### What is procedural justice? What strategies should an organization take to ensure that their performance management system is fair?

Procedural justice refers to the transparency in the process of issues discussion and decision making on different levels of a company. Thus, procedural justice can be illustrated by the company when employees participate in the process of decision making and this process is consistent and fair, so everyone can understand where this or that decision comes from. Procedural justice is beneficial for any company since employees are eager to work harder and contribute to the development of their companies when they see how decisions are made.

Of course, employees also praise that their opinions are taken into account, so personnel becomes more active. To ensure that a company’s performance management system is fair the company should implement certain strategies. First of all, it is essential that all employees could be involved in all issues discussions. So, it is necessary to create some database. Every employee should submit the results of his/her work. It is important that employees could also submit their comments and suggestions about some issues.

Of course, it can be helpful if employees could send their evaluation of management work. Thus, when learning such data it will be clear what the contribution of each employee was. Besides, company management should also make all employees aware of various decisions, especially when it deals with the performance management system. Thus, employees will be sure that every decision is fair, or if it is not, it will be possible to interfere and make management explain why this or that decision was made. This transparency will be beneficial for both, employees and management.

### Discuss the benefits and drawbacks of incentivizing discretionary behaviors at work. In other words, discuss how rewarding people with money for things they used to do without being directly compensated can be both good and bad

First of all, it is necessary to point out that any monetary reward influences positively on personnel performance. As far as incentivizing discretionary behaviors is concerned there can be both positive and negative outcomes. On one hand, employees will be able to see what kind of work they do is paid and how. Thus, people will pay more attention to those areas which are mostly paid. So, the most important tasks will be fulfilled more carefully.

The company can increase the quality of employees’ performance in a certain field which can be beneficial. Apart from this when a company starts paying for some particular task which was completed by an employee; it can be regarded as a kind of reward and recognition. Employees will see that their work is appreciated and some will feel that their incentives (for instance, when the work does not directly presupposes the fulfillment of certain tasks but an employee completed them) are taken into account and appreciated. In this case, employees are encouraged to suggest new incentives and work harder.

On the other hand, incentivizing discretionary behaviors can lead to such negative outcomes as poor performance and employees’ dissent. Thus, some employees can ask for a kind of compensation for the time they were doing the task which was not paid previously.

Apart from this, some employees can pay less attention to other tasks that are not transparently paid for or paid less. So, the main concern of employees will be completing the tasks they are particularly paid for. Besides, employees may ask for extra payment for other tasks, and if they do not get their extra payments, they can stop fulfilling those tasks or complete them badly. Of course, in this case, the employees’ performance will worsen.

Thus, when incentivizing discretionary behaviors a company’s management should consider all possible outcomes and implement the changes taking into account those considerations. Ideally, employees should regard such changes as a kind of reward, recognition, and motivation. So, every employee’s performance (each task) should be considered and the scope of the tasks fulfilled should be taken into account, so the salary will consist of payments for every task completed by an employee.

### Discuss your pay package—or a pay package in a previous job. You needn’t give specifics in terms of salary, etc., but you should identify the methods of compensation the organization provided. Please discuss how your compensation is effective or ineffective and what the organization could do to increase your motivation, job satisfaction, etc

When I was hired I was offered a certain sum of money and a promise of an annual reward (80% of a salary) at the end of a year (annually). I was provided with a list of my duties with a sentence where I acknowledged that some other tasks can be added to the list.

Of course, in some period, the list was enlarged considerably, with no salary growth. It is necessary to add, that I got the reward at the end of the year. However, the abundance of tasks I fulfilled led to the necessity to ask salary increase (I was also regarded the opportunity to quit) since I was fulfilling many tasks but was paid quite low wages (in comparison with other companies). Eventually, I got the extra payments but I cannot say I could be completely satisfied since there was no confidence that such a situation can repeat.

To my mind, I could be more satisfied if I knew exactly what I was paid for, so incentivizing discretionary behaviors in the company I worked for could be beneficial. Thus, it could be better if I could see what tasks are of profound importance (how much I am paid for them) and try to complete them in the best possible way. In case if I was asked to fulfill some more tasks I could see whether I was able to fulfill all of them and maintain the high quality.

If I saw that the task would take me too much time I could justify why I could not complete new tasks. Thus, the company should have considered all points carefully and we could come to some reasonable solution. I would like to have part n such processes since I believe that the performer can analyze the situation and provide the necessary data for the best solution.

