Compensation and Performance at Etisalat - Research Paper Example

Table of Contents Company Overview 3 Research Objectives 3 Etisalat Compensation Model and Strategy 4 Application to Theoretical Concepts 9 Research Design 9 Research Results 10 Recommendation 16 References 18 Appendix 19 Survey Instrument 19 Company Overview Etisalat UAE is a subsidiary of Etisalat International that provides products and services in the market in the telecommunication sector. The company is based with its headquarters in Abu Dhabi, UAE and has diversified operations in the field of communications. The main business units that are operated by the company include consultancy services, payment solutions, internet and telecommunication services as well as cable television the under the names of Etisalat Academy, Ebtikar, EDCH, EMIX, Contact Centre and eVision (‘Company Profile’, 2012). The main strength of the company in the UAE market is the extensive fiber to home project that was undertaken by Etisalat. In UAE the company has a considerable human resource base employed at different levels of management and organizational support positions. Research Objectives The main objective of this study is to determine the level of satisfaction of the employees in the company with regards to their job remuneration packages. Etisalat is one of the biggest companies operating in the UAE an enormous human resource. The compensation and remuneration strategy that is employed by the company is analyzed in terms of whether it manages to satisfy the employees of the company. Through documents disclosed to stakeholders, the company does provide the strategy it employees for compensating its employees, but the level of satisfaction is difficult to determine from external sources. As a result method of primary data collection from the employees of the company is sought to determine the levels of satisfaction. Etisalat Compensation Model and Strategy Etisalat is a company that is committed to providing better futures for its employees. The company has a comprehensive remuneration package for its different types of employees which cater to their respective needs. The compensation model of the company is based almost entirely on the performance for pay model (Etisalat Annual Report, 2009). The company’s strategy is to provide a basic pay to its employees, to which it adds a percentage of variable pay based on the job qualification, past performance, experience, job description and the field of expertise of the employee (Etisalat Annual Report, 2010). This is the standard compensation model that is used by the company, but it has been set so that it can be customized for the different types of employees of the company. The senior management in the company in addition to this model receives stock options as well which gives them an ownership stake in the company (Etisalat Annual Report, 2007). This is a strategy used by Etisalat to motivate employees to work harder to achieve the objectives set by the company as well as to reward them for their efforts. The elements of the compensation model at Etisalat include the basic pay, variable pay and allowances. The company also provides incentives to its employees to motivate them to achieve the target set by the company which contribute to the achievement of the company’s strategic goals. In order to derive the ratio and content of the compensation model Etisalat makes use of market surveys to determine what compensation packages are being offered by its competitors. The company also engaged in periodic feedback with surveys conducted by the Human Resource Management Function in the company that focus on getting the feedback from the employees regarding their compensation packages. The culture of the UAE region and the prevalent norms also affect the compensation strategy of the company. Aside from this the labor unions and the legal framework for labor in UAE through policies affect the compensation model that Etisalat uses for its employees. The senior management which is one of the types of employees targeted through the primary research conducted for this paper is compensated based on a complex model based on performance and merit. The HR management at the company takes into account the job description and the seniority of the rank along with the performance of the senior management in the last or similar positions with Etisalat or other companies where the compensation is being set for newly positioned senior management. It is the policy of the company to set the value of the compensation awarded to this management is based on a linear regressive model where a number of factors influence the value of the compensation. These factors that are taken into account by the company include the job description and what it entails, the education and the qualification of the candidate along with their past track record. In addition the grade of the position and the sensitivity of the management role are also key factors that determine executive compensation. The components of the compensation for these management include the basic pay, allowances, target incentives, performance bonuses, pension plans and well as insurance and stock options provided by the company. At the beginning of each financial year, the executive compensation model is revised to adjust for the performance of every division managed by the executive management and its process and cost efficiency. This compensation is highlighted in the annual reports of the company. The compensation made is based on the attainment of the strategic goals and objectives by the management and their respective division’s contribution to the profitability of the company which contributes towards the assessment of the following year’s salary for the management. A percentile scale is developed which includes the performance of the executive management, with the resulting salary being based on the position of each executive manager on the percentile scale. The increment to base pay, incentives, bonuses, and stock options provided