How HR is working it out

 

Employees represent a vital part of an organization’s success. Through solid HR strategies based on customized payment-and-benefit models, companies can ensure that they attract talented workers and, at the same time, they can motivate their existing workforce by providing some long-term advantages.

A few trends are likely to dominate the HR sector this year, reflecting the fact that many organizations are currently focusing on gaining a better understanding of their workforce.

Talent programs as a human capital strategy

Globally, base pay is considered to be the top attraction factor. Meanwhile, in the Middle East, young professionals, particularly, who are looking to join an organization, are motivated by career advancement opportunities, challenging work and job security.

Senior managers and leaders need to inspire and motivate their employees by actively listening to their aspirations and providing them with accelerated leadership programs. Succession planning and development programs are key tools to spot bright young talents.

The best such programs must be based on the development of knowledge skills and abilities to prepare the employee for advancement in key positions. This practice will not only create opportunities for highly competitive employees, but will also answer their need for growth and development.

Nowadays, employees choose a company based on development opportunities rather than focusing only on the salary package. In addition, given the increased number of young professionals in the region, managers must provide continuous support through coaching and an open approach that enables clear and
effective communication.

 

Enhancing benefits to retain talent

Following the increase of employee attrition rates in the GCC region, employers are starting to realize the impact of an effective benefit strategy in business development. Thus, it is essential to align the HR strategy with the company’s objectives and provide benefits that answer the employees’ needs.

A solid healthcare and wellbeing strategy must continue to be one of the top priorities for companies in 2016 and many employers in the Middle East are now embracing this approach.

In addition to a targeted healthcare strategy, companies must also look to their end-of-service benefits (ESB). Many Middle Eastern organizations are offering enhanced ESBs in order to comply with local or industry best practices and, more importantly, to retain key talent within the organization.

 

Pay for performance

Executive pay in the GCC region in recent years is in alignment with international best practices and this level of professionalism and maturity will lead companies to perform effectively in terms of growth potential and successful market entries.

Middle Eastern companies are introducing differentiated rewards programs for their executive teams, optimizing what they spend on rewards and incentivizing those behaviors that encourage long-term growth. As a result, executives show a higher annual potential, have access to long-term incentive plans and also have leadership effectiveness training. This way, companies can reward exceptional performance without having to pay high amounts for below-par performance.

 

Salary increments

According to Towers Watson’s latest Salary Budget Planning Study, Middle Eastern employees are expected to receive pay increases between 4.7 percent and 6 percent in 2016. Thus, pay rises across the Middle East region are expected to reach five percent next year in the UAE, Kuwait, Oman and Qatar, while employees in Jordan and Lebanon will enjoy average increments of approximately 6 percent and 5.8 percent, respectively.

Sectors such as financial services and energy and natural resources will benefit from salary increments in the UAE in 2016. Furthermore, most of the companies plan to allocate the larger portion of their salary increase budgets to high performers, while a few plan to equally share the budget allocated to all employees.

Impact of HR on business ROI

In order to truly become a business
partner and contribute to the bottom line of the business strategy, organizations must create value through programs developed and implemented to translate the business strategy into people strategy. Furthermore, they should measure the impact of such programs on the business and its people in order to provide top management with concrete data that will support and demonstrate the impact and return on investment for such programs.

 

Rethinking performance management as a business tool 

Performance management has a great impact on business success and goes beyond the evaluation and rewarding of employees according to their performance. In other words, performance management represents a powerful business tool that not only looks back on performance, but also looks forward in terms of discussing and unleashing people’s potential.

Companies in the region are redesigning their performance management processes based on continuous feedback and support provided to their managers by developing the right skills and deploying the right tools. By having a robust performance management process, companies will be aware of the level of satisfaction of their managers and employees, and thus ensure their retention and loyalty within the organization. Furthermore, performance management processes are directly linked to several areas that are crucial to the business growth, such as workforce planning, people development, employee engagement and retention levels, as well as the promotion of an internal culture.

 

Segmentation of the workforce to drive investment decisions

Workforce segmentation to drive a company’s investment decisions is another major trend, with different roles within an organization contributing to the business differently. For instance, an approach based on focused investment in learning and development, depending on the role as well as rewards, will result in better performance.

Therefore, companies must differentiate their employees and provide customized approaches to each employee profile. Employees that are pivotal to the organization can be treated differently to yield much higher Return on Investment than a ‘one size fits all’ development investment or reward approach.

 

Workforce analytics

Given the drop in oil prices, companies suffered budget cuts and that led to the setting up of workforce analytics and planning as one of the hottest trends.

Organizations want to use evidence-based analytics – combining business data, performance data and workforce demographics – to understand how change can be more effective in creating a better, more efficient workforce going forward. Organizational re-design is in high demand as companies reset their business strategies to adjust to slower regional and global growth and also to focus on new functional mandates, clarification of role accountabilities, better shape (fewer spans of control) and a higher calibre of staff with better skills to optimize head counts.

At the heart of the talent challenge is the need to offer a robust career management structure and strong development opportunities. Delivering on this goal will continue to be crucial in the region to attract and hang onto the best people in the market.

The outlook for 2016 is promising, as companies in the region are embracing employees as a crucial component to achieving business competitiveness in an uncertain market. Organizations must ensure high engagement levels by implementing a holistic human resources approach, based on development opportunities aligned with a solid performance management strategy.

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