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  • Essay / Employee Compensation and Islamic Ethics - 874

    From the Islamic perspective, one of the major drawbacks of this organization's compensation policy is organizational injustice towards employees. According to Abulhassan (2006), Islamic principles are about justice and fairness. Organizational justice is essential because it represents employees' perception of fair treatment within the organization (Murtaza et al, 2011; Prof. Dr. Muhammad Ehsan Malik et al, 2011). Greenberg and Baron (2003) found that organizational justice included employees' perceptions of the distribution of outcomes and perceived fairness. There are four axioms that govern Islamic ethics, namely unity, balance, free will and responsibility (Naqvi, 2001). The Islamic ethical system that aims to overcome this drawback is the concept of adl or justice. The employee must receive compensation equivalent to the efforts made. When their efforts are fairly valued and fairly rewarded, employee motivation increases. Subsequently, their performance is improved. Considering that Lu Yueting has worked in the company for more than 15 years, his wages and salaries should also be proportional to his experience in the company. Their merit should increase to recognize their previous professional performance and also to reflect changes in experience or skills. 15 years of professional experience in the company makes a person very competent. So, Lu Yueting should be compensated for this. Additionally, the cost of living in 1993 will not be the same as in 2009. Cost of living adjustments should be increased to create employee satisfaction. The increase must be equal for all employees. Therefore, the company must increase the cash compensation in terms of merit and cost of living adjustments. Hashim (2009) and Khan et al...... middle of article ......agement, Vol. 2, 3, p. 251. Khan, B., Farooq, A. and 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. and Ahmed Khan N. (2011). Impact of distributive and procedural justice on employee engagement: a case of public sector organization in Pakistan. European Journal of Economic, Financial and Administrative Sciences, 29. Naqvi, SNH (2001). The Islamic ethical system. In Khaliq Ahmad and Abulhassan M. Sadeq (eds.). Business and management ethics. London, UK: ASEAN ACADEMIC Press.Prof. Dr. Muhammad Ehsan Malik and Naeem, B. (2011). Impact of perceived organizational justice on faculty organizational commitment: Empirical evidence from Pakistan. Interdisciplinary Journal of Business Research, Vol. 1, 9, p.. 92-98.