Improve your employee retention with stay interviews

Annual employee engagement surveys are a common activity these days. More and more companies are also conducting pulse surveys, asking only a few questions on a more frequent basis. While these are for your entire employee population, a stay interview can be very personalised. A stay interview can give your organisation additional insights and identify specific actions to retain key talent.

What are stay interviews?

Most organisations conduct exit interviews. The leaver is asked about the reasons for their decision to move on. A standard question is what would have made you stay. As exit interviews generally take place on the leaver’s last working day or even after they’ve left, it’s too late. The employee is gone.

With stay interviews, you have an opportunity to find out where an employee stands right now. It’s an opportunity for an organisation to learn more about the individual’s needs and explore how to retain them. Stay interviews also discover areas which make the employee want to resign.

When to conduct a stay interview?

Stay interviews can be conducted at any time of the year. They can be informal chats or formal meetings. Ideally, the stay interview is a face-to-face meeting to underline the importance the company places on it. A stay interview could take as little as 15 minutes or could be a longer conversation.

Who should be involved?

The direct supervisor should meet with the employee as it also aims to create and deepen trust and open communication between the two.

The line manager needs to be willing to hearing the employee’s feedback. Active listening is key to successful stay interviews. Line managers may need to receive a (refresher) training. Line managers will need to be mindful that, while they may disagree with the answers, they are hearing the employee’s current reality.

Stay interviews aren’t performance discussions where the line managers provides the employee with suggestions to enhance their performance. It is therefore all about the individual, their desire to stay and grow with the company.

Should the line manager and the employee have a rocky relationship, HR may support such stay interviews. Alternatively, external survey providers may provide an additional level of safety and create extra room for honest answers.

What are some sample questions?

Stay interview questions should be easy to answer questions with tougher ones to discuss as the meeting progresses. They should also express your commitment to the individual.

Stay interview questions include:

  • Do you look forward to coming to work when you brush your teeth in the morning?
  • What do you like most about your work and the company?
  • What do you like least about your work and the company?
  • How happy are you working here on a scale of 1-10 with 10 representing the happiest?
  • How would your day working here look like if it were a 10?
  • Do you feel that you are part of a bigger vision and mission? Why or why not?
  • Do you believe that your work has meaning? How can we work together to make your work more meaningful?
  • Do you feel “fully utilised” in your current role? If not, what could we change?
  • Are there additional things that we can do to take more advantage of your talents and interests?
  • Is the company providing you with opportunities to grow and develop as a person and as a professional?
  • What would you like to learn here?
  • What can I as your line manager do differently to support you the best? What can I do more/less of?
  • Are you treated respectfully by your co-workers?
  • What type of feedback would you like to receive about your performance? From me as your line manager? From co-workers?
  • How would you like to be recognised?
  • Have you ever thought about leaving the company? If so, what might tempt you to leave?
  • Is there anything else you want to share that we did not cover?

What happens after the stay interview?

Most stay interviews are documented. Best practices recommends going further. HR should collate and analyse the input before sharing the results with managers. Together, the organisation can identify which feedback to implement and how, looking for quick wins and possibly phased approaches, as part of their retention strategy. As such, it’s of vital essence that the organisation is willing to take actions after conducting the stay interviews. If not, it may give the employee just another reason to leave.

Are you afraid of losing your key performer? Conduct a stay interview and uncover areas of concern. Uncertain how to link it to your overall HR strategy and initiatives? Contact us and find out how we can help you make low-cost changes making a big impact for your employees.

Your top performer has resigned. Now what?

It’s Thursday afternoon. Your employee asked you for a personal meeting. You’re thinking it will be a quick update meeting. Not quite. Your star performer is handing in their notice.

This is not how most of us want to end their week. Receiving the resignation from your top performer can leave you feeling frustrated. So many thoughts are running through your mind. Just what are you going to do now?

Accept and learn

Take a deep breath. It may feel like the end of the world. It isn’t.

You may experience the feeling of hurt and disappointment. After working closely with your top performer, you’ve trained and developed them and don’t understand why they didn’t open up earlier about their plans. The employee may have had their reasons for not sharing them with you. Or perhaps they did all along and you just didn’t listen?

