Reward Management

Name: Maaku Jacob Danladi

Professor’s name
Hamza
University name
Anglia Ruskin University
Date of submission
14th December 2017
 1

1.0 Introduction
(i) Purpose of the report
In any organization around the world, reward management is aimed at
formulating and implementing the strategies and policies that are aimed at
rewarding everybody in the organization fairly, equitably and consistently. The
purpose of this report is to show how the reward system can be used in driving the
business context such as the labor market, industrial and sector trends.

(ii) Definition of Reward Management.

Reward management is mainly formulating and implementation of the strategies and

policies that are aimed at rewarding the employees, fairly, equitably and consistently with the
values of the organization.
(iii) Outline of the report.

This report will contain four parts. Company background information, problems
encountered by the company (MAS), Conclusions and Final recommendations. The first
part will deal with giving the company background information. This section will give
the information regarding Malaysia Airlines (MAS). It will provide organizations term of
operation, the market share, competition and the organization performance. This will be a
detailed information regarding the company. The second part will be on the problems
encountered by MAS. This will be the problems encountered by the management and the
employees, problems encountered by other competitors, the issue of Kopi-Gang culture.
The third part will be the conclusion part. This part will summarise all the points given in
the case study and will be based on the findings. The final part will be the
recommendation part where the study will recommend what should be further done to the
reward system.

2.0 Company Background

Malaysia Airlines (MAS) is one of the major airlines that operate from Kuala Lumpur
international airport having some centres in Kota Kinabalu and Kuching. It has destinations
throughout the Asia, Oceania, and Europe (O’Connell & Williams, 2005). It is the flag carrier of
Malaysia, a member of the one world airline alliance. The company is owned by two subsidiary
company that is the Firefly and MASwings. Firefly does operate from Penang and Subang
international airport while MASwings focuses on the inter-Borneo flights (M.O.B, 2012). These
airlines do operate both the cargo flight and the passenger’s flight. The company has been facing
some financial issues since the disappearance of MH370 in the skies. The company has been
facing massive losses.
 2

Market share
The market share to Malaysia Is set to increase due to the expansion of the four
Malaysian carriers that include AirAsia, AirAsia X, Malaysia Airlines and Malindo Air (Teresa
& Peter, 2010). There has been a projection of growth by 11 % in 2017. In 2016, the Malaysian
market grew by 7% having an approximate 68 million numbers of passengers. The affiliated
Lion Group was responsible for the growth bringing more than four million passengers on board.
The revenue of the company rose from 68% to 82 % in the last quarter year. However, it is
expected to rise in early January next year (BBC, 2017).
Although the above Malaysia Airlines (MAS) Chief Executive officer (CEO) have
reported that the market share has been regaining the loss (BBC, 2017). There has been some
improvement due to the increased sales and improvement on customer yields. For instance, in
2013, the company reported a loss of RM 1.14 billion in a net loss.
Competition
MAS has been facing much competition from other airlines like the Cathy Pacific and
Singapore carriers whim are offering relatively fewer fares. The company has received an
increase in competition since the public has lost confidence in them especially in the case
where the airline loses in the skies.
Despite the previous challenging quarter, the airline is working towards improving the
performance of the company. The company has been seeking to improve the performance
of the company. The company has not been engaging with its employees and their
representatives. Despite all these challenges the managing director has been working
tirelessly in ensuring that the employees have been engaged in one way or the other, he
has been touching the lives of many employees in the company (Lim, 2010).

3.0 Problems Encountered by MSA (30%)

3.1 Problem Encountered by MAS in Strategic Context

Haygroup analysis the impact of recession hitting an organization pushes them down and it
becomes a struggle to re-create a profitable organization. Although the organization having
issues in getting revenue growth, the organization has to settle for cost containment and
performance improvement as a means to a profit growth. Whereas the four requirement needs to
be balance; cost containment, performance improvement, talent enagement and risk
management.
 3

Due to the concern over retention and motivation organizations mainly focuses on top
performers, high potentials and others with rare skills, even though the choice of increasing pay
for retention or performance this is not a good option for organization having issues with profit
growth so the focus is shifted to intangible rewards (which can be motivational leadership,
challenging work and also career development) this is to increase engagement. [ CITATION
Hay10 \l 1033 ]

3.2 MAS can apply this model as discussed by Haygroup, due to the fact that the company just got out of
recession. And the company are looking towards a better strategy which will enable the company
spend less and be able to retent employees that have rare skills or top performers. Has indicated by
Haygroup using intangible reward to over the issue of the recession, so to enable the organization
gain profitable growth without giving out tangible rewards to retent employees.

