government Pension Scheme, where their respective companies contribute towards the scheme. Employees are also permitted to receive Provident Fund, if its contribution is higher than End-of-Service Gratuity. The company gives 12% of employees’ basic salary towards the fund while employees are expected to part with 5% of their basic salary to cater for this fund. Employees of Emirates Group are eligible for a concessional journey on the airlines’ route. Being an employee of Emirates Group enables an individual to shop at various outlets in the country at a discount using the company’s credit card.

Strength and Weaknesses of Compensation Program

Emirates Airlines’ compensation program cover every part of the employees’ needs, thus, it offers value to employees. The company’s compensation program has several strengths, which enabled it to sustain the company’s operations. Earning a basic salary that is not taxed is something that can be commended while rewarding new knowledge in an existing role can enhance the workers’ productivity. Employees are motivated to devise new methods of handling their responsibilities, and the company rewards them for their contribution. Salaries are awarded depending on the positions available, as well as education level. Whenever the company achieves its targeted profit, employees are awarded a share of that profit.

Emirates Group’s compensation program includes health cover to ensure that employees do not incur costs while seeking medical attention on injuries related to their jobs. All employees are issued with a Government Health Card to assist them in seeking medical attention at a low cost in all public hospitals. Employees are assured of their lives after the end of their contracts through various saving schemes.

However, the company’s program is does not demonstrate accountability and transparency. The weakness of this program is that it does not indicate the amount that an employee gets as compensation. It does not indicate who benefit from specific provisions, or qualifications to benefit from a given provision. Some issues, such as accommodation allowances, insurance coverage, profit share schemes and professional specialist allowances are not well explained. This leaves a lot of explanation to be made by the human resource management, or the personnel in charge of the compensation program.

The company may incur numerous costs if it does not evaluate the pre-existing condition before offering health insurance cover. The company’s compensation program does not create boundaries under which certain positions receive some benefits while others do not receive such benefits. Employees would prefer a program that is simple and precise for everyone to understand without asking for further explanations. 

Need for Revision

Despite emphasis on the importance of human capital in any organization, many firms do not rely on compensation program since they lack detailed compensation data on their employees’ remuneration (Bengtsson and Hand 313). Compensation strategies should strike a balance between internal equity and external market pressures. The fundamental issues in compensation strategies are simplicity, certainty, and moderation. Employees are quite sensitive to how wages and other benefit improvements are shared between the managerial and non-managerial groups in the workplace, thus, transparency should always be observed.

An effective compensation program should be flexible to changes that may happen to the company’s management, even though it should reflect a long-term incentive strategy. According to Griffin, several employers offer private pension plans to their employees, where employees contribute to the scheme (231). Even though a company of Emirates Airlines’ caliber may not lack such scheme, it is essential that the scheme be included in the compensation program. The company should also establish a process of reviewing the compensation program to allow for new strategies. A research should be conducted from the employees to accumulate data that can help in reviewing the program. Compensation needs may compel the management to make instant changes, thus, flexibility of the program is fundamental.

Conclusion

Compensation is critical in any organization as it creates a means to which employees attain a realistic standard of living. To a company such as Emirates Group, compensation program helps in measuring employees’ values, since unsatisfied employees will leave the company for better opportunities elsewhere. An effective compensation program group employees according to their professionalism and identify their compensation requirements. Emirates Group’s compensation program has succeeded in tackling the main issues that involved employees’ payments and benefits. The company has provided for health insurance, as well as enrolling employees into government schemes. However, some of the compensation provisions are vague, thus, demanding for more explanations. It is quite essential for Emirates Group to contemplate on reviewing the compensation program for accountability and simplicity.

Works Cited

 “Employee Benefits.” Emirates Group careers (2014). Web. 21 June 2014 http://www.emiratesgroupcareers.com/english/Careers_Overview/opportunities/emp_benefits.aspx

Bengtsson, Ola, and John R. M. Hand. “Employee Compensation in Entrepreneurial Companies.” Journal of Economics & Management Strategy 22.2 (2013): 312-340. Business Source Complete. Web. 21 June 2014.

Griffin, Ricky W. Management Fundamentals. Mason, OH: South-Western Cengage Learning, 2012. Print.

The report: Dubai 2007. London: Oxford Business Group, 2007. Print.