Businesses in the UAE compete not only for the best local talent, but also for the best workforce available in the global market. The thriving business environment is attractive to many, but there is unprecedented competition in the market, which has driven up labor costs significantly. As a result, forward-thinking companies are looking for new ways to attract and retain the best talent. In this article, we look at how emphasizing employees' financial well-being may improve employment efficiency and go beyond simply paying high compensation.
War for Talent and Why Employee Retention is Important
Surprisingly, even though the global economic crisis is continuously getting worse, labor market tensions are not abating either. This is a result of two, seemingly contradictory factors: As more and more Fortune 1000 companies announce major layoffs (Twitter, Meta, and even more recently, Hewlett Packard), the need for top talent with the experience and crisis management skills to steer companies in the right direction during difficult times is growing.
But these employees must be found, attracted to the company, and retained. Effectively recruiting talent is no easy task, and retaining employees for the long term seems to be one of the biggest challenges in the labor market. Especially, since recent trends indicate that the Great Resignation will continue, with more than 30% of Middle Eastern employees thinking about looking for a new job.
Quitting employees have an adverse effect on HR KPIs, productivity, ROI, and re-hire costs. The loss of an average employee alone incurs the following costs:
- Administrative and legal costs associated with the departure
- Possible severance payments
- Costs of organizing a replacement and the associated loss of working time
- Costs for advertising a new position
- Costs for HR recruitment agencies
- Costs for organizing the recruitment process and lost working time for interviews
- Costs for onboarding
- Specific costs of talent acquisition (relocation premium, new equipment, etc.)
- Time lost by the employee and colleagues due to training
It is easy to see why, especially for top talent, is it essential to find the right person and retain them for the long term.
Must-haves to Attract Talent
Recruiting professionals is based on the right employer brand: HR can only be successful if the company's reputation, organizational structure, perception of managers, career paths, and a 21st-century work-life balance are in place.
Once a company has laid these foundations, it has a much larger pool of potential candidates at its disposal. But many companies still make the mistake of basing their recruitment strategy almost exclusively on salary. This leads to a never-ending spiral for those competing in the job market, as candidates are happy to take the opportunity of extremely high salaries. On the other hand, a high salary buys loyalty for only a few months, and the employee can switch for a few percent salary increase.
It's no wonder many employers and employees are looking for opportunities beyond salary. Companies that keep the financial well-being of their employees in mind can gain a distinct advantage in the job market.
What is Financial Well-being?
For employees, it is not only the monthly salary that is important to create value for the employer. They also need working conditions that allow them to focus on the business. Today, it is clear that opportunities such as relaxation at work, meditation, and sports activities have a positive impact on productivity, because physical and mental health are essential, along with a good work-life balance.
However, there is much less talk about the financial health of employees, which is also a very important factor. Aurem's own research shows that employees who worry about their savings are 3 times more likely to leave the company, while they spend an average of 10% of their working time worrying about it.
A few frequently asked questions about financial well-being:
- Are my retirement savings sufficient?
- What are the average expat age and savings in the UAE?
- How can I invest my retirement savings?
- How to approach my workplace about an employer savings plan?
- Which savings account is the best in the UAE?
The above diverse questions illustrate how employee financial well-being has become a complex issue. Hence, financial well-being as a benefit can be an effective means of attracting and retaining talent. Also read about how financial wellbeing is the key to more employee engagement in our recent article.
Solutions to Improve Employee Financial Well-being
Aurem is reinventing the current, outdated status quo of workplace savings. Through its app-based savings solution, the company empowers employees to build stronger relationships with their money while providing meaningful benefits to employers.
Employers have multiple opportunities to enable employees savings- and investments-related benefits, including:
- Company savings plans: As an employer, you have the option of opening an investment account in the name of the employee, to which you can transfer the agreed amount monthly, quarterly, semi-annually, or annually. This can be linked to the existence of a KPI, but can also be a general benefit. As an essential addition, the employee can also contribute to this amount. The amount in the account is invested according to the current risk profile.
- Long-term vesting plans: This solution offers a professionally managed and transparently organized option for companies that wish to reward some or all of their employees with company ownership. This is typically a process that takes place over several years, and the details can be easily tracked in Aurem's system.
- End of Service Benefits: Under the rules currently in force in the UAE, a worker is entitled to full gratuity compensation based on 21 days of salary for each year of service if they have worked for the company for more than a year but less than five years. After five years, they are entitled to 30 days' pay for every additional year of employment. By offering this benefit to employees in a transparent way, you can significantly increase loyalty toward the company, because the longer someone stays, the higher the amount they can earn.
Supporting Employees’ Financial Well-being is a Win-win
The use of “financial well-being as a benefit” solutions not only strengthens the employer brand, but also brings many other benefits.
- Cost savings: Healthy financial well-being strengthens employee loyalty in the long term, leading to stronger retention. In turn, retained staff can generate significant cost savings, as replacements are a burden on both existing staff and HR, as well as on new recruits.
- Increased productivity: More loyal employees are more willing to work for the company because their long-term interests are aligned with the company's goals.
- Less stress and sick days: Employees concerned about their finances typically spend up to 10% of their time on the issue. Investing in employee financial well-being allows businesses to create a more predictable and transparent environment, reducing one of the major stress factors - in the long run, this can also reduce the number of sick days.
Solutions like Aurem enable employee benefits that are unique in the market, providing an outstanding opportunity for forward-looking UAE businesses to attract the best talent and retain them in the long run.