Comprehensive Report on Reward Management at Etihad Airways

This report provides a comprehensive analysis of reward management practices within Etihad Airways, examining the context of the rewards environment, key perspectives influencing reward decisions, and various methods of gathering and presenting reward intelligence. The report delves into the principles of a total rewards system, highlighting its significance in shaping reward strategies, and emphasizes the importance of equity, fairness, consistency, and transparency in reward policies and practices. It further explores how line managers contribute to reward decision-making and the impact of intrinsic and extrinsic rewards on employee contribution and company performance. The analysis includes the application of PESTLE and SWOT analyses to understand the external and internal factors influencing Etihad Airways' reward system, and it discusses the application of benchmarking, surveys, CIPD research reports, labor market statistics, and national minimum wage in developing and implementing reward strategies. The report concludes by emphasizing the importance of a positive reward experience and the principles of a total reward system in creating a motivating work environment at Etihad Airways.

REWARD
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1.1 The context of Rewards environment and key perspectives that inform reward decisions.. 1
1.2 Appropriate ways in which reward intelligence can be gathered and presented..................4
2.1 The principles of total rewards system and its importance to reward strategy.....................4
2.2 The significance of equity, fairness, consistency and transparency as they affect reward
policies and practices..................................................................................................................7
2.3 Ways to implement policy initiatives and practices..............................................................8
3.1 Various ways in which line managers contribute to rewards decision making....................9
3.2 The contribution of intrinsic and extrinsic rewards to improve the employee contribution
and manage performance of the company................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Reward management is adaption of policies that reward employee on consistency, fair
and equitable basis in line with the vales of organisation. Rewards comprises of praise,
challenging work, avenues for growth and development. Praise can be simple cognition for work
in presence of other employees (Al Marzouqi, Khan and Hussain, 2019). In simple words, the
achievements as well as benefits received by the employee for there performance in job in a
company is called as rewards. Rewards are best for motivating the employees within
organisation as the main purpose of reward is to create value for the people and it also helps on
developing the culture of performance in the organisation.
This preset report is context to Etihad Airways of United Arab Emirates. It is the second
largest airlines in the country which was founded in 2003. Its head office is located in Abu
Dhabi. This airlines operates more than 1000 flights per week to over 120 passengers and cargo
destination in the Middle East, Asia, Europe, Australia, America. Company is also operating in
Etihad Cargo and Etihad Holidays.
This preset report will provide clear and depth understanding of how the business context
drives strategies and policies of rewards including industrial trends, labour markets, regional
differences. Financial drives of the company and the impact of balance sheet will also discuss in
this assignment.
TASK
1.1 The context of Rewards environment and key perspectives that inform reward decisions.
In the modern-day world, rewards for finer performance as well as success matter more
than the effective achievements itself. It is very important to have the best rewards system and
strategies so that organisation can obtain productive work from the employees. Reward
management of the company is influenced by the external and internal forced in both positive
and negative way (Adeniran, Egwuonwu and Egwuonwu, 2016). The reward system Etihad
Airways is also influenced by the macro and micro environmental forces. In order to track the
impact of external and internal factors on the reward system of the organisation, Pestle analysis
and SWOT analysis is one tool
PESTLE ANALYSIS
Pestle Analysis is an instrument that is used by the organisation to track the external
forces which the influencing operations and function in both positive and negative way. Etihad
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Airways has also used to this tool to identify the macro environmental forces affecting the
reward policies and strategies of the company.
Political Factors:
Political factors comprises of all the level of government intervenes in the country or
businesses as it included all the government laws, policies, legislations made by the parliament
of the nation. Etihad Airways is operating on international routes and the airlines is mostly
exposed to global political development. With the emergence of threat of terrorist attacks, Trump
had bad to restrict travel for the movement of six Muslim counties and this political decision has
limit the growth of Etihad Airways business that ultimately put on negative impact on reward
policies of the company (Holston and Kleiner, 2017). On the flip side, the political stability in
UAE has risen the growth of the company that has resulted in positive impact on the company.
Economic Factors:
Economic Factors comprises of the economic conditions of the country that includes
GDP, inflation rates, interest rates, foreign exchange rates, unemployment rates etc. These
elements of economic factors has direct or indirect impact on the performance of Etihad Airways
that ultimately affect the rewards strategies of the company. The Dirham is strongly high related
to the US dollars so expenses of the people living in UAE is also high, it is important that
company should pay that able to fulfil their expenses (External Analysis of Etihad Airways,
2016). On the flip side, Etihad Airways is providing services at cheaper cost to develop the
business through high customer base. This cost strategies of Etihad Airways is leading positive
impact of reward policies.
