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Human capital retention in the United Arab Emirates, a brief review
profi20

Zaplatinskaia Larissa

Introduction
For the last thirty years, United Arab Emirates have seen a growth in economic prosperity and rising living standards. However, its reflection in the job market has been slightly different. A major section of the workforce in the UAE, particularly in the private sector, comes from outside the country.

According to some local management consulting agencies, UAE companies may be incurring 9.9 billion dirham (US $2.7 billion) in staff-related costs, due to high turnover among workers in the country.  Employee recruitment and retention in the Middle East continues to challenge both public and private organizations amid the global economic crisis, resulting in additional operating costs, reports said.

Quoting an official labor report, it said expatriate workers in the UAE make up more than 90 per cent of the private sector staff, at about 3.1 million employed by 260,000 establishments

Flagship Consultancy estimated the cost of turnover per worker at 15,180 dirham (US $4,125) annually. Quoting another survey, conducted by Bayt.com (the number 1 job site in the Middle East, offering a complete range of end-to-end employment solutions and career planning tools) and YouGov Siraj, the average monthly salary in the UAE is 10,120 dirham (US $2,750) and the average length of time holding a job in the UAE is 4.7 years. It put the turnover rate at 21 percent, or 657,930 workers, representing 9.9 billion dirham (US $2.7 billion) in costs to businesses every year.

Zed Ayesh, the Flagship Consultancy managing director, said that the mobility of skilled professionals remains a challenge to the UAE businesses, costing a substantial waste of resources and weakening their competitive positions against those, who have a stable workforce with lesser turnover rates. “Regional companies are losing significant revenue opportunities because the majority of the departing professionals own unique expertise and knowledge and they are being head-hunted by direct competitors to their incumbent companies," said Zed Ayesh.

High staff turnover has both monetary and non-monetary consequences and costs. Companies have to bear costs in the separation process like severance package, end-of-service benefits, cost of employment card and visas, absence of staff till replacements are found, loss of productivity and the lost knowledge and training of former employees. Other costs include recruitment processes like fees of recruitment agencies or cost of advertising for the vacant post, screening and interviewing candidates and cost of administrative process. "Costs of turnover can easily surpass 150 per cent of the employee compensation figure and would be much higher for managers and high paid executives," Ayesh said.

The most pressing challenges facing today’s executives is to keep their best people. In the modern knowledge and service-based economy, companies differentiate themselves by their talents, the people with specialized skills, knowledge, competency and experience. New products and innovative strategies can be quickly copied by competitors, therefore the only source of sustainable competitive advantage for organizations is its human capital.

Hospitality Industry.
Employee recruitment and retention are one of the major issues facing the Middle East hotel industry. According to a report of Catererglobal.com, one of the world's top hospitality recruitment websites, only 10 percent of staff expected to look for career opportunities within their current property. The report surveyed over 3,000 hospitality professionals from across the region.
When asked what employees next career move would be, an additional 10 percent said they would consider a move within the hotel group they currently work for.  According to the report's authors, “this alarming attrition rate implies that retention is an area that regional hotels need to dedicate more attention to if they are to continue to operate successfully”.

The same report suggests that the working environment and salaries are key attributes to attract new talent to the region. Hotels must look at what they offer candidates in terms of salary, benefits, and accommodation in an increasingly competitive landscape.
According to the report, 61 percent of employees surveyed said they would be looking to stay in the Middle East, but for a short period, as there is increasing demand for hotel staff from the emerging markets of Asia and India. The hotel groups in the region need to go some way to addressing this outbound flow, and need to target staff in new markets.

Peter Willis, Sales Manager of Catererglobal.com said that historically the Middle East has relied on a highly dependable Asian source of candidates. With the growth of these emerging markets, especially in India, the Middle East seeing the flow of candidates change direction. Indian hotel professionals are now returning home as the strong Rupee and better living conditions can outweigh what they are being offered in the Middle East.  The resource pool needs to be extended and some HR teams are actively targeting new areas such as South America and Africa.

In addition, hotel groups are changing their views on the criteria expected of candidates. Hotels are now starting to look outside the hospitality industry for personalities who have enthusiasm, because the right people can be taught the key skills within a new industry.

Hospitality Industry under recession
The other report of Catererglobal.com, which surveyed over 3,500 regional hospitality professionals, reveals how hotels are streamlining department costs to hedge against the next few years' expected turbulence by increasing job cuts. Human resource departments have been forced to severely cut costs in order to balance the books and deliver on their stakeholder or shareholder obligations. However, Peter Willis believes that drastic redundancies may prove to have more damaging, long-term knock-on effects for business operations. “Sudden, wide-scale redundancies may lead to future problems, including incurring heavy costs, both in terms of time and money, to recruit and train new employees when market conditions improve. Although only 39 percent of pipeline hotel projects are going ahead, there are still 86,000 confirmed hotel rooms forecasted to come online by 2011 in the Gulf region alone, and this figure will undoubtedly create more job opportunities”, Willis said.

