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Global patterns of ‘at risk’ pay

United Arab Emirates: Saturday, January 31 - 2009 @ 16:00

These findings are part of an analysis by leading global consultants Watson Wyatt that shows the differing patterns of ‘at risk’ pay across 57 countries.

The average actual bonus and profit share as a proportion of base pay for UAE middle managers is 25%, which is the seventh highest globally, according to Watson Wyatt analysis of its latest Global 50 Remuneration Planning Report.

Actual bonuses and profit share make up on average 36% of base pay for senior executives in UAE companies (the 13th highest in the world). However in other countries it is considerably higher – for example, Greece (55%), Luxembourg (51%), Brazil (50%), Saudi Arabia (46%), the United Kingdom (45%) and the United States (45%).

Actual bonuses and profit share as a proportion of base pay are lower for more junior staff in UAE at 12%. Out of the 57 countries in the Watson Wyatt report, this ranks UAE 15th.

Countries with higher proportions of bonus for senior managers are generally not the same as those with higher proportions for other staff. For junior staff, the highest bonuses and profit share as a proportion of base pay are paid in Asia. The top three countries for this are South Korea (23%), Taiwan (20%) and Malaysia (19%). For middle managers, companies in Egypt and Taiwan pay out the largest proportion of earnings in the form of bonuses and profit share (28%), followed by South Korea (27%).

“Bonuses and profit share have become a more important element of the overall reward package in most countries in recent years,” said Anne G. Severeyns, a senior consultant at Watson Wyatt. “However, there are marked differences in the size of ‘at risk’ pay compared with base pay from country to country as well as differences in the weight given to ‘at risk’ at different job levels.

“At Watson Wyatt we believe that variable pay, and in particular incentives, offer organisations a number of opportunities to manage cost and performance at a time when budgets may be tight. In particular, it enables organisations to focus limited annual review budgets on those individuals who provide the most value to the business. It can also be a retention tool for keeping top talent and drive the right behaviours from employees. However it is not just about the right design and communication of the incentive programme that matters. In particular the role of line management is critical to the success of such programmes,” he added

The analysis comes from Watson Wyatt’s 2008/2009 Global 50 Remuneration Planning Report, which contains the latest pay and benefits information for 50 benchmark positions from a range of industries across 57 countries.

The comparative results were calculated using the Watson Wyatt Global Grading System The roles of ‘senior manager’ (equivalent to head of function, general manager or business unit manager in a medium size organisation), ‘middle manager’ and ‘junior’ (junior professional or senior technician/administrator) relate to grades 18, 14 and 8 respectively in Watson Wyatt’s Global Grading job value framework. These global grades are spread across a 25-level job-worth hierarchy designed to underpin the survey job matching on a consistent worldwide basis.

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Saturday, January 31- 2009 @ 16:00 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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