For now, simply accept their decision and take some time to reflect on it.

(No) counter offers

You may not be that ready to accept their resignation. You may consider offering them a counter offer, generally involving a higher salary and/or exposure to specific work and responsibilities.

Some companies categorically rule out counter offers. Such organisations see counter-offers only as temporary band aids. After all, you shouldn’t stop a rolling stone.

Unfortunately, history has shown that most employees who accepted a counter offer will still leave for the same reasons that made them look externally in the first place. Next time around, the company will not offer another counter offer and the employee will leave for good.

In contrast, some organisations may provide a counter offer for top performers in critical roles or working on time-sensitive projects. For these companies, a counter offer closes the immediate need and buys them more time to find an alternative, knowing the employee may still resign in a few weeks or months.

Before committing to any counter offer with your star performer, check with your company’s process and DOA. How long will it take to reach a decision, including answering these questions:

  • Do you know what would make your employee stay (higher salary, flexible schedule, a different project)?
  • Will you be able to match the external offer? Do you want to match the external offer?
  • If not, what non-financial offerings (e.g. new customer, new responsibilities) can you provide? How will you sell these?

Learn from exit interviews

“Employee leave for more money” used to the be explanation. Study over study shows that compensation is not one of the top reasons. For many top performers, a number of events is leading to their resignation.

Organise an exit interview and understand the employee’s motivation for leaving. Exit interviews are ideally held on the employee’s last working day or after they’ve left the company. This way, they don’t have to fear any repercussion for providing direct and honest feedback.

For any exit interviews held by HR in person, careful attention has to be paid to non-verbal cues. Assumptions and interpreting what the employee may wish to say can be misleading. More and more companies therefore use online exit interviews which protect the employee’s privacy and allow them to speak freely.

Implications for the team

While an exit, whether voluntary or involuntary, can impact the team, the disruption can be limited. This is an opportunity to review the team’s roles, responsibilities, processes and workflows.

Most teams generally anticipate some additional work while a replacement is being identified. During this time, support for the remaining team is crucial or a domino effect may be expected.

Managers can spend more time with each team member and modify work goals. At the same time, take a genuine interest in each employee and also help them achieve their personal goals. It’s the latter that also increases employee engagement, something in high demand especially during these times of change.

Just as current work arrangements are being reviewed, focus on making knowledge sharing and succession planning integral parts of running your business. Being pro-active now can reduce the impact of future resignations.

Create a succession plan where you identify those employees who could immediately step in, even if it’s only for a specific period, and who needs to be prepared within the next 6 or 12 months or longer. Do you have any employees who could be cross trained to reduce your dependencies on one individual leaving? Decide what specific training and exposure they’ll require and then start getting them ready. Depending on the transparency levels within your organisation, you may wish to inform these employees about your succession plans while also carefully managing their expectations.

The replacement

As you’re considering the current team structure, you may decide that a replacement is no longer needed. Perhaps you place this role on hold, profiting from manpower savings and only revisit the potential recruitment activities in a few weeks or months.

Should you have determined that freezing the vacancy is not an option, start thinking about the requirements on the role and the ideal candidate. It can be a challenge finding the perfect successor for your star performer. By understanding your team’s needs, you can narrow down on the must have skills, knowledge and experience. You’ll be able to recognise desirable abilities and traits as a differentiator between two (or more) equally suitable candidates.

You may choose not to recruit for the replacement externally and select an internal candidate, although their profile may not be a 100% match. Such a decision may be linked to your overall EVP and HR strategy, focusing on growing talent internally and reinforcing your company’s stand on internal career progression. You’ll provide the internal candidate with an individualised learning plan, acknowledging the support and training they require from you to become successful in the new role.

Make for a smooth exit

While notice periods vary from role and level within the organisation, motivation generally declines quickly after giving notice. It’s best to start the hand over as soon as your top employee handed in their resignation. Agree which activities need to be completed or to whom they need to be handed by what date. Obtain log in details and passwords. Decide who will notify customers about the individual’s departure. When will that communication go out and how?

