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Group Compensation Strategy – Saudi Arabia Company Subject: Human Resource Management Institution Name: Columbia University Table of Content Company Profile............................................................. Group Compensation Strategy................................................... Saudi Payroll Policy.......................................................... 6 Expat Payroll Policy........................................................... Flexible workforce Policy...................................................... 10 References.................................................................. 13
Group Compensation Strategy Group compensation strategy is a broad framework to guide compensation plans for individuals, individual units and the whole group. The Group compensation strategy must be aligned with the corporate strategy. The compensation strategy should push forward the corporate strategy and help the company to achieve it plans. Company Profile: The company works in Construction Industry. The group has a workforce of 100-150 employees and the company is currently in Geographic growth or expansion. The company has minimum 30 Saudi employees in 3 different levels of the organization and has minimum 50 Expat employees in 2 different levels of the organization. Group Compensation Strategy
1. Attractive Compensation : The group compensation plans should be attractive to employees in line with the corporate strategy to attract best talent from the market. If the compensation plans are not attractive in terms of payments and rewards, then attracting and retaining talent may be difficult. The compensation plans drawn for any specific role must be of higher value than average compensation offered in the market for the same role. Compensation does not mean only basic pay but incentives including bonuses and commissions. Total compensation plan also includes in-direct compensation including holidays, vacations, insurance, pension, recreational services and food services (Cullinan, 2017). The company must have best in market policy for holidays, vacations, insurance, pension plan, recreational and food services in line with strategy to have attractive compensation.
be decided accordingly. This would help to solve the problem of paying more for less complex work or paying less for a more complex role. Example: A job of senior architect may have higher salary considering complexity of the work, qualification and experience required. c) If there is geographic expansion then compensation may vary by country. This would be true because average salary in market would be different and living costs are different in different countries. Example: Compensation offered in Egypt by the same company may be lower than compensation offered in Saudi Arabia (Almakky, 2019). This is because the cost of living in Egypt is lower than in Saudi Arabia. This is true due to lower housing costs and cheaper agricultural products.
4. Support National Policy : The group compensation plans should reflect the corporate strategy to support Saudi citizens in line with the national policy of Saudi Arabia. The Kingdom of Saudi Arabia supports companies in its territory by giving security, infrastructure and lower taxes. In return the government of Saudi Arabia wants companies to support local population by giving higher access to stable and growing careers (Hammer & Adham, 2019). The government also expects the companies to train local youths with skills required and support their education. The corporate strategy is to support the government policies. The construction company also gets lots of government projects and it becomes important to be aligned with the kingdom vision. The companies must financially support education of local employees, if they want to take breaks to pursue education, particularly in developed countries (Fadaak, Talha & Roberts, 2018).
5. Legal & Valid: The group compensation plans must be following local laws in its country of operations. The company is currently in expansion mode and the compensation plans in all countries of operations must follow local laws. Example: The pension plan in Egypt is mandated according to local laws where a part is paid by the employer and another part is paid by government. The pension component as percentage of total salary varies in different countries. Some countries have minimum wage requirement for workers while some countries have taxes on individual salaries. 5. Cost Saving : The compensation plan for temporary workforce or non-essential staff must be developed according to cost saving strategy. Temporary workforce is not in long term engagement with the company. There is no motive to develop employee loyalty within temporary force and their payment structure may be monthly or per hour. Saudi Workforce Payroll Policy Policy Name: Saudi Workforce Payroll Policy Description : This policy would apply to members of permanent workforce who are Saudi citizens. This policy scope is limited to compensations.
- Total compensation would include fixed pay, variable pay, pension, housing allowance, vacation allowance and free food services.
- The fixed salary would be decided according to job profile depending on average market salary, complexity of the work, work conditions, qualification requirement and experience requirement.
