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The GCC sits in the middle of the ‘Big Mac Index’, which measures the cost of living in burgers

Housing allowances, adds Gomes, have become a major bone of contention. Between 2013 and 2015, rental costs in Dubai increased by an average 52 per cent. But for the first time, employers began to take a more cautious approach and decoupled allowances from the broader rental market, restricting rises to around 10 per cent. The impact on the cost of living isn’t hard to guess, and Gomes says health insurance may be the next flashpoint: “Medical inflation in the GCC is at 12-15 per cent, and it isn’t rare to hear cases of premium rises of more than 20 per cent. In the longer term, this situation is unsustainable.” Given such complexities, and the likely increase in pay pressures over the coming year, the scope for compensation and benefits specialists to balance the needs of employees, budgets and long-term talent planning ought to be obvious. Gomes

“Now, you don’t come to the GCC to save and send your money home”

says there is reason to believe companies now understand this: “The prevalence, scope of work and capability of remuneration specialists in the region has been rising dramatically over the last decade, as have many HR specialties. Remuneration specialists are now expected to add value to the function through detailed benchmarking analysis, correlation of compensation data with employee demographics, performance reviews, career track record, aspirations and social interests.” At the same time, McGuigan feels expertise in setting senior salaries is still lacking – which may be a factor in the way senior pay has been allowed to outpace both inflation and broader pay trends. “The

lack of remuneration committee expertise at an executive level is shockingly evident,” he says. “Given they set reward strategy in a top-down way, they need to understand the complexities of the area. For many companies, pay makes up 50-plus per cent of operating expenses. Yet [boards] still don’t apply the appropriate level of due diligence and review that an in-house expert or qualified non-executive director could supply.” That matters, says Mosley, because pay doesn’t have to be a source of pain. It can become a ‘hygiene factor’ if handled properly, and the conversation can switch from whether employees are paid enough to be sufficiently motivated, to how to increase both engagement and productivity. “If a company’s voluntary resignation rate is above 15 per cent then something is wrong and it’s almost certainly pay,” he says. “But if you get pay right then the factors that motivate employees in the GCC are things such as ‘who is my boss’, ‘what sort of work am I doing’, ‘is my work challenging enough’ and ‘have I got career opportunities two years ahead?’” In Mosley’s book, paying too much is almost as detrimental to productivity as paying too little. All of which means how HR handles the compensation question in 2016 has never been more crucial. People Management Middle East


People Management Middle East: Issue 2  

The CIPD magazine for the Middle East

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