Sunday 30, April 2017 by Jessica Combes

Pay people properly

 

As companies try to manage their budgets in the current economic climate, underpaying their staff could cost them in the long run.

In a survey conducted among 20,000 jobseekers and employers across the GCC by recruitment platform BLOOVO.COM, 43 per cent said they are dissatisfied by the jobs they are currently in. The two main factors topping the list of employee demotivation are low salary and job mismatch. Low salaries often extend to new hires as well and can be attributed to the recent slump in oil price.

 

Business leaders and HR professionals are more careful and cost-conscious these day and the insecurity factor that they face, living in the Middle East region, doesn’t help because companies are looking more closely at their budgets, more carefully managing their costs and trying to get people at a lower level or with less experience or who are ‘less expensive’ is part of that mind-set, according to Nuno Gomes, Principal, Information Solutions Leader Middle East, Mercer.

 

“We would all like to have the best people available for our businesses but a lot of that needs to be balanced with budgets and expectations in terms of company profitability. When business leaders recruit people there is always a bit of uncertainty in terms of what the return on investment will be. There is a lot of reluctance to pay a lot of money for somebody that we honestly do not know, despite all the efforts and details in the recruitment processes. Unless someone is really a perfect fit or recognised in their field, companies are more often than not willing to go over and above to make that monetary investment,” said Gomes.

 

This trend to employ individuals at a lower rate of pay can only sustained in the short-term, according to Simone Beretta, Head of HR, Robert Bosch Middle East. “The drop in oil price can affect the short-term decisions of the company; however we have to look at the long-term investment and the long-term success of our companies. I would rather not recruit for a position at all if I have to save across the corporation costs, rather than employ the wrong person. So, underpaying or hiring the wrong talent is not going to be a successful start.”

 

Baretta added that in the long-term this kind of approach is not beneficial to candidates as well the companies. Candidates will end up not hitting their targets, will lose confidence and will not be productive anymore. That means companies will not hit their own business targets, and therefore not reach the full potential in the market as they would with the right people.

 

According to research by staffing agency, Robert Half, the cost of cutting corners and hiring the wrong person can be extremely high. The company does not only lose money and time by bringing in the wrong person, management could also potentially have to recover lost revenue as a result of the wrong person interacting with clients, or by having to repeat procedures that were handled ineptly. There will also be added pressures on other employees who will have to pick up the slack. But the cost of a bad hire do not end there; 39 per cent of CFOs surveyed said that bad hires impacted company productivity, while 11 per cent said the wrong person brought in fewer sales. It was also found that the amount of time supervisors spent managing poorly performing employees equalled about one day per week. Further research by the Harvard Business Review suggests around 80 per cent of employee turnover is due to a bad hiring decision.

 

Another long-term implication of not remunerating the right people can impact the company by losing their top people. “If business leaders are looking into recruiting people at lower pay levels in an effort to manage that cost, it becomes a lot easier for another company to poach those important assets out of the business. Paying fairly and accurately for each individual becomes crucial, especially in these times of uncertainty and instability,” said Gomes.

 

Candidate proactivity
Job seekers should not be passive when entering the recruitment process; they can be more proactive in ensuring they are securing the right roles for the right remuneration. The first step is by leveraging their networks to find out the market value of the role, and online tools such as Glassdoor.com will provide a good indication of the spectrum of a salary base for a specific position in an industry, said Baretta.

 

Gomes added that a benefit to using tools such as online recruitment is that it becomes a lot easier to capture candidates’ information, but there is a lot more information that HR teams and managers need to go through to find the right people. They need to remove the haze between the good candidates and a great number of others.

 

“Candidates need to be more targeted in the roles they apply for. We’re seeing people applying and looking for jobs anywhere. More and more we talk to people who put job ads out there and they receive CVs in the hundreds or even the thousands, and the majority of those are not really a fit for the role. While there is a tremendous rush for jobs, applicants are putting their names and CVs forward for jobs that really either do not fit their profile or they do not have the right level of experience,” said Gomes. Candidates need to ensure the job profile fits their career needs and expectations, and it’s not just another job providing an escape from their current employer or to try something new.