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UAE Firms Should Give “Realistic Pay Rises” During Boom Time

UAE Firms Should Give “Realistic Pay Rises” During Boom Time

Unrealistic pay rises during boom time might prove counterproductive to a company’s growth, expert says.

Companies in the UAE should provide realistic pay rises during the boom period to improve talent retention, an expert has said.

“Pay rises should be in line with performance of employees and not generally across the board,” said Adam Kingl, director of learning solutions for executive education at London Business School in an interview with Gulf Business.

Kingl emphasised that providing salaries to meet rising inflation rates is important, but paying unrealistic figures could be counterproductive to a firm’s growth.

“During boom time, if companies give their employees a 10 per cent pay rise the first year due to a rise in profits but only a four per cent rise the following year for any reason, it will create a feeling of dissatisfaction among employees. This might in turn reduce productivity,” he said.

“If a company has excess funds due to a profitable year, then they should use it for talent development and training of employees.”

The expert said that investment in human resources through talent development would fuel long-term growth among companies. He added that firms should focus on overall development of employees.

“It would, for one, maximise organisational efficiency and most of the research indicates that talent development is far more effective and cheaper than pay rises,” said Kingl.

He said that firms should also instill a sense of belonging to the brand to further improve talent retention during the boom period when employee turnover rises.

Kingl said that research indicated that employees with a better brand engagement are almost 55 per cent more productive than those who do not connect with their firms.

Referring to a general trend, the expert pointed out that UAE firms need to improve their human resources development policies.

“I think they understand that if they do not reform their HR policies, they might lose talent to their competitors and this might affect the performance.”

With the successful Expo 2020 bid, Dubai is set to see a hiring boom in the coming years.

A MEED report predicted that more than 277,000 jobs will be created between 2013 and 2021, with around 40 per cent of them in the travel and tourism sector.

The Expo job surge is expected to add at least 1.5 per cent to the UAE’s GDP in the run up to the event.

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