While salary remains key, other forms of compensation & benefits are emerging
Organizations in the GCC continue to see bonuses and other monetary benefits as the key way of rewarding their employees for their work and faithfulness, although other forms of compensation & benefits are emerging as valued alternatives. That is according to a report from Procapita Group.
Despite the preference for monetary benefits, room for salary adjustments is narrowing slightly in many organizations, and as a result, organizations are increasingly looking at longer-term and non-monetary initiatives to attract fresh talent and keep existing talent on board.
In 2024, annual salary increase rates in the GCC declined, with 74.3% of organizations providing salary raises, down from 77.6% in 2023, indicating a drop in budgets for salary adjustments. To stay competitive, organizations can benefit from implementing comprehensive reward strategies, like performance-based bonuses and customized incentives, which can strengthen their appeal in the talent market.
Saudi Arabia and the UAE are leading the region in providing financial increments, followed by Qatar and Kuwait. This comes as no surprise: the KSA and the UAE are the economic powerhouses of the GCC, attracting the most foreign talent by far.
Bonuses and competitive salaries
Performance-based bonuses are increasingly a major part of talent-retention strategies. This shift toward rewarding individual contributions is being seen in organizations across the GCC region, which are looking for differentiated ways to win over and retain talent in a heated labor market.
Money remains a crucial motivator for talent, as shown in Procapita Group’s findings, and it is also a leading reason for employee departures. In the GCC, improved compensation is the primary driver of employee exits, as individuals seek financial rewards commensurate with the region’s expanding opportunities.
Competitive salaries are now a baseline expectation, particularly in dynamic markets like the UAE and KSA. Nevertheless, career development is emerging as a critical factor in job retention. Organizations that provide such opportunities are positioning themselves as “career accelerators,” which can give them a significant advantage over other talent hunters.
In order to balance financial expenditure with employee loyalty, companies are increasingly adopting Long-Term Incentive Plans (LTIPs). These plans align employee interests with the organization’s long-term performance, emphasizing sustainable growth through rewards linked to long-term achievements.
The UAE leads in the implementation of Long-Term Incentive Plans at 45%, particularly in the healthcare sector, reflecting alignment with global best practices. Around 35.5% of companies in the GCC are projected to offer some type of Long-Term Incentive Plan in 2025, found the report by Procapita Group.
More than the financials
In 2024, non-monetary benefits have proven essential for attracting and retaining talent in the GCC. The increasing prevalence of benefits like life insurance and child education allowances point to the importance of addressing employee well-being and long-term security.
Beyond more traditional benefits, many organizations are looking to a more holistic approach to employee experience. Many are focusing on cultivating positive work cultures, facilitating professional development, and promoting work-life balance.
This includes wellness programs featuring on-site gyms, healthy food options, mindfulness initiatives, and flexible work arrangements, such as remote work or adaptable hours.
A robust company culture, built on employee recognition and appreciation, is also a key retention tool. Organizations that offer team-building activities, social events, and community engagement initiatives alongside competitive compensation are more successful at driving employee engagement and retention.