3.3 The Problems Encountered By Management and Employees

According to M. Strebler (2004) he said that poor performance is legally defined “to be a
fall in performance due to employees bahaviour going below required standard”.
[ CITATION Str04 \l 1033 ]
In MAS the poor performance of the employees was in lack of transparency and the poor
performance management system in implementation due to the poor communication, poor
leadership and poor accountability of the management. There has been much blame on the
culture, where there is lack of proper rewarding. The management has been failing to reward
good performance but rather penalize those performing poorly (Norhayati & Siti-Nabiha,
2009). The management has also not been accountable for the poor performance of the PMS.
There has also been poor communication between the employees and the management of
MAS. Due to this reason, the PMS has not been able to perform effectively. The performance
of the employees has not been reviewed at any given time.
3.4 Problems Encountered By Other Competitors Use of Strategic Performance and Reward
System By Line Managers

According to Sam Redding and Allison Layland (2015) said that strategic performance management
is a means an organization uses to help the strategy, mission and objective of the organization, this is
 4

used to help in measuring the factors and also the key indicators to ensure a propal steps are taking to
keep the organization in check. [CITATION Gri09 \l 1033 ]

According to Nathaniel Holmes, Geraldo Carvalho and Marie Powers (2010) defined
reward systems has a designed method of evaluating and compensating employees based on
their performance. [ CITATION Nat10 \l 1033 ]

3.5 Despite the PMS being accepted by the employees, there have been of inconsistency on the
LMS. This has also led to the inconsistencies of the PMS in evaluating the performance of
the employees. The employees have in turn expressed some form of dissatisfaction since the
process is seen to be unfair and inconsistent.
The other problem being encountered is the payment of the bonuses. They have realized that
LMs are responsible for evaluating the performance that has been mainly blamed to the LMs
instead basing on the company policy.
This problem that has been encountered by the competitors the performance of their
employees. Treating the employees unfairly and with some inconsistency will result in the
employees not performing their task on time and well (Nik Mat, 2014).
3.6 The Kopi-Gang Culture

Kopi- Gang culture definition: Kopi- Gang culture is a form of culture mainly in the Asian
countries where there is lack of proper definition between high and low performers (Lim, 2010,
pp.4).
The kopi-gang culture in MAS highlights the poor reward system has the kopi-gang culture
explains how the line mangers play the blame game, due to the fact that they all feel the sense of
obligation to their subordinate. In the case study it shows that the employees are been blamed for
the dismal of financial performance. If MAS managers could be transparent with the reward
system and treat those who performance well fairly this might motivate them to perform more
and this will lead to competition of who could be better. But due to the Kopi-gang culture the
rating of performace is unfair and this demotivates the effective workers, while everyone plays
the blame game.

4 Conclusion (15%)

MAS is seen to be facing some challenges that will not end soon unless something has to
be done. The company is facing many challenges, especially in the worker's sectors. The
employees have not been receiving rewards which will lead to the “dying” of the company.
These problems have led the company to large losses. There have been many losses that the
company has faced since 2013. Due to this loss and its inability to sustain itself properly,
 5

competitors have come in and try to take its markets lifting up the risks of “killing “the
company. Cathy Pacific and Singapore have started to take over the company airspace
through tough competitions. Of the many problems encountered by the airlines include
reward system of the employees and the problem between the management and the
employees. The PMS has been performing poorly due to lack of proper management of the
systems. There has also been the problem of strategic management and reward system where
the employees have been treated unequally amongst other employees. Since Malaysia is in
the Asia region, the Kopi- Gang culture has been used thus reducing the morale of the
employee making them shift into other companies that offer better services and listen to their
employees. This issue has led the company not appreciate its employees well; the reward
system can be blamed for the losses that have been experienced in the company. If the
employees are not well rewarded, they will reduce their productivity and performance. From
the analysis, it has been indicated that the company’s not well rewarding its employees and
there is a need for further recommendations that will enable the company to thrive to success.

