Retaining Talent:Strategies to engage and retain professionals in the Middle East region

A Manpower Green Paper

engage retain

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Contents

Executive Summary 2

Introduction 2

Confronting the Talent Crunch 3

Middle East – its unique talent retention concerns 4

Retention in the spotlight: WHY 6

Retention is an imperative: HOW 7

Some key non-compensation elements to retention 8

The importance of employee engagement in retention 10

Individual motivation for talent mobility 10

Conclusion 12

References 12

2

Talent shortage and talent movement are twoimportant dimensions of staff management thatcompanies throughout the world grapple with.According to data from Manpower’s 2008 survey,“Confronting the Talent Crunch”, 41% of employersworldwide are facing difficulties filling positions dueto a lack of available talent, making employeeretention a vital requirement for industry leaderslooking to maintain their frontrunner status.

This green paper explores the challenges andopportunities of retention strategies in the Middle Eastregion and provides some recommendations forcompanies looking to retain their talent.

Globalization brings with it the two key characteristicsof collaboration and intense competition. In order toremain leaders in their industry, companies need toattract and retain the best talent. Companies are willingto pay over the odds to get the best on board.Competition brings with it a war for talent, resulting inthe talent pool having more opportunities to consider.This scenario calls on companies to keep their topplayers engaged and motivated to contribute toinnovation and growth.

Executive Summary

Introduction

Shifting demographic trends, industry practices, advancesin technology and globalization have contributed to talentshortages in growing and developing economies.

Demographics shifts (aging

populations, declining birthrates,

economic migration), social evolution,

inadequate educational programs,

globalization, and entrepreneurial

practices (outsourcing, offshoring, on-

demand employment) are between

them causing shortages, not only in

the overall ability of talent but also –

and more significantly – in the specific

skills and competencies required in

industrialized, emerging, and

developing economies.

“Confronting the Talent Crunch: 2007”

Manpower White Paper

3

Companies in diverse sectors across the globe will facea growing talent crunch in hiring people with requiredskills. The World Bank’s GDP annual growth figures1

(of 3.3% in 2000, 4.5% in 2005 and 5.1% in 2006) forthe Middle East and North Africa (MENA) region reflectthat economic activity and prosperity is high, with hugeprojects in non-oil sectors attracting global talent to theregion. However, demand far outstrips supply in nearlyall areas and skill groups.

GulfTalent.com’s survey of September 2007 shows thatfirms are seeing a constant upward spiral in salaries.This survey pegs the average rise in salaries in the GCCregion at 9% in 20072. Grappling with inflation and highcosts of replacement, firms in the region are realizingthe importance of retaining talent.

Confronting the Talent Crunch

Source: Figure 2: Manpower White Paper, “Confronting the Talent Crunch: 2007”

Men Women

Lack of resources createstension on the high-skillsmarket

Oversupply of low-skillresources generatesunemployment

Number of people available by skill level

Demand for skill Supply of skill

$ per hour

1 World Bank, Development Indicators database, April 20082 GulfTalent.com Survey, September 2007, “Gulf Salaries rise by 9%.”

Figure 2: The Talent Supply/Demand Disconnect

4

3 http://yaleglobal.yale.edu/display.article?id=8333

The Middle East has traditionally had a large proportionof expatriates from Asia and Europe, in addition to thelocal workforce. YaleGlobal Online quotes: “About13 million foreigners make up about 70 percent of theworkforce in six member countries of the GulfCooperation Council (GCC)”3 alone. In the United ArabEmirates, the concerted nationalization efforts havebrought a higher mix of nationals into the talent pool,but the national population is simply not large enoughto sustain the economic growth of the country, hencethe strong reliance on expatriate workers.

Clearly, given the differences in ethnicity and culture,these two broad groups of individuals approach theircareers differently and seek to satisfy diverse needsthrough their work. The region has traditionally had aculture of high salaries and cash rewards.