If your star performer is in a sensitive role, you may wish to put them on garden leave. If you decide that, how will you extract their knowledge and manage the hand over?

Some individuals may ask to shorten their notice period. As tempting as it is to hold them to the entire notice period, be honest with yourself: How much will they actively contribute 9, 10 or 11 weeks into their notice?

To keep the experience with your organisation a positive one, consider agreeing on an earlier end date, especially if brought up by the employee.

You can ask them to take any accrued but untaken leave days. This will reduce your financial responsibility to pay out any such days. Although it may be hard for you to appreciate it, you are, however, giving the employee some time to relax, finish working for your organisation on a high note and start their new job fresh. It all adds up to a positive image of your company and the employee being an ambassador for your organisation even when they’ve moved on.

Finally, wish them well. You may not want to throw a big farewell party. Yet, you may wish to give them a card and say good-bye with dignity and respect. Cherish the good memories you, the team and your top performer shared.

Don’t be caught off guard when your top performer leaves. Contact us today and learn how we can reduce your organisation’s dependency on a single employee. Don’t be stuck in a crisis mode. Be prepared.

How volunteering can create an engaged and happy workforce

Can volunteering be an effective tool to attract, engage and retain employees? Yes and it’s time you use it!

A new approach to attracting talent

Volunteer programmes serve as a proven attraction tool for millennials. This generation is all about aligning their personal values with their organisation’s values. 64% go as far as rejecting job offers if they don’t see the hiring organisation having strong corporate social responsibility (CSR) values.

88% of millennials would also leave an employer whose CSR no longer matches the individual’s values. While other generations may not be as outspoken, CSR is also a recognised retention tool.

When it costs almost 1/3 of the employee’s last total salary to replace them, companies also risk the non-financial implications like reduced moral and increased absenteeism.

It’s high time find new, strategic and holistic approaches to engage and retain talent. This is where employee volunteer programmes linked to the organisation’s community social responsibility (CSR) kick in.

CSR and wellbeing

Although CSR has been around since the 1950s, Archie Carroll’s defined the modern approach in his article “Pyramid of Corporate Social Responsibility” (published in 1991).

  1. Economic responsibilities: Be profitable
  2. Legal responsibilities: Obey the law
  3. Ethical responsibilities: Be ethical
  4. Philanthropic responsibilities: Be a good corporate citizen

The philanthropic responsibility may only be a discretional responsibility for an organisation. Yet, 91% of global consumers expect companies to address social and environmental issues and “contribute financial and human resources to the community and to improve the quality of life.”

Looking at these numbers, no business can afford not to have a CRS strategy in place. In its “2017 Volunteerism Survey”, Deloitte discovered that “creating a culture of volunteerism may boost morale, workplace atmosphere and brand perception.”

They further found 77% respondents to “volunteering is essential to employee well-being.” Willis Towers Watson identified 2 in 5 companies customising their wellbeing initiatives to act as a differentiator to attract and retain talent.

It’s been shown over and over again that employees who feel their organisation is inventing in their wellbeing give back to their employer higher productivity and engagement.

Create volunteering opportunities

Supporting employee’s altruistic values, companies can offer volunteering opportunities in different ways: Giving one’s time, energy, skills or talents to a charitable organisation without obviously expecting anything in return.

It’s here when the company’s sincerity for CSR is tested. Businesses donate money for a cause. Yet, when implementing paid-time off volunteering initiatives, the authentic and genuine approach to CSR is shown. It underlines the commitment for specific issues and causes and there are plenty for organisations to choose from, naming just a few:

  • Education, where employees mentor school-aged children, read out to children or adopt a school
  • Environment, where groups plant trees, organise clean up drives
  • Health, where teams participate in a walk or run to raise awareness for diabetes or cancer
  • Social, where teams offer pro-bono services or take part in Ramadan iftar initiatives
  • Skills, where individuals donate their specialised knowledge

Companies can identify possible causes linked to their corporate goals, mission and purpose. Alternatively, local projects may be selected together with employees. Local government authorities can also act as an introducer to approved charities which whom any organisation may wish to partner.

