Background

Dubai, over the years, has become a place that is synonymous with global business. It is a tolerant and comfortable base for businesses seeking base in Gulf region. While the city has just 1.6 million residents and a gross domestic product of $80 billion, it is the business gateway for a region with a $1 trillion economy, millions of eager young consumers, and hundreds of billions of dollars to invest. With such business influx, Dubai emerged as a strategically vital region in the Middle-East and owing to its open culture, top-notch infrastructure, high salary offerings and liberal taxation policy attracted multinationals from around the globe. At present, UAE nationals make up just 15 percent of the population in Dubai. However, when recession hit global markets in 2008 and shrinking foreign investments, Dubais growth fortunes reversed. The real-estate sector in Dubai suffered a serious setback. Lot of companies started putting on hold projects that hadnt currently begun or were in the pipeline. With little confidence in the environment full of layoffs, salary cuts, soaring interest rates, drying market liquidity, crashing property prices, many expatriates started planning to move out of the country. Although financial systems in Middle East countries had not been highly vulnerable to the crisis so far due to their limited integration with global financial institutions, the impact of the global recession on the real economy can be significant in many parts of UAE especially Dubai, which is more closely linked to the global economy and less dependent on oil reserves. Amid high oil prices and strong investor interest the region, the Middle East region grew by nearly 6 percent per year between 2004 and 2008. However, oil prices started falling owing to lower demand levels during recession. The Middle Easts oilexporting countriesAlgeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, the UAE, and Yemenstarted feeling the impact of the sharp fall in oil prices which resulted in a fiscal deficit of nearly $10 billion in 2009. As a result of this, companies in the region started to re-think about their employee benefits and started focusing more on cost-saving. Less demanding employees became the most treasured ones and the companies started re-framing their requirement criteria for employee skill-sets. A challenge for them was to retain the most productive and the most business-critical resources as they had been groomed over the years. Losing them would result in a substantial loss to the organization.

Problem Statement
The document underlines the problems faced by the organizations in the Gulf region at the time of recession in filtering out the most critical human resources and the strategies employed for their engagement and retention.

Problem Objectives
To study the policy and organizational changes exhibited by the XYZ Corp. towards its existing
employees in a business slowdown scenario.

To study the filtering and retention strategies adopted by the XYZ Corp. during recession. To study the behavioral changes of the employees in response to the organization-wide strategy
changes.

To establish how this organization took various measures to keep the morale of the employees
high and achieve the most productivity out of limited resources.

XYZ Corp: A Quick Glance

XYZ Corp. is a leading player in network systems, business solutions and services, and has a local presence supported by over 3,000 employees. They are leader in Mobile Broadband with the highest number of LTE references in the Middle East and many ongoing trials, the fastest growing Global Services player in the region and holding a leading position in the deployment of Renewable Energy and Green Solutions.

They support 50 customers in their objectives in 22 countries, including major groups such as Etisalat, Du, Orascom, Qtel. Their operations in the Middle East are divided into two sub-regions. Middle East - Center: Bahrain, Djibouti, Egypt, Eritrea, Ethiopia,Kuwait, Libya, Oman Qatar, Saudi Arabia, Somalia, Sudan, UAE, and Yemen. Middle East - East: Afghanistan, Iran, Iraq, Jordan, Lebanon, Pakistan, Palestinian Territories, and Syria.

They also have a number of partnerships in Middle East with leading players in the industry and have strong relationships with selected regional business partners, research institutes and funding organizations. One example of the programs in which they participated is working with the College of Electrical and Mechanical Engineering, the largest constituent college of National University of Sciences & Technology in Pakistan, to provide E&ME students with industry exposure and insights into the latest in telecom technologies.

