Provision and Compensation and Benefits: Comparison of the UAE and Qatar - Research Paper Example

College of Business Sciences Master of Science in International Business Cohort 4 Human Resource Management BUS640 PROVISION OF COMPENSATION AND BENEFITS: A Comparison of UAE and Qatar Research Paper Done by: Fatima Al Awadhi - ID: M80003217 2013 There exists various human resource challenges in Qatar and the United Arab Emirates. For the purposes of writing this paper, challenges that regard compensation and provision of employee with benefits has been identified. The paper will focus on discussing the issue in the two countries and identify both the similarities and the differences. The methodology adopted in the establishment of findings is that of qualitative method since it requires an in depth analysis which cannot be easily given numerical values for analysis. The basic problem regarding the challenges in both countries is identified and forms the basis of the solutions that have been discussed in the paper. The literature review focuses on other studies that have been done in the region regarding the same issues. The solutions that are given in the paper are tailor made to the two countries as they address the specific issues that exist in the region. The solutions are dependent on some of the ongoing processes in the two countries so as to offer guidance on how to handle the human resource issues that exist and which are specific for the two countries. ....................................................................................................................................................... Introduction The Arab world which is well endowed with natural resources has been an attraction for many people seeking employment from both the local and international community. Given “the abundant natural resources in the region, there abounds growth in the business sectors” and hence an increase in the number of employees (Cecil, 2006). For this reason the region has of late been faced with major human resource management challenges. This emanates from a range of issues that are in existence in the region and which are unique to the labour market in this region. The level of skill of the people in the people that are released into the job market every year always differs. Kolb (2005) states that this coupled with government regulations that demand that the workforce be localized are some of the major issues at play when operating in this region of the world. To deal with the issues on the ground, the HRM managers have had to come up with very specific approaches with the focus being the need to seek solutions to some of the existing challenges. For the purpose of writing this paper, two HRM major challenges in both in Qatar and UEA have been identified. One of the HRM issues addressed is that of compensation. This revolves around issues that are aimed at rewarding the employees for the job they have done. These include payment for the job that has been done, promotion on the basis of experience and rewards to recognise exemplary performance (Frank, 2006). The other challenge that is of focus is that of giving employee their benefits. This entails the provision of other things that are meant to make the life of the employees to be more comfortable and have more value such as the provision of retirement benefits, provision of affordable mortgage for the employees to be able to build their own homes and other benefits. The paper will go further to try and compare these issues in the United Arab Emirates and Qatar. Analysis of the issue The major HRM challenges surrounding the issues of compensation and benefits “have its origin in the fact that there is preferential treatment” in the compensation and provision of benefits between the nationals and the expatriates (Manacorda, 1999). The region has many policies that have been instituted by the ruling elite which are mainly meant to give preference to the nationals in the region. Some scholars have labeled employment in the government jobs as more of a social welfare thing. According to Frank (2006) the issue is further compounded by the fact that the nationals of Qatar and United Arab Emirates are usually less qualified to fit into the jobs that are offered by non-governmental organizations in the region. This leads to these non-governmental organizations to take more of non residents to do the jobs and fill out the employment opportunities (Powell, 2004). The issue of compensation is further compounded by the fact that even when some nationals of these two countries meet the qualifications needed to enable one to secure a job with the non-governmental organizations, they mostly make unfeasible demands (Rabi, 2002). Many nationals of Qatar and United Arab Emirates demand to be given a compensation package like that of the government and at the same time get the benefits of working for fewer hours. This means that “the cost of operation for the non governmental organizations will then be unreasonably high” given that they end up paying the employees highly for lesser work done (Psacharopoulas, 1994). This is because the government jobs only require the employee to work from 8 AM in the morning until 3 PM in the afternoon. The employees also get on average about six weeks for holiday annually and other religious and national holidays. At the end of this paper I intend to establish the existing differences in the provision of benefits and employee compesatin between Qatar and UEA. Literature