Cathay Pacific Case Study

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2nd Term 2015 - 2016

HRM 3201 – 2

Performance and Compensation Management

Individual Report on Pay Structure Design

Cathay Pacific Airways Limited

Company Background

Cathay Pacific Airways Limited, an international airline company with the hub located in Hong Kong, was founded in 1946 and developed continuously. It is currently offering flight and cargo services to 194 destinations in 52 countries, and hiring more than 33,000 staff around the world, according to the interim report 2015.

Internal Environment

a) Corporate mission and strategies

Cathay Pacific aims to become the world’s best airline with providing outstanding products and services with safety concern as the most important factor. The company

Cathay Pacific has employed 33,000 people worldwide, while about 23,000 of them were hired in Hong Kong. The human resources department gives a fully support in value chain activities to the company so as to manage such a wide range of staff.

Besides, as Cathay Pacific serves international passengers, it launched its travel retail platform to the world but not just Hong Kong. It is obvious that Cathay Pacific will continue its expansion of flight services in the future.

c) Financial Situation

Cathay Pacific is currently at a stable, profit-earning financial situation. According to the interim report 2015, its net equity ratio is 0.81 which slightly decreased 0.04 times compare to 2014. Moreover, the profit after tax is HK$955 million which recorded an increase for more than HK$5 million compare to the previous year. The financial figures showed Cathay Pacific is strong and firm in financial conditions which can provide a definite support in expansion of the business while it has sufficient resources to employ more talents in the future.

However, due to the oil hedging, Cathay Pacific is currently paying for a higher price for fuel compare to other airline companies which may weaken the possibilities to use price discounts as to attract passengers.

d) HR

Recruitment

As Cathay Pacific pursuits for high quality services to customers, it has to pay high attention in selecting suitable candidates to be their staff. As Cathay Pacific is a service provider that it concerns on teamwork, the staff’s ability on interpersonal skills should be one of the essential factor when undergoing selections in order to meet its culture and values. For instance, when picking flight crews, Cathay Pacific ought to look for people who are proactive, resilient and willing to take challenges that are capable to deal with different situations on the plane.

2. Compensation and Benefits

As Cathay Pacific is facing vigorous competitions from not only low-cost airlines but also the other international airlines, the quality of service should be well-maintained. To attract and retain talents, it has to provide competitive and attractive compensation packages so as to ensure the turnover rate low. Moreover, Cathay Pacific may consider more incentive schemes such as low fare staff tickets, extra allowance for talents with outstanding work performance.

External Environment

a) Aviation