Reap unexpected benefits

While volunteering increases engagement, organisations have seen other (unexpected) benefits, too.

  • 79% of participants in skill-based volunteering found higher job satisfaction and 70% found it having complemented their career development
  • 92% of respondents agree that volunteering is an effective way to improve leadership skills
  • Relationships with co-workers and colleagues are strengthened, organisational silos are broken down
  • 93% of respondents agree volunteering improved their mood, 75% felt healthier and 79% felt less stressed
  • Line managers can recognise those employees who go the extra mile and who contribute to their communities through company-sponsored volunteering or on their own initiative

Can your business afford not creating volunteering opportunities? Contact us today and find out how company-sponsored volunteering opportunities can build an engaged and happy workforce.

Succession planning – What’s the next role?

If your Finance Director has to be hospitalised, do you know who could take over now? Your top sales person just resigned, who in your organisation could to fill this role?

The departure of a key employee can leave an organisation in a state of uncertainty. Succession planning is the answer to reduce such interruptions and provides stability.

What is succession planning?

Succession planning more than a mere replacement planning. It takes a comprehensive and integrated approach to identifying and growing the talent pipeline to “fill business-critical positions in the future”. It identifies the next generation of leaders and has also become a common tool to tackle skills shortages.

As both small and large businesses need to ensure business continuity, succession planning can be seen as a form of risk mitigation. Preparing and developing existing employees for their next internal move can reduce potential disruptions to the daily operations and reduce the financial loss caused by an employee’s departure or unavailability of talent.

Lay the foundation

It’s all about the role. Dave Ulrich reminds us that succession planning doesn’t start with people. “It starts with the requirements of the position.” While some companies focus solely on the top of their house, others go down deeper in their organisation and cover every role. A third approach is to address only business-critical positions. Any organisation will therefore need to decide its very own approach to success planning.

High potential employees vs. all employees. Focusing on high potential employees for succession purposes allows companies to provide very targeted development opportunities. In times where budgets may be limited, this may appear as the appropriate way of making the most of such constraints.

To not be restricted to a small group of employees, most companies consider all employees for their succession planning. This sets the basis for a fair review of previous performance.

Companies need to keep in mind that not all high performing employees also have the potential and/or aspiration for a higher level role. They may, however, be a potential candidate for a lateral move.

Internal vs. external candidates. For some companies, succession planning is closely linked to talent management and only internal candidates will be considered for senior roles. Existing employees are already living the organisation’s culture and values and technical expertise can be taught.

While an external candidate may bring a fresh perspective and new skills, they may not fit into the team, potentially taking the company back to square one.

The individual’s readiness. Organisations need to differentiate the employee’s readiness to take on a new role. This review illustrates the organisation’s internal talent pool and simultaneously the training and preparation requirements for each role.

The immediate readiness would be for emergency covers on a temporary basis or for a start in the new role today. Medium-term readiness could be around 12-18 months while a long-term successor, e.g. for a senior role, may require 3-5 years. It’s been reported that the former CEO of McDonald’s, Jim Skinner, coached and prepared his successor Don Thompson for almost 7 years. The preparation for GE’s current CEO, John L. Flannery, who took over in August 2017, was started in 2012.

Top management support. In a crisis, decision making often concentrates on immediate needs rather than strategic and sustainable solutions. To benefit the most from succession planning, top management needs to own this process and align it to the long-term objectives of the company. Their expertise will also need to be shared as part of the internal coaching and mentoring.

Not having the right talent in house can substantially influence the organisation’s competitiveness, potentially to the point of not being able to stay in business at all. Which company can afford this?

Integrate succession planning with core HR programmes

Insights from the performance discussions. Moving away from the dreaded performance reviews, line managers are urged to give more timely feedback. The continuous conversions provide an opportunity to review an employee’s behaviour, attitude, skills, knowledge, experience and talent (BASKET).

They can further learn about the individual’s career aspirations, although not every employee may have the trust in their line manager to honestly share their ambition.

The more an organisation understands their employees’ BASKET and career goals, the more can this be reflected in the succession planning. Under the traditional approach, an employee may not have been considered for a position while the additional insights also highlighted transferable skills of the individual, making them a suitable candidate.

