ADNOC Reward Management: Environment, Strategy, and Impact Analysis

This report provides a comprehensive analysis of reward management at Abu Dhabi National Oil Company (ADNOC). It begins by assessing the reward environment, utilizing PESTLE and SWOT analyses to identify internal and external factors influencing ADNOC's reward strategy. The report explores methods for gathering reward intelligence, such as Hay and Mercer reports, and benchmarking. It delves into the principles of total rewards, emphasizing the importance of equity, fairness, consistency, and transparency in reward systems. Policy initiatives and the impact of extrinsic and intrinsic rewards on employee contribution are examined. Finally, the report highlights the crucial role of line managers in the reward management process, concluding with key findings and recommendations for ADNOC to optimize its reward strategy for enhanced employee motivation and organizational performance.

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Reward environment and key perspectives.................................................................................3
PESTLE analysis.....................................................................................................................3
SWOT analysis........................................................................................................................4
Ways gathering reward intelligence............................................................................................5
Hay reports...............................................................................................................................5
Mercer reports..........................................................................................................................5
Benchmarking..........................................................................................................................6
Principles of total rewards and importance.................................................................................6
Significance of equity, fairness, consistency and transparency...................................................9
Policy initiatives........................................................................................................................10
Extrinsic and intrinsic rewards on employee contribution........................................................12
Extrinsic rewards...................................................................................................................12
Intrinsic rewards....................................................................................................................12
Line managers' contribution......................................................................................................13
Conclusion.....................................................................................................................................14
Reference.......................................................................................................................................16

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Introduction
The purpose of reward management in an organisation is to motivate and encourage the
employees so that they can feel more satisfied and dedicated enough to enhance their
performance. According to Aslam et al. (2015) the reward management has a close relation with
the profit orientation of the organisation in the form of encouraging the satisfying the
e3mployees and makes them more focused on enriching their performance. Therefore, the
deserving candidates will get the rewards based on their performances. As the purpose of the
reward management is to motivate the employees so that it seems a useful and significant tool for
the organisational development. Moreover, Lin and Lo (2015) opined that the reward
management helps the organisation to set a strong bond with the employees and procure better
workplace environment based on cooperation and mutual understanding. As a matter of fact, it
can be stated that the reward management has a sharp focus on the fair and transparency in
organisational culture where the best people can get privileges and recognition. In course of the
practice, the rest of the employees will feel encouraged and inspired by the rewarded workers
and also put more effort in the performance.
Based on this understanding, this report aims to deal with the reward management
process dedicatedly. For a proper and authentic discussion, Abu Dhabi National Oil Company
(ADNOC) has been chosen. In course of the discussion, the reward environment of ADNOC is
going to be evaluated at first. After that the report tries to develop an argument over the relevant
principles and other determinant factors like the role of equity, fairness and consistency and the
understanding regarding policy initiatives. Moreover, it can be stated that the report also

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identifies the contribution of the line manager and the extrinsic and intrinsic contribution of
rewards in the organisational framework.
Discussion
Reward environment and key perspectives
PESTLE analysis
As far as the external environment of UAE market is concerned, there are number of
elements that can influence the reward practice of ADNOC dominantly. In the political
perspective, the UAE government is highly focused on improving the labour market situation.
Therefore, the economic vision 2030 of Abu Dhabi directly implies government initiatives to
develop the labour productivity. Moreover, this practice is also associated with the notion of
economic factors where the economy of UAE is primarily based on the oil production and
export. Therefore, it is important for ADNOC to initiate such a measure to encourage the
workers. It is also associated with the social and legal framework where the Abu Dhabi
government is trying to ensure the cultural expectation and the retirement pensions and benefits
for the employees effectively. Furthermore, introduction of cutting edge technologies requires
employee skills so that the workers deserve more financial benefits in terms of reward and
recognition. In fact, the hardship and dedication of the employees lead to further justification to
provide economic benefits to the workers.
In this regard, it can be stated that primarily the business environment and the ability of
the UAE employees creates a need to facilitate awards. It is further influenced by the government
initiatives in strategic and legal proceedings. For an instance, the UAE government wants more

