Contemporary Issues of Compensation - Essay Example

Name: Tutor: Title: Compensation and Contemporary Issues Institution: Date: Table of Contents Title: Compensation and Contemporary Issues 1 Table of Contents 2 Executive summary 2 National bank of Abu Dhabi Human resource policy and practices 4 Types of Compensation and benefits in national bank of Abu Dhabi 6 Base pay 6 Piece Rate 7 Health Insurance Plan 8 Retirement Options and Life Insurance 8 Advantages of components of the plan 9 Disadvantages of components of the plan 9 Recommendations on how to improve components of the plan 10 Conclusion 11 Interview questions 11 Bibliography 13 Executive summary Human resource management is an important practice in today’s business environment. Organizations want to attract, maintain and brain employees to accomplish organizational goals. Employees are considered most valuable assets in an organization and therefore need to be effectively and efficiently managed. Compensation is the remuneration offered to workers in return for their contributions to the company. It is a planned practice that entails balancing the employee-work relation by offering monetary as well as non-monetary benefits to the employees. The national bank of Abu Dhabi considers its employees as the most important assets and thus offers different forms of compensation to its employees along with a rewarding working environment that enables employees to learn and progress their careers. The bank have developed and implemented reward policies and procedures which ensures that the organization is able to attract and retain the required number of employees with the appropriate skills and experience to be able to achieve its business goals. This paper critically discusses how the national Bank of Abu Dhabi implements human resource policy and practices within the region. Various types of compensation and benefits are highlighted. The paper also examines the advantages and disadvantages of the components of the plan and give recommended ways of improving the components of the plan. National bank of Abu Dhabi Human resource policy and practices The national bank of Abu Dhabi which is the leading bank in the United Arab Emirates considers its staff as the its most important asset and works very hard to be the excellent employer of choice through offering great compensation along with a rewarding working atmosphere that enhances employees to learn and progress their careers. The bank aims at attracting the best worldwide talents and it provides great opportunities for people from diverse preferences and backgrounds to develop successful careers in banking and is highly committed in supporting progress of young talents. The bank is continuing with the development of Emiritisation training and recruitment programmes in order to meet market requirements for talents and skills. The bank actively takes part in programmes and initiatives that educate prepare and train the UEA youth. The bank has also entered into partnerships with numerous organizations to raise career and educational opportunities for the UAE nationals. The bank believes that the greatest innovate way of keeping its employees happy is through taking care of them. According to The Rothschild Corporation, (2002), Training and development of employees is fundamental to the success of any company. Even though technology and internet have facilitated international competition and collaboration, employees are the competitive advantage of an organization. Training and development of employees enables them to develop competencies and skills essential to improve bottom-line outcomes for their company. It also enables them to develop their careers and to effectively perform their work. The bank organizes career fairs as a portion of its emiritisation drive to continuously develop, attract and retain the skills of its employees and UAE nationals. The bank provides onsite interviews with candidates to provide insight into available career opportunities at the bank. Taking part in career fairs offers the bank with a great chance to meet people seeking for job, to recognize and to recruit and select promising candidates. The Emiritisation strategy of the national bank of Abu Dhabi is not only concerned with hiring of UAE nationals but it is also aimed at ensuring that education and skills development is the center of the strategy which makes this bank to be an employer of choice for the UAE nationals. The bank provides great career development chances for its employees and UAE citizens who want to pursue careers within the financial sector. The national bank of Abu Dhabi has a comprehensive employee training and development that consistently engage and develop every employee. Bodimer (2012) argues that the variety and quality of employee training an organization offers is key to employee motivation. Whatever a reason for undertaking employee training sessions, an organization is needed to develop training of employees within a framework of an ongoing, consistent and comprehensive training program. This form of training program is fundamental in keeping employees motivated on learning novel concepts. Training helps the bank to create a short term gap amid job requirement and employee’s present attitude, knowledge, and skills while development of employees is aimed at ensuring long term commitment and involvement. In 2008, the bank received the human resource development award in the banking sector of UAE in recognition for the outstanding human resources development initiatives and policies. This award demonstrates that the national bank of Abu Dhabi has effectively achieved the criterion established by award organizers in main areas entailing emiritization, training