The report also underlines how important staff retention will be in the regional industry's post-downturn recovery. "The response to this year's survey has been overwhelming and in the current economic climate, the retention of quality staff remains a critical issue; perhaps even more so, with other service sectors looking to tap into the hospitality industry skill base. Currently, about half of the region's Human Resource Directors are facing staff retention dilemmas," Willis said.

Willis added that to ensure market share in the long-term, hotels should be investing in staff training to maintain service quality and safeguard brand delivery. Hotels should realize that its people are its brand, and seek to maintain service quality, which will see their properties' market share boosted when conditions becomes more stable. It is extremely encouraging that, according to the survey, 67 percent of Human Resource Directors have recently increased learning and development opportunities to address staff retention.

UAE Law Industry
According to recent research by GulfTalent.com, the Middle East’s leading internet recruitment portal professionals, UAE has the most fluid labor market for lawyers in the GCC. GulfTalent.com researched on supply and demand for lawyers in the main countries of the Gulf Cooperation Council. The results indicated that termination notice periods for lawyers in the UAE were usually capped at one month, compared to three months in Saudi Arabia.

The analysis also addressed employee loyalty in the legal profession as measured by the 'switching premium', for instance, the minimum percentage salary increase expected by employees before they would consider switching to another employer. The average switching premium in the UAE was less than 10 percent, indicating a high level of receptiveness to offers. In Saudi Arabia, the pattern was more complex, with lawyers of Saudi nationality expecting a high premium to switch employers, while for expatriate lawyers considering positions outside the Kingdom, the switching premium was actually negative, suggesting that they would consider another job offer at lower pay relative to their current compensation.

GulfTalent's research also considered career preferences of lawyers in the region. Working for a law firm was by far the most popular choice among lawyers, with banking and finance being the second most popular career option. The research determined considerable desire by overseas-based legal professionals for relocation into the Gulf region. This came primarily from lawyers in neighboring Arab countries such as Jordan and Egypt, followed by US and European-educated lawyers of Middle Eastern origin wishing to return and practice their profession back in their home region, and finally a small segment of Western lawyers interested in gaining international experience in the Gulf.

Spa Industry
According to various local studies, one of the many challenges that the UAE spa industry faces is staff recruitment and retention, particularly in Dubai, where the spa market is flooded with options and opportunities. The studies argue that more now than ever, the opportunities available for spa therapists, receptionists and other spa positions within the region. It seems there is no stopping in the growth and demand for spas in the region. This growth is great for the employee, where demand for staff is at fever pitch but becomes an increasing challenge for the companies.

Dubai is, probably, unique in the aspect that the entire team can be expatriates. Recruiting a team made-up completely of expats is challenging and recruiting via long distance phone call for a hands-on, skilled role can be tricky. A candidate with great credentials on paper can arrive only to reveal an uncaring and unfriendly personality, with lack of ability to integrate well with the rest of the spa team. Employer may end up bringing someone with relatively basic core therapy skills and more often than not, a fairly basic standard of English.

In an industry that is challenged with high turnover and an ever-depleting pool of good quality candidates, it has become mandatory to address effective ways of keeping existing staff attrition to a minimum. Spa employers need to regularly review the salary, benefits package, working conditions, career progression and training that they are offering to the staff. The offer should be in line with the competition but more importantly in line with employer’s brand values and company vision. The employers should consider internal promotions where feasible. This not only rewards staff for their own hard work, but also sends out the message to others that progression is possible and proficiency applauded. Training and development are integral part of the spa calendar.
Employers should ensure that it is well-planned, scheduled in advance and delivery is interesting and informative. The approach should be innovative, but flexible, because people learn at different rates and learning anything new in a second language is very challenging.

Emiratisation
In recent years, the UAE government has been designing a policy to make more local people take up jobs in the UAE. According to local reports, these policies have started showing results and there has been a growth in the number of native employees in both public and private sectors. However, there is a disproportion in the total number of workforce employed at various cities of UAE. While urban cities like Abu Dhabi, Dubai and Sharjah have been housing around 15 to 30 percent of the total workforce, less renowned cities like Ajman and Umm Al-Qaiwain have been employing only a very small fraction of the workforce. The number of foreign expatriates taking up various kinds of job in UAE has remained more or less constant, according to various local reports.

The Ministry of Labor and Social Affairs in UAE have been working on different policies towards increasing the number of national employees in the service sector. However, a noticeable trend in the work force has been an inclination towards government jobs more than private jobs. This trend is most evident in case of women employees. The government has designed a number of policies to make a change in this prevailing trend, according to the Ministry of Labor annual report.

The same report revealed that the most significant of the policies was the pact signed between Higher Colleges of Technology (HCT) in UAE and the Ministry of Labor and Social Affairs. According to this pact, the employers in both the public and private sectors in UAE will give first preference to pass-outs from these institutes while recruiting people particularly in the service sector like telecommunication and Banking. Students however, have shown a slow change in terms of choosing available jobs. Many still prefer working in the government bodies than in the private sector for better benefits. As a response to this trend, the government has made new plans, bringing the private sector at par with the public sector in terms of employee benefits. This includes similar social benefits and pension schemes, disability benefits, retirement benefits and more.

Emiratisation and Hotel Industry
With Emiratis being put through intensive leisure and hospitality training programmes, they become attractive to other industries, such as finance and retail, leading to poaching, which is putting off some managers hiring Emirati staff in the first instance. But this would not be the case if employers pushed Emiratis forward, according to director of the Centre for Emiratisation Research and Development at the Emirates Academy of Hospitality Management John Mowatt. “When an Emirati goes through a hotel they become very attractive to other industries because they have very good skills in dealing with people," he said. "Retention is an issue, but that's across all industries as there is more demand than supply. That is the problem, but companies have to learn to be employers of choice. They say to us 'but they'll leave', but Emiratis will stay with employers who push them forward," Mowatt said.

Working closely with the Department of Tourism and Commerce Marketing (DTCM), Emiratis are entered into training programmes and channeled through the hotel industry where they work in guest relation roles, front of house, gyms and spas. "We are dealing with entry level jobs, but the courses are seven weeks, with four weeks in college and three weeks in a work placement. But the aim after graduation is to encourage further development and for Emiratis to move up to the next level of jobs," said Mowatt.

Mowatt also stated that Emiratis in the hospitality and leisure industry made a huge difference to the experience of clients and tourists. "When people come to Dubai they want to have a flavor of the Emirates and that can't happen without Emiratis. We have found that Emiratis bring their own sense of culture and hospitality to the whole process. "Guests prefer to see Emiratis at the concierge desk and in the gym. It is a competitive advantage and repeatedly I notice the difference when guests come across Emiratis. Therefore, it is important to build a sustainable workforce of nationals," Mowatt said.

However, it was not only some of the hospitality managers who needed convincing that a career in leisure and hospitality was suitable for an Emirati, according to director of the Employment and Skills Development Centre, Noora Al Bedur. "People within the hospitality and leisure industry are becoming aware of what we are doing. But there is a challenge, because parents don't understand what, for example, the hotel is doing. They think hotels are just bars, dancing and room service," she said. "They don't realize at first that there are so many different types of jobs, such as public relations or finance within the leisure and hospitality sector." Al Bedur stressed it was essential for people to be aware of the issues as there was a real need for Emiratis to enter into the leisure and hospitality industry. "Tourism is around 10 percent of our income at the moment and I think we have to participate in building our economy and developing our country. It is a social responsibility for this country," Al Bedur concluded.

Employee Retention in the Middle East: A Regional Perspective Report
This is an outcome of Bayt.com poll, monitored from January until April 2008:
1.    Do you daily have the opportunity to do the work you do best every day?
-    yes, almost always: 54 percent
-    sometimes: 27.9 percent
-    usually not: 10 percent
-    never: 8.1 percent
2.    What percentage of your staff do you believe are fully engaged in their job:
-    1-10 percent:  9.7 percent of participants
-    11-20 percent:  24.2 percent of participants
-    21-40 percent: 11.3 percent of participants
-    41-60 percent: 22.6 percent of participants
-    61-80 percent: 17.7 percent of participants
-    81-100 percent: 14..5 percent of participants
3.    What factor would most cause you to immediately become more engaged in your job?
-    higher salary: 27.7 percent
-    more training and development opps: 26.8 percent
-    better management: 24.8 percent
-    better job descriptions 8.1 percent
-    better communication in the company: 6.8 percent
-    flexible hours: 5.9 percent
4.    What factor do you believe would cause your staff to immediately become more engaged in their job?
-    better management: 37.4 percent
-    higher salary: 29.7 percent
-    more training and development opps: 19.8 percent
-    flexible hours 5.5 percent
-    better communication in the company: 4.4 percent
-    better job description: 3.3 percent
5.    Is there someone at work who encourages your development?
-    Yes: 61.2 percent
-    No 38.8 percent
6.    Is the last month, have you receive recognition or price for doing good work?
-    yes sufficiently / frequently: 40.2 percent
-    insufficiently / infrequently 16 percent
-    never: 43.8 percent
7.    Do you have the materials and resources needed to do you work?
-    yes almost always: 54.8 percent
-    sometimes: 31.1 percent
-    usually not: 14.2 percent
8.    How clear are you about expectations of you at work?
-    usually very clear: 55 percent
-    somewhat clear: 22.6 percent
-    not very clear: 13.2 percent
-    not at all clear: 9.1 percent
9.    What would motivate you most to accept a new job;
-    opportunities for growth / advancement: 41.5 percent
-    higher pay: 29.6 percent
-    a better company: 11.8 percent
-    a better position: 7.2 percent
-    more interesting job description: 7.1 percent
-    flexible hours: 3 percent
10.    What is the most important aspect you look for in a job?
-    opportunities for growth / advancement: 59 percent
-    well-defined role / responsibilities: 17.6 percent
-    friendly team: 9 percent
-    pleasant environment: 7.5 percent
-    cordial and professional boss: 4.3 percent
-    proximity to my home: 2.6 percent
11.    What is the maximum length of time you see yourself staying in a job?
-    1 year: 6.8 percent
-    2 years: 10.8 percent
-    2-4 years: 19 percent
-    5 years: 15.7 percent
-    6-10 years: 16.2 percent
-    I hope to stay with a company indefinitely: 31.7 percent
(Dan Stuart, April 4, 2008, Employee Retention in the Middle East: A Regional Perspective)