As far as rewarding is concerned, I think, transparency of my salary could be quite enough. Of course, I could be also motivated by a kind of promotion. It should not necessarily lead to salary growth; instead, a shift to some other or more specific area could be very effective. In this case, I could occupy another post and I could be helpful in that new area since I would have a fresh eye. I would be eager to work out some new ways and suggest numerous solutions.

It is necessary to add, that being an employee I would also like to play some more active role in decision making since I had many interesting ideas that were never taken into account. If I felt my contribution can be real, I would be encouraged to do more than was expected from me. Thus, without any additional costs, the company could get a highly motivated employee who is eager to start something new and self-develop.

## Econometrics: Wages Changes’ Statistical Analysis

### Question a

Linear model for the natural log of wage as a function of age and education:

Where:

- W is the wage
- E is education level
- A is age in years
- C is a constant term

### The possible consequence of ignoring age

Age is an important determining factor of wage. It is expected that wage is low among children and teenagers. Wage then starts increasing at young adulthood, peaks at adulthood and then starts declining in old age. This is a reflection of the productivity of people at different times of their lifespan. Excluding the age variable from the model will result in poor fitness of the model. That is, education alone cannot explain wage and therefore without the age variable, the model would be poor. This in practice is normally reflected by the measure of the goodness of fit of the model, which is the R squared. A low R squared reflects a poor fit of the model while a high R squared reflects a good fit of the model (Koop, 2004).

Extend the model in a (i) above to allow for the possibility that wage changes with respect to age, at a different rate depending on the level of age:

The above model shows that the natural log of wage is a function of education level, age in years and age squared. The purpose of including the age squared is to show that wage changes as age increases but in a non-constant manner. The model is in form of a quadratic function, with respect to the age variable.

Extend the model in a (ii) above to allow for the possibility that wage changes with respect to age, at a different rate depending on education levels:

The above model shows that the natural log of wage is not only a function of education level, age in years and age squared, but it is also a function of the interaction between age in years and education level. The interaction term a_{4} AE shows that the natural log of wage changes with respect to age, at a different rate depending on education level.

### Question b

### Model 1

From the Eviews output 1, the coefficient on education is 0.089715, while that on age is 0.014212 and the constant is 0.623976. The standard error associated with the coefficient on education is 0.004948 and the associated t-statistic is 18.13304.

The probability value is 0.0000. The standard error associated with the coefficient on age is 0.001211 and the associated t-statistic is 1173407. The probability value is 0.0000. The standard error associated with the constant is 0.078503 and the associated t-statistic is 7.948386. The probability value is 0.0000. The R-squared is 0.277857 while the F-statistic is 247.4048 with a probability value of 0.000000.

Model 1:

Dependent Variable: LN_WAGE | ||||

Method: Least Squares | ||||

Date: 11/20/11 Time: 13:53 | ||||

Sample: 1 1289 | ||||

Included observations: 1289 | ||||

Variable | Coefficient | Std. Error | t-Statistic | Prob. |

EDUCATION | 0.089715 | 0.004948 | 18.13304 | 0.0000 |

AGE | 0.014212 | 0.001211 | 11.73407 | 0.0000 |

C | 0.623976 | 0.078503 | 7.948386 | 0.0000 |

R-squared | 0.277857 | Mean dependent var | 2.342416 | |

Adjusted R-squared | 0.276733 | S.D. dependent var | 0.586356 | |

S.E. of regression | 0.498667 | Akaike info criterion | 1.448567 | |

Sum squared resid | 319.7876 | Schwarz criterion | 1.460580 | |

Log likelihood | -930.6013 | F-statistic | 247.4048 | |

Durbin-Watson stat | 1.960079 | Prob(F-statistic) | 0.000000 | |

#### Interpretation of the coefficients

The coefficient on education (0.089715) implies that if education level increases by one level, wage will increase by 0.089715 x 100% = 8.9715 percent. The coefficient on age (0.014212) implies that if age increases by one year, wage will increase by 0.014212 x 100% = 1.4212 percent.

### Model 2

From the Eviews output 2, the coefficient on education is 0.085245, while that on age is 0.072534. The coefficient on agesquared is -0.000738 and the constant is -0.370723. The standard error associated with the coefficient on education is 0.004875 and the associated t-statistic is 17.48498 while the probability value is 0.0000. The standard error associated with the coefficient on age is 0.007706 and the associated t-statistic is 9.412955.