This has changed over the past few years. While localtalent is not so concerned with security yet, expatriatesare increasingly looking for stability and longevity in anemployer. They are often willing and keen to relocate tothe region permanently. Earlier, foreign nationals to theMiddle East region viewed their stint with a three-yearhorizon, looking to return home at the end of theirassignment. Now they look to move on to other jobsand extend their tenure in the region. This has changedthe equation, and the ‘one size fits all’ approach toattracting and retaining talent no longer works.

The Middle East is also seeing unprecedented growthand economic activity. Non-oil sectors like construction,tourism, hospitality and banking are experiencing heavyinvestment and huge projects. This has put significantpressure on talent supply, which is inadequate to meetthe growing demand. As a result, firms are payinghigher salaries to attract top tier workers, who are thenattracted away by the promise of even higher salaries,raising attrition levels and resulting in companiesspending even more to replace talent that they havelost to other opportunities.

Middle East - its unique talent retention concerns

5

4 http://www.emiratesgroupcareers.com5 http:.mercer.com/middleeastbenefits6 http://www.talentmgt.com/departments/dashboard/2008/August/705/index.php?pt=705&start-0&page=1

As a result of these changes, the Middle East is seeinga unique blend of ‘old’ and ‘new’ HR policies andpractices. We see more of the ‘old’ HR practices innon-oil producing countries where the focus was ontraditional personnel management and payroll-basedpolicies and HR did not play a role in building theorganizational brand or create the Employer ValueProposition (EVP) through dynamic recruiting,onboarding, development, rewards and benefits orretention strategies. ‘New’ policies are generally basedon a more strategic style of human resourcesmanagement, which is competency-based. The Dubai-based international airline Emirates, which isfast becoming an “employer of choice” not only fornationals but also for expatriate professionals fromaround the world, is a case in point. The airlinedemonstrates a progressive approach to its HR policiesand benefits4 such as concessional airfares, medicaland dental insurance, exchange rate protection for 50%of the basic salary, annual leave with passage,furnished accommodation, profit sharing and careergrowth opportunities that compare with the best in thecorporate world. This is to ensure that the airline is notonly able to attract, develop and retain key talent, butalso provide long term career proposition. Withincreased competition, demand outstripping supply,more millennials joining the workforce and local lawsbeing amended to make job changes easier, allowingfor talent movement and therefore healthy competitionin the region, having progressive HR policies is not anoption but a business necessity.

Throughout the region, HR practices that promoteemployee engagement by setting up systems fortraining, feedback, communication and career planning,and active retention strategies, are gaining ground.Mercer’s 2008 Middle East Benefits Report provides an update of the trends covering areas like employeeprotection programs, lifestyle programs and otherperquisite benefits.5 & 6

“About 13 millionforeigners make up about

70 percent of theworkforce in six member

countries of the GulfCooperation Council.”

YaleGlobal Online

6

Retention in the spotlight: WHYFirms are realizing that it is more cost-effective to retaina talented employee than to climb on to the recruit-train-lose-recruit juggernaut. Research shows that itcan cost around 1.5 times the salary to replace existingtalent. Direct costs include advertising, recruiting andtraining, but companies also need to consider indirectcosts, such as reduced morale in the workplace,disruption of work flows, dissatisfied customers andovertime put in by others to make up for the loss of the individual.

High employee turnover causes multiple challenges:

• Employers miss out on growth opportunities andsustainable development as they are not able to keepand leverage subject matter experts, highly skilledand tenured employees whom they can place inleadership roles to manage expanding areas ofbusiness or new and emerging markets.

• Focus is distracted from the core business becausecompanies are required to constantly induct and trainnew staff.

• Inexperienced employees negatively impact quality ofproduct or service, resulting in dissatisfied customers.

• Attrition causes a chain effect as more employeesdefect if they perceive that the senior talent poolis weak.

• The cost of replacing people who have significantknowledge about the company is high.

If retention is not all about salaries, then what are theother factors that can help companies retain the rightemployee? A survey conducted by Manpower China in2006 indicated that employees often cited reasonssuch as lack of career advancement, learning andgrowth opportunities as reasons for resigning, inaddition to compensation. Research into the reasonswhy people choose to relocate for work show similarresults; a recent Manpower White Paper highlighted themotivators for relocation from jobseekers in differentregions of the world.

