Emiratisation and Compensation & Benefits – part I

Emiratisation and Compensation & Benefits

With the government’s recent push on emiratisation, and similar decisions in the other GCC countries, Compensation & Benefits professionals have a role to play in supporting the attraction, retention and growth of UAE Nationals in both the private and the government sectors. In Emiratisation : the way forward ?, Jane Williams from INSEAD explains in a very thorough manner what the situation is and some of the challenges the country is facing with respect to emiratisation. I strongly recommend you take the time to read this article.

So what can you do ? In today’s post I will cover the most straightforward elements that C&B influences: basic pay and allowances / benefits, KPIs, and incentives. My next post will cover Performance Management, promotions criteria, retention, referrals, and recognition.

Phew ! In fact,there is a lot that Compensation professionals can get involved in with respect to emiratisation efforts ! So let’s get started.

  • Salary ranges and allowances

Hay recently announced that Emiratis are paid 33% more than expats on the same job in terms of gross salary (basic + allowances). You need to make a decision on whether you want to have a different set of salary ranges for Nationals, or if you want to use the same salary range for expats and Emiratis. I very much prefer the second option: have one set of salary ranges, and use the full spread of it so that if needed you pay a higher basic pay to the locals vs the expats. In my opinion, this respects the principles of job grading and pricing better : one job grade, one salary range – and individual decisions with respect to basic pay, influenced by experience, education, professional path… and, in the GCC, by nationality as well.

Similarly, you will want to establish if you pay different or higher allowances for the UAE Nationals. You may create special allowances, or simply pay more for the Emiratis. Or you can get a bit more creative. Some companies pay the same housing allowance for UAE Nationals and expats, but actually subsidise the amount : for instance, the Nationals only reimburse 50,000 AED out of the annual housing loan of AED 150,000 while the expats reimburse the full amount through a monthly pay deduction.

  • Statistics and KPIs related to emiratisation

A lot of companies will translate emiratisation into a quota target, for example to have x% of Nationals in the headcount. Well, this is nice… but not nearly enough and definitely not meaningful. Will you look at the quota overall for the company ? This is not very inducive of accountability as no-one will really feel ownership for a company-wide target. Or will you set the quota for each department ? In that case, do you set the same quota for all units, or do you differentiate (for example, based on their current emiratisation numbers, or based on the perceived degree of difficulty in finding UAE Nationals to fill positions in this job function) ?

As you can quickly see, a quota only is not the solution. You also need qualitative targets and KPIs, as well as a human interpretation of certain numbers. For example, if you focus only on the emirati headcount in each Unit, you will eventually hurt the growth and development of your national talent pool. Why ? Because in a pure numbers approach, a manager will refuse to let one of his talented Emiratis transfer to another department, as this will impact her quota target negatively… while overall nothing has changed for the company so there’s no real gain from that metric. In that case, the UAE National may get  disappointed and frustrated, and may leave the company altogether due to a lack of internal career opportunities. So your purely quantitative effort to reach a certain % of Emiratis in your workforce has eventually led to a reduction in the number of Nationals in your headcount.

Again, you need to integrate a qualitative approach to your thinking. Look at the different phases of an employee’s life in the organisation, and devise some KPIs related to them : attraction – retention – growth. Look at trends, and incorporate space for discretion or interpretation of the numbers. You want to make sure that the numbers do not mask what the reality is.

  • Incentives

Once you have determined the appropriate KPIs for your organisation, you will naturally think of incentives. Will you want to give some compensation towards reaching your emiratisation objectives ? And if so, will you pay something collective (for example integrate emiratisation in the Division’s objectives) or individual for employees who have people management responsibilities ?

Will you integrate objectives related to emiratisation into your existing scheme ? As a replacement of other objectives, or as additional criteria ?

Or will you determine a whole set of objectives and use them as a multiplier to your regular bonus scheme ? Or on the contrary use them as a hurdle (ie minimum conditions that need to be met for the payment of the normal bonus) ? Both the multiplier and the hurdle are effective ways to draw even more attention to emiratisation, as they have such a potential impact on the final payment of the bonus. Really, in these cases, “what gets measured gets done”. So you may want to consider these.

Once you have covered the basics of monthly pay and allowances and bonuses, you will want to see which other compensation elements you can use in order to support the emiratisation efforts in your organisation. I will cover them in my next post.

 

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Comments

  1. Ravinder Bhan says:

    Making an issue out of paying more to nationals is a waste of time; every nation has a right to do so. The real issue in my mind is where two expats of different nationalities are paid differently based on if they are Gora (western) or dark (eastern) – even where the qualifications, experience and skills are same. This is not only unprofessional but shamefully racist as well. What’s worse in many cases a western expat with lower expertise and skills is paid more than his / her Asian counterpart with higher skills etc – whether an employee or a consultant.

    If this be error and upon me be proved – then I request your attention to job ads clearly mentioning requirements that would substantiate what I am saying!

    • Yes Ravinder, I agree. In an ideal world, everyone would be paid based on their skills, experience, fit to the job and the company culture, and (where necessary) their leadership and decision-making skills.But we don’t live in an ideal world….
      This kind of bias is one that females all over the world face in terms of their compensation, and that’s why so many countries are implementing laws in order to fight against the gender pay gap. There is also something similar in countries where the society is or was based on a system of casts, where people’s jobs and salary were largely determined by their social and ethnic origins.
      When I first started to support the MEA region many years ago, my company had 4 different salary ranges for its employees in the Gulf (in decreasing order of salary based on region of origins) : Gulf Arabs, Westerners, Other Arabs, and Asians. I was shocked when I found that out, and proceeded to eliminate these ranges to create one single salary range based on grade. Yet this is only one step that C&B can take. If the culture is one of such differentiation, it takes time, putting in place role models, and making some serious conscious efforts on a daily basis to eliminate these tendencies.
      It’s not the same though as the topic of emiratisation / nationalisation in the GCC. Here, the issue is not simply to pay the Nationals “more”. The issue is to transition the local economies from government-funded, highly paid jobs that are subsidised by the hydrocarbur economy, which is not sustainable in the long term due to the demographic boom and other factors, to an economy based on Nationals taking up jobs in the private sector ie a self-sustained economy. But in order to be competitive, the private sector has to maintain costs on a lower basis, maybe productivity expectations are higher than in the government, and so organisations need to put in place systems and programs that will provide an attractive alternative to the Nationals…

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