Dubai: Several studies have shown that UAE employers have allocated funds for salary adjustments this year, with some consulting firms forecasting a pay upgrade of 5 per cent to 5.5 per cent for 2015. However, the reality is that not everyone will be getting an increase.
Recruitment specialists said that gone are the days when employers would grant an across-the-board increase.
With the current economic conditions, businesses are wary of increasing their operational costs and have decided it is wise to modify their rewards and talent retention strategies.
In effect, the focus has moved away from the blanket increases of the past and shifted to rewarding star performers.
“Employers in the UAE are becoming more selective in their salary decisions, mainly due to a desire to make the most of their budgets and a wariness around increasing fixed costs,” Vijay Gandhi, regional director at Hay Group, told Gulf News.
Analysts like Ghandi agree that employees that have done their jobs really well are the ones likely to receive pay increases that are higher than average, probably around seven and 11 per cent, this year. The bad news is that those that have shown poor or mediocre performance are not going to get any financial rewards this year.
“Workers who are performing well may receive higher than average pay increase, while it’s likely that poor and average performing workers will receive little if no increase,” said Ben Frost, consultant at Hay Group. “However, a business is nothing without its people and, during periods of low growth, organisations must think creatively about how they motivate and reward their employees.”
Consulting firm Mercer had earlier forecast that companies in the UAE and across the Gulf are expected to grant pay rises of between 5 per cent and 5.5 per cent this year.
Gandhi said the amount of increases can vary across sectors. The financial services industry, for example, may see movements that are significantly higher than 5 per cent. Adjustments also depend on how well the company, as well as the individual employee, has performed.
“With limited resources on hand, the focus is on rewarding top performers. For example, the difference between increases of the top performing five per cent and those below them are significantly higher than the differential among the next 80 to 90 per cent,” Gandhi said.
“Managers in the UAE are being trained to identify good and poor performers and use performance management techniques to help improve, or manage out, poor performers. More employers are also looking at their managerial roles differently with many introducing long term incentive schemes to encourage performance beyond the short term. “