Identify gaps. Reviewing the requirements for the identified future roles, an employee may have certain BASKET gaps. The regular feedback and the structured performance discussions can be used to reveal these while constructive 360-degree-sessions can be utilised for a more holistic assessment. After all, an employee will not only work with their line manager but a variety of individuals. Based on these gaps, HR can prepare a customised development plan for the employee.

Provide development opportunities. Whether this is by coaching, mentoring, training and special assignments, companies should utilise all development channels and can apply the 70-20-10 model. Here, 70% is linked to experience, for example gained from stretch goals or working on certain assignments or taking the lead for a particular project. 20% of the individual’s development comes from coaching, mentoring and knowledge sharing with others and the remaining 10% from formal training programmes or webinars.

The training and development initiatives for the future role should be integrated into the regular learning activities as arranged by HR and the current department.

If no central training system is used, the company needs to ensure the effective usage of resources. Communication between HR and the current department needs to be smooth to avoid booking the same training course twice.

Regular succession reviews. For smaller organisations, succession planning and performance management may be done on post-it notes stuck on a white board. This works for some.

However, for an organisation that wants to be more efficient, agile and/or grows, a home grown succession and skills database, tied together with performance and training elements, may be more appropriate.

For larger organisations, specific and integrated succession planning modules from vendors like SuccessFactors, Workday or Saba may be more suitable.

Depending on the organisation’s industry, an annual succession planning meeting will not suffice. Review meetings on every 3-6 months may be more appropriate.

Start your succession planning today

Succession planning reinforces an organisation’s commitment to their employees. It shows the company’s investment in employee development and creates career paths upwards and sideways.

Hiring from within the organisation can be a cost-effective recruitment tool. Internal candidates have already proven their cultural fit and can be acquire the missing skills and knowledge through a personalised development plan.

Overall, succession planning prepares an organisation for the unexpected and gives the company stability and sustainability required during disruptive times.

Can your company afford not to implement succession planning? We prepare organisations for the unforeseen by creating customised HR solutions fit for their business now and in the future. Contact us and find out how we can support your company.

Increase your engagement this summer

The high temperatures in the summer can affect us, even when trying to stay cool indoors. Add these to engagements results and you are starting to wonder. Will we achieve the sales goals set for the quarter? Will we finish the projects we’ve been working on? No company can afford a slow summer!

Gallup’s research found only 15% of employees globally or 14% of employees in the Middle East engaged at work. These individuals are the ones who drive your organisation forward. Either number is substantially below what any company requires to succeed. It’s therefore a must for any organisation to review their not-engaged population. Easier to identify than the sabotaging actively disengaged employees, not-engaged employees do just enough to keep their job. They won’t go the extra mile or are indifferent towards customer needs or company requirements.

The 3 types of employees according to Gallup’s State of the Workforce (figures for the Middle East):

  • Engaged employees (14%) work with passion and feel profound connection to their company. They drive innovation and move the organisation forward.
  • Not-engaged employees (64%) are essentially “checked out”. They’re sleepwalking through their workday, putting time – but not energy or passion – into their work.
  • Actively disengaged employees (22%) aren’t just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish.

The research conducted by Gallup further found once again the direct link between engagement, productivity, sales and consequently bottom-line results. Highly engagement organisations have reduced their safety incidents by 70% and increased profitability by 21%. As publicly traded organisations, they’ve further grown their earnings per share by 115% compared to just 27% by other companies.  Can you afford to lag behind your competition? This summer, start making small changes to increase your employees’ commitment and dedication to their work and your overall success.

Localise your global initiatives

In a region as diverse as ours, many initiatives from headquarters based in the US or Japan may not work here. You’ll need to identify what your employees here value and what motivates them. This can be done with formal employee surveys or informal conversations, whether between the manager and employee or within team meetings.

Encourage new ways of meeting

Walking meetings in the winter time are a great way to get up and moving. Not just physically but also mentally. Summer temperatures are limiting many teams to continue. Conduct a standing meeting. Is your company already active, go further: Hold meetings on out wobbly boards or stationary bikes at your corporate gym.

