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The most important resource for any Company has always been the human one and the Company that adopts a well-structured Corporate Employee Benefit (CEB) package will not only retain but also attract a higher caliber of staff. This ultimately reflects positively in the performance of the Csee if your company could qualify for a CEB and the full article which recently appeared in Human Assets Middle East,
Corporate Employee Benefits - considered as the norm in any remuneration package in the western hemisphere but is still very much of a luxury in this region. Predominately the gratuity benefit system prevails in the GCC and international employers recognize the problems associated with providing bespoke corporate benefits to their staff whether expatriate or locally employed. This problem is growing since the flow of international expatriates, particularly high net worth employees, is a rising trend. The latest figures on international migration from the UK indicate that an increasing number of people leaving their home country to live overseas are those employed in professional and managerial roles. This trend is influenced by the increasing internationalization of the business world coupled with recessionary employment prospects at home. In essence, people with skills are now more willing to look abroad in pursuit of their long-term career ambitions. The problem for any HR executive is the difficulty in targeting this group individually. However, with the implementation of a well-administered CEB package, the attraction will bring such individuals to you door. After all, when companies employ senior personnel in key positions, they are keen to retain such staff. Companies invest in their expertise and appreciate the value of their experience, so they do not want to see their investment walking out the door. Therefore, a suitably structured CEB package should be an essential element to your overall system of remuneration.
Presently most companies in this region adhere to the gratuity scheme. Some companies are not compelled to move away from the gratuity system since, for one thing, it is still legal requirement in the UAE. Moreover, very few companies maintain the actual gratuity liability amount as a cash holding in their accounts as required by law. These monies are generally used for other projects or as cash flow in the hope that not all your staff leave in one day.
This situation is fine if your company does not have any long-term plans in building up a loyal and productive workforce. Furthermore, the implementation of a bespoke CEB could actually call upon this money as seed funding which some companies would rather not allocate. Other companies take a view that the money is better invested in their accounts than that of their employees. One again, this view is shortsighted and engenders bad feeling among staff. The situation in this region is likely to change and it has already been muted by local authorities that the system of gratuity will be replaced. Take note, be pro-active and get ahead of the game before your competitors do.
Ultimately, how do your staff view the gratuity system? It does not work for the staff member who is loyal and provides you with a good return of service. Why? For example if you were an employee working for a company for 10 years, your gratuity entitlement in year one does not grow, not even at bank rate, and is only accessible on retirement or departure (subject to many other clauses being met too!). If the individual’s gratuity entitlement were placed in an interest bearing account, still under the control of the Company or Trustee, this would be more beneficial for both employee and employer. Employees feel more inclined towards enhancing their end of service benefits knowing that it is being well managed on their behalf as a perk from the Company. The Company can create increments of pay into their CEB account that is redeemable through a return of service or by achieving productivity targets. The Trustee is a useful body to ensure both party’s interests in the CEB scheme are met. This represents a fair way of ensuring correct remuneration since confidence in gratuity schemes has waned over the years.
HR professionals are sometimes further dissuaded from implementing such benefits due to a perceived administration burden. Many international providers of CEB’s have systems in place that are readily transferable to meet the needs of individual companies needs. This negates the need for additional admin support in the company and in some instances totally alleviates the need for any in-house support. With the advent of online systems, many solutions we offer can be managed by the company directly thereby giving the Company control. If such CEB providers can manage the idiosyncrasies of the UN for example, then it is likely that they can cater to your company’s needs too. Typically we are asked to provide solutions on corporate medical cover, group life and pension (Gratuity replacement) schemes. When providing corporate financial solutions we typically use our strategic relationships with several leading independent actuarial and employee benefit consulting firms around the world. Drawing on the strengths of our strategic partners and the specialist industry expertise, we are able to offer our clients innovative solutions on a local, regional and a global basis. More importantly, the CEB is individually tailored since no two companies meet the same profile.
Globaleye, along with our specialist associates, are very familiar with specific employee benefit needs. Moreover, it helps having an individual service with an administration system being locally placed. We understand the needs of the GCC client and can translate the CEB proposition relevant to your company. We can demonstrate that the administration for such benefits is straightforward and in some cases we can alleviate demands on existing arrangements. We can simplify the process of constructing a CEB but at the same time ensure that the interests of both employee and employer are met. Sometimes, having and independent third party oversee the development of a CEB will create more confidence in the end product from both sides of the fence.
Having a CEB can also provide individual financial advisory services to senior international executives requiring advice on tax, offshore investments and protection. This service ideally complements their corporate benefit provisions, and enables the individual to have access to high quality financial advice at corporate rates. The demand for this service is generally high reflecting the need and value placed on this benefit by senior executives. Moreover it reflects that there are numerous high net worth expatriates who now fully intend to develop their career overseas – the challenge for the HR executive is to ensure that these professionals are working for your company. For example, pension arrangements in their home country (if any!) are not suitable for the seasoned expatriate and the need for a fully portable and international solution is becoming paramount. If your company can provide that solution for them at a corporate level, this is likely to be a key consideration precluding them from leaving the next time the head hunter calls!
CEB are definitely here to stay and we anticipate more and more companies in the region will be looking to adopt them. The legislation recognizes this trend and the labour laws in the GCC are likely to change soon. Typically, most companies look to establish a medical insurance package first that will satisfy the executive level of the company. Thereafter, some form of gratuity replacement or pension provision is considered as the company progresses it’s CEB programme. It may appear to be a daunting process but with proper guidance and support the investment of your company in to a CEB package to attract and retain key staff will pay dividends in the future.
If you would like an appraisal for your company on the suitability of a tailored CEB then please contact us today. Similarly, send this to your HR department head - you may be doing yourself a favour! |
