Towers Watson Data Services - Middle East - Blog

Dubai, January, 2009 – By international standards, United Arab Emirates (UAE) middle managers receive a high proportion of their earnings in the form of bonuses and profit share.

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 per cent, 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 per cent of base pay for senior executives in UAE companies (the 13^th highest in the world). However in other countries it is considerably higher – for example, Greece (55 per cent), Luxembourg (51 per cent), Brazil (50 per cent), Saudi Arabia (46 per cent), the United Kingdom (45 per cent) and the United States (45 per cent).

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

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 per cent), Taiwan (20 per cent) and Malaysia (19 per cent). For middle managers, companies in Egypt and Taiwan pay out the largest proportion of earnings in the form of bonuses and profit share (28 per cent), followed by South Korea (27 per cent).

“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.”

 UAE & Western European countries – average actual bonus and profit share as a percentage of base pay (excluding sales roles)

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.

Watson Wyatt’s 2008 Global 50 Remuneration Planning Report costs €2,100 for online access and €2,300 for online plus print copy delivery and is available from

Watson Wyatt Middle East 
Robert.Richter@watsonwyