Growth opportunities abound
In the Middle East, companies are experiencing exceptional growth opportunities. Although they face ongoing political uncertainties that affect their business priorities and the markets they operate in, the results of our Global CFO Signals survey suggest there is greater optimism in the region than in the surrounding North African and Levant countries.
While HR directors in the Middle East share some of the same challenges as those in other EMEA countries, several issues are more pronounced. Their companies are struggling to fill talent gaps, raise the bar on talent development and address escalating turnover costs. But with one of the youngest populations in the world, the challenge is to attract and retain a new generation who seek lifelong development opportunities along with engaging and meaningful work. Family businesses – an important sector – are prioritising leadership development and succession planning, while in Gulf countries the focus is on creating knowledge and talent resources that will make their economies less reliant on expats.
Engagement: public vs. private sector
Only a minority of organisations in the Middle East are starting to measure employee engagement and drive a talent strategy to enhance it. There is a lack of research comparing levels of engagement between the public and private sectors, which would need to consider the work choices of the national population.
Public sector employment is a dominant source of employment in most Middle Eastern countries, especially for women. According to World Bank estimates, 78% of national male employees and 87% of females work in the public sector. In Kuwait the figures are 76% and 80% respectively, while in Qatar they stand at 82% and 84%. In many countries, the public sector also pays better, creating what is called a ‘public sector wage gap’. In Egypt, for example, the average hourly earnings in the public sector are 50% higher for men and 90% higher for women.
In Gulf countries, public sector employees enjoy benefits that the private sector cannot commercially compete with, such as job security for life, energy and food subsidies, property and housing benefits, and some public goods and services. Social norms also encourage young people to seek public sector employment and nationals strongly prefer it. Consequently, these candidates would rather wait for a government job and pursue fields of study in school that are suited to public sector employment, which leads to a potential dearth in the necessary skills for private sector companies. All these factors impact employee engagement in the public sector in a way that is unique to the Middle East region.
Redressing the balance
At macro level, only the private sector can create the sheer quantity of jobs needed to accommodate the growing workforces of countries in the region. The status quo of public sector-led employment and large subsidy bills is no longer fiscally sustainable. This creates an conomic imperative to support the public sector to become a more attractive career option for nationals.
The private sector, meanwhile, must focus on innovating its talent brand and market rewarding career experiences that compete with more ‘secure’ public sector opportunities. Companies should use a corporate responsibility approach through academic, vocational and entrepreneurial education within schools and universities to lessen the skills gap and build learning environments that could create leaders.
The role of HR and organisations
If we define engagement as how much employees are motivated to contribute to organizational success and accomplish its goals, then engagement is driven by many factors. These include trust in the leadership of the organization by levels of communication, future vision, retention, empowerment and performance management. As an HR leader, you need to focus on these key areas. Multinationals in the private sector are looked upon as best practice examples in terms of innovation in HR practices. Some large regional companies are also investing effort and money in the right direction, especially in the oil, telecom, banking and other financial services sectors.
Predictions for the year ahead
In January 2012, our report: Talent Edge 2020: Redrafting talent strategies for the uneven recovery, cited that 71% of surveyed executives expressed great concern about losing critical and high-potential talent. This concern will endure in 2014. In the Middle East, the gap between employer expectations and employee skill levels will remain, although there will be no shortage of graduates. Companies will struggle to find and develop leadership skills to manage tough markets and constantly changing needs.
The top three HR and talent concerns in EMEA will continue. These are developing leaders and succession planning (49% of EMEA respondents in 2013), sustaining employee engagement/morale (46%), and connecting HR and talent with business critical priorities (35%). On the positive side, more companies in the Middle East region are beginning to address these challenges with better HR and talent strategies built on focused solutions to local problems.
Some public sector initiatives, especially in education, are innovative and moving in the right direction.