Strategic reward management in UAE -and the larger Gulf region – has become more of a corporate branding tool nowadays. Companies are parading gleeful workers on brochures and roadside banners as a marketing weapon.
Whenever you squawk about an “overdue” reward, the C-Suite executives rush to find out what the competition is offering. This post is therefore a cheat-sheet for people managers who want to stay ahead of their rivals.
Check out the proven, 5-strong list of incentivization strategies at the end. It’s full of unexploited reward secrets!
Benefits of a Strong Reward System to the Business
Data-backed recognition and robust reward systems are two great investments for businesses of any size. In the Gulf, and more so in UAE, organizations are reaping the following six benefits.
Six Reward Strategy Benefits for Companies in UAE
When you aim to reward the team equitably, fairly, and consistently, the house achieves these rewards in return.
- Helps attain and retain the trust of employees. Bonuses, benefits and pay booms makes employees loyal and significantly lowers staff turnover.
- According to “The Management Agenda” by McCartney and Holbeche, motivated staff always put in extra work, thereby contributing to organizational success.
- Satisfying work environments definitely attracts new, better-equipped talent.
- A reward strategy that conforms to the business culture is a shortcut to attaining your organization’s core objectives.
- Extensive research in the UAE clearly shows that companies with well-defined reward strategies post better financial results. HR managers in UAE, turn your employees into growth partners!
- A clear and strategized reward policy presents equal opportunity for every employee to earn due recognition. Gulf states are championing a DEI-friendly workplace, and strategic reward management is their best route.
A Brief History of Strategic Reward
Since the 1900s, psychologists have been studying human behavior. Businesses analyze and control behavior elicited by worker compensation, remuneration, and other employee benefits to structure a reward policy.
A committed rewarding structure consists of 5 main pillars, namely:
- An explicit set of pay policy and practices.
- A strong and timely salary and payroll administration mechanism.
- A total reward strategy (further discussed later in this article).
- A minimum wage limit and an executive pay ceiling, And
- A creative team reward formula.
Motivational Theories Behind Strategic Reward Management
The Frenchman, Sigmund Freud, is the father of behavioral psychology. All other motivational theories that shape reward management stem from Freud’s Psychoanalytic Theory.
The 3 theories I highlight below – and their variants – are primary sources of strategic reward management in UAE.
Important Note: Motivational theories are further split into two groups; process and content theories.
Content theories name and analyze extrinsic rewards which motivate people to work efficiently and perform better e.g bonuses.
Process (intrinsic reward) theories explain personal traits that impact / interfere with worker’s behavior such as respect and recognition.
Theory #1: Victor Vroom’s Expectancy Theory
A thriving business applies the formula “ Performance = Talent (Ability) X Reward (Motivation) according to Vroom.
Theory #2: Abraham Maslow’s Hierarchy of Needs Theory
The layered series of human needs in Maslow’s hierarchy places employment resources under Level 2: safety needs. The workplace contributes to Layer 3’s sense of belonging. If an employee gets recognition, they satisfy the need for self-esteem at Tier 4.
Theory #3: Frederick Herzberg’s Motivator-Hygiene Theory
Frederick argues that job satisfaction and dissatisfaction aren’t two ends of a continuum. Each should be measured separately, using either motivator or hygiene factors.
According to Herzberg, actual motivation comes from completing job tasks. The primary function of reward is to prevent worker dissatisfaction.
The Structure of a Reward Strategy
Any strategic reward decision is a consideration of four major factors:
- The Base Pay
- Variable Pay
- Employee Value Proposition, And
- Benefits & Rewards.
Therefore, every feasible reward strategy should incorporate the following elements:
- A comprehensive list of guiding principles.
- An outline of observable traits that reflect how the company is developing post-reward.
- A detailed list of all financial and non-financial rewards on offer, And
- An all-inclusive, step-by-step implementation plan.
Models of Organizational Reward Systems
Renowned companies in UAE such as Cape East LLC. are focusing on reward management strategies to stay ahead in employee recognition efforts. Let me leak two of their outstanding incentivization models.
- Model #1: The Armstrong Total Reward Model
This extrinsic approach combines, differentiates, and assesses the impacts of transactional incentives. It also measures the relevance of relational employee motivators.
Compensation rewards are tangible, arising from salaries / wages, commissions, bonuses, and benefit transactions between the company and her employees.
Relational motivators are a total of the worker’s interactions with teammates, juniors, and the executive wing.
- Model #2: The Intrinsic Reward Model
In addition to payment, there are other employee-intrinsic rewards that motivate people to want to complete tasks, assignments, or projects.
The worker’s psychology plays the biggest part here. Such factors as the nature of our abilities, workplace actions, feelings, and moods affect how we handle jobs. Intrinsic rewards include pride, personal satisfaction, or even self-esteem.
The 2 Main Types of Rewards
Any worthy people professional in GCC countries balances both the financial and non-financial incentives while forging a company’s strategic reward management program.
- Financial Rewards
They include salary increments, bonuses, percentage commission, referral programs, tax reliefs, deduction waivers, and allowances.
- Non-financial Incentives
Includes things such as occupational health and safety, flexible working hours or schedules, work-life balance, leader-board appreciation, training opportunities, and employee engagement.
Fact
Job enjoyment and other non-financial incentives account for 65% of employee motivation. Non-recognized employees are the most demotivated workers.
5 Major Trends In Strategic Reward Management: A Closer Look at The GCC Employment Scene
Great reward management systems hinge their incentives on performance. A single policy should consistently cut across the whole organization.
Modern UAE employers use employee data to write creative, strategic initiatives that celebrate their workers’ achievements and success.
The following strategies of managing incentives are vogue in UAE and the Gulf region.
Employee Incentivization Strategies in UAE Today
In order to appreciate their employees, modern businesses in GCC use any (or a combination) of these 5 trending reward policy designs.
- Total Reward
Most UAE companies have taken to salary evaluations. Minimum wages are part of government policy, but employers dangle checks with more dirhams and riyals than their respective regulatory authorities.
Overtime is becoming a must-have, while cunning HR professionals include full medical covers and housing allowances in the package. Flexible benefits like food, transport, return holiday tickets, and family relocation are just a few extras.
- The New Realism
Modern analysts say objectivity and fairness, the core principles of strategic reward management, are lost whenever we use “old” methods. The career family structure strategy is a new norm in people management.
The new realism strategy advocates for an assessment of the nature and size of the job you’re hired for, NOT ranking employees against one another. Realism attempts to solve the cons of static job evaluations.
- Engaged Performance
Line manager capabilities lead to a more engaged and motivated workforce. Engaged performance reward strategy incorporates the employees’ input in drafting company reward policies. It also considers what key business rivals are offering.
Questionnaires, surveys, and open forum contributions are the raw drivers of motivation systems. Organizational profits and business projections act as a control mechanism. Take precaution not to give in to frivolous employee demands, though!
- Equal Pay for Work of Equal Value
Performance appraisals evaluate and review an employee’s work behavior against a preset standard. The process is meant for either positive or negative reinforcement.
Edward Lawler (University of Southern California), in his research, shows 93% of companies in UAE and the world over undertake “rank and yank’’ exercises. It’s akin to a “contribution-related pay” model.
- Job Evaluation
HR data analytics helps personnel executives to understand and identify a job’s ranking to eliminate job discrimination.
A working job evaluation system tells management which rewards should be handed out, to whom, and in what amount. Such an evaluation is the basis for job grading, payment structures / schedules, and handling work & pay relativities in GCC. Broadbanding is the most common modus operandi.