and development, internship programs, career planning and recruiting effectiveness. Types of Compensation and benefits in national bank of Abu Dhabi Employee compensation and benefits are fundamental in attracting and retaining talent for the national bank of Abu Dhabi. The national bank of Abu Dhabi have developed and implemented reward procedures and policies which make sure that the company is capable to attract and retain the needed number of staff with suitable experience and skills to be capable to accomplish its business goals. The bank utilizes employee share option system to reward key staff and top talent through offering them an alternative to invest in the bank’s shares at a fixed cost at a prospective date. Obringer (2011) argues that employee benefits package and compensation might be the determining factor for an organization to attract several potential employees. Compensation is not merely the money and to make an organization to be more competitive and attractive to the job candidates, the human resource must provide outstanding total benefits package. This is a very significant portion of an organization’s management process and business planning if it needs to employ and retain top employees. Base pay Base pay is the most common form of employee compensation in national bank of Abu Dhabi. Base pay is offered is offered to every employee and it is the major component of the salary of an individual. It offers basic attraction to employees to effectively and efficiently perform their job. Base pay is the most significant component of the bank’s total reward strategy. According to Gerhart and Milkovich (2005), base pay acts as a fixed price and therefore it is important for an organization to accurately evaluate jobs and give due consideration to both external and internal equity. It is also essential to assess the contributions of employees to the organization and the impact of compensation on a variety of employee behaviors and attitudes. Compensation might directly affect major outcomes like attraction, job satisfaction, performance, retention, skills acquisition and cooperation. The bank uses price rate method of pay whereby remuneration is offered on basis of pieces or units generated by a worker. Piece Rate Piece rate method of compensation is advantageous in that it requires less supervision and usually leads to low per unit price of production. This scheme also results to improvement of employee morale because the salaries paid are directly linked with work efforts. The scheme is disadvantageous in that it is not easily computable, and results to decline in work quality. In addition, it results to wastage of organizational resources, reduced unity of workers, higher production cost and insecurity amid employees. This system is appropriate work is repetitive and there is more emphasis on quantity other than quality. Merit pay is another form of compensation used by the bank where high performing employees are rewarded. According to Anonymous article published in 2011, merit pay is an excellent pay scheme to utilize for pay for performance. A merit pay scheme manage the payroll of the organization wisely whilst rewarding excellently performing employees and is viewed as more fair since workers normally support pay schemes that reward high performers. Merit pay assists in retention of employees through retaining stellar workers and motivating low performing workers to improve their performance. Variable pay in national bank of Abu Dhabi is awarded in a wide range of formats such as holiday bonus, deferred compensation and bonuses. Health Insurance Plan National bank of Abu Dhabi uses different forms of employee benefits to improve employee morale and work productivity. As a result of the increasing costs of health care, the bank offers a health insurance plan for its staff. These plans are established to cover individual workers as well as the family of the employee. Health insurance plans are made available to the employees at a more attractive and cheaper rate that the staff could attain on their own. Paid sick days and vacation days are other forms of benefits offered by the national bank of Abu Dhabi. There is paid time off which permits workers to take care of their families or to go on a holiday. The paid time off benefit is advantageous to both employees and the organization in that it assists employees to have flexible working schedules and it also assists maintains employee morale and reduces unanticipated absenteeism. Retirement Options and Life Insurance Retirement options and life insurance are other forms of benefits that national bank of Abu Dhabi offers to its employees. These forms of benefits make employees more loyal to the organization since their future has been invested in the organization. In addition, it offers employees a feeling of authority through having control over the planning of their retirement. The bank also offers education benefits to its staff in order to attract and maintain workers and also to raise the moral of employees and promote job performance. National bank of Abu Dhabi offers tuition reimbursement to allow workers to further their education whilst still working in the bank. Advantages of components of the plan The compensation plan of national bank of Abu Dhabi is composed of base pay, variable pay and several employee benefits such as health care benefits, health and insurance benefits and tuition reimbursements. All these of components are aimed at promoting employee more and improved job performance. When the compensation and benefits provided are efficiently managed, they contribute to greater organizational productivity. The key advantage of the components of compensation plan of the national bank of