What labor market trends make it hard for these companies to recruit and retain the staff they need?
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UAE in general and Dubai, in particular, continue to “dominate as the most attractive destination in the GCC” (Gulf Talent). According to a recent report issued by a trusted recruitment portal, more than 60 percent of professionals would like to move to UAE if an opportunity arises (Gulf Talent). However, despite the positive attitudes of expatriates towards the region, Dubai experiences changing recruitment patterns that do not bode well for ALCAZAR and BALCAZAR. The spike in hiring at the beginning of 2015 was followed by a significant downturn in recruitment activity. It has to do with the fact that a couple of multi-billion dollar oil and gas projects have been canceled creating market redundancies and cooling the business environment on an unprecedented scale (Gulf Talent). As a result, many companies are restricting their “recruitment to replacement hiring only” (Gulf Talent).
Moreover, numerous organizations have started restructuring and outsourcing their departments in order to survive in a new business environment. Most companies looking for multi-tasking candidates capable of taking on a wide range of responsibilities. However, new demands from employers make it hard for Dubai companies to recruit and retain the staff they require. The situation is exacerbated by the fact that average salary increases in the region are set to slow down. According to the report, “average pay rises in 2015 slowed down to 5.7%, from 6.7% in the previous year” (Gulf Talent). The cost of living in Dubai is also rising, making it difficult for employees to sustain their families. The unfavorable recruitment situation might be changed if the city witnesses a significant rate of business growth facilitated by the government investment in the private sector. Moreover, government subsidies and the reduction of value-added tax might solve the problem of stagnant disposable incomes, thereby making it easier for private-sector employers to expand their workforce.
Recommend two different approaches that could be taken in the short term as a means of improving their ability to retain staff effectively
Employee retention is a key area of concern for ALCAZAR AND BALCAZAR. Taking into consideration the fact that the staff turnover rate in the companies is around 25 percent, it is necessary to develop effective strategies for dealing with the problem until it worsens even further (Case Study 1). Moreover, the companies operate in a highly competitive environment requiring a highly skilled labor force that can be poached by competitors at any moment.
Retention through norms and values is a short-term approach to solving the problem of high turnover rates in companies. By establishing a corporate culture that effectively communicates organizational norms and values, encourages cooperation, and creates a sense of unity and identity, it is possible to significantly increase the level of employee retention. The managers of the companies should put in place extrinsic rewards to improve the motivation and dedication of their workforce (Ortlieb and Sieben 1689). The accrual of positive attitudes towards companies is not possible without the creation of interpersonal networks encouraging all employees to work towards the organizations’ success as a part of a team.
Retention through incentives
Retention through incentives is another approach that has to be taken by the management of the companies in order to reduce the level of employee turnover. If it is not possible to provide their workforces with retirement funds, career prospects and other elements of economic motivation, the leaders of ALCAZAR and BALCAZAR should use “off-the-job incentives like sabbaticals, opera tickets, or childcare facilities” (Mathis 56) among others to attain their loyalty. Moreover, extra vacations and reduced hours are also known to be effective incentives lowering turnover intentions.
What cost savings could be realized as a result?
Nobody would deny that turnover costs companies their time and money; therefore, proper retention management cannot be ignored. According to recent research, replacement costs for an entry-level employee can amount to 30-50 percent of their annual salary (Mathis 122). For mid-and high-level workers, costs of replacements can reach as high as 150 percent and 400 percent, respectively (Mathis 122). Therefore, effective HR managers should know exactly the cost of retaining and replacing their employees. In addition to the direct turnover costs, there is a large number of other elements that have to be taken into account. All costs associated with employee turnover can be divided into four categories: financial, replacement costs, training costs, and miscellaneous costs (Mathis 123).
Financial costs include the HR manager’s time which is usually spent on retention attempts and exit interviews. The category also includes accrued paid time off that might be used by some employees before leaving and temporary coverage consisting of costs spent on contingent employees or overtime for the existing workforce (Mathis 123). Replacement costs include compensation for newly hired employees, along with signing bonuses and other perks, HR staff time, and orientation expenses. Training can range from mentoring to formal instruction and require the allocation of resources. Other costs come from productivity loss, operation delays, lost clients, disruption to team cohesion, and loss of knowledge. Therefore, newly-appointed HR directors have to develop comprehensive strategies aimed at improving new hire retention as well as decreasing turnover rates of already existing staff (Mathis 124).
Over the longer term what should be the key features of the resourcing strategies that the companies establish?