Social Factors:
This factors is comprises of the trends of society which is important for organisations to
consider in there operations and functions. The economic recovery after the crises of 2007/08, it
has been identified that the growth of middle classes that has contributed to the optimistic change
in the demand of Etihad Airways (Aygün, Yılmaz and Gülseçen, 2017). Now, people can afford
to travel in emerging nations that has ultimately leads to positive impact on the reward policies
and strategies.
Technological Factors:
This the factors that is comprises innovation and automation in the industry and it leads
to effective growth in the airline industry. It has been witnesses that airline sector has seen rapid
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technological changes pertaining to the techniques deployed to reach the target audience as well
as to identify the patterns of business in order to raise the services delivery and development.
The emergence of online bookings trends are also increases as Etihad Airways has taken this an
opportunity and provide customers the application of the company for booking that has lead to
organisational growth and positive impact of reward system. Further, with the technological
advancement, now company can track the performance of the company in a correct way like Key
performance indicators that has eliminated the bias element and had positive impact on the
reward policies (Vilkaitė-Vaitonė and Papšienė, 2016).
Environmental Factors:
The increasing carbon footprint in the airline sectors is continuously increases because of
high demand for air travel. It is important for organisation to take corrective actions for this as it
has lead to negative impact on the growth of Etihad Airways, so they have invested resources
into R&D to evolve alternatives. The investment in R&D programmes has optimise the reward
strategies of the company as the development of alternative is beneficial as whole.
Legal Factors:
Legal factors comprises of all the laws, rules and legislations which company have to
follow for smooth flow of operations. Etihad Airways follows all the laws which are necessary
and it has also lead to positive impact on the reward system such as Employment laws, Health
and Safety Act, Equality Acts etc. These laws has provides clear guidelines for pay to employees
which has lead to positive impact on the decision making regarded to reward system (Hossain,
Kibria and Farhana, 2017).
SWOT ANALYSIS
Strength
 Etihad Airways has strong brand image in the country as it is second largest arilines in
UAE.
 Etihad has over 120 aircraft's that are mainly from Boing and Airbus. About 1000 flights
are over per week of the airline (Internal analysis of Etihad Airways, 2019).
 Company has high stability in last couple of years as in 2016 there has been 41 percent
hike in the profits.
 The network of Etihad has worldwide operations with a modern, young and economic
fleet.
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 The technological automation is also highly advance and innovative as company use to
provide full entertainment system to passengers trough its E-Box.
Weaknesses
 When, Etihad Airlines has joined alliances in order to collaborate as well as to improve
their load factors, company has decided to purchase stakes in other airlines to grow its
routes. For this, Etihad has contributed huge amount and resources but the financial
performance of these airlines are concerning.
 Customer satisfaction is not up to the mark as many customers have make complain that
Etihad is only focusing on first class and business class passengers (Gill-McLure and
Firth, 2016).
Opportunities
 Etihad can tie up with the airports to give premium facilities to the customers.
 Etihad could add depth to the network with increased frequnecies on some of the key
markets to Damman, Dublin, Dusserdorf, Calicut, Jeddah, Cairo, Riyadh, Manali,
Ahemdabad and others.
 Ethihad can also raise its security and privacy so that they can prevent the threat of
terrorist attacks.
Thereat:
 The competition is very high in the airlines industry as Etihad has facing competition
from Qatar Airlines and Emirates Airline.
 The cost of fuel is also rising continuously that has raises the cost of operations.
 The government policies as well as international aviation laws and regulations are
changing that also create threat for the company.
1.2 Appropriate ways in which reward intelligence can be gathered and presented.
Rewards intelligence is associated with the data that HR professional can obtain as well
as analyse to inform the decision making process. It is very important that organisation should
have effective and efficient reward management strategies so that they can retain the employees
for longer period and obtain productivity (Schölkopf, 2015). Here are the sources of reward
intelligence which can be adopted by Etihad Airways for undertaking the benefits are as follows-
Benchmarking: this is one of the best practice which can be adopted by the Human
resource management for reward intelligence as it is the practices of comparing the performance
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of one employee to another employee. Etihad Airways used to determine as well as establish key
performance standards along with the measure the performance against those standards over
time.
Advantages of administration surveys: This is another source of reward intelligence
within organisation. Etihad can undertake the survey inside the company for employees
performance within in 6 months so that they can provide better rewards to employee's and
undertake the best strategies for reward management.
