RIYADH — Despite some criticisms regarding the current Saudi labor policy of mandating business establishments and companies to employ Saudi youths, still the Ministry of Labor's initiative is generally regarded as productive and rewarding. The regional head of Towers Watson, a leading human resources consultancy, said in an interview that “Saudization should be an advantage, not a legal requirement for medium to larger companies.” Paul Morris, Managing Director, EMEA region at Towers Watson, said the Saudi government's drive to increase the number of actively employed Saudi nationals is fully understandable. “While it is often easier to rely on foreign workforce, it is in the national interest to grow and deploy local talent. We have seen a number of very creative initiatives by the government to encourage local national employment affecting large, medium and small size organizations.” He said their clients tend to be medium to large size organizations and “we are actively helping them to turn the human capital related challenges into their advantage.” Excerpts from the interview follow: • The situation breeds demoralization on the part of existing workers (expats at that) that would eventually, if not addressed effectively, affect their productivity and redound to the company's earnings in the long run. How do you motivate the dejected employees and reward their performance when factors beyond their control sway their company's fortunes? We have noticed similar comments from some struggling organizations. However, many of the leading Saudi companies adopt more proactive views and policies. The Saudi market is a relatively large and expanding market that provides opportunity for growth. The most successful companies tend to achieve Saudization rates by expansion rather than replacing expats with locals. In this way, expats with added value skills can have strong career opportunities, local talent is being developed and employers achieve Saudization rates beneficial for the country. While the situation would differ with the type of industry and size of the company, it is important to take a proactive approach and follow a well-articulated Human Capital strategy that reflects the external dynamics and serves the business. • In cases where external challenges, for example terrorism and global economic meltdown ensue, how would you keep the employees still motivated and their spirits up? Is it preferable to commission an independent HR company to introduce and conduct an innovative performance-based pay evaluation to guarantee fair treatment so that the workers would remain focused on company goals and engaged in their work, no matter what challenges are thrown their way? We long argued for pay for performance as a concept. Numerous research studies have confirmed that if designed properly; pay for performance system improves employees' productivity and motivation. An important aspect of effective pay for performance system is that an employee is rewarded for the behavior (and results) he has under control. Examples of external challenges you mentioned are typically beyond the control of an employee and as such would not necessarily impact the design on an incentive plan. • A globally integrated, locally customized talent and HR strategy demand a combination of centralized, global standards and services coupled with distributed, highly trained experts. What are the requirements necessary for a regional company to start with? Following the economic slowdown in 2008, we have seen a number of regionally based companies coming out as “strong survivors”. A subsequent review of their business strategies led many to focus on regional or even global expansion. When doing so, one of the main requirements is to acquire skills to deliver business across the region. This often necessitates acquiring new talent and even major changes in leadership. We often help companies to set up the supporting HR infrastructure from HR policies to Compensation and Benefits programs essential for successful operation oversees. A new regional organization needs to set a local strategy within the context of the global corporate strategy; once this articulated it needs to focus on organization design and clear role accountability to then consider adaptations to compensation and benefit frameworks. Similarly, it needs to consider other amendments to its performance and talent management systems. • What performance metric is the best to use in calculating rewards/incentives to workers? There is not really a single best metric you could refer to. Subject to the type of business, organizational goals and the type of roles it has, the metric could vary greatly. We have recently advised a business that is not expected to generate profit only in the next 12 to 18 months and yet a proper incentive programs could significantly improve employee behavior to ensure that the goals set for the next 12-18 months are met. • Are HR and business leaders in the region ready to deal with the future challenges? What are the imminent challenges this year? What are the best ways to handle and overcome them? The Middle Eastern region is one of the fastest growing regions in the world and understandably many companies did very well in the past. We expect an increased competition for many of our clients in the near to mid-term which will put in test their business and human capital strategies. Unsurprisingly companies with strong leadership and readiness to execute on their strategies would do better than others. This is increasingly so with major improvements in the understanding and awareness of the role of HR within firms. Major challenges are the fall in oil and gas prices, although both KSA and the UAE have solid reserves so the impact on the overall economy will be marginal. In HR terms the main issues center around the ability to attract and retain key talent; the quality of middle managers and leadership in general. • Do you see increases in talent and HR investments for companies in KSA, in the region, in 2015? Over the past years, we have seen a continuous commitment by companies based in KSA to invest in talent and HR. We expect this trend to continue for coming years in general. Major investments are around HR Technology, employee capability and assessment and workforce planning. • Nowadays, leadership, retention, HR skills, and talent acquisition are the top global and regional trends in perceived urgency. How prepared and ready are the companies in Saudi Arabia and the region to respond to these challenges and trends? Many organizations recognize this as important but the majority tend to act only when they feel the real pain. We anticipate that in the near future, many organizations will review their talent strategies and will opt to introduce new programs such as core-employee retention schemes to prevent undesired turnover of critical staff. • While global trends are similar around the world, program needs vary by region. In this region, how do you transform learning and development to align with business strategy? Given the demographics of the region, it is growing one of youngest workforces in the world. These Generation Y individuals (sometimes called the “Connected Generation”) are looking for challenging work with strong learning and development opportunities. This means that they are expecting more on-job experience, coaching and mentoring from senior colleagues with less emphasis on formal classroom training. • Since investing entails different types of risk, what is the best approach to minimize risks and ascertain the best possible ROI? Towers Watson is introducing a new concept to the region focusing on greater segmentation of the workforce and their work by looking at which roles in the organization are “pivotal, proficiency or efficiency” roles which then helps focus where firms need to best invest for significant return on performance. — SG
