The supply chain and logistics industry continues to suffer from a skill shortage throughout the Middle East, with companies struggling to attract talented personnel to the region. Logistics Recruitment highlights some of the issues facing Middle East employers and how they might be resolved.
Although a skills shortage is apparent in the Middle East logistics industry, the problem actually spreads much further afield, with companies throughout the world struggling to recruit experienced and qualified supply chain professionals.
A recent market survey, conducted by Logistics Recruitment, highlights this scenario and provides a stark warning to employers on taking necessary measures to overcome the crisis.
"On a global scale, the logistics industry is competing for a limited talent pool and geographic boundaries are becoming less defined," explains Kim Winter, group managing director of Logistics Recruitment Worldwide. "This underlines the necessity for logistics companies to provide innovation and flexibility in salaries, remuneration packages and the work environment."
The Middle East has emerged as a particularly challenging market for employers, as the region's unprecedented growth has outstripped the supply of labour. In total, 90.27% of respondents in the Middle East indicated that business activities and growth had increased in the last year, while 88.53% predicted this will continue further in the next 12 months.
With little sign of the market slowing down, logistics companies will have to increase staff levels to support the expansion, although Nigel Moore, Logistics Recruitment's managing director for the Middle East and Africa, is sceptical about companies being able to achieve this due to the current high inflation levels.
"The Middle East is no longer the honeypot it once was for expatriate staff," he emphasises. "Without doubt, the region provides an exciting and challenging work environment and a good standard of living. However, the traditional strategy of providing excellent savings potential for employees no longer rings true."
Running parallel to the increasing cost of living, the Middle East has also experienced stronger competition from other countries for qualified logisticians. In particular, China, India and South East Asia are offering viable alternatives for employees.
"India will have a huge requirement for supply chain and logistics talent in the coming five years and with rising salaries in that market we are already seeing many Indian nationals returning home for better prospects," explains Moore.
The world is fast becoming more mobile, and the survey is proof of employees' desire to relocate. 68.42% of Middle Eastern respondents indicated that they have relocated internationally due to their careers and 89.57% said they would consider relocation in the future.
There is thus a high risk of the region losing many of its staff to neighbours. According to the poll, 88.35% say cash would be a motivator to move, while 73.79% would change for career development opportunities, and 66.99% would relocate due to better living costs.
As a result of the rapid growth in the economy, living expenses in the emirates are increasing and this can act as a major deterrent for overseas candidates looking to relocate. Furthermore, inflation puts pressure on companies to increase salaries accordingly, which can be detrimental to a company's margins.
Regarding regional salaries, 47.73% of employees received a pay increase of more than 8% at their last salary review and 49.01% believe they will receive more than an 8% increase at their next review.
Although these numbers are reasonably encouraging, it is not just salaries and inflation that are affecting recruitment; the weak US economy is also a contributing factor to people's employment decisions. By pegging the dollar against the GCC currency, concerns have arisen over the value of these salary increases.
For example, 52.81% believe that currency exchange variation has had a negative impact on their business in the last 12 months. However, 47.37% believe that interest rates have had no such effect. While economic instability is a factor, it does not currently seem to be critical. More pressing are the rising costs.
"Gulf economies are experiencing inflation, which has eroded most employees' ability to save," Moore says.
Nevertheless, although the region is becoming more expensive, it still has its own unique incentives, such as quality of housing, enjoyable weather and lifestyle, affordable private schooling, and, obviously, it is still tax free.
But regardless of this, the region is still experiencing a shortage of staff, not only because of the increase in demand for expatriate workers, but also because of limited local talent in the industry.
There are educated prospective employees in the market although arguments persist that there is insufficient training and investment in this area. 32.30% of respondents in the region indicate that they have completed a postgraduate degree, while 31.28% have completed a bachelor's degree.
Collaboration with colleges and universities is underway to build on these numbers.
"We have a long way to go if we are to ensure a ready supply of locally educated talent for the industry, but those companies who develop real careers for Middle East nationals will be the long term winners," promises Moore.
It is vital however that companies place a substantial effort in attracting the right people to organisations. Regional employers can no longer rely upon remuneration to draw the best employees, as the global competition is too high.
"Today the challenge is to offer interest, variety and satisfaction in the job, plus a clearly defined career path," advises Moore. "This can mean more focus on evolving roles and involvement in key projects rather than promotion. International transfers, especially back home into a senior position, are of key interest to expatriate employees," adds Moore.
Another recommendation is communicating the exact description of the job role, so that candidates know whether they are suitable for the specific job, or it wastes both the employer's and employee's time.
"In addition, do not write off older candidates that may be in their 50s as they can bring experience and stability to the team and often cost less - having no school requirements or a need for five bedrooms," enthuses Moore.
Once you have secured the right candidate, it is imperative that you then invest every effort into maintaining them. A good working environment, flexible working practices, involvement in key development projects and a positive and supportive management style all come into the equation.
"Companies are quick to talk about career development, performance management and communication, which are obviously important. However, few walk the talk," says Moore.
"Middle East employees are no different from elsewhere in wanting well-defined opportunities to progress, training and regular appraisals linked to remuneration," he adds. The successful companies in the region are those that develop a culture where people feel engaged with the organisation.
A good salary package is also important, but many employees are dissatisfied in jobs in which they feel they are not appreciated or rewarded for hard work. "To rectify this, the real answer lies in more innovative remuneration structures," reports Moore. A key method is offering an annual bonus based on individual performance.
"The solution is simple but rarely applied - generate job-specific key performance indicators (KPIs) that are measurable, realistic and achievable within specified timeframes for all staff. Then link bonuses to the KPIs and review regularly," says Moore.
Ideally the result is a stable and motivated team that then provides benefits to a company's bottom line. "It is amazing that only a minority of companies in the Middle East employ this simple method to measure and enhance performance. I thoroughly recommend it," continues Moore.
As the industry becomes increasingly competitive, the ability to recruit and retain the right talent can make the difference between success and failure. Companies should understand the importance of implementing the right procedures to ensure a successful recruitment process.
"At the end of the day, if the Middle East wants to become worldclass then we need to adopt worldclass techniques to attract and retain talent," concludes Moore.
31.12% of respondents in the Middle East are employed in the field of logistics
50.72% classified their role as logistics manager
12.18% are employed in the sales and marketing sector
Has there been a shift in staff levels in the current financial year?
78.87% of respondents stated that staff levels have increased
78.13% of respondents believe there will be an increase in the next 12 months
Has infrastructure had an impact on your business?
57.89% of respondents in the Middle East believe road developments have been positive
59.31% believe that port developments have been positive
58.38% believe that air developments have been positive