CIPD research reports: CIPD stands for The Chartered Institute of Personnel
Development. This is professional authority that accredit as well as award human resource's
qualification. So for better reward policies, Etihad Airways can use this report.
Labour market statistics: This is also one of the source that is required for better reward
intelligence policies in the organisation. There are mainly three situations in labour market
which are employed, unemployed and inactive. There are some common factors that influenced
the labour market such as discrimination, unions, employment and income inequality. So, the
reward policies of the organisation should considered these factors.
National Minimum wage: Basically, in UAE, there is no national minimum wage for
employee who are expatriate but national of UAE are subjects to some particular salary
requirement and thresholds. The wage or salary of a person should not be less that DH3000 per
month if there national has no high school qualifications (Hassabis and et.al., 2017). Usually,
rewards are apart from wages and salary but for determining the reward strategies, it is important
to undertake or consider national minimum wage.
2.1 The principles of total rewards system and its importance to reward strategy.
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Total rewards system consist of all the efforts that employer can use in hiring, recruiting,
motivating and keeping employees within organisation (The Reward Management System, 2019).
There are five elements of reward system which are compensation, benefits, recognition, work-
life balance and professional development (Levi and et.al., 2019). While formulating the reward
strategy, it is important that Etihad Airways should adopt the principles of reward system for
employees. Total reward system not only benefits and compensation but it also encompasses
personal and professional growth, opportunities and a motivating working environment. Here are
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Illustration 1: The Reward Management System

the the main six main principles of total reward system which are important for making reward
strategies are as follows
Create a positive and natural reward experience: According to the principle, the reward
management of the company should able to create positive environment within organisation.
Managers should communicate and make employee understand about the rewards strategies and
how they can take advantage (Six Reward Principles, 2019). During the formulation of reward
strategies, management of Etihad should keep in mind that reward strategies should able to
create positive environment.
Rewards Strategies should be align with the business strategies: According to this
principle, in order to gain the competitive benefits, there should be proper alignment between
rewards and business strategies. It will result in better productivity as they continue to add value
and efforts in the work as well as Etihad must acknowledged thee value with rewards (Mimovic,
Budimčević and Marcikić-Horvat, 2018).
Extent people's line of sight: This principle of reward management stated that human
resource manger should involve employees in extending there thinking ability to what extent it
influenced the outcomes of there business units, team, company and groups. By adopting this
principle in making rewards strategies, Etihad can make the best strategies and achieve desire
goals by making employee satisfied.
Integrate Rewards: According to this principle, while making the reward strategies,
manager should use each reward instrument for what is does top-quality. Manager should
undertake while perspective of total rewards instead of only considering total pay during the
determination of employee reward. Etihad can develop a customized finer human resource deal
from total rewards.
Reward employee ongoing value with base pay: This is one of the most important
principle as it is the way to create positive environment at workplace. As per this principle,
organisation should be keep in mind that there are three dimension of valuing the individual
which are skills as well as competencies required by organisation:; employees uniformity
performance; the value of employee associated with the labour market. This principle help
Etihad in reward strategy as they can pay the best to employees and make them satisfied.
Reward outcomes with variable pay: This principle stated that the bottom line is that
organisation required to fulfil the expectations of shareholders as well as render a persuasive
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future. By rewarding the employees to gain the objectives, variable pay (cash & equity) develop
a stakeholder-ship as well as win-win partnership among employer and employees that result in
success of both. The result evaluated by both the from variable pay is appropriate because it is
flexible, responsive, agile adaptable and it focus on the core areas of success.
2.2 The significance of equity, fairness, consistency and transparency as they affect reward
policies and practices.
According to the Vojtek and Smudja, (2019) Reward management is very important part
of the organisation but it is also very necessary that it should state equity, fairness, consistency
and transparency because it leads to direct impact on the practices and policies of the company.
During the formulation of reward strategy, management should ensure to be fair and impartial
rewards as well as employees should have right to inform about the strategy as if it do not
perceived fairness of employee rewards it will surely result in employee turnover which is all at
all not good for company's brand image. However, Huang, (2018) To avoid all the challenges
and issues, the management of Etihad has should make sure that the reward strategies is based on
the principle of fairness and equity as well as it should demonstrate a positive work environment
in the organisation.
