Retain staff to stay in the game

With the average cost of recruiting a new member of staff at least 10 per cent of their salary, not to mention relocation costs if hiring from abroad, the price of new recruits is not cheap.

If there is more than one vacancy, companies can shell out hundreds of thousands of dirhams every year on recruitment and with budgets being squeezed during the credit crunch, some can ill afford such outlays. Therefore retaining existing members of staff is becoming even more important.

There have been many stories of late where staff have been forced to take unpaid leave or pay cuts in order to keep their jobs. While this is not ideal, staff have done it to prevent redundancy.

British Airways is perhaps the most famous example with all staff requested to work a month for free.

The trend has also hit our shores too. Industries from real estate to advertising and the media have all asked staff to do what they can to help the company survive.

One media executive, who asked not to be named, said everyone in his company has been forced to take two weeks unpaid leave, with the money deducted from salaries over a few months. And while he was not very happy, he said it is preferable to the alternative.

"You're never going to argue against it but that's the way it's framed. No one will say 'no' because they know they will lose their job if they do," he says.

"The company has been straight with us and they didn't lay people off like others so it was a smart move on their side. The industry changed overnight and now everything is scrutinised, but that's made us better at what we do.

"It's the recession so you can't be loyal because you don't know what will happen," he added.

Yet despite the associated aggravations – not to mention cost – redundancies continue to happen. Recruitment agencies are one of the few industries to profit from such initiatives but even they do not always think it is the best option.

Nina Hoffman, a consultant for Executive Solutions, says: "Considering the cost of hiring an employee, including the expenses for visa processing and the time span until an employee becomes fully operational, this habit of hiring and firing is extremely short-sighted. It has proven to be detrimental not only to more established economies, but also to the reputation and capability of a market/organisation to attract the right talent later."

Nevertheless, companies have still taken steps to fire some while hiring others. The recruitment manager of one Dubai Media City-based company said it makes financial and common sense to keep existing employees due to the time it takes to train them, not to mention recruitment agency costs, visas and airfares for the employee and possibly their family.

"If the employee is performing well we always want to keep them," he said. "The average person gets a 30 per cent rise when they move jobs so most of the time we have to match this and give them a promotion to maintain balance in the team."

But even so, such a rise can still work out to be less than that of a new recruit. The rep said they now pay the equivalent of one month's salary as opposed to the 12 to 15 per cent they paid last year to a recruitment agent and when coupled with airfares and visa costs for the family it can work out to be cheaper to keep the original person.

"It's a win-win situation. You can't take everyone for a ride, you win some and lose some but a CEO will always believe that if a person has been in the system for two years they are better than a new recruit," he adds.

Internationally, The New York Times gave staff across the board a five per cent pay cut but off set it by giving them 10 extra days' holiday, which some experts say is a good retention method, but employers must be careful when using it as a trade-off against cutting salaries because it can lead to staff feeling cheated as well as overworked and underpaid.

Hoffman says: "To offer training or other non-cash benefits will definitely increase loyalty to the company and assist in retaining talent. Employees will naturally feel less exploited if there is compensation, if not monetary then at least in terms of career-building measures, such as training, development or other forms of recognition."

Training is another area that companies are also focusing on at present as a way of enticing staff to stay. Although it is increasingly focused, equipping people with new skills can be a good way to keep them, says Patricia O'Sullivan, Managing Director of Pro Training.

"Training is a huge motivator for any ambitious employee wanting to build his skills and a good employee will want to work for a company that will develop them so it is a good incentive for making them stay but I don't know if it makes up for a cut in salary because it's a huge de-motivator," she says.

A number of companies, however, are taking the same path as the media executive's, quoted above, and attempting to be open and honest with employees about the problems they face. It worked for our spokesperson and it seems he is not alone. Better Homes has taken this approach throughout the year as it has been forced to make redundancies. Managing Director Ryan Mahoney says morale has been one of their primary concerns since the cuts were made and as such they have opened up communication to all parties.

"We were obviously very concerned about motivation and decided that the only way to keep everyone focused was to regularly communicate the reasons behind such cuts and the strategy we had to deal with the crisis," he explains.

"What can really undermine morale in a company is when major decisions are made with no justification or communication so we have regular updates on the state of our revenue, cost and profit as well as the strategy being implemented to navigate through the challenges.

"The key for us is communication and constant re-evaluation of our strategies. We cannot change the reality of the marketplace but we can clearly communicate our strategy to deal with it."

A number of predictions have pointed towards the job sector recovering in the final quarter of the year, so many will no doubt be hoping a pay rise isn't far away.

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