The other outcomes:
Average salary raise in 2008 in the UAE was 17 percent, average perceived COL (Cost of Living) increase 37 percent. Salary satisfaction in 2008 was: 3 percent highly satisfied, 50 percent medium satisfied, 47 percent low satisfied.  Average time in one career bath was 8.78 years, 71 percent of people have had 2+ jobs in last 5 years, and average time at one job was 2.25 years. 32 percent will change company in next year and 44 percent will change industry in next year. 50 percent of loyalty is related to income, 40 percent of loyalty linked to career progression (other than pay). 43 percent of GCC Nationals loyalties are linked to line mangers, 36 percent of Western Nationals loyalties are linked to colleagues, daily tasks and work environment.  With differences between Nationalities, there is no one-size-fits-all approach to retention.

Summary, Retaining Talent: Strategies to engage and retain professionals in the Middle East region
The study, titled “Retaining Talent: Strategies to engage and retain professionals in the Middle East region”, advocates the implementation of HR policies that encourage harmonious corporate relations and employee loyalty. Such policies have the potential to attract and retain the best talent, enhancing the ability of organizations to remain frontrunners in their respective industries.

The Manpower study shows that the current shortage of competent professionals in the Middle East is not a unique regional phenomenon, as up to 41 percent of employers worldwide are struggling to fill job vacancies due to lack of suitable talent. Results also reveal that the replacement process could cost up to 1.5 times the salary of outgoing employees, thus making retention a more cost-effective and sustainable option.

“In the current climate where many employers have chosen to restructure their workforces to remain profitable, identifying low cost, effective and meaningful retention strategies is critical as they promote a more sensible and productive approach to economizing and boosting productivity. It is imperative that effective measures to retain people who display significant expertise and knowledge be adopted, as they form part of the major assets of a corporate entity,” said Patrick Luby, Managing Director, Manpower Middle East.

“It should also be noted that numerous studies have dispelled the notion that salary is the sole motivation for good employees to continue their services. Other elements such as career advancement and optimal work environments also have significant influence yet do not necessarily involve excessive company investment. These have to be more closely explored as the loss of key personnel can negatively affect product and service quality and, consequently, customer satisfaction and revenues,” added Luby.

According to Manpower's findings, better employment opportunities (79.4 percent), career advancement (80.8 percent), and improved work environment (45.9 percent) are some of the top reasons for job mobility aside from increased pay, which is cited as the basis for 85 percent of respondents to leave their current jobs. The study indicates that organizations offering benefits such as experiential opportunities, a clear career path, mobility options, travel, and working conditions that balance work, personal and family growth are more likely to retain their pool of talent.
'Our study shows that companies that have deployed effective training, feedback, communication and career planning programs are not only surviving but even thriving despite presently challenging global economic conditions. This serves as a strong motivation for Manpower Middle East to further assist employers throughout the region in increasing the productivity and performance of their workforce,' concluded Luby.

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Bi-Me staff. (2009). The Ongoing Challenge of Recruitment and Retention
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Gulf.Talent.com. (2008). Employee Participation in Middle East
Hotelier Middle East Staff. (June 23, 2008). The living brand: The answer to staff retention and customer satisfaction
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Stuart, Dan. (2008). Employee Retention in the Middle East: A Regional Perspective