5 Recommendations (30%)

To ensure that the company has started to gain its status back and ear much profit fist it
will consider the method of rewarding its employees. The following are the models that the
company can use so that they effectively reward the employees.
Armstrong model – this model suggested by Armstrong and Murlis (2017) is a good method
of rewarding the employees. The rewarding should support the business strategy; he states
that reward “strategy determines the direction in which reward management innovations
and developments should go to support the business strategy, how they should
be integrated, the  priority that should be given to initiatives and the pace  at which they
should be implemented.” Pp.8
Armstrong & Stephens (2005) indicates that for an organization to reward someone it
should engage for some strategic purposes. It must seek the purpose of the organization and
come up with a corporate strategy which is as follows.

Business
Goals
 6

Business
Strategy

HR
Strategy

Reward
Strategy
 7

Bibliography
Armstrong, M. and Murlis, H., 2007. Reward management: A handbook of remuneration
strategy and practice. Kogan Page Publishers.
Armstrong, M. and Stephens, T., 2005. A handbook of employee reward management and
practice. Kogan Page Publishers.
ADMINISTRATION, M.O.B., 2012. Different Industries and Sectors of Malaysia (Doctoral
dissertation, Gujarat Technological University Ahmedabad).
BBC, 2017, ‘Malaysia Airlines turnaround challenge 'unprecedented,' Retrieved from
http://www.bbc.com/news/business-38022279
O’Connell, J.F. and Williams, G., 2005. Passengers’ perceptions of low-cost airlines and full-
service carriers: A case study involving Ryanair, Aer Lingus, Air Asia, and Malaysia
Airlines. Journal of Air Transport Management, 11(4), pp.259-272.
Hay Grooup, (2010), the changing face of reward. Retrieved from
<http://www.haygroup.com/uk/downloads/details.aspx?id=26870>
Jody, H & Greg J, (2010) High- and low-road strategies for competing on costs and their implications
for employment relations: international studies in the airline industry, The International Journal
of Human Resource Management, 21:2, 165-179.
Kurz, R. and Bartram, D., 2002. Competency and individual performance: Modelling the world of
work. Organizational effectiveness: The role of psychology, pp.227-255.
Lim (2010) Fight or Flight: Performance and reward in Malaysia, HayGroup,
http://www.haygroup.com/sg/downloads/details.aspx?id=27778
Maertz, C.P., and Campion, M.A., 1998. Turnover. International review of industrial and
organizational psychology, 13, pp.49-82.
Mulvey, J.M., Gould, G. and Morgan, C., 2000. An asset and liability management system for Towers
Perrin-Tillinghast. Interfaces, 30(1), pp.96-114.
 8

Norhayati, M.A. and Siti-Nabiha, A.K., 2009. A case study of the performance management system in a
Malaysian government-linked company. Journal of Accounting & Organizational Change, 5(2),
pp.243-276.
Nik Mat, N. H. (2014). The HRM role of line managers: A Malaysian case study. Retrieved from
http://ro.ecu.edu.au/theses/1087
Teresa , P & Peter W (2010) The lowest of low-cost carriers: the case of AirAsia, The International
Journal of Human Resource Management, 21:2, 197-213, DOI: 10.1080/09585190903509480
Siegrist, J., Starke, D., Chandola, T., Godin, I., Marmot, M., Niedhammer, I. and Peter, R., 2004. The
measurement of effort-reward imbalance at work: European comparisons. Social science &
medicine, 58(8), pp.1483-1499.
Sparrow, P.R., 1996. Transitions in the psychological contract: Some evidence from the banking
sector. Human Resource Management Journal, 6(4), pp.75-92.
Stahl, G., Björkman, I., Farndale, E., Morris, S.S., Paauwe, J., Stiles, P., Trevor, J. and Wright, P., 2012.
Six principles of effective global talent management. Sloan Management Review, 53(2), pp.25-
42.
World at Work (WAT), 2017, What is Total Reward?, Retrieved from
https://www.worldatwork.org/aboutus/html/aboutus-whatis.jsp
Wachtel, P.L., 1997. Psychoanalysis, behavior therapy, and the relational world. American
Psychological Association.

Ya-Ling Kao Ching-Fu Chen, (2016),"Antecedents, consequences, and moderators of

ambidextrous behaviors among frontline employees," Management