Though there have been talks of scarce human resources and the challenge of retaining the star performers for the last few years in the corporate circles but in the last two years the situation has become more challenging for the companies. OER takes stock of what’s going on in the mind of employees and what actions employers are taking to manage the talent crunch to safeguard their business interests

When the UAE government announced a salary hike of 70 per cent for the federal employees in November last year, the speculations were rife that Oman government will also increase salary of its staff. As His Majesty declared a salary increase of 5-43 percent in the beginning of the year for the government staff, the private sector companies also followed suit. Ideally, the employees should have rejoiced with their pay packets swelling. But are they really happy?

One middle level manager of an Indian nationality told OER on condition of anonymity, “I got a so called decent jump of 20 per cent on my basic salary which translates to an additional RO120 per month. My house rent has gone up by RO 70 simultaneously. The spiraling inflation rate has added to my monthly household expenses by another RO50.  I’ve to send atleast 30 per cent more money, compared to last year, to my family in India as the Rupee has become harder and the high inflation rate in India has made household budgets go up. Practically, my monthly savings have gone down drastically and even a raise of 50 per cent on basic would have been insufficient”. The Omanis have a similar story to tell as the common nationals are also hit hard by the increase in rents and household expenses.

No wonder whether an Omani national or an expatriate professional, everyone seems to be negotiating hard for a significant salary increase with their employers or looking for a change in the hope of a better remuneration. Oman was already facing shortage of talented workforce and with the current boom in the economy, the demand for human resources has skyrocketed. In such a scenario, with the possibility of job switch over within Oman becoming a reality thanks to labour reforms, there has been a significant increase in the movements within corporate Oman.

Market environment
Two region wide HR survey reports released recently corroborates the trend that people do perceive that their cost of living outpaces their earnings. According to ‘Regional Human Resource Overview’ January 2008 done by Bayt.com, leading job website, and YouGovSiraj, the premier market research consultancy, 17 per cent Gulf residents feel that they deserve a raise of 51 per cent or more; 24 per cent believe that they deserve a raise of 31-50 per cent and 22 per cent would like to get a raise of 21-30 per cent. Only 1 per cent felt their raise was at the right level. The disparity between salary hike and perceived cost of living was most pronounced in Qatar, with a perceived average cost of living spike of 38 per cent, 22 per cent higher than salary increases. The widening shortfall has led many to take dramatic steps. In Qatar, 50 per cent respondents are considering relocating to another country or return home. Oman comes in second, with an equally high 47 per cent, a major cause of worry for the business owners in the Sultanate. Kuwait has the lowest numbers of professionals looking to leave the country. People are also looking at switching to another industry. In the case of Oman, 20 per cent of the respondents are thinking of doing so for better opportunities.

“In terms of perceived cost of living increases and what this is doing to retention rates, the numbers are cause for concern,” says Rabea Ataya, CEO, Bayt.com. “Around 70 per cent of the survey respondents say they’ve held two or more jobs in the last five years. On an average, people are changing jobs once every two years. We also found that loyalty improved as salaries increased. Employers who do not close the gap between earnings and living expenses will have difficulty attracting and retaining people”. On the pay linked loyalty, the survey indicated that loyalty improves visibly with increase in income. 28 per cent of respondents indicated that their loyalty was 95-100 per cent linked to pay; 23 per cent indicated that their salary was 70-94 per cent linked to pay and 19 per cent indicated that their salary was 50-69 per cent linked to pay. Only 6 per cent of respondents asserted that their loyalty was definitively not linked to pay. This is of particular interest when looking for new talent, and identifying potential sources. Asian nationals comprised the group with the highest incidence of loyalty linked to pay in the 95-100 per cent bracket, and Gulf nationals represented the lowest levels of loyalty linked to pay with 8 per cent indicating that loyalty was not linked to pay. If you think that the above survey doesn’t reflect the true picture, another recent HR survey done by a leading regional business publication that belongs to a large media company has thrown up more alarming numbers. It says that almost three-quarters of employees in Oman said that they were more likely to quit their job this year. Only 14 per cent said that they were more likely to see the year out in their present position. According to the survey, in the GCC, workers from India and Pakistan were particularly dissatisfied with their current employment, with 70.6 per cent and 65 per cent respectively saying they were more likely to quit their jobs this year. In the case of Oman, the biggest motivating factor for change in the job was salary ahead of promotion, training and career development. The writing is very clear on the wall more in the case of expatriates in Oman. Perhaps gone are the days of long term career progression. Delayed gratification is an old concept. The mantra today is ‘I’ll do this, and what can you pay me’ is the order of the day – instant productivity and immediate rewards. Ask any manager; perhaps his reply will be that he is experiencing this almost every day in the office.