- In event of accident compensation bonus will also be paid by the company to members of workforce. These compensation plan would be applicable of all three levels of Saudi workforce: In event of minor injury, a compensation payment will be paid equivalent to 12 months of the employee salary. In event of a major injury not amounting to disability, a compensation payment will be paid equivalent to 4 years of employee current salary. In event of a major injury amounting to disability, a compensation payment will be made equivalent to 7 years of employee current salary. In event of death resulting from accident, a compensation payment to the nominee declared by the employee will be paid. The amount would be equivalent to 14 years of employee current salary.
- Employees who are at level 3 would be paid SR 70,000 for vacations, employees at level 2 would be paid SR 50,000 while employees at level 1 would be paid SR 40,000. This would-be one-time payment at start of a financial year.
- Employee appraisal will be every 12 months. It may result in promotion or change in PayScale.
- All other points in general compensation plans would be included for Saudi Citizens but this document would override any point in any other policy document. This document would be applicable for only employees who are Saudi citizens.
- This policy document would be applicable from 1st^ January 2020. HR Manager Signature. Expat Workforce Payroll Policy Policy Name: Expat Workforce Payroll
Policy Description: This policy would apply to members of permanent workforce who are non- Saudi citizens. This policy scope is limited to compensations.
- Total compensation would include fixed pay, variable pay, pension, housing allowance, vacation allowance and free food services.
- The fixed salary would be decided according to job profile depending on average market salary, complexity of the work, work conditions, qualification requirement and experience requirement.
- Paid holiday of 25 days would be applicable to employees at level 2 while paid holiday up to 20 days would be granted to employees at level 1. In addition, non-paid leave will be granted to expats up to one month for travel to home countries.
- The company would fund up to 2 tours to home countries for employees at level 2 while the company would fund up to 1 tour for employees at level 1. This would be for two-way Air ticket using shortest route to home country. The company would fund travel of family members along with employees, if they stay here.
- The company would also fund health insurance including dental insurance for all expats employees as well as their immediate family (only if they are living in Saudi Arabia).
- The total number of working days would Monday to Saturday in a month. General holidays would not be a working day.
- In event of accident compensation bonus will also be paid by the company to members of workforce. These compensation plan would be applicable of all two levels of Expat workforce:
- Temporary workforce will be hired at only fixed monthly salary or fixed hourly rates subject to the decision of hiring manager. This means that bonus, general healthcare insurance, dental insurance, paid vacation or housing allowance will not be applicable to them. Free food services would be available to temporary workforce as well.
- Temporary workforce members must not be hired at a monthly salary higher than 75% of a permanent employee fixed salary (considering both employees to be at the same level).
- The number of paid holidays will be 8 for temporary employees against 16 for permanent employees.
- General holidays will be applicable to temporary workforce as it is applicable to permanent workforce.
- Temporary workforce will not be paid variable component of salary which is based on performance.
- Temporary workforce will be eligible to receive extra-time payments on per hour basis (calculated on basis of existing salary) as received by permanent employees.
- Temporary workforce is covered by medical insurance for any accident at the work site. The company will take care of medical costs for treatment only in event of accident at work site.
- In event of accident compensation bonus will also be paid by the company to members of temporary workforce. In event of minor injury, a compensation payment will be paid equivalent to 6 months of the employee salary. In event of a major injury not amounting to disability, a compensation payment will be paid equivalent to 2 years of employee current salary. In event of a major injury amounting to disability, a compensation payment will be made equivalent to 5
years of employee current salary. In event of death resulting from accident, a compensation payment to the nominee declared by the employee will be paid. The amount would be equivalent to 10 years of employee current salary.
- Please note that the compensation plans mentioned in point 8 will be only applicable on accidents within the company premise, client’s premise, construction sites or during travelling by company vehicles.
- Temporary employees may be given preference in filling up permanent positions on basis of performance.
- If there is any clash between any policy document and this policy document then this document will be applicable for temporary workforce in matters of compensation unless notified otherwise.
- This policy document will become effective from 1st^ January 2020 for all units and sub-units of ABC construction limited. HR Manager : Signature:
