Essay on Employee Compensation and Islamic Ethics

Essay on Employee Compensation and Islamic Ethics

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From the Islamic perspective, one major drawback in this organization compensation policy is organizational injustice towards employee. According to Abulhassan (2006), Islamic principles are concerned with justice and fairness. Organizational justice is essential as it represent employee’s perception about fair treatment in organization (Murtaza et al, 2011; Prof. Dr. Muhammad Ehsan Malik et al, 2011). Greenberg and Baron (2003) found that organizational justice comprised of employee’s perception toward distribution of outcome and perceived fairness.

There are four axioms that govern Islamic ethics, namely unity, equilibrium, free will and responsibility (Naqvi, 2001). Islamic ethical system that is related to overcome this drawback is the concept of ‘adl or justice. Employee should be given compensation equivalence to the efforts given. When their efforts are valued justly and rewarded fairly, employee’s motivation will increase. Subsequently, their performance is enhanced. Considering the fact that Lu Yueting has worked in the company for more than 15 years, his salaries and wages should also in proportion with his experience in the company. His merit should increase to recognize his past work behavior and also to reflect changes in experience or skill. 15 years of working experience in the company makes a person very skilful. Thus, Lu Yueting should be compensated for that. Besides, the cost of living in 1993 will not be the same with that in 2009. The cost of living adjustments should be increase to create satisfaction in employee. The increment has to be equal to all employees. Therefore, the company needs to increase the cash compensation in terms of merit and cost of living adjustments.

Hashim (2009) and Khan et al...

... middle of paper ...

...agement, Vol. 2, 3, p. 251.
Khan, B., Farooq, A., & Hussain, Z. (2010). 'Human resource management: an Islamic perspective. Asia-Pacific Journal of Business Administration, Vol. 2, 1, p. 17.

Murtaza, G., Shad I., Shahzad, K., Kamal Shah M. & Ahmed Khan N. (2011). Impact of distributive and procedural justice on employee’s commitment: A case of public sector organization of Pakistan. European Journal of Economic, Finance and Administrative Sciences, 29.

Naqvi, S. N. H. (2001). The Islamic ethical system. In Khaliq Ahmad & Abulhassan M. Sadeq (eds.). Ethics in Business and Management. London, UK: ASEAN ACADEMIC Press.

Prof. Dr. Muhammad Ehsan Malik & Naeem, B. (2011). Impact of perceived organizational justice on organizational commitment of faculty: Empirical evidence from Pakistan. Interdisciplinary Journal of Research in Business, Vol. 1, 9, p. 92-98.

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