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Middle East EMEA Global

Increased pay 81.4% 80.5% 81.8%

Better employment opportunities 79.4% 69.6% 72.7%

Opportunity to learn another language 27.2% 43.4% 47.4%

Opportunity for career advancement 80.8% 71.1% 73.6%

Opportunity to experience a new culture or environment 52.5% 46.4% 51.4%

Move to a better environment (better weather, less crime, etc.) 45.9% 42.3% 43.2%

To live closer to family 26.4% 17.6% 16.3%

Other 8.0% 5.8% 6.1%

Source: Manpower Research, Global: Relocating for Work online survey: 2008

Effective employee retention should focus on strategiesand practices that prevent employees being attractedaway to another organization. Employees are morelikely than ever to expect working conditions to gobeyond simple monetary rewards in order to keep themsatisfied. So, organizations that creatively offer a rangeof benefits, such as varied experiences, learning andadvancement opportunities, visible career paths,mobility options, travel and working conditions thatenhance work-life balance will stand a better chance ofretaining their talent pool.

More and more “employers of choice” are starting torecognize that keeping their talent is a top priority inorder to maintain higher profitability and stay ahead ofthe competition.

So, what is happening in the benefits space? While amajority of multinational firms in the region offer totalmedical insurance, there is the likelihood that they mayswitch over to a cost-sharing option in view of inflation.Other usual perks that most employers in the region offerare allowances like a company car, flights home, housingand schooling. Today, employees also seek protectionbenefits in the event of death or disability. Popularretention practices in the region include discounted health

club memberships and long service awards. Anemployee-friendly compensation structure is a practicalway of empowering employees to structure apercentage of their salary according to their need andlifestyle.

Citigroup and BAE Systems are two examples ofcompanies that allow á la carte flexible benefit plansthat vary by country, in compliance with localregulations. Companies today set aside 60% of thecompensation as the base and allow 20% for housingand the remaining 20% as a flexible basket ofallowances that can be allocated by the employee forhealth care benefits, travel, etc.

Retention is an imperative: HOW“It’s all about giving employees ‘line of sight,’ so they can see

that they contribute to the success of the business. But it’s not good to

tell them you value what they do. You have to demonstrate it

through your action.”

Gerard Montocchio, HR Practitioner

Why would you consider relocating for a job?

8

With the rising trend in salaries (fuelled partly by payrises in the public sector, the weakening dollar,competition and economic growth in Asia), MiddleEast employers are seeking retention options that

aim to meet newly emerging employee needs forsecurity, long-term stability, continuous learning andfeeling valued. Clearly, compensation by itself is nolonger the magnet that retains talent.

This section aims to examine the different non-compensation elements to retention.

Retention strategiesgiving talent a reason to stay

Self Management -

empowering the

employee

Innovative benefits programs empower employees with the ability to self-administer

benefits, supported by a robust HR Information System (HRIS). Here, a flexible

basket of allowances up to 20% of the total cost to company per employee is left to

the discretion of the staff to allocate according to their choice, such as leave travel

allowance, continued education, topping up of gratuity, sick leave, holiday rates, car,

and gym membership.

Talent Value

Management

A comprehensive talent management strategy involves a clear line of vision on career

progression - i.e., career path, 360 degree review feedback, encouraging employees to

put in place career development plans, mobility assignments to work in other regional

offices, increased responsibilities, stretch assignments, decision-making responsibilities

and succession planning. Managers engaging in ongoing development dialogues with

employees is a core ingredient in talent management, so that managers can provide

employees with roles mapped to their skills and career aspirations.

Employee and

Career Profiling

A plethora of assessment options exist in the market for employee profiling. The most

common are the Myers Briggs Type Indicator (MBTI), DISC Profile, Hermann Brain

Dominance Instrument (HBDI) and Job Characteristics Inventory (JCI), amongst others.