to them are all based on their positioning on the percentile scale. The compensation model of the company can be represented as The basic pay at the company is a flat rate as depicted by the legislation; however the company adds approximately 20% to the basic legal rate to arrive at the basic pay for its employees. Other factors that are taken into account for the determination of the basic pay are the job description, the number of years experience held by the employee and the performance of the employee in the past. The basic pay is constant but can be incremented on a periodic basis to adjust for inflation changes and improvement in the employee’s performance. The variable pay includes the allowances provided by the company that include transport allowance, medical allowance, insurance, car allowance, security, utility allowance, allowance for children and education allowance to name a few (Plunkett, 2008). Different types and rates of allowances are applied for the employees based on their job description, and their requirements. In addition to the basic and the variable pay, the company provides bonuses on the achievement of targets at all levels of the management. The company recognizes that the human resource at Etisalat is one of its key assets. The intellectual knowledge, skills, and experience held by them are amongst the best in the region. This is why the company significantly focuses on analyzing and adjusting its compensation and remuneration strategy for its employees on a periodic basis. Evidence of this can be observed from when the company adjusted its compensation strategy (AMEinfo, 2007) to better reflect the effort and rewards for the employees which was rolled out on November 1st, 2007. Aside from this the company provides programs for personal development to its employees through the Etisalat Academy (‘About Etisalat Academy, 2012’). By attending these personal development workshops, seminars and related programs the employees of the company can further develop their career prospects for growth. Application to Theoretical Concepts A brief review of the theory on compensation management provided that majority of the companies that exist in the market use Victor Vroom’s model for compensation and pay for management of employee motivation. This stands true for Etisalat as well. The Vroom’s theory (1964) states that employees can be motivated to work along the objectives set by the company if they are rewarded through compensation for their efforts which is reflective of their performance. The theory focuses on motivation through valence, expectancy and instance. Etisalat’s compensation model is entirely based on this concept with the remuneration packages offered to its employees directly reflecting their performance. The company managed the motivation of its employees by highlighting that better performance is to be compensated with higher salaries and better payment packages. The use of incentives and bonuses for this purpose is also employed by the company Research Design The study is based on mainly on primary data collection which was conducted through a survey approach. A brief questionnaire was developed which was then sent out to the employees of Etisalat to record their responses. Help from the Human Resource Department at Etisalat was taken for the purpose of the research, which helped in rolling out the questionnaire to their employees and providing the filled questionnaire back. In return the results of the research were promised to be shared with them. The questionnaire provided to the human resource department at Etisalat was both in a hard copy format as well as an electronic document. The HR department at the company made use of the electronic format questionnaire through their internal email and messaging system. The responses gathered were also provided back in the electronic format. Through discussions with the HR personnel at Etisalat it was determined that for the study three main types of employees should be targeted with 50 questionnaires for each type of employee. These included the senior management, the technical staff and the sales & customer representative staff. The differentiation in the respondents was made as it is possible that due to the significant differences in their job descriptions and roles as employees for the company, the motivations behind their satisfaction or dissatisfaction with the compensation plan may be different as well. Research Results The responses gathered through the questionnaire from the managers, technical staff and the sales and customer representative staff at Etisalt were tabulated and analyzed. The analysis provided the job satisfaction and satisfaction derived from the current remuneration packages offered to the employees at Etisalat is considerably high. The management was most satisfied with their current remuneration packaged, followed by technical staff and the sales staff and customer representative. Using the likert scale of degree, the degree of satisfaction from the compensation plan was inquired. This showed more specific results, with the dissatisfaction level more than when the employees were point blank inquired whether they were satisfied with the current plan or not. The findings provide that the management is most satisfied, with relative less degrees of dissatisfaction. This was followed by the technical staff responses which indicated that they were satisfied as well, but less compared to the management. The sales staff and customer representatives showed the least level of satisfaction from amongst the three employee groups. The results of the survey indicated that the sales staff and customer representatives from amongst the employees of Etisalat surveyed are the most interested in changing their current compensation and remuneration packages. These correspond with 92% of them indicating the desire to do so. The technical staff is less likely to desire changed with only 62% indicating their desire for the respective changes. The management at Etisalat is the one