Provide flexible working schedules

During Ramadan, many companies not only work shorter working hours. They also provide alternative work patterns. Continue offering different start/finish times while implementing core working hours. You can extend your availability for your clients and allow your employees to arrive without the daily stress caused by busy traffic and school drop offs.

Allow employees to switch off

Due to our geographic location, it doesn’t come as a surprise that this region is one of the most connected ones in the world. Many employees don’t feel they have the right to switch off after work. They regularly check their mobiles after work and on weekends, often out of fear to miss an email from their boss or client. Western companies switch off email deliveries to allow their employees to enjoy their time away from the office, resulting in “better conversations”.

Invest in wellbeing

Long commutes, some of the longest working hours in the world plus the increasing cost of living put a strain on employees. As a company, encourage employees to take breaks, eat balanced and healthy meals as well as being physically active.

As part of your wellbeing strategy, team up with your health insurance provider and offer meditation classes. They have been proven to reduce stress and strengthen resilience. Apps like Insight Timer can support the employee while at home or on travel.

Combine physical team activities

Playing sports together has shown to positively improve relationships and increase open communication at work. Employers are using this insight when hosting cricket matches or arranging family fun run days. During the summer, organisations should look at alternative indoor options. Host a summer stairs challenge. While more strenuous at first, climbing stairs is gentle on the joints. Participants will notice their fitness levels improve faster compared to steps challenges.

Do you want to take your team out of their regular place of work to boost morale, find new perspectives and come up with fresh ideas? Take the team to cooler places! A snow hike in Ski Dubai and ice skating in Dubai Mall may sound like fun. Just like the obstacle course at Adventurezone in Times Square, everyone in the team can lift up other members and help them accomplish the course.

Volunteer together

Supporting a cause aligned to the company’s values has numerous advantages. Your written statements come strategically to live by acting on them. Similar to team sports, employees volunteering together form deeper relationships. Companies that are engaged in the local community rank higher in attracting candidates, resulting in lower recruitment costs.

Charities like Dubai Cares organise various open campaigns during the year. If you prefer to hold a company/cause specific event, providers like Gulf for Good can also support you creating these while staying compliant with the UAE charity regulations.

Create more meaning

More studies are conducted showing the relationship between an employee’s values, their role and their engagement levels. The more meaning an individual sees in their job, the higher their engagement and commitment. In the past, this may have been expected predominantly in the charity sector and is no longer this exclusive. Regardless of industry, applying personal interests and finding a purpose in the role has been seen as the number one driver for employee job satisfaction and engagement.

Be an authentic leader

This outlines the importance of line managers understanding the individual’s motivation, values and aspirations. Whether they use daily chats or formal feedback sessions, a line manager can learn a lot about their team members by actively listening and showing genuine concern for them.

Recognise the employee. A simple “thank you” is effective way to acknowledge an individual. It’s surprising to see it as an underutilised tool despite it being linked to an employee’s intend to stay and commitment levels. Paul Mastrangelo and Karen Barbera’s article in CEB’s CHRO Quarterly Q1 2018 identified employees feeling trusted and valued as one of the strongest engagement drivers.

Provide them with formal and informal learning opportunities to develop their skills further. It doesn’t always need to be an external training organisation that delivers a course. Allow your employees to share their knowledge for their own team or for another department.

Support the individual when taking personal development courses outside of work. Continuous development can provide employees with the tools to manage their current role more effectively and prepare them for future roles.

As such, your training and development policy may provide a financial contribution towards the course fees. Alternative schedules as mentioned above and special assignments where theory can be put into practice can boost the individual’s learning and result again in higher engagement.

While not every organisation has the funds for extensive training programmes, global assignments or fancy sports initiatives, introducing even little changes can result in increased motivation, drive and commitment from your employees. Can you afford to not make these enhancements to your current practice? Contact us today and learn how your organisation can benefit from lower absenteeism, higher productivity and overall sales.

What’s happening in compensation and benefits this year?

As every year, Informa hosted the 2-day-long Compensation and Benefits Forum in Dubai last week. For us, it was an opportunity to reconnect with former colleagues, meet new friends and share the latest compensation and benefits trends with you!