How big or small the company is, everyone is feeling the pinch. Recently while making a presentation to the media, John Malcolm, Managing Director, PDO also commented on the HR challenges faced by the company as he said: “Skills are also in short supply throughout the region, and we face an ongoing battle to retain the senior technical staff to take our multiple projects forward. There is little evidence that this situation will improve in the coming years.”
 

Omanisation policy
While talking about the HR challenges, some of the head honchos said that though they welcome the Omanisation policy but in the current scenario it adds further pressure on their productivity and profitability. The Omani businessman said, “I’m in favour of the development of Omani human resources. But I think we need to be more innovative in driving the Omanisation. We should look beyond percentage terms or numbers”. A prominent 5-star hotel manager pointed out that on the one hand Oman is promoted as a tourist destination but on the other hand we must maintain an Omanisation rate of 75 per cent that will go up to 85 per cent by 2010. He added that the supply of local talent is not enough to meet the stipulated requirements and the talented Omanis opt for more lucrative options.
 

Some time back, while talking to OER, MB Holding Company’s chairman HE Mohammed Al-Barwani had stated: “Omanisation policy is great, it’s extremely important in developing and improving the standard of living for citizens in Oman and for developing a strong national economy… the government should also make it easy for the companies to fire employees if they are not productive. Employees should not be protected in a job if they don’t perform. One can still fire an Omani if he is incompetent but it is a tedious process to do that. The procedure should be made easier to fire unproductive employees. People think that a job is a right. A job is not a right! If you are productive, you have a job. If you are not, you should be fired. Companies are not charities; they have to compete for their own survival…”

Next generation HR
In the global market also, the talent war is on. There is a major shortage of skilled professionals. According to a Stanton Chase/Birkman survey, by 2010 there will be 11.5 million more jobs than workers in US. The multinational companies besides battling out for the talent, are busy developing new HR strategies to meet the challenge.  HR has to move to the next-generation, become more accountable to the organisation’s business performance, said Pete Sanborn, leader in global HR consulting firm Hewitt Associates’ Talent and Organizational Consulting practice. He also leads Hewitt’s Next Generation HR research, solution development and client rollout.

He informed, “Hewitt conducted a research on the future of HR interviewing over 50 academicians and HR chiefs of global organisations, people like management expert Peter Capelli from Wharton, Ed Lawler from the University of Southern California, Jeff Pfeffer of Stanford University and Dave Ulrich from the University of Michigan. We also interviewed the HR heads of companies like American Express, IBM, Starbucks and Capital One. The conclusion we arrived at was that HR has to be linked to business outcomes. It has to move from a vertical-oriented strategy — recruiting, learning and compensation & benefits — to end-to-end processes like talent supply, leadership and  key talent capabilities and high performance that cut across verticals.

“HR has to be made accountable to deliver business solutions. The difference in this approach is the move from process mentality to functional mentality. A good example is Cisco Systems which disbanded the recruiting function altogether as each business was doing recruitments on its own. The company appointed its senior supply chain executive as in charge of the talent supply process. The talent supply process, as opposed to the vertical functions, includes taking care of various stages from workforce planning to candidate sourcing to assessment and selection, onboarding and orientation, and first year performance. It’s very important to avoid a linear growth model where revenue increase is attained by a similar growth in headcount.”

It will be interesting to see how many business drivers understands and introduce the next generation of HR management in Oman. Sooner they do it, better it is for their companies and the market. 
 

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