A new survey from Hewitt Associates, a provider of human resources consulting and outsourcing services, carried out in four GCC countries focuses on overall changes in salary increases for the 2008 calendar year and projections for the 2009 calendar year.
As a result of recent financial downturn GCC companies are also rethinking their approaches to compensation, hiring, and reward practices. Hewitt research forecasts a decrease in salary to 9% in 2009.
The study indicates that 38% of participating companies are taking proactive measures to curb expenditures and this reflects in their reduction in projected salary increases. These organisations ( majority of whom are multinationals) plan to decrease their 2009 overall salary increase projections by 30 % on an average. The rest of the surveyed companies have adopted a “wait and watch” approach.
Companies are still interested in very talented employees. High quality talent continues to be a scarce and valued resource in this region. According to survey results, two prevalent measures being adopted are hiring and retention. Companies are going in for strategic hiring in the coming year as a way to utilize the current scenario to selectively recruit some of the very best talent. Exceptional performance will be rewarded by employers with a higher part of their salary.
According to the study some organisations are likely to go for a hiring freeze and/or staff reductions.30% of the participating organisations have scheduled or intend to schedule more frequent employee communication initiatives within their organisations.
Multinationals will implement global cost and manpower reduction strategies with uniformity across markets whereas companies based in GCC will wait and watch before taking any measures in order to protect long-term business outcomes.
If GCC-based companies maintain a stance which takes into account long-term business results, it is likely to provide them with a sustainable competitive advantage, says Debabrat Mishra, consulting business leader, Hewitt Middle East. They’ll be far better prepared when the economy shows signs of recovery. It could also make them emerge as preferred employers in the long term.
In the past few years, the hyper growth in the region had led to many organizations operating with a significant cushion in manpower numbers, says Andy Heath, senior consultant and industries lead, Hewitt Middle East. The current scenario will make organizations reconsider these surplus manpower numbers and rationalize them to more established norms. Layoffs are therefore more likely to be triggered responses to surplus headcounts, rather than a sign of economic reversal. However, a reduction in employees needs to be treated with utmost caution especially in sectors like real estate and infrastructure which are manpower intensive. Organizations need to establish manning norms aligned to their business model before undertaking headcount reductions.
L.D.