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efficiency and increase the production for making outstanding progress in the economy. It is
associated with the training and development of the workforce ability. The government
initiatives and the legislative framework thus create an environment where reward decisions of
ADNOCcan contribute to enhance the efficiency extensively.
SWOT analysis
On the basis of the SWOT analysis, it can be stated that there are ample of opportunity
and strengths for the ADNOC to expand its business strategically through not only open new
market but also developing the skills and efficacy of the employees is also considered to be a
significant measure. In this regard, reward policy can contribute to encourage the employees to
engage into the professional activities and help to usher more profitability for ADNOC. For an
instance, it can be stated that staff engagement and satisfaction are encapsulated in the
organisational activity of ADNOC. In other words, the organisation understands the role and
value of its employees and due to high threat in the oil market it becomes an important aspect for
ADNOC to retain its highly skilled workers so that they can provide strategic advantage in
highly competitive business orientation.
However, there are some weaknesses and threats that can perturb the flawless business
initiatives of ADNOC. For an instance, the paid leave practice can jeopardize the step towards
establishing better employee satisfaction. As a matter of fact, the cash payment mechanism is
also associated with high fluctuation of market rate. Unstable market and economic fluctuation
also influence the payments of the employees. As a result of that it seems a bit problematic for
ADNOCto maintain a unitary payment policy for the workers. In this context, the rewarding
policy can facilitate an effective measure for ADNOC to compensate the employees financially.

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Ways gathering reward intelligence
Hay reports
The Hay report is dedicated to the corporate organisation in order to carry out job
evaluation and the compensation strategies of the companies. In this regard, it is essential to
evaluate the reward intelligence data with the help of the hay report. Primarily there is a series of
steps in hay report responsible to evaluate data in a structured manner. As far as the benefits are
concerned, clarity in the accountability of the organisation, enabling financial benefits for
standardization of job level and improving the succession planning within the organisation are
the basic elements of identification of the need of reward (Roth 2014). However, there are some
drawbacks within the system in the form of lack of availability of alternate resources, ethical
considerations like job bias in equal pay claims can perturb the entire framework and lack of
mechanism to engage the trade unions in the process. Therefore, it will be helpful to use the key
benchmarks like salary, total cash and salary administration.
Mercer reports
The Mercer report is entitled to deal with the cutting-edge insights in human capital and
benefits. It is also important to deal with the data driven HR decision making that can resemble
with the rewards and benefits of the organisation (Gharib, Kahwaji and Elrasheed 2017). In this
context, the benefits of Mercer report are associated with the insights of HR functions related to
the reward and benefit practice. Moreover, it is also resembled with the legislative framework
that puts great emphasis on safeguarding the interests of the employees (Terera and Ngirande
2014). Moreover, user friendly framework of the report will help the organisation to develop a
reward intelligence evaluation. However, the report is facing severe limitations in terms of the
putting a collaborative approach regarding the contractual employees and the organisation.

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Therefore, it becomes problematic in case of establishing the key purpose of planning reward
strategies.
Benchmarking
It is associated with the understanding of compensation and benefits benchmarking in
order to attract and retain top quality and committed staff. Therefore, the effective remuneration
policy and the effort to sustain employees are the most important factor for the organisation
through generating and evaluating the reward intelligence data. In this context, the benefits are
related to the comparison between company’s position and the existing market situation.
Moreover, identifying the bottom line positive factors for the organisation are also referred
through the benchmarking process (Simpson and Sroufe 2014). However, the benchmarking tool
is not fit for developing a need of rewards and recognition. Rather it focuses on the reward
intelligence data only to evaluate the requirements of the workforce. In this regard, it is essential
for ADNOC to follow a two-step process for establishing an effective benchmarking mechanism.
For an instance, the specification of the job description is one of the major part of the process
where the company can segregate different ranks and designation of employees and rewarded
them accordingly. On the other hand, the second step is dealt with the in-depth analysis on the
triggering issue that forced the organisation to take adequate measures in order to implement the
reward and recognition practice.
Principles of total rewards and importance
Total reward is a concept that is associated with the effective reward strategy in terms of
bring together all the investments of an organisation with the purpose to ensure the interests of
the workforce (De Gieter and Hofmans 2015). The interests of the workforce is generally
influenced by the payments, pensions, learning and development. The primary focus of the total

