Arik Air Hr Problem : The Employment Problem Essay

1032 WordsJul 17, 20165 Pages
ARIK AIR HR PROBLEM: The employment Problem Introduction One of the major corporate problems in the current century involves continuously soaring salaries and wages. In fact, some companies face up to 50 percent of their annual income being expended on staff compensation only. In several such cases, the highest number of employees are usually nationals of the host country within which the company operates. It thus follows that the numerous costly legalities involved in getting an expatriate into the country, coupled with getting to compensate them for their troubles away from home would amount to a significantly higher amount of staff compensation costs. Add this to the already compounding corporate problems and you land in a real nightmare of a situation. It is for this reason that Arik Air is in trouble. On its own, Arik has a major cost issue to contend with, as paying expatriates is pretty costly. On the other hand, there is the potentially divisive issue of wage spirals. As the local employees and pilots are both qualified, paying these foreign employees premium wages would eventually lead to resentment, laxity at their job performance and even aggressive industrial action. As such, management will be motivated to resolve such issues and avoid creating a toxic environment. Unfortunately for the company, this can only be accomplished by paying the other employees similarly high rates, therefore effectively pushing their personnel expenditure even higher (Chen & Flashel,

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