The employer trends report

Prior to the actual event, we supported Informa in creating their 2018 employer trends report. Participants reported being challenged by the fluctuating economic conditions across the region. As such, 20.36% of participating companies are planning to implement modest pay increases of up to 3.5%. In contrast, 6.04% of participants are proposing increases of 6.0% or higher in 2018.

The labour market is currently in favour of employers, yet, there’s always an opportunity for high performers. More than half of participating companies are experiencing an attrition rate of 5.0% or less while almost 1/5 of participants report over 10.0%. It was surprising to find out that over 11% of companies are unaware of their attrition rates.

The implementation of VAT (value added tax) has also kept rewards professional busy. For most companies, no special adjustments will be made for salaries or benefits. Employers are taking the view that VAT is part of life and the burden cannot be taken off employees’ shoulder. This comes as a mindset change. Historically, this region has provided various allowance like housing, transportation and schooling to help (expat) employees with the cost of living.

2018 challenges

2018 offers to be an exciting year. Conservative and innovative approaches need to balance business needs and employee expectations. Participants reported the following three areas as the most important ones on their agenda:

  1. Increased employee engagement
  2. Manage cost
  3. Retain employees

The challenges are interlinked and are no longer answered by HR Business Partners or HR Generalists alone. Rewards professionals are being asked to create solutions to complex HR topics.  Some of the attendees at the Compensation and Benefits Forum described their challenges as “thrilling”, “not sure how to manage everyone’s expectations” and “a big step towards where we should be”.

Automated analyses

AI is everywhere these days and HR can no longer hide from it. Yet, not every company is prepared or ready for the digital transformation. Mohammad Salman Hashim from Nielsen suggested taking a data-driven approach for your rewards spend. Before starting, look internally and take stock. Which reports are currently available and which ones of these do you utilise?

Hashim advised to review these reports critically. Many HR Generalists still struggle to interpret the data and need to become more comfortable dealing with numbers. Nonetheless, reports can be set up with insufficient segmentation which can obscure the story for HR Generalists.

A regular activity for rewards professionals is to simulate various scenarios. To advise any business leader, they need to be given a full overview of options and the long-term impact of each proposal. For Hashim, this area is where HR and rewards teams can contribute substantially to the business: Predicting the impact before taking any actions. Business leaders can be stopped making a decision based on gut feeling that may end in financial loss or reputational damage.

Short-term incentive (STI) schemes

Discussing the regional application of STI schemes, Dr. Sabeeh Ghugharia, Regional Corporate Human Resources Manager at Mediclinic, emphasised the need to include the patient (or customer) experience to the performance matrix. The traditional components like company sales and individual performance can no longer be the driving factors in the bonus equation.

Sachin Bajaj, Head of Performance & Rewards, NEMEA at Takeda Pharmaceuticals, took it even a step further. Instead of offering a convention STI, he proposed employees opting for up to 100% bonus. While this is more common for sales roles, it would be a radical move for support staff. Companies would need to improve setting realistic targets and enabling employees to be able to reach their goals when implementing such an approach.

For most attendees, this was an approach too far out of the box for them to warm up to. Nevertheless consensus in the forum was that every employee should be incentivised for the part they play in an organisation’s success. STI schemes may need to become a profit sharing schemes for roles where the direct impact may be harder to measure. With that, the forum recognised the importance of incentives to engage and also retain employees.

Sustainable rewards

Oluyomi Okunowo carried on with this thought and he sees STI schemes as a cost-effective way to manage change. As STI schemes only pay out when results have been achieved (i.e. self-funded), the STI design can thus become inspiring and targeted while optimising its spend.

All too often, it’s the individual who gets rewarded on their own merits. Their interactions with other team members may not be fully taken into consideration during the STI design. To optimise the STI spend, Okunowo suggested a renewed focus on team-based initiatives.

Consistency

Consistency is key in 2018. Companies are required to create more strategic approaches to their rewards and overall HR activities. While economic conditions are favourable for companies, this may change and employees will dictate the rules. Organisations are to build employee loyalty now, as Okunowo urged. “How will you get loyalty when 40% of Americans will be Gig employees by 2020?”