Abu Dhabi is motivation. The forms and types of compensation enhance the organization to attract and retain productive employees. Disadvantages of components of the plan The components of national bank of Abu Dhabi compensation plan is disadvantageous in that they do not consider the level of requisite skill and knowledge that employees require in order to qualify for these benefits. The compensation plan does not consider and reward workers on competencies such as the capability to work within a team based flexible environment as well as the technical skills that permit them to get the greatest level of productivity and performance. According to Greene (2012) business owners and employers are required to develop organizations where superior performance results to competitive advantage for individuals throughout the company. Without proper rewards there is low productivity and high turnover of employees as well as long term malfunction of the organization. Nevertheless, reward of non performing employees saddles a company with high payroll costs and also encourages low performers to remain whilst discouraging employees who go beyond and above expectations. Recommendations on how to improve components of the plan In order to succeed within the increasingly competitive business environment, national bank of Abu Dhabi must design a compensation plan that will be able to motivate employees, ensure equity and control compensation costs. Milkovich, and Broderick (1989) notes that compensation is a vital portion of the entire human resource strategy. Since compensation is both important and visible to workers, a compensation program that is designed to reward and communicate strategic goals raises profitability that workers will acknowledge the goals as well as accomplish them. Since workers also recognize that the compensation money is significant to the company, the strategic aim of other human resource functions such as career development, recruitment and performance management will become clear if they are consistent with compensation plan. Therefore, compensation programs must be a portion of the compensation strategy of the bank. The bank must design a compensation plan that will fit into the organization’s overall strategy for employee recruitment and retention. National bank of Abu Dhabi can use strategic compensation to determine and offer compensation packages to workers that are aligned with business objectives and goals. In modern day competitive environment, an organization is required to take special measures in regard to compensation of employees so that it is able to attract and retain valuable employees. According to Amin et al, (2011) compensation is a vital encouragement of exchange process amid employees and employers. It has been identified as a crucial element of psychological contract central to the relationship amid employees and employers. Psychological contract is an individual’s belief concerning reciprocal obligations and beliefs are contractual when employees believe that they owe employers particular contributions such as loyalty and hard work in return for particular inducements such as pay for performance or high pay. Suitable strategic compensation practices inspire workers to utilize their skills and to work hard and promote work processes (Amin et al, 2011). Conclusion National bank of Abu Dhabi considers employees as the most value asset in the organization and therefore strives to be the best employer of choice via offering compensations and a rewarding working atmosphere that enables people to effectively works and meet organizational goals. The bank utilizes different forms of compensation such as variable pay, base pay, health insurance plan and retirement and insurance plans to attract retain and motivate its employees. Through offering and effectively managing compensation packages, the bank is able to increase employee morale and increase job performance. The bank have developed and implemented compensation and benefit plans which ensures that the organization is able to attract and maintain the needed number of staff with the right experience and skills required in achieving organizational goals. Interview questions 1. How is the bank’s human resource Policy? 2. Which reward procedures and policies have the bank developed? 3. How does National bank of Abu Dhabi view its employees? 4. How does the bank enable its staff to advance their careers? 5. Which schemes does the bank use in training its employees? 6. Which programmes does the bank use attract and retain candidates with the right talents and skills? 7. Which forms of compensation and benefits does the national bank of Abu Dhabi use? 8. Do the different forms and benefits offered by the bank effectively motivate its employees? 9. Does compensation and benefits offered by the bank enable it to meet its business goals? 10. Do the different forms of compensation and benefits offered by the bank improve work productivity? Bibliography Bodimer, J., (2012). Use training and development to motivate staff. Retrieved on May 25, 2012 from The Rothschild Corporation., (2002). Employee training and development. Retrieved on May 25, 2012 from http://www.managementtrainingconsultant.com/Default.aspx?tabid=61 Obringer, L., (2011). How employee compensation works. Retrieved on May 25, 1012 from http://money.howstuffworks.com/benefits.htm Amin, R., Ahmad, U., & Garmsari, M., (2011). The relationship between strategic compensation practices and affective organizational commitment. Interdisciplinary Journal of Research Business, 1 (2): 44-55. http://www.idjrb.com/articlepdf/idjrb_5_1.pdf Milkovich, T., & Broderick, F., (1989). Developing a compensation strategy. Cahrs working paper series. Read More