The probability value is 0.0000. The standard error associated with the coefficient on agesquared is 9.63E-05 and the associated t-statistic is -7.659714. The probability value is 0.0000. The standard error associated with the constant is 0.150871 and the associated t-statistic is -2.457213. The probability value is 0.0141. The R-squared is 0.309389 while the F-statistic is 191.8903 with a probability value of 0.000000.

Model 2:

Dependent Variable: LN_WAGE | ||||

Method: Least Squares | ||||

Date: 11/20/11 Time: 13:55 | ||||

Sample: 1 1289 | ||||

Included observations: 1289 | ||||

Variable | Coefficient | Std. Error | t-Statistic | Prob. |

EDUCATION | 0.085245 | 0.004875 | 17.48498 | 0.0000 |

AGE | 0.072534 | 0.007706 | 9.412955 | 0.0000 |

AGESQUARED | -0.000738 | 9.63E-05 | -7.659714 | 0.0000 |

C | -0.370723 | 0.150871 | -2.457213 | 0.0141 |

R-squared | 0.309389 | Mean dependent var | 2.342416 | |

Adjusted R-squared | 0.307777 | S.D. dependent var | 0.586356 | |

S.E. of regression | 0.487848 | Akaike info criterion | 1.405471 | |

Sum squared resid | 305.8241 | Schwarz criterion | 1.421489 | |

Log likelihood | -901.8263 | F-statistic | 191.8903 | |

Durbin-Watson stat | 1.963936 | Prob(F-statistic) | 0.000000 | |

#### Interpretation of the coefficients

The coefficient on education (0.085245) implies that if education level increases by one level, wage will increase by 0.085245 x 100% = 8.5245 percent. The coefficient on age (0.072534) implies that if age increases by one year, wage will increase by 0.072534 x 100% = 7.2534 percent. The coefficient on agesquared (-0.000738) implies that if age increases by one year, wage will reduce by 0.000738 x 100% = 0.0738 percent.

### Model 3

From the Eviews output 3, the coefficient on education is 0.050464, while that on age is 0.063333. The coefficient on agesquared is -0.000760 while that on age_educ is 0.000859. The constant is 0.041101. The standard error associated with the coefficient on education is 0.018958 and the associated t-statistic is 2.661846 while the probability value is 0.0079. The standard error associated with the coefficient on age is 0.009097 and the associated t-statistic is 6.962193 with a probability value of 0.0000.

The standard error associated with the coefficient on agesquared is 9.69E-05 and the associated t-statistic is -7.842321 with a probability value of 0.0000. The standard error associated with the coefficient on age_educ is 0.000452 and the associated t-statistic is 1.898335 with a probability value of 0.0579. The standard error associated with the constant is 0.264157 and the associated t-statistic is -0.155592 with a probability value of 0.8764. The R-squared is 0.311322 while the F-statistic is 145.1102 with a probability value of 0.000000.

Model 3:

Dependent Variable: LN_WAGE | ||||

Method: Least Squares | ||||

Date: 11/20/11 Time: 13:58 | ||||

Sample: 1 1289 | ||||

Included observations: 1289 | ||||

Variable | Coefficient | Std. Error | t-Statistic | Prob. |

EDUCATION | 0.050464 | 0.018958 | 2.661846 | 0.0079 |

AGE | 0.063333 | 0.009097 | 6.962193 | 0.0000 |

AGESQUARED | -0.000760 | 9.69E-05 | -7.842321 | 0.0000 |

AGE_EDUC | 0.000859 | 0.000452 | 1.898335 | 0.0579 |

C | 0.041101 | 0.264157 | 0.155592 | 0.8764 |

R-squared | 0.311322 | Mean dependent var | 2.342416 | |

Adjusted R-squared | 0.309176 | S.D. dependent var | 0.586356 | |

S.E. of regression | 0.487354 | Akaike info criterion | 1.404220 | |

Sum squared resid | 304.9682 | Schwarz criterion | 1.424242 | |

Log likelihood | -900.0200 | F-statistic | 145.1102 | |

Durbin-Watson stat | 1.963665 | Prob(F-statistic) | 0.000000 | |

#### Interpretation of the coefficients

The coefficient on education (0.050464) implies that if education level increases by one level, wage will increase by 0.050464 x 100% = 5.0464 percent. The coefficient on age (0.063333) implies that if age increases by one year, wage will increase by 0.063333 x 100% = 6.3333 percent. The coefficient on agesquared (-0.000760) implies that if agesquared increases by one unit, wage will reduce by 0.000760 x 100% = 0.076 percent.