Review Compensation is an important aspect of HRM since it is necessary in ensuring that a firm or any organization is able to attract and retain professionals who are culturally and technically qualified to hold the position on offer. HR managers in an organization have a duty and responsibility of ensuring that compensation and benefits that are given to the employees are fair and reflect the amount of work done and the level of skills of that qualified the employee for the job (Duff, 2002). The impact that has emanated from the growth of the international economy is a major force in the human resource management. Compensation and provision of benefits have emerged as one of the most complex areas of human resource management in labor markets like that of Qatar and United Arab Emirates. The existence of many multi-national corporations in the regions also has a compounding effect on the issue of compensation and provision of benefits for the employees in the two countries. This because these organisation are faced with the challenge of having to establish a system of pay that conforms to the local customs, policies and laws and at the same time ensure that the organisation remains profitable (Webb, 1997). Here the HR managers have to carefully weigh the options that they have and ensure that the motivational use of employee compensation and benefits is not lost at all. The purpose of establishing good human resource management policies is to ensure that there is consistency together with equity in the provision of employee compensation and benefits. The compensation package should be developed in a way that enables it to meet certain objectives such as to ensure that an employee is able to maintain a certain standard of living and at the same time feel motivated to continue working for the organization in question (Metcalfe, 2006). The package should be comprehensive in a way that ensures even an expatriated class of employees can be attracted and maintained with the same. This is because the labour market in Qatar and the United Arab Emirates have a large population of expatriates who work there.Given the growing of the global economy most organisations are staffed with a host of either expatriates or a skilled labour force that is in a position to help the organisation meet its objectives. Jasim (2008) adds that for this reason striking a good balance on the management of employees can be what stands between and either failure or success in the business circles. In the case of multinationals that are operating in both Qatar and the United Arab Emirates, there exists a host of international assignees that hold various jobs. In the recent past it has been costing many multinationals upto five times more to maintain these international assignees as compared to the employees in their home countries (Emilie, 2010). It has emerged out that there exist differences in the skill and experience of these international assignees and hence there needs to be variations in terms of compensation. The differences that are mentioned by many scholars include the length of the contract, age and experience of the assignees, the health and productivity of the employees, international cadre of employees who move from country to country and a host of other permanent expatriates who are placed in a foreign country for a period of more than five years (Jasmin, 2008). When compensating or minting out benefits to the employees there are several approaches that an organization can adopt. All these approaches are seen in application in both Qatar and the United Arab Emirates. The most common approach is the use of negotiation or what is mostly referred to as the ad hoc basis (Willoughby, 2008). This involves negotiation with each individual employee and hence there exists differences in compensation and benefits for the different employee of the organization. An organization can also decide to use a regional approach where there exists a predetermined form of compensation in the region and for which all the employee are compensated with. Another approach is the cafeteria system which allows an organisation to provide its highly paid executives with a host of benefits which are also predetermined and that are meant to ensure there is increased motivation (Kolb, 2005). Other organisations come up with global pans under which all employee in a given job classification are provided with a set compensation and a host of benefits that go with it. For multinationals operating in both Qatar and the United Arab Emirates, compesation of the employee has to conform with the host country philosophy or a combination of the organisation’s plans and policies and those of the host country. This is haboured by the “pressure from the ruling goverment to ensure that there is maintained equity with the local people” and a way of showing respect for cultural and religious differences (Richardson, 2006). Methodology Most researches can be identified as either quantitative or qualitative in nature. Qualitative research utilises data which cannot be easily coded or converted into numerical values aiming at establishing an in depth understanding of the human behavior together with the reasons that drive the behavior in question. From this the aim is to answer the why and how on top of answering the issues of what, where and when. In light of the above knowledge I predominantly choose a qualitative approach in my methodology. This because the research operates in the interpretivist and also the