Employee profiling helps the leadership of the organization to assess and map career

paths, allowing for informed prediction of successful performance.

Shaping - the

managerial tool

Managers are moving to focus beyond the transactional and engage their teams in

transformational thinking in decision-making that benefits the organization. They

demonstrate thought leadership in risk-taking, play a role in strengthening the cultural

DNA of the organization and put in place an environment conducive to creativity and

innovation. Developing employee and manager “ready reckoner” toolkits for career

development and making these available on the company’s intranet as and when

needed is valuable. Organizing team building activities, having Quarterly Business

Reviews (QBRs), and taking teams off-site are all innovative practices that cater to the

needs of the Millennials (see page 10 for more on the Millennials).

Some key non-compensationelements to retention

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Mentoring Mentoring is a powerful tool that provides an opportunity to meet and interact with

senior leaders of the firm. Campus and lateral hires benefit immensely with guidance in

setting personal and professional goals, skill development, cultural orientation, and in

navigating the firm. This allows employees to build their own personal “board of

directors” to leverage through their careers with the company.

Flexible Work

Policies

It is imperative for employers in the Middle East to start implementing retention

practices that expatriates from European countries are already used to. One of them is

workplace flexibility, which enables employees to complete their tasks and yet enjoy a

life outside the workplace. Examples would include flexible hours, compressed work

weeks, telecommuting options, on-site childcare, concierge services, job sharing,

membership to local health club or on-site gym, and work scheduling options. The pay-

offs from having such benefits are multifold - from having engaged and loyal employees

to increased productivity, the development of management skills that can work with

virtual teams, reduced absenteeism to developing trust and meeting business goals.

Learning and

Development

Identifying critical competencies for success for managers and employees is a pre-

requisite to arriving at a relevant learning and development curriculum for the various

levels in an organization. Employees need holistic professional development

opportunities to benefit from. These include live instructor-led sessions (internally and

public) to self-initiated learning behaviors promoted by establishing a comprehensive,

on-demand library of online learning modules accessible to employees. This blended

learning approach sets the tone in developing a culture of learning in organizations. A

robust Learning Management System (LMS) allows both manager and employee to

track completed learning and any credits earned. These are then taken into account

during performance reviews or to direct employees to develop required skills during

feedback sessions. Leadership and business speaker series led by senior leaders of

the company provide learning opportunities for employees about the firm, its business

and leadership principles. Top firms typically adopt a 70:20:10 approach where 70% of

learning takes place on the job, 20% through professional interaction and 10% through

formal learning opportunities. On-the-job learning not only provides opportunities for

transfer of learning from senior employees, but the knowledge gained is also retained

better than in formal training. The best organizations today have successfully mapped

learning curricula to critical skills required to perform successfully at different levels of

the organization. This provides a structured and well laid out learning path for

employees to benefit from.

Employee

Engagement

The expectations of today’s talent have changed from merely being satisfied with a top-

down approach to that of wanting to be informed, consulted on decisions and

participating in the management of the organization. The Gallup Q-12 questionnaire is a

good tool to use to measure employee engagement. Other employee engagement

mechanisms include social committees, affinity networks and employee benefits

committees, using data from exit interviews and employee surveys to develop policies

to enhance the employees’ working environment.

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Employee engagement is vital, not only because theseemployees work harder and are more productive, butalso because engaged employees are retained. The Blessing White (2007) study7 reveals that 85% ofemployees that were engaged indicated their intent tostay with their current employer. Employee engagementnot only has a positive correlation with retention, butengaged employees tend to ‘give’ to the organizationby way of creativity and innovation that in turn have apositive impact on the earnings per share versusdisengaged employees who are only looking to ‘get’from the organization. Key drivers to engagement include:

• Linking employee work objectives to business goals

• Employee confidence in senior management’s abilityto drive the organization forward

• Compensation

• Feedback from immediate superior

• Being looped in on organizational developments

• Being included in the decision-making process, rather than just being told after the fact

• Employee feedback on policies, working conditions,benefits administration, work place flexibilityand other issues.

