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Dubai: Employers should have a differentiated monetary incentive policy to keep critical talent in an organisation, a leading HR consultancy firm Towers Watson said, since this might be a bumpy year for companies in the Middle East as crude oil prices fall.
More and more privately held companies in the UAE are doing extra, other than what is required by the law, to retain talent. Only 34 per cent of the companies increased their end of service gratuity compared to 48 per cent in 2014. This mainly includes multinational companies and also leading local companies.
“When it comes to critical roles, the organisation is ready to pay premiums to limit the risk of losing these people. When it comes to performance management, the employers should have a tailored performance management system for employees who are critical [to the business]. Employees should get a leveraged incentive plan,” Roman Weildlich, Rewards, Talent, and Communication Director at Towers Watson told Gulf News.
“Something that was a practice by only a third of companies is now becoming a norm in line with the market,” said Weildlich
“People are not inclined to saving their money, they come here, and enjoy and love the zero tax environment. They see this as windfall money coming in their direction and spend it rather than save,” he said.
“Pension plan arrangement can take many forms but [there is] one that encourages employees to save part of their salaries with a matching contribution from their employers and in that way create a pool of money that is growing and that can be used when employees change their job in the region,” said Weildlich.
New employers should recognise that it’s an evolving market trend, and make a strategic decision in how they want to be aligned with market practice, an effective tool to retain key talent.
However 2015 could prove to be a difficult year for employees looking for huge salary raises or hefty bonuses, and employers are closely watching the movement of the price of crude oil, which shed more than 60 per cent of its value last year.
“A few oil and gas companies have reduced their merit increases by around 0.5 percentage points compared to what they predicted a few months earlier. However, if the price continues [to drop from] where it is now, it is very likely that domestic operators could get impacted and this could translate into salary freezes or reduction in merit increases or deferred bonds payout,” said Weildlich.
Companies may use this as a golden opportunity to identify talent critical to the organisation.
“We believe that it’s a great opportunity for companies to challenge themselves and ask what talent means for their business. Our research shows that companies across the Middle East are reluctant to work towards differentiation and rather tend to treat all employees equally,” said Weildlich.
“Research demonstrates that successful companies try to identify roles that make fundamental difference to their business and then treat these roles differently and they can give premiums and highly leveraged incentive plans for those pivotal roles. This would become more important in 2015 as it proves to be a challenging year,” said Weildlich.
According to Weildlich, companies are relatively slow to react but there are a few instances of a reduction in merit increases by 0.5 percentage points. He said decisions on any pay increase planned for April, July and September are made at the end of the first quarter with a lot of companies updating their salaries towards January, so many of these decisions have already been made.
Source: Siddesh Suresh Mayenkar, Staff Reporter, gulfnews.com