constructivist paradigm both of which operate by the use of qualitative methods (Ruttledge, 2011). Solution Powell (2004), states that human resource strategy needs to be standardized in the light of local culture and legal of the country. The differences that abound in the compensation of the human resources and the provision of benefits can be addressed with the adoption of appropriate human resource management policies. According to Kolb (2011), these policies create standardization helping to eliminate the huge discrepancies in the compensation and the provision of benefits to the employees in both Qatar and the United Arab Emirates. Another approach to the issue is the existence of a continuous review of the compensation and benefits given out by the organization. The reviewed compensation and benefits should also be in line with the local cultures, legal and tax provisions. A regularly reviewed system of compensation is a good way of ensuring that employee continues to live a good life and enable them to work without any distractions given that changes keep occurring in the life standards keep changing (Frank, 2006). It is of essence to establish a good job evaluation, grading and compensation system. The system should also put into consideration the local culture and other government regulation in order to ensure relevance continues to exist (Rabi, 2002). Most banks and stakeholders in the Qatar and United Arab Emirates banking industry have adopted what is called the customisation of compensation and benefits system. This will help in the establishment of a competency based culture in the region. This means that despite putting into consideration the other issues such as culture and legal requirements, the performance of the employee will be key in the determination of compensation and the benefit that one gets (Duff, 2002). Over and above this, the assumption that the international employees that work in the two countries are more skilled will be dispelled as they will also be required to ensure that they demonstrate performance for them to be eligible for the compensation and benefits that will be based on the new system. Other more lasting and sustainable solutions include taking measures such as the ones that have been instituted in the Qatari system of education (Jasim, 2008). This system focuses mainly in establishing long lasting changes in the especially in the primary and secondary school education systems. The systems exist independent of the local cultures and practices with emphasis on critical thinking and the problem solving model as the key learning tool. This has been an initiative of the government to try and empower the local workforce in order to ensure that they are in a position to take up the employment positions that are in existence in the country. There exists a big deficit in the United Arab Emirates as regards to these education developments since it has not instituted any structural changes in the education sector (Webb, 1997). The proponents of these changes argue that there is a need to ensure that the workforce is skilled something that will also have an impact in the compensation and the benefits that they receive. This is because there is a great emphasis on the establishment of a system of compensation and benefits provision that relies on the employee skills on top of other benefits that may be obtained due to the local regulations and government policies. Conclusion The issue of compensation and the provision of benefits for employee is of importance when it comes to good human resource management. The findings indicate that these issues arise due to the policies in place and other employee related facotrs. These issues can be solved through the adoption of good HR policies. For this reason where the workforce is diversified as it is seen in Qatar and the United Arab Emirates, it is important to come up with realistic policies that will enable the organisation to run well without loosing its employees and at the same time meeting its objectives. The use of compensation and benefits in the labor market and on managing the employee is sensitive since there exist other factors beyond the business that are regulatory to the issue of compensation (Powell, 2004). The many challenges that exist in the Qatar and United Arab Emirates job market are caused by some factors that can be addressed through the adoption of good human resource management practices as illustrated in the above discussion. There exist both the need to institute long-term and short term measures in addressing the issues. References Cecil, O. (2006). “Oman’s Progress toward Participatory Government,” Middle East Policy, p. 60–68. Duff, A. (2002). Approaches to learning: Factor variance across gender. Personality and Individual Differences, p. 997–1110. Emilie, R. (2010). Growing Levels of National Unemployment in the Arab Gulf: Time to Update the ‘Social Contract. Middle East Policy, p. 38-51. Frank, L. (2006). “Qatar Taps Wells of Knowledge,” Science, pp. 46–47. Jasim, A. (2008). Emiratisation: Drawing UAE Nationals into their Surging Economy. International Journal of Sociology and Social Policy, p. 365-379. Kolb, A. (2005). Learning styles and learning spaces: Enhancing experiential learning in higher education. Academy of Management Learning and Education, p. 193–212. Manacorda, M. (1999). Skill Mismatch and Unemployment in OECD Countries, Economica, p. 181–207. Metcalfe, B. (2006). 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