Why employers need to rethink their salary strategies

Companies that fail to move with the times risk losing out on top talent

Attracting the creme de la creme of talent means offering a fair and competitive salary that reflects their worth. Getty

About 49 per cent of companies in the UAE are budgeting to increase employee salaries during their annual pay reviews, a recent report from professional services company Aon found. Perhaps the percentage is not as high as you would expect.

Nevertheless, it is great to see businesses recognise the importance of offering staff a pay rise amid rising inflation and stiff competition for talent. So, why aren’t they applying the same logic to salaries for new employees?

It doesn’t add up. Seventy-four per cent of companies have felt increasing pressure to attract and maintain talent in today’s job market, the Aon survey found. Yet, from my experience, too few employers are doing what it takes to appeal to prospective hires.

Pushing top talent away

On the contrary, some employers are alienating candidates, pushing them into the arms of the competition. They cannot understand why their role is taking so long to fill, yet the reality is that their approach is standing in the way of the perfect hire.

Imagine a seasoned candidate with a decade of experience applying for a senior role for which they are more than qualified. They are clear from the beginning about their salary expectations, which are consistent with the market rates.

After many rounds of interviews, it comes to the crucial negotiation stage, at which point the employer not only disregards the salary range already discussed but also offers the candidate 12 per cent less than what they are currently earning.

We are seeing more and more employers move the goalposts on salary at the 11th hour, which is a waste of everyone’s time.

In other instances, employers are offering candidates incremental wage increases (say, Dh1,000 more than their current monthly salary) that simply aren’t enough to secure their interest and lure them away from their current role.

Typically, these candidates find a competitor with a more appealing offer. Again, it is the employer that misses out.

So, why are some companies in the region behaving this way? It is hard to know, but employers often try to justify paying below-market salaries by highlighting the benefits they offer.

However, many studies focused on jobseeker preferences confirm that salary still reigns supreme — and in the current economic climate, it is more important than ever.

Admittedly, “benefits” such as hybrid working are in high demand, but employees see flexibility as a given rather than a perk. Besides, it doesn’t pay the bills.

Spiralling costs

The stark reality is that costs are rising globally.

British annual inflation surged to a new 40-year high in June, pushed by rising fuel costs, adding to the cost-of-living crisis. Meanwhile, in the US, consumer prices rose by 9.1 per cent, year on year, in June, the largest gain since 1981.

In April, inflation in Dubai accelerated to 4.6 per cent from 1.1 per cent in December 2021, driven by transport costs, according to Emirates NBD.

Fuel costs have increased by more than 70 per cent since January, in line with soaring global prices.

Transport and food prices have also increased and are the two biggest drivers of inflation.

Everything costs more these days — and salaries need to reflect that.

Yet, some companies in the region are still behind the times when it comes to talent attraction.

The labour market is tighter than ever and employers that want to be in with a chance of securing the talent they need to grow and succeed must change their ways.

That means providing the benefits that candidates want and expect. It also means streamlining hiring processes to support fast and effective decision-making.

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Exceptional candidates get snapped up quickly. So, businesses conducting five or six rounds of interviews risk missing out on their preferred candidate.

However, more than anything, attracting the creme de la creme of talent means offering a fair and competitive salary that reflects their worth.

If your goal is to secure exceptional people, you need to provide them with the financial reward and recognition they deserve. If you don’t, you can be sure your competitors will.

Zahra Clark is head of Mena at Tiger Recruitment