In a depressed job market, where increments and bonuses are hard to come by, employers can look at variable pay to reward those who deliver and retain performers.
A report by the Hay Group highlights that companies are increasingly awarding a greater share of total rewards to variable pay to increase focus on critical goals, and to reduce the vulnerability of companies to high fixed reward costs. However, they are also re-examining the measures they use to assess performance, to reduce the risk of disproportionate or undeserved bonuses and to reflect a broader understanding of performance that includes social responsibility and brand.
However, the concept of variable pay is not that popular in the UAE.
According to Toby Simpson, Managing Director at The Gulf Recruitment Group, “Genuine variable pay such as performance linked bonuses are not as common in this region as they are elsewhere. Variable pay is designed to act as a motivational tool to drive better performance rather than a retention strategy which is best served by the all too uncommon long term incentive schemes.”
Konstantina Sakellariou, Partner, Marketing & Operations Director at Stanton Chase believes that variable pay being paid to the employee depends very much on the position and may not apply to all. Besides, it should not be considered as a retention tool
“Variable pay depends on the position, it cannot act as retention strategy for all. However, positions that are directly linked to sales are often tied to variable pay, in order to provide an additional motivation and a monetary objective to the employee that is tied to results and not to fixed amounts. Variable pays usually allow an employee to make more money than with only a fixed salary, but, of course, have some level of risk. It is any remuneration that is connected to specific results and is not predetermined and standard on a monthly basis,” she told this website.
Agrees Ahmad Turani, Business Development Executive at Bayt.com. This kind of pay works the best with sales staff in the country.
“Employers can choose between paying their staff a fixed rate or paying based on performance. The latter is often the case when dealing with sales professionals or others employees whose performance is extremely important to the company,” he explained.
Giving a break-up of salaries in the country, he added: [Our recent salary survey revealed that basic salary plus benefits (65 per cent) is most common in the UAE with top five benefits offered being personal medical insurance (49 per cent), personal annual air ticket
(48 per cent), bonus (35 per cent), housing allowance (34 per cent) and gratuity (33 per cent).
“In terms of preferred pay structure, 62 per cent of UAE professionals tend to prefer a 100 per cent fixed-pay structure. When asked about the incentives they find most attractive to be included in their compensation package in lieu of a proportion of their salary, UAE professionals showed a preference for performance-based incentives (59 per cent), followed by professional training and development courses
(35 per cent) and commission for business or revenue generated (24 per cent),” he added.