The 2018 Robert Half survey, recently stated that talent management (52%) was the most important key business focus area for companies operating in the UAE. This was followed by implementing new technologies (36%) and updating internal financial policies and procedures (35%). In fact, 87% of CFO’s acknowledged that it had become a challenge to recruit skilled finance professionals in the region.

A Hay survey published in August 2017, indicated that of the 300 senior HR professionals surveyed, almost 60% cited staff retention and talent management as their most important areas of focus. 21% indicated that retaining employees represented a significant challenge.

Retention is not a new issue for UAE HR professionals and they will be acutely aware that various studies have discovered that almost half of professional employees are considering changing jobs in the next year. Poor retention in the region has often been blamed on the transitory nature of expats however, statistics released by Zurich show that that over “the last 6 years, the average service period has grown from 4 years 7 months to 6 years 10 months “. Employees are staying in the UAE longer which begs the question of how companies should go about retaining those that are talented?

Learning and Development plays a significant role in talent management. In addition, ensuring that salaries are market related, that adequate benefits are provided and perhaps, introducing some flexibility to the total reward offering, are all ways to encourage retention.

But what about other traditional incentives?

Typical UK Pay Composition Graphic

The graph above illustrates that in the UK market, in general, Short-Term Incentives (“STI”) and Long-Term Incentives (“LTI”) make up about 40% to 70% of an executive’s total pay – the salient rationale being that this pay structure encourages performance and acts as a retention tool.

LTI

Several multinational companies in the GCC do provide some form of home based LTI scheme to their senior executives. Regional GCC companies have been reluctant to incorporate LTI, and especially share-based plans. In most instances, this retention tool is not available to HR managers to use.

STI

Several UAE companies, and especially international companies, do provide STI’s for executives – where executives would be defined as operating at a Paterson D5, Towers GG 15, Hays Level 19 and above. Most of these schemes are formula based but some are discretionary and on average, the on-target STI equates to roughly 30% of the Base Salary.

However, few companies offer STI’s for lower level employees and by implication, for those talented employees – half of who may be considering moving! Such schemes are relatively easy to implement and could be introduced only for those employees who have been recognised as “talent”. In our experience, this “eligible talent pool” should never be more than 5% to 10% of the total number of employees.

The scheme should be structured in such a manner that 50% of payments are deferred into future financial years – this will mean that the scheme will not only serve the purpose of motivating the talent to continue their superior performance but will simultaneously act as a powerful retention mechanism.

As stated above, the design of the Talent STI is hardly rocket science however, as we all know, the devil is in the detail and concomitantly, the scheme must satisfy the following criteria or underlying principles:

Axiomatic Infographic

 

Fore more information please contact Brett Hopkins on +27 11 305 1945 or brett@axiomatic.co.za