The coefficient on age_educ (0.000859) implies that if age_educ increases by one unit, wage will increase by 0.000859 x 100% = 0.0859 percent. Given that age has been interacted with education, this coefficient can also be interpreted as: the return to education increases by 0.0859 percent as age increases.

### Question c

### The t-tests

The t-test is a test for the significance of the estimated coefficients. The null and alternative hypotheses for the t-test are given as:

αi represents the individual coefficients in each of the three models above. The null hypothesis states that the coefficient is not different from zero hence it is statistically insignificant. The alternative hypothesis on the other hand states that the coefficient is different from zero and is therefore statistically significant. To determine the statistical significance of the t-tests, one compares the p-value with the level of significance (Tinbergen, 2004). If the p-value is less than the level of significance, we reject the null hypothesis and fail to reject the alternative hypothesis (Wooldridge, 2009).

Assuming a significance level of 5% (0.05), the p-values in model 1 are all 0.000 and are therefore less than the p-value. In this case, we reject the null hypothesis that the each of the two coefficients is statistically insignificant and conclude that all the coefficients are statistically significant.

Similarly in model 2, all the p-values are 0.000 and are therefore less than the level of significance. In this case, we reject the null hypothesis and conclude that each of the three coefficients is statistically significant.

In model 3, the p-values associated with the four coefficients are: 0.0079, 0.000, 0.000 and 0.0579, respectively. Comparing the p-values with a 5% level of significance, only the first three coefficients are statistically significant. The last coefficient (on age_educ) is not statistically significant at 5% level of significance. However, it is statistically significant at 10% level of significance.

### The F-test

The F-test measures the joint significance of all the coefficients (Kennedy, 2003). The null and alternative hypotheses are given as:

Like in the t-test, the significance is determined by comparing the p-value (of the F-statistic) with the level of significance (Baltagi, 2011). In model 1, the p-value of the F-statistic is 0.000000 which is less than the level of significance (0.05). The conclusion is that education and age jointly explain changes in wages.

Similarly in model 2, the p-value of the F-statistic is 0.000000, which is less than the level of significance of 0.05 implying that education, age and agesquared jointly explain changes in wages.

Likewise in model 3, the p-value of the F-statistic is 0.000000, which is less than the level of significance of 0.05 implying that education, age, agesquared and age_educ jointly explain changes in wages.

### Question d

Other potentially relevant variables that should have been included in the model include: years of experience, skills level and government policy.

The interaction between age and education (showing the dependence between education and age) is statistically insignificant. This shows that education is indeed independent of age and therefore the models are not mis-specified.

### References

Baltagi, B.H., 2011. *Econometrics.* London: Springer.

Kennedy, P., 2003. *A guide to econometrics*. Cornwall: MPG Books.

Koop, G., 2004. *Analysis of Economic Data. Hoboken.* UK: John Wiley & Sons, Inc.

Tinbergen, J., 2004. *Econometrics*. Oxfordshire: Routledge.

Wooldridge, J.M., 2009. *Introductory econometrics: a modern approach.* Mason, OH: South-Western Cengage Learning.

## History Of The United Arab Emirates

### Introduction

The history of the area starts in the 7^{th} century when Islam was converted, but the archeological research shows that the first human occupation can be referred to as the Neolithic period. A new formation, United Arab Emirates, comprising six emirates (Abu Dhabi, Umm al-Qaiwain, Sharjah, Fujairah, Dubai, and Ajman) was established on 2 December 1971 (UAE Interact, 2011).

### Basics

Now, UAE is a constitutional federation that includes seven emirates (Ras al-Khaimah is additional). Even though 4/5 of the territory is a desert, the country is highly developed economically and culturally. The country has a positive location and beautiful landscapes that attract many tourists (UK in UAE, 2011).

### Language

The country has an official language, Arabic, but there also other widely spoken languages as English, French, Urdu, and Hindi.

### Religion

Islam is the central religion of the country. It controls all the spheres of human life in the UAE.

### National Dress

National dress is known as pandora or dishdasha in the country. Women usually wear an abaya, a long black robe which covers their shoulders. A scarf that covers women’s hair is a traditional attribute of female clothes. Women are forbidden to wear swimsuits on public beaches (Ask Ai, 2010).

### Climate

The climate is warm and sunny in winter, about 26 °C during the day and 12-15 °C at night. Summer is hot and humid (no less than 40 °C).

