Worker incentives: Are MENA employee stereotypes shifting?

 In reviewing comprehensive strategies for closing the gap between education and employment—an unresolved agenda of the Arab uprisings—one area where there is no ready agreement is non-monetary compensation. Everyone acknowledges that money is the chief incentive for attracting employees, but there is a dilemma when taking a longer view of the “employee value chain,” that is, from graduation to employment to career, what matters for recruiting and retaining good workers? In looking for possible answers, there are clear differences between countries that have plenty of people and plenty of funding, such as Saudi Arabia, and countries that have plenty of people and limited funding, such as Morocco. In both countries, young people assert that they want to and are ready to work. Yet in both countries there are wide gaps in expectations between those with secondary and university educations, which preclude a “one size fits all” approach.

The case of Saudi Arabia

In Saudi Arabia, where hundreds of thousands of new jobs are needed annually over the next 5-10 years to fill employment needs of locals under 25, the clear preference is for white collar jobs, even though industrial workers are in high demand throughout the country. While there has been extensive research on the categories of jobs available to Saudis, the most difficult step—motivating young people to fill the potentially available slots, has yet to be taken.

The kingdom has a three-pronged approach: 1) pushing the private sector to hire more Saudis and provide incentives for companies to have in-house training programs; 2) upgrade government coordinated training programs to enable young Saudi men and women to acquire skills linked to the rising demand centers for employment; and 3) educate and motivate Saudis to take seriously employment as a career.

The majority of the general population as well as university graduates are female, who, while seeing a gradually growing number of workplace opportunities, are also facing a dwindling pool of eligible husbands. This fact impacts the career aspirations of both men and women and cannot be overlooked as a normative peg is promoting employment.  


The case of Morocco

Morocco has different challenges since its young people are attracted by both blue and white collar jobs but the labor supply exceeds demand, especially if potential employees are reluctant to relocate. University graduates who prefer government-related jobs are disappointed in that few are being chosen under the accelerated hiring program of the current government. Since it has limited funding, the government is incentivizing the private sector through subsidies and grants to train in specific sectors. This is especially important since government training facilities are limited in number and unable to carry the full burden of training across a range of jobs. While there is an increasing emphasis on entrepreneurship and start-ups, the overall environment for promoting new businesses is still difficult to navigate. There is a large pool of entrants into blue collar work if they can access effective training programs.

Non-monetary incentives

Given the challenges in both countries, another motivational tool is identifying non-monetary incentives that could be part of an effective recruit and retain policy. Offering some ideas are two articles. McKinsey & Company just republished a seminal article on the topic “Motivating people: Getting beyond money.” And IESE Insight published “Remuneration Tips for a More Motivated Workforce,” which covers a study conducted by this Spanish economic institute. Both are based on surveys done with a variety of companies, ranging from mid-size to large corporations.

The McKinsey article found that:

“…praise from immediate managers, leadership attention…, and a chance to lead projects or task forces—[are] no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options. The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth.” 

The IESE Insight article found that:

“variable remuneration schemes, although increasingly widespread, do not always achieve their main objective: to motivate people.” In these schemes linking benefits to company profits (however measured), the author found that the relationship between variable remuneration and motivation is too complex as “numerous factors that cannot always be controlled influence the equation.”

In the MENA countries, using Saudi Arabia and Morocco as examples, both the financial and non-financial motivators cited in the two articles are not common practice. Yet the McKinsey article noted that “…in developing markets…[respondents] cited employee motivation as a key reason for modifying incentives.”

The Way Forward

So where to begin? Promoting one’s initial job as an entry into a career will be a major culture change in how Moroccans and Saudis perceive employment. Too often, either the job in industrial settings has defined limitations, or traditional job security has meant that there was little turnover to allow movement upwards for young, talented employees. Senior management must become committed to integrating their traditional role as benefactor/bureaucrat with a balanced style that demonstrates appreciation for talent, initiative, and loyalty.

Both articles warn that nonfinancial compensation schemes must be fair, objective, and realistic to discourage employees from “gaming” the system by working for the reward and not the overall benefit of the company. Discussions about how to motivate through nonmonetary rewards are a very useful device for engaging employees, if the option for these benefits is available. In addition, until middle management and supervisors also adapt their behaviors to support a corporate culture that recognizes and rewards teamwork and respect for diverse skills, talents, and personalities, any incentive-based motivational program will be eroded by a “do as I say, not as I do” credibility gap.