Is the pay rise being replaced with other benefits?

Is the pay rise being replaced with other benefits?

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Is the pay rise being replaced with other benefits?

This report is about human resource management in a global environment and investigates the perceptions of undergraduates in the 21st century employability skills that facilitate the development of career adapt-abilities in the context of the United Arab Emirates. With the United Arab Emirates having embarked in the implementation of its economic vision 2030 that seeks to encourage the participation of the Emirati in the workforce in the country, particularly in the private sector, which is dominated by expatriates, it is pertinent that the human resources management practitioners in the country are cognizant of the changing labor force landscape if the young Emirati are to be attracted to and retained in private organizations in the country. The report is based on the article, ‘Is the pay rise being replaced with other benefits?’ that was authored by Ylan Q. Mui and published on 31 July 2015 on the world economic forum publication. Notably, Mui is a financial reporter with the Washington Post an regularly makes commentaries related to the Federal Reserve and the economy. In this article, Mui presents his observations about the changing landscape in the management of human resource in the American context, which offers a basis on which human resource management practitioners in the country can adapt to the global labor market changes.

Concepts and issues

The article concentrates on the concepts of remuneration, rewards, compensation, benefits, salaries, financial security, and cost-effectiveness as relating to human resource management in the contemporary business environment. These concepts underpin the compensation strategies used by organizations to attract, retain and motivate workers in their workplaces (Urbancová & Šnýdrová, 2017). Notably, compensation is the manner in which employees are rewarded by an organization in return for their work. Compensation can take a monetary form and a non-monetary form and is often as a salary and benefits. Usually, organizations have a compensation policy that outlines how employees are to be compensated and the parameters and criteria that is used to decide on the level and compensation of compensation to be awarded to employees from time to time. From this precept, the article reveals that the compensation policy and strategies in companies have undergone transformation in their focus and direction as employees experience changes in the importance and meaning of the monetary and non-monetary rewards offered to them by companies over time. 

In this regard, the article discusses the tectonic shift in the human resource management landscape in which companies were moving away from annual salary increments for their employees in favor of non-salary benefits and non-monetary compensations. Mui (2015), noted that the financial crisis of 2008 had accelerated an ongoing trend in the rewarding strategies employed by companies in which increasing of the benefits to workers was being preferred over increasing their salaries. However, the shift towards cheaper and creative employee compensation approaches and the stagnation of salaries had been happening for the last 2 to 3 decades as companies sought to compensate their employees in a manner that was commensurate to their lifestyles. 

Focus and importance of the issues

The focus of the issues in the article is not only the trends in human resource practices related to compensation policies and practices but also the causes of these trends in the contemporary business environment. Notably, organizations were spending less rewarding their employees with an increased preference to immediate and short-term rewards as opposed to long-term compensation. In other words, companies preferred to compensate employees immediately with individualized rewards rather than reward them collectively with long-term compensation packages. This trend had been instigated by poor financial performance of companies and the changes in the lifestyle preference of the millennials who were increasingly entering the job market. Notably, companies were increasingly finding assured annual salary increments for their employees to be unsustainable in the long term and were therefore opting for alternative rewards that could be given to employees on a one-off basis alongside being based on employee performance. In the long term, this approach promised to be cost effective while motivating the high performance of employees. Besides, the millennials, whose proportion was increasing in the labor market and the workforce, valued flexibility and autonomy, and therefore preferred to be rewarded in a manner that was flexible, consistent with their lifestyle , and addressed their immediate needs (Ciarniene & Vienazindiene, 2018; Holmberg-Wright, Hribar & Tsegai, 2017).

In addition, national statistics on the compensation trends and numerous examples of companies that had used innovative ways alongside testimonies of employees are provided to illustrate these shifting trends in human resource management practices. For instance, on a national perspective, the average hourly wages has remained stagnant in the United States for five years even though the rate of unemployment had dropped and hiring of workers had spiked in the same period. In addition, the amount of finances spent on employee benefits by companies had increased by 16 % while the wages of workers had increased by 2 % since the year 2004. Further, the proportion of the total compensation for workers that constituted benefits had been rising steadily for over a decade and had reached 31.6 %, which indicates a reduction of the proportion of salaries to the compensation package. At the company level, companies were increasingly aligning and matching their compensation policies and strategies to the lifestyles of their employees, a trend that had been continuing for the last 2 to 3 decades. In addition there had been a 7 % increase in the spending on benefits within a year by nearly 35 % of the companies in the country while bonuses and other awards had reached their highest amounts in the preceding period exceeding three decades. Likewise, employee testimonies indicated that they were rewarded with time to stay off work rather than be given money, after exceeding their employers’ expectations, while others were rewarded with company equity, gym membership, doctor-on-demand and pretax commuter benefits instead of a large salary.  

Addressing the changing approaches to employee remuneration and rewarding is important because it helps firms formulate human resource strategies that can be employed to motivate, increase the productivity and endear the loyalty of employees while facilitating the retention of highly skilled and talented employees. The current crop of employees are millennials whose perceptions about work and the workplace, and their lifestyle preferences differ from those of the baby boomers who preceded them and are increasingly going into retirement and thus reducing at the workforce (Bencsik, Horváth-Csikós & Juhász, 2016; Holmberg-Wright, Hribar & Tsegai, 2017). 

Recommendations and implications

It is recommended that human resource department in companies endeavor to understand their employees and indentify their preferences and lifestyles, so that they can create remuneration and award initiatives that are meaningful to and valued by the employees while providing the desired outcomes to the company. 

The vision 2030 of the United Arab Emirates makes provisions for equipping youth to enter the labor force alongside attracting skilled workforce in its social and human resources development pillar. Therefore, considering that the Emirati value their family and leisure times, it is pertinent for companies in the country to devise ways of rewarding and compensating their employees in a manner that is meaningful to their culture and lifestyle. In addition, the Arabic culture in the United Arab Emirates makes the Emirati score highly in uncertainty avoidance meaning that they generally prefer stability rather than changes alongside being risk averse and therefore preferring to stay with one employer for a long time (Mohamed, Mohamad & Awad, 2017). However, the millennials are globalised generation that is that is not adhering to the longstanding cultural norms and practices, and their preferences are unique and novel and therefore challenging to long-established human resource practices.     


Bencsik, A., Horváth-Csikós, G., & Juhász, T. (2016). Y and Z Generations at Workplaces. Journal of Competitiveness8(3), 90-106.

Castano, E. (2016). Should you increase salaries or benefits? Blue Vine. Retrieved 21 July 2019 from

Ciarniene, R., & Vienazindiene, M. (2018). Flexible Work Arrangements from Generation and Gender Perspectives: Evidence from Lithuania. Engineering Economics29(1), 84–92. 

Holmberg-Wright, K., Hribar, T., & Tsegai, J. D. (2017). More Than Money: Business Strategies to Engage Millennial. Business Education Innovation Journal9(2), 14–23. 

Mohamed, A. A., Mohamad, M. S., & Awad, A. E. (2017). The Relationship between Pay Satisfaction and Turnover Intention in Egypt. Journal of Competitiveness Studies25(1), 65–79. 

Mui, Y. Q. (2015). Is the pay rise being replaced with other benefits? World Economic Forum. Retrieved 21 July 2019 from

Urbancová, H., & Šnýdrová, M. (2017). Remuneration and employee benefits in organizations in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis65(1), 357-368.

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