The importance of employeeengagement in retention

Millennials and their expectations

The millennials8 are known by other names such as Generation Y and the Digital Generation. This subset of thedemographic consists of those born between 1981 and 1993. The expectations of the millennials from organizationsdiffer significantly from those of previous generations as they challenge older, accepted business models. This tech-savvy generation has no hesitation in questioning the status-quo, expects more choices, flexibility in workingconditions, a quicker pace of career development and having greater control when making career decisions.

The Manpower Latin American Mobility study conducted in 2007 reveals that attractors and retention factors canbe slightly different for people with different skill sets. A critical aspect for HR practitioners to bear in mind is thatfactors that attracted people to the company will always have some intrinsic value in keeping them there. In otherwords, it is essential that the organization delivers on what was promised when selling the job. So, to the extent itis appropriate, these should be leveraged to the fullest to retain talent.

Individual motivation for talent mobility

7 Engagement Level, Performance and Retention in the Development of Successful Emerging Leaders, David Samuel, 20088 http://www.deloitte.com/dtt/article/0,1002,sid%253D26551%2526cid%253D120906,00.html9 ASTD State of the Industry Report, 2002;http://www.astd.org/NR/rdonlyres/2E06A797-1EF6-44A9-B387-0AC7D14C1157/0/SOIRpress_release.pdf

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• Investment in Training - with change being the onlyconstant today, employees are keenly aware of theneed to upgrade knowledge and skills to remainmarketable in a competitive work environment. This drives the desire for them to be associated with a learning organization that provides them theplatform to develop these skills. Given the trendstowards seeking stability and longevity in anorganization, employers have recognized the need to work closely with local universities to developsuitable courses. A case in point is Accenture tying upwith the Xavier Labour Research Institute in Indiathrough which they provide executive education forupcoming HR professionals. Re-skilling, up-skilling andallowing employees to set their own developmentcourse will also go a long way towards fighting thetalent crunch. The American Society for Training andDevelopment9, a leading authority on workplacelearning, in its 2002 study, indicates that companiesgenerally spend from 1 to 3% of the payroll ontraining. This contributes to the development of apositive ‘employer brand’ for the organization andpositions it as an ‘employer of choice’.

• Both national and expatriate employees in the MiddleEast cite relationships with co-workers as vital totheir remaining in the firm. While nationals place theirrelationship with their managers as more important,expatriates indicate that they need a positiverelationship with their colleagues and peers to staywith an organization. It is necessary, therefore, forfirms to realize that employees often leave managers,not company. The manager can make members ofhis team stay on with the company by offeringtransparent career paths, and also relevantleadership skills development opportunities that areappropriate to the ethos of the organization, and to alarger context, the region.

• Recognition programs focus energies on achieving thefirm’s business goals, and there are several low costoptions available to HR managers. Certificates andengraved plaques have now become banal. Innovativerecognition programs include public acknowledgementof contribution at seasonal celebrations, an extra paidday off, reserved parking, bonus airline miles, movietickets, dinner coupons, breakfast with theCEO/boss, ‘top star’ ribbon, monogrammedcompany merchandise, a video scrap book featuringthe star employee as well as more profession-orientated rewards such as the opportunity to cross-train, or nomination to a stretch assignment in acoveted, high-visibility project. Employees can berewarded by informal and simple handwritten notes of appreciation as well as formal ‘employee of themonth’ rewards.

Figure 2: Individual Motivation for Talent MobilitySource: Manpower Latin American Mobility Study, 2007

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ConclusionGlobally, employee retention is a top agenda item for organizations. In the Middle East, with employersfinding it increasingly difficult to attract and retain talent,and inflation and high salaries further compounding the situation, employers in the region have realized that their HR strategies need to be revisited to includeinnovative and progressive retention programs andpractices if they are to retain and nurture the top talentthey own.

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Each year, Manpower publishes a number of researchpapers that address the current labor market andemployer issues.

All Manpower white papers can be downloaded at www.manpower.com

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