Challenge for XYZ during Recession

XYZ Corp. was still in its nascent phase in the Middle East when the region experienced its worst economic turmoil. Besides putting up its infrastructure in place, it had invested a significant amount in hiring and training its employees. With the economic situation worsening in 2008, and with only a small client base as it was still building its base in the region, its bottom lines were taking a hit. The top management had a decision to make in terms of its employee related strategies. Since, in a service based organization, the employees are the most critical resource, employee retention becomes even more critical. The top management was convinced that a quality workforce would be paramount for the company overcoming the recession, which is just a temporary phase, and would be the driver of its growth in the post-recession period. Hence, the company decided to focus on retaining its key talents by developing strategies as a part of its employee development and retention plan. Following key strategies were adopted: 1. Developed a compensation plan that rewards employee performance. XYZ Corp, globally, had a relook at their compensation strategy putting a greater emphasis on employee and business unit performance. It introduced a variable component in the compensation plan which was directly linked to the performance. A mathematical model was put in place for evaluating the performance criteria. The performance of the business unit i.e. the net profit was used to calculate the Business Rate Multiplier (BRM) factor. Employee Performance was measured on a 5 point Performance Evaluation (PE) rating scale which was based on the performance of the employees in a particular quarter. The variable component was decided on the basis of a combination of BRM and PE factors.

According to the company spokesperson:

Re-aligning our compensation plan lead to an 18% performance increase even during the time of recession. It clearly helped us identify the top performers and nonperformers and even lead to reduction in the total compensation payout at our unit in Dubai. This change was met with a great response among the employees and in general, increased their motivation to do well.

2. Filtering out non-deserving employees

XYZ Corps newly introduced Performance rating system highlighted the individuals with no significant performance levels. The employees with the rating Needs Significant Improvement in the PE system, were asked to show a significant improvement and achieve a rating of Solid Contributor in the next quarter or face the exit. Even, such employees were given 1 level reduced appraisal in the next appraisal cycle. XYZ Corp, hence, did not lay-off employees directly, but placed strict performance guidelines on its employees to ensure only the employees with significant contributions stay on employed with the organization. According to the companys spokesperson:

The diversification of the financial resources from nonperforming to those who were really the key assets was one of the major strategies of the talent retention. For our industry, talent is the key success driver.

3. Reduced bonuses and perks for the top level employees to reward the more deserving employees. XYZ Corp, reduced the annual bonuses and quarterly perks for the top level employees by about 25%, and focused more on rewarding high-performing employees. Lower level employees directly involved in execution of key projects were given a 3-8% performance and experienced based raise in order to increase their motivation levels and promoting quality of work. 4. Hiring key talent and balancing workforce. XYZ Corp, instead of completely freezing its hiring, was on a constant lookout for key people with the requisite skill set. This was a part of the future strategy of the company as during the recession, people with high-value skill sets can be hired for a lesser compensation. Their skills and experience can be used to increase the knowledge among the other existing employees of the organization. Also, it increased its local workforce by 8%, in view of the need to grow business and increase the client base in the Middle East. Also, a lot of Asian workers were hired at lesser pay base technical jobs.

5. Placed greater importance on experience. One of the key strategies was to retain the experienced employees by giving them special incentives and rewards in the form of recognitions, financial benefits and personal development opportunities.

6. Emphasis on a better workplace environment. Individuals who were skilled, and held good positions, might find similar work elsewhere. So, to retain them, they were either promoted and the organization tried to build a close working relationship with them. This would help the employees feel esteemed and actively participate in organizations goals, exhibit prolific workplace behavior such as increased job involvement and less-turnover rates.

Conclusion
Employee retention is the most critical issue facing corporate leaders as a result of shortage of skilled labor, economic growth and economic turnover. Therefore, the analysis of retention should be considered at more than a single level, because, the influences of retention can rise upto multiple levels. Retention is considered as all-round module of an organizations human resource strategies. Today the demands of the skilled workers have increased very much. It is in terms of every aspect, not only salaries and perks, but also work experience and cultural context in which it occurs. Providing a prolific, flexible, stable work environment is critical at the time of recession. Therefore, in order to develop an effective retention plan, it is vital to realize the varying needs and expectations. If the retention strategies are not properly embedded in the business processes, all the effort since the recruitment ultimately proves futile.