Are you set to tackle the 2018 challenges in your company? Call us on +971-52-2516322 and find out how we can help you optimise your rewards programmes to engage and retain your employees while balancing your company’s budget.

Maximise a limit merit budget

For many organisations in this region, the 2018 merit rounds will bring new challenges. As in other parts of the world, merit budgets are limited while employees are experiencing a rise in cost of living. Since 1 January 2018, VAT has been added to most areas of our life. Employees have already asked last year how companies will compensate them for these increases?

Most companies still wait and see what other companies are doing and are planning to provide a merit increase only. Any cost of living increases may follow at a later stage. With budgets already set for many organisation, companies can still be creative and maximise a limited merit budget by using one or a mixture of the following course of action:

  1. Peanut butter approach
  2. Differentiation by performance
  3. Targeted increases
  4. Lump sum awards

The peanut butter approach

The peanut butter style provides the same percentage increase to every employee. It is generally taken by organisations wanting to give an equal increase to cover the employees’ cost of living, especially since the implementation of VAT. While managers are not involved in the process and no additional calibration and approval meetings, the process is reduced substantially. HR and Payroll can implement the new salaries almost instantly, freeing up resources for other projects. However, such increases become a mere cost of living adjustment rather than a merit increase.

Differentiation by performance

Companies may want to support their performance-driven culture by linking it to financial rewards. These organisations provide different increases for the different performance ratings. In general, a low performing employee would receive no increase or only a minimal one. In contrast, the efforts, achievements and behaviours of high or top performers are recognised with merit increases equivalent to 2x or 3x of the budget.

An effective performance management system is a pre-requisite for any pay-for-performance programme. While some companies set a fixed increase for each performance rating, the trend is to enable managers to determine the increase from a range. In the latter case, a realistic timeframe needs to be set for managers to provide their recommendations and calibration before the increases can be communicated to employees and executed by Payroll.

Targeted increases

Similar to differentiated increases by performance, organisations can provide targeted increases for certain employee groups. This could be for critical roles which create value in, for example, improved quality, financial performance or customer satisfaction. They could also be of a strategic impact where roles are linked to the organisation’s capability to maintain and strengthen its position. Other employee groups could include high performances, high potentials, individuals on the succession plan, hard to replace or employees with hot skills or those low in the salary range.

Knowing which roles, skills or individuals should be focused on, HR and management can identify an appropriate merit increase. For simplicity, all increases to the identified groups can be of the same amount (peanut butter approach), yet, such increases may not lead to the desired motivation boost amongst the workforce. Should the company wish to differentiate between these groups, the proposed merit increase can be distinguished based on certain factors, like the contributions made to the organisation and the implications and risks of leaving. This process, however, can easily be over-engineered, leaving to a lengthy planning and implementation period which, at times of a limited merit budget, may be counterproductive.

Lump sum awards

As merit increases not only increase the current salary, they also add costs to other salary-linked elements like bonus, end of service benefits, pension or social security contributions. For companies to control the rising long-term cost implications, lump sum amounts can be paid.

Even here, companies have options around the payout: For all employees or just specific employee groups. A flat amount or varying amounts based on a points system (e.g. for performance or criticality of the role or individual).

Each approach has pros and cons as explained above and HR teams need to their overall objective when identifying the appropriate one (or a blended one) for their business. Linking it to the company’s culture is as important as getting top leadership buy in before communicating the chosen way to management and consequently employees.

When facing financial challenges, companies win by communicating a transparent overview to their employees. It helps to manage employees’ expectations and reiterates the company’s philosophy for success. Line managers need to be supported by HR and be prepared to communicate potentially harder messages to employees not receiving any pay increase.

HR teams together with line managers should also look at non-financial rewards to recognise, motivate and retain while being challenged by a limited merit budget.

Do you want to ensure your limited merit budget achieves the desired outcomes? Are you uncertain about which approach is the right one for your company? Call us on +971-52-2516322 and find out how we can help you maximise your merit budget motivating and engaging your employees.