which is least likely to desire changes at all in their current compensation and remuneration plans. However they do not deny a progressive change if offered, but amongst the three groups surveyed their desire is the least to change. The findings also provide that the requested changes if offered to the employees depicted that the management sought changed mostly to their total pay at 58%, with least requests for changing the variable pay at 6%. The technical staff on the other hand requested more for increase in variable pay at 22% with the increase in basic pay requested by 52% of the respondents. The sale staff and customer representatives indicated that 34% of them requested changes to their variable pay rate, with 24% requesting base pay changes and 42% requesting increments to their total pay. Aside from questions on their pay and compensation, the employees of Etisalat were also inquired about what changes they desired in their non monetary compensation. The findings of the survey provide that management sought flexible timings the most followed by increase in vacation days, better work environment and career development opportunities. The technical staff at Etisalat respondent with a priority for flexible working hours, followed by increase in vacation days, better work environment and career development opportunities. The sales staff and customer representatives had their priority for increase in vacation days which was followed by flexible working hours and better work environment and career development opportunities. The overall findings of the research provide that while the employees state that they are generally satisfied with their compensation packages, when further inquired, they display different satisfaction levels. They also display desire to change their current compensation plans, with each type of employee having different choices. The analysis of the non monetary changes offered provided that the employees are generally satisfied with the working environment and the career development offered at Etisalat. This is congruent with the market surveys offered by the jobsites in the UAE which show reviews by employees of Etisalat (Indeed.com, n.d). Recommendation The research results show that the company is highly competitive when it comes to compensation and benefits that it provides to its employees. Being a large enterprise in the region, the company has a rather large influence in the market as well. This makes it have competitive advantages. The working environment at the company is favorable as indicated by the employees who have a high desire continue to work in the company. The satisfaction of the employees is an issue that has to be managed by Etisalat. The management and the technical staff are considerably satisfied with what they are offered by way of compensation and remuneration at Etisalat, but the sales and customer representatives show that they have levels of dissatisfaction as well which is more than those for the other two employee types. In order to rectify this issue, Etisalat should look at the motivations that result in the dissatisfaction for the different types of the employees. The management desires higher total pay, while the technical staff also indicates a combined desire for higher total pay and higher variable pay. The customer representatives and the sales staff however desire more variable pay increases instead of basic pay or total pay increase. This is primarily based on the type of payment structure offered to them, which focuses on higher performance rewarded with higher variable pay. The company should take notice of this and adjust its pay structure for the technical staff and the sales staff and customer representatives so that their efforts are better compensated at the total pay and variable pay level to result in higher satisfaction levels. References n.a., (2007), Etisalat Annual Report 2007, Etisalat Corporate Website, available at http://www.etisalat.ae/eportal/en/images/docs/EtisalatAnnualReport07.pdf n.a, (2007), Etisalat Board approves enhanced compensation and benefits packages for employees, AMEinfo, available at n.a, (2007), Etisalat enhances compensation and benefits for employees, Telecompaper, available at n.a., (2009), Etisalat Annual Report 2009, Etisalat Corporate Website, available at http://www.etisalat.ae/eportal/en/images/docs/EtisalatAnnualReport09.pdf n.a., (2010), Etisalat Annual Report 2010, Etisalat Corporate Website, available at http://www.etisalat.ae/eportal/en/images/docs/EtisalatAnnualReport10.pdf n.a, (2012), About Etisalat Academy, Etisalat Academy Corporate Website, available at n.a, (2012), Company Profile, Etisalat Corporate Website, available at http://www.etisalat.com/html/corporate/company-profile.html n.a, (2012), Senior Management, Etisalat Corporate Website, available at n.a, (n.d), Etisalat Employer Reviews, Indeed.com, available at Plunkett, J.W., (2008), Plunkett's Advertising & Branding Industry Almanac 2008: Advertising & Branding Industry Market Research, Statistics, Trends & Leading Companies, Plunkett Research, Ltd Vroom, V., (1964), The Knowledge to Power Your Business, QuickMBA.com, available at Appendix The following is the sample survey instrument that was sent out to the management, technical and sales and customer representative staff at Etisalat Survey Instrument Select one option for each question 1. Are you satisfied with your current job and remuneration package Yes No 2. How satisfied are you. Please select the choice which is most appropriate Very Satisfied Satisfied Neutral Dissatisfied Very Dissatisfied 3. If offered would you change your current remuneration package Yes No 4. Which of changes would you prefer the most to your current remuneration package Percentage increase in Basic Pay Percentage increase in Total Pay Percentage increase in Variable Pay 5. What non money related attributes about you job would you prefer to change Increase in vacation days Flexible working hours Better work environment Career Development Opportunities Read More