One of my recent subscribers wrote to me :
“I think the biggest challenge for any one handling HR in the GCC would be Total Rewards equity. Convincing people that they are paid fairly and equitably by any company seems to be an impossible task to achieve. Nationals keep wanting to be promoted despite their qualifications, or lack of it. Expats coming from lower paying markets want to be paid the same as those coming from higher paying markets. Add to the lot, everyone who is paid highly in their home country come to the GCC expecting to be paid a lot more than they would anywhere else regardless of cost of living, etc….”
I agree. This different treatment regarding total pay based not just on the job level and jobholder’s skills is one of the most fundamental challenges in the GCC. I actually wrote a post dedicated to this question of how to pay expats : purely based on the job, or also taking into account where they come from ? (Here it is if you are interested).
All expats around the world are motivated by the hope of earning more than in their home country. It is actually the main motivation for most of the people who decide to leave their country, family and friends.
If income-related hope wasn’t there, we’d only see a very small expat population : those seeking the thrill of a new culture or challenge (so essentially very young people, or those towards the end of their career), and those trying to escape horrendous conditions at home such as war, famine or severe economic depression (so generally lower skilled people as these are often the first victims in those desperate conditions).
“More money than back home” is a reward for the risk-taking and the impact of separation from loved ones and a familiar environment.
Now, in all fairness, maybe the dream of expats from lower paying markets is to be paid the same as those coming from higher paying markets, but in all my years of C&B in the Middle East and Africa region, not once have I heard anyone ask for an increase or trying to negotiate a better package upon hire, using this argument. Probably because everyone knows that salary negotiation is based on the individual and his/her ability to perform and add value to the company, not on some generic macro-economic request.
And to be honest, on a personal level, despite having grand principles of pay being based on merit and not on country of origin, I also don’t believe that it makes any sense to pay someone a salary that allows them to send back home 10 times a local (home country) manager’s pay every month, which is what would happen if we paid the people from lower-pay home countries the same levels as we pay for higher-pay countries. That would not be equitable either, would it ?
Also, let’s consider macro-economics. The economies of the GCC countries could not be competitive and sustain to pay everyone on the same high level. It would dramatically increase cost of production. With so many multinational organisations having moved here because of a cost advantage compared to their home economies, it would make a lot less sense for them to stay in the region if their cost of production surged to similar levels as back home. And then, if they decide it doesn’t make sense for them to be here, then where would all the job opportunities for expats go ? GCC countries would still be natural-resources rich, but their real-life economy would not grow that much and require us all and in the end this would result in lost opportunities for expats at all levels.
Finally, regarding Nationals. Yes, it is true that oftentimes they (especially the younger ones) want promotions very quickly, and they don’t always seem to appreciate that promotion = bigger job = more responsibilities = more skills needed.
However, when an organisation is dedicated to talent management, and focuses on educating its employees on the concepts of performance and contribution, of equity, of transparent feedback and of “real” growth through the acquisition of skills and experience, then this pressure comes down. It is also mostly felt, I think, in semi-government organisations, where there are large amounts of Nationals and some HR practices that are more aligned to the private sector than the pure government organisations. With an official rate of less than 2% Nationals in the private sector in the UAE, I am pretty sure that private organisations can manage these individual situations relatively easily :-).
All in all, the GCC countries are in a very unique position of having such a prominent portion of their residents being non-citizens. It’s a challenge frustrating at times, but also what makes our lives as HR and Compensation pros so stimulating in the region 🙂
So, what do you think is the biggest HR challenge in the GCC ? Please share your views in the comments section !