Further, as per the findings of Albers and et.al., (2017) it can also be stated that, avoiding
the equality, fairness, consistency and transparency in reward strategy create a climate of
hostility an distrust within Etihad airways that ultimately affect the performance of the company
because employees will not put there efforts that company desired. It also erodes performance as
well as commitment of employees to the enterprise. However, there are so many negative impact
if company ignore or above fair and equity reward strategy. Blain and et.al., (2017) said that,
fair, consistence and equity rewards demonstrate employee retention as they feel satisfied and
happy working in the company. Company cut down various expenses if employee retention is
high like orientation cost, training cost and others.
As per the views of Garzon and Taylor, (2016) by adopting fair policies of rewards, it
will raise the bottom line of Etihad Airways, a culture that achieves , possesses breadth, retain
employees as well as draws top talent that makes a organisation highly competitive as well as
positively influence the bottom line of the company. It also raises the employee moral that also
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result in raising the bottom line of Etihad Airways. It is the policy and business goal of the
company to raise the employee retention in the company that is also very important to align the
business strategies to reward management strategies as per the principle of reward management.
Thus, it can be said that, Etihad Airways is affected by the policies and strategies negatively if
they do not adopt fair, consistency, equity in total reward management and if they adopt fair
policies of reward it will leads to positive impact on the organisational performance as a whole
because it is defined as a good practice.
2.3 Ways to implement policy initiatives and practices.
In order to implement reward policies and practices there are some ways to implement
the reward policies and practices in Etihad Airways are as follows-
Proper alignment with organisational mission and vision: This is the first thing that
company should have proper alignment with business strategies and rewards policies. For
example, providing benefits and compensation to employee's that ultimately aims to raise the
performance of the company as well as it also motivate employees to put more efforts in raising
the performance of the company (Fayyazi and et.al., 2015).
Building Effectual leadership Team: In implementing policies and strategies of reward
management in Etihad Airways, it is very important to build an effectual leadership team.
Leadership improves innovation as well as creativity in formulating and implementing strategies.
Leaders will use participative leadership styles and involve employees in decision making where
there views and opinion will be considered. It will result in easy and effective implementation.
On the other hand, leadership is also very important when employees are disagreed on some
points as at that time leaders will make them engage through their leadership styles.
Assign Roles and Responsibilities: In implementation of policies and strategies of
rewards management, it is also necessary that the roles and responsibilities are assigned to all the
employees. It is because a person who is doing the work of salary process will count the days of
present, log in-log out time, so it is very challenging to manage reward system like calculating
overtime amount, compensation, incentives, benefits etc. so in order to get rid of these
challenges, Etihad Airways has assign the roles and responsibilities to different human resource
managers.
Communicate the strategies: Communication is the essence of implementation of
policies and strategies so that each and every employee's know what actually company is
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planning for. Communication can be written or verbal but t is mandatory. Etihad Airways could
communicate all the reward management strategies through emails with regards to human
resource team of the company and they also take session in the auditorium to solve the queries of
employees regarding policies and strategies of incentives, compensation etc.
Have adjustment if necessary: This is also one of the best way to achieve success for
longer time in the company through reward management strategies and policies. For example, If
company have set the benchmark of incentive very high which in unable to achieve, so company
make adjustments in the strategies (Wu and et.al., 2018).
Developing the supporting culture of the company: Employees support is very
necessary for organisation and it is up to the leaders of Etihad Airways to develop the type of
culture of the company so that if any type of policies and strategies are implemented it will
successfully accepted by the employees.
3.1 Various ways in which line managers contribute to rewards decision making.
Line managers are the person with direct managerial responsibility for a particular
employee. The role played by line managers in the rewards decision making is very important as
they are said to be recognised as strategic partners of Human resource manager. The role played
by Line manager at Etihad Airways in decision making of both financial and Non-financial
rewards are as follows-
Conducting performance appraisal of employees on regular basis so that they can
inform the human resource management about the performance so that they can reward the
performance accordingly. So that, rewards are given to right people on right performance.
Performance Management: Line managers also helps in identifying the performance of
employees in terms of pay or training and development. Further, line managers also renders a
way of accomplishing commitment as well as ownership from the line and can raise relationship
between the staff and managers (Mimovic, Budimčević and Marcikić-Horvat, 2018).
Communication: Line manager also helps a medium of exchanging information of
employees and senior management. Liner mangers talk with the employees and identify there
expectations that what they are expecting from the company either financial rewards or non-
financial rewards. This also help company in decision making regarding reward management.
Initiate Fair Reward policies: It is very essential that reward policies are understood as
well as detected as fair by the workforce, at that time, it is important to have effective
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