Sunday 15 September 2019
 
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ANALYSIS

Long-term staff incentives ‘key to business success’

BEIRUT, July 30, 2019

Long-term employee incentive arrangements can contribute to the sustained performance of Middle East businesses and impact different organizational stakeholders, said professional services firm Deloitte in a new whitepaper.

Countries in the GCC have put in place long term strategic visions aimed at diversifying their economies, as well as recent immigration policies geared towards the longer term, it added.

“These new immigration policies, for example the potential for individuals to obtain 10 year visas in the UAE, aim to attract and retain key talent in the region,” explained Alex Law, tax partner, Deloitte Middle East. “There is therefore an opportunity for businesses in the Middle East to implement well-thought out, long-term reward strategies that are in line with organizational objectives and global best practices so they can attract, motivate the retain the best talent.”

Ali Virani, Reward Subject Matter expert, Deloitte Middle East, said: “A key asset to any organization is its people, and employers therefore need to have a strategy to ensure they are attracting and retaining the right talent, and that their objectives are aligned with those of the business over the long term.”
 
The first issue of the Deloitte whitepaper series explains how incentive plans can impact different organizational stakeholders and describes the more common reward mechanisms used globally which are:

1.    Cash-based mechanisms where participants receive a cash payment in the future, usually dependent on the satisfaction of certain objectives. The advantages and considerations of this are also explored.

2.    Performance shares where equity is delivered to participants on a set vesting date subject to achieving certain pre-determined performance targets over a defined time period. Simpler alternatives for unlisted and family-owned businesses are also explained.

3.    The whitepaper explains the impact of long term incentive plans on key Leveraged equity mechanisms that are most commonly seen in an investment fund environment, but can also be relevant to new start-ups which are funded by investors who are not involved in the day-to-day running of the business.

Some key considerations when designing long term incentive plans are also set out, including design considerations, tax, communications and accounting.  

“Ultimately, it is the people within an organization that provide the inspiration, agility and drive that enables the organization to succeed,” Virani added.

“Employers, especially in the region, need to define appropriate reward and incentive strategies to attract, retain and motivate the right people which can in turn significantly contribute to the long term performance of an organization.” – TradeArabia News Service




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