### Clothing

Visiting UAE, a tourist should follow some simple rules, which may appear to be rather strict for Europeans. Shoulders should be covered, the dress/skirt should not be too short, and too tight. Men should wear a shirt. Shorts are not preferable if they do not cover knees (Ask Ai, 2010).

### Greeting/invitations

The greeting of familiar people is supported by body language. The citizens of this country are very emotional in the invitation and may seem even too passionate. Loud conversations with too emotional gestures are not strange in the UAE.

### Holidays

There are several national holidays which are of high importance for the citizens. Some of them are dedicated to religion (like Ramadan, Prophet Mohammed Birthday, Israa & Miraj Night, Eid Al Fitr), and some of the holidays are national (like New Year, Islamic New Year, and national day).

### Ramadan

This is the central Islamic holiday of the country. It lasts for a month and provides the following rules and restrictions. People are forbidden to eat, smoke, have sex, and do other inner injections during the daytime. Pregnant, children, sick people, and elderly ones can be freed from sawm. People have to pray, read Qur’an, and donate more during Ramadan.

### Cultural do’s/ don’ts

It is forbidden to drink in the UAE. There are specific places, usually on the territory of the hotels, where tourists can consume alcohol. Women should follow the rules of the national dress code. Drugs are banned in the country as well. It is forbidden to take different pornographic books and videos to the country as well.

### Communications

The country possesses modern technological items, like mobile phones and the internet. The post office services are spread. The mass media system is developed. The television and the newspapers are the sources of information for the citizens of the UAE.

### Currency/Banking

UAE Dirham (100 Fils) is a currency in the country. The UAE Central Bank is a central financial establishment in the country. Several local banks have the net in different regions, foreign banks, and representative offices which support the interests of the clients of different banks in the world. ATMs are numerous and they accept the cards of different national and international banks.

### Shopping

There are two main shopping areas, malls, and souqs. Malls are more than just shops, they have food areas and different kinds of entertaining centers. Souq is a public market which does not only offers items for sale but can be considered as entertainment.

### Hours of Business

Business hours are specific as all government establishments are opened from Sunday to Thursday (from 8 am until 4 pm). Most shops are open from 10 am until 10 pm.

### KUSTER Medical plan, coverage, and claims procedure

Insurance is important. No one tourist is allowed to enter the country without insurance. Medical service is of high quality in the country center, but there may be difficulties with the medicine in the outlying areas. Some drugs allowed worldwide may be prohibited in the country, so it is essential to keep a doctor’s prescription.

### Hospitals and Doctors

There are a lot of hospitals in the country. Pharmacies work 24/7. If one needs a doctor, it is necessary to talk about it in the hotel. You should not try to search for a hospital yourself.

### Schools

There are a lot of different schools and other educational establishments in the country. United Arab Emirates University is considered to be the central one. There is also Zayed University, higher colleges of technologies, etc. which provide students with high-level knowledge.

### Recreation

UAE is a world tourist center that has a lot of different places for recreation. Tourists as well as the native citizens can relax on a beach, visit different places of interest, attend sports events, etc. There are a lot of cinemas, theaters, and clubs of interest which may be attended.

### Restaurants

There are a lot of restaurants, fast food, and cafes that offer different cuisines, like Indian, Asian, Arabic, Lebanese, Iranian, etc.

### Alcohol

It is forbidden to drink alcohol in public in the country.

### Photography

Being a tourism center, it is allowed to take photos. Moreover, the country offers a wide range of e-cards with the country’s landscape.

### Driving

Right-hand traffic is used in the country. The roads are of high quality, three colored traffic lights are accepted, like in most countries. The signs are understandable and can be easily seen. Cameras are used, so one should stay and wait for police arrival in case of an accident. It is better to rent a car rather than buy it.

### Pets

Pets are allowed in the country, but a lot of certificates should be provided in case either a dog or a car is brought to the UAE. Some landlords forbid tenants to keep pets, so this problem should be considered beforehand.

### Employment Opportunities for spouses

When a person comes to UAE for business purposes, he/she can bring a spouse. The working opportunities are not great, but if one has graduated from any educational establishment, there is an opportunity to remain as a teacher there (Zayed University, 2011; HCT, 2011).

### Reference List

Ask Ali. (2010). Web.

HCT: Higher colleges of technologies, United Arab Emirates. (2011). Web.

UAE Interact. (2011). Web.

UK in UAE, British Embassy. (2011). Web.

Zayed University, United Arab Emirates. (2011). Web.