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Role Of Compensation: Compensation And Benefit

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Discuss about the Role of Compensation for Compensation and Benefit.




Compensation and reward are the crucial and global parts of the management procedure in every enterprise. In order to achieve their objectives, missions and to maximising their return on investment, an organisation provides compensation or rewards to their employees or workers. The company uses the rewards to motivate their employees and increase their productivity. The organisation should consider the requirement and need of its employees before implementing a reward strategy. This report will discuss regarding the role of rewards in modern organisation of the United Arab Emirates.

Effective Compensation Strategy

An effective reward system is not just increasing the salaries of employees; instead, the company should adopt a compensation policy based on their unique work culture. Various factors influence a compensation strategy such as bonuses, benefits, non-monetary advantages, learning opportunity and career safety. An effective reward system can enhance the performance of an organisation. Many companies believe that monetary rewards are enough for the satisfaction of employees, but those rewards do not provide job satisfaction; instead, they are effective in achieving short objectives.

Abraham Maslow is known for his hierarchy of needs theory in psychology. The theory helps ascertains the various stages of human motivation. Monetary compensation only satisfies the two basic desires of Maslow’s Hierarchy theory which are physiological and safety. Other three needs of employees, including love, esteem, and self-actualization, can only be achieved by an effective compensation and reward policy. Modern organisations throughout the United Arab Emirates have adopted this approach in their organisation, in order to provide compensation to their employees (Abraham 2012).


Role of Reward System

Rewards are used by the management in order to motivate their employees. There are two types of rewards, first is Extrinsic and second is Intrinsic. The extrinsic rewards include salary raise, bonus and other monetary rewards. The intrinsic rewards include non-monetary compensations such as public appraisal or self-worth (Reddy 2016).

It helps in motivating employees to perform better increase their efficiency, so they can deliver desired results. The company can enhance the productivity or satisfaction of their employees by providing them compensations or rewards. An effective reward system increases the loyalty of employees towards their organisation. The intrinsic rewards benefit employees by enhancing their self-esteem.

The dedication of employees could be achieved by adopting an effective compensation policy. The organisation retention or recruitment process depends heavily on their compensation policies. The reward system should be fair towards all the workers. An organisation should adopt their compensation plan after researching their employee’s requirements (Barhem, Younis & Younis 2010).

UAE Compensation Policies

The modern organisation of the United Arab Emirates, use their compensation policies to increase the productivity and efficiency of their employees. The giant companies such as GASCO, a gas company from Abu Dhabi, have implemented a specific reward system for their employees after researching their requirements. The company uses CAMS method to evaluate their employees by asking them questions regarding their job, cases happened at the workplace and their performance skills, to create personal development plans for employees (Shatat, El-Baz & Hariga 2010).

The other methods used by the modern organisation include compensation based on the performance of workers. Many companies monitor the progress of their employees and reward them for their achievements. The Emirates group conduct a survey on their workers, at the end of the year, to know about the level of job satisfaction, quarries, and ideas regarding the jobs. The company forms their compensation plan based on their employee’s requirements and desires.

A modern organisation focused on intrinsic reward approaches to motivate their employees in order to achieve overall growth and job satisfaction. A research conducted by Ahmed (2015), on the companies of Malaysia and UAE proved that the employees of UAE organisations prefer intrinsic rewards, such as power in the workplace, certificate or further training and education opportunities.

Etisalat Company provides several benefits to their employees such as health, life, accidental and retirement insurance. Other benefits include diversity programs, personal developments, legal assistance and free lunch or snacks. The benefits increase the trust and satisfaction of the employees of Etisalat. These policies help companies in gaining a competitive advantage over its competitors as well (Etisalat Employees Benefits and Perks 2017).


From the above report, it can be concluded that numerous modern organisation of the United Arab Emirates uses compensation and reward policy to enhance the productivity and satisfaction of their employees. The reward policy should be prepared based on specific requirement of the employees. These systems help in company’s growth and provide them a competitive advantage over its competitors.



Abraham, S. (2012). Development of employee engagement programme on the basis of employee satisfaction survey. Journal of Economic Development, Management, IT, Finance, and Marketing, 4(1), 27.

Ahmed, S. (2015). Employee Perceptions on Reward/Recognition and Motivating Factors: A Comparison between Malaysia and UAE. American Journal of Economics, 5(2), 200-207.

Barhem, B., Younies, H., & Younis, M. (2010). Employee satisfaction in the health care sector: A comparative study of private and public health care organisations in the UAE. Journal of Health Management, 12(1), 19-38.

Etisalat Employee Benefits and Perks. (2017). Glassdoor. Retrieved 15 August 2017, from,8_IL.9,11_IN1.htm

Reddy, C. (2016). Advantages and Disadvantages of Employee Benefits - WiseStep. [PDF file]. WiseStep. Retrieved on 15 August 2017, from

Shatat, A., El-Baz, H., & Hariga, M. (2010, March). Employee expectations: Perception of Generation-Y engineers in the UAE. In Engineering Systems Management and Its Applications (ICESMA), 2010 Second International Conference on (pp. 1-6). IEEE.

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