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rewards process is to find out the importance of the workforce and value their skills and abilities
by means of reward and recognition. In response to this, the most popular satisfaction quotients
are identified as the flexible working and the career opportunities through the reward mechanism
(Hoole and Hotz 2016). As a result of that it will encourage the employees to stick with the
organisation effectively and increased their ability so that the organisation can set its policies in
favour of the employees.
In this context, different pay systems should be installed by the total reward. The purpose
of maintain different pay system is based on the difference in designation among the employees.
Every organisation has an organisational structure that helps to understand the different levels of
decision making. Therefore, it is highly important for the organisation to set the total reward
policy on the basis of the different pay systems so that it will be effective to evaluate and reward
the employees as per their designation (Bussin, Nicholls and Nienaber 2016). As a matter of fact,
focusing on unitary reward practice can discourage the executive employees to perform
effectively when their rewards are equal to the low level employees.
Moreover, another framework is related to the confirmation of the incorporation of
feedback before rewarding the employee financially. As per the reward practice in an
organisation is concerned, there should be an unanimous decision by the management in order to
deal with the process effectively and putting more emphasis on the practice of establishing an
unitary decision making for rewarding an individual employee (Noe et al. 2017). Therefore, the
feedback forms are played pivotal role in order to foster a unique and common percentage of
reward that can show the management takes a common decision in terms of deciding the reward
amount of the employee.

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On the other hand, the total rewards practice is associated with a number of benefits and
privileges that the organisation is willing to provide so that the individual who is going to award
financial hike feel more encouraged and ensure his professionalism effectively. In this context,
Aguenza and Som (2018) articulated that the role total reward is to inform the employee about
the benefits that are provided. Therefore, as a result of that it will be helpful for the employees to
get encouraged effectively.
Moreover, the rewards are not only comprised of the financial benefits. There are also a
series of other benefits that the organisation is going to provide on the basis of the management
decision making. In this regard, flexible working arrangement is also a significant benefit that
often employees get. It will help to bring a relaxed workplace environment where the employees
can opt for shift timing (Bikard, Murray and Gans 2015). Not only this but also the flexible
working engagement will influence the other employees to get the benefit as well. As a result of
that it becomes an important aspect for the organisation to engage the employees in the process
of maximising the profitability through the total reward practice.
As per the research of Hoole and Hotz (2016) the total reward practice is highly linked
with the development and growth of the individual employees. All the employees are always
dreamt of better opportunity and advance career growth which will bring satisfaction in their
professional exposure. Moreover, it is also essential to make the employees more enthusiastic
and dedicated enough with their profession. Henceforth, the total reward practice strongly puts
emphasis on the maximum number of employee engagement thorough the practice of elevating
their career positively.

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Significance of equity, fairness, consistency and transparency
As per the research of Webb et al. (2014) it can be stated that equity, fairness,
consistency and transparency are considered to be the foundation stone of reward management
framework. Reward policy is associated with a number of purpose and motives of the
organisation. For an instance, it is important for the organisation to reduce any chance of
employee turnover. Moreover, maximising the production it is also essential for the organisation
to put stern focus on effective reward policy. Fung (2014) advocated that the salary has a
remarkable impact on the process of working relationship between the employees and
employers. Therefore, making a fair and transparent reward policy will bolster the relationship
further. In addition to this, the tangible evidence of integrity and consistency of the reward policy
influence the employees emphatically and providing enthusiasm so that the employees can feel
encourage to participate in the maximisation of business profitability. In this context, it can be
stated that any kind of intransparency or inconsistency can jeopardise the entire workplace
environment. Through the research of Meng and Wu (2015) it can be argued that the reward
practice increased the willingness of the employees to take a part in the profitability of the
workplace. It is a tool of encouragement that keeps the employees on track to convince them that
the organisation respects their interests so that reward policies are undertaken. However, lack of
equality and consistency will send a message to the employees that the organisation is no longer
concerned about employee benefits (Castilla 2015). As a result of that increase in employee
turnover and inefficiency can be occurred sporadically.
In this context, it is also important for the reward policy to set a transparent framework
that will consider effective for the organisation. Risher (2014) mentioned that it was always a
key characteristics of the employees to get transparent policies so that they can understand the

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motive of the organisation and the importance of the policy as well. However, absence of
transparency in the organisational reward policy is not only considered to be a negative practice
for the future sustainability of the organisation but also violating the legislative framework that is
entitled to safeguard employee interests (Choi and Rainey 2014). As Long (2016) opined that it
is highly unlikely an important aspect for the modern corporate houses to consider the interests
of the employees as well. Otherwise, there are trade unions and government regulations that can
bar the organisation to continue its business uninterruptedly.
Policy initiatives
ADNOC tries to set up a better reward management system that follows the transparency
and the fairness in reward policy statement to each and every employee irrespective of their
ranks and designations. In this regard, ADNOC introduces an employee portal from where the
workers can get adequate information related to their interests and government regulations on the
specific organisational policy. However, the departmental head are entitled to evaluate the job on
a monthly basis. In addition to this, the top management also assesses the efficiency of the
employees on a quarterly basis relying on the monthly performance report. On the basis of the
entire process the reward and recognition process will be set.
As far as the reward structure is concerned, it can be stated that ADNOC maintains an
effective structure of reward and benefit based on the type of job and the designation employees
are enjoyed. The purpose behind such difference in the reward and benefit structure is associated
with the motive to set the rewards as per the needs and relevance of the job role (Deepa,
Palaniswamy and Kuppusamy 2014). It is a joint decision of the top management and the HR
department. For an instance, a normal employee of ADNOC gets salary benefits where as an
employee in a managerial rank can get financial benefit as well as relaxation in work timing.

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Besides this, it can also be argued that ADNOC practices a performance based reward
system for every level of employees. In this regard, there is a Grade A, Grade B and Grade C
reward slot for every employees. However, the benefits are different as per the employee levels.
In this regard, it is important to know that the oil sector market is highly volatile and based on
the existing market rates the employee rewards are fixed. Nevertheless, there is a possible
unequal practice can be created in case of the reward policy making (Cummings and Worley
2014). Therefore, ADNOC sets a yearly reward system so that it can create a transparent an equal
rewarding framework.
Furthermore, ADNOC witnesses a huge impact of reward and benefits on the
performance of the employees. First of all it can be stated that higher management is always
highly interested in maintaining a clear and equitable reward policy. One of the major reason is
to ensure fairness and transparent policy making in every sphere of the organisational activity.
As HolmesParker, Agogino and Tumer (2016) mentioned that the top management should carry
out a transparent working practice and policy making so that it will influence the lower rungs of
the organisational structure. In case of ADNOC also this king own top-down practice can be seen
where the higher management is always encourages fairness in business practices. As a matter of
fact, it will facilitate a strategic advantage to ADNOC for future sustainability. In fact, the reward
strategy is identified as an advantageous factor for ADNOC because always the employees are
encouraged to make progress in their performance in order to get rewards. Therefore, a healthy
competitive environment is existed in ADNOC that leads the organisation to deliver a positive
and productive outcome as well.