Case Name :      Xiamen Airlines: Pay for Performance

Authors :           Wenhua Wu, Ann Peng, Gerard Seijts

Source :             Ivey Publishing

Case ID :           W15163

Discipline :        Organizational Behavior

Case Length :    16 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

On June 6, 2014, the deputy general manager of the human resources department of Xiamen Airlines, based in Xiamen, Fujian Province, China, discussed his company’s “best practices” at China’s first national forum on aviation security. Since 2009, a significant reform in the company’s pilot compensation system had aimed to promote a stronger linkage between their pay and performance. Initial outcomes had been positive, with improved productivity and job satisfaction. Yet, there were ongoing challenges in recruiting and retaining pilots due to increasing shortages of qualified personnel in the domestic and global aviation labour market and greater competition from both state-owned and new private airline companies in China. How could Xiamen Airlines become an employer of choice? Was the high compensation sustainable if the industry became less profitable? What else could the company offer to retain talented pilots?