HR directors of ALCAZAR and BALCAZAR should start thinking “about retention before employees are hired, while they are working, and after they leave” (Mathis 124). It means that retention strategies have to be integrated into the broader process of workforce management. To this end, it is necessary to conduct a turnover analysis which will help to determine the direct and relative costs of leaving employees and to what extent the process is dysfunctional. HR staff has to use structured exit interviews as well as post-exit surveys for gathering data necessary for assessing the effectiveness of retention initiatives. It will help to better understand turnover decisions determining staff intentions to leave.
Over the long term, the HR directors of the companies should improve and/or develop the following elements of a successful retention strategy: recruitment, socialization, training and development, incentives, supervision, and workforce engagement (Mathis 124). At the level of recruitment, it is necessary to make sure that all applicants are provided with correct information about performance expectations and potential challenges associated with the call center jobs. Proper socialization practices will help to ensure that all hires properly adapt to a new environment. At the level of training and development, the HR managers have to ensure that “current employees satisfied and well-positioned for future growth opportunities” (Mathis 124). It goes without saying that compensation and rewards are the main features of a successful employee retention strategy. All managerial positions in the companies have to be filled with people who are capable of taking leadership roles and providing their subordinates with proper supervision and coordination. Improving employee engagement is another key area of a successful staff retaining strategy.
What steps should they take to ensure that future skills needs are met?
The market competition for highly-trained professionals that “speak English and at least one other language fluently” (Case Study 1) makes turnover a problem that has to be managed properly as soon as possible. At the level of 25 percent, employee turnover becomes dysfunctional, thereby endangering future skills needs of the company. In order to meet those needs, the HR directors have to recognize that the website design industry is associated with the necessity to hire people having rare skills. Even though call-center type roles are usually can be easily filled, if the current market trends associated with a high level of both voluntary and involuntary turnover continues, the companies might find themselves in a position where they are no longer able to find good employees.
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In order to prevent such a situation from happening, it is necessary to recognize all key workers on board. It will help to better understand the skills needs of ALCAZAR and BALCAZAR and to take active measures aimed at retention of the most valuable employees. Of course, some share of voluntary turnover cannot be avoided; therefore, it is necessary to regularly administer questionnaires that will help to recognize leaving intentions while it is possible to manage them. The following elements have to be taken into account when predicting turnover in order to make sure that future skills needs are met: employee attitudes, quality of workgroup relationship, role clarity, job design, and team cohesion (Mathis 139).
Explain how the companies are positioned strategically and to what extent their actions may affect one another
The companies operating in the same market segment. Moreover, their competitive positioning makes it hard for their customers to differentiate their propositions. Furthermore, taking into consideration the fact that ALCAZAR and BALCAZAR are run by British managers, it could be argued that they take a similar approach to both delivering values and creating their market profile (Case Study 1). Therefore, their actions may significantly affect one another. If one company puts more emphasis on operational achievement, product and service leadership, and customer partnership it will be able to gain a competitive advantage. It might result in other companies losing their position on the market. Furthermore, taking into consideration the fact that the industry is associated with stiff competition, the unscrupulous operations of one company’s recruiters might lead to the key employees leaving their teams. Replacing the talent is an extremely expensive endeavor; therefore, it is better to anticipate all possible actions that might be taken by the company’s competitors (Mathis 139).
Explain why these companies would want to become “Employers of Choice”. To what extent would it be possible for them to achieve this?
Becoming “Employers of Choice” is a mark of a superior corporate culture that inspires people to stay on board with a company and dedicate themselves to its success. ALCAZAR and BALCAZAR would like to become “Employers of Choice” because they would have a much easier time recruiting and retaining their labor force. Skilled people will approach such companies themselves; thereby, saving them considerable amounts of money and time. Another reason why the companies would like to be recognized as “Employers of Choice” has to do with the fact that high-skilled professionals seeking employment in prestigious companies are known to improve team cohesion and performance to a significant degree (Mathis 174). Furthermore, high-caliber workers are ones that make conscious decisions about joining a company; therefore, their loyalty might substantially reduce turnover rates (Mathis 174).
It can be argued that even considering a high level of competition in the Dubai IT market, both companies have a great chance of becoming “Employers of Choice.” If they manage to retain their unique value propositions to both customers and employees, thereby expanding their market shares, ALCAZAR and BALCAZAR might actually achieve industry recognition. Regardless of the popularity associated with the title of an “Employer of Choice,” it is worth striving for it even if only to gain a competitive edge in the process.
Gulf Talent. “Employment and Salary Trends in the Gulf.” Web.
Mathis, Robert, et al. Human Resource Management. Cengage Learning, 2016.
Ortlieb, Renate, and Barbara Sieben, B. “How to Safeguard Critical Resources of Professional and Managerial Staff: Exploration of a Taxonomy of Resource Retention Strategies.” The International Journal of Human Resource Management, vol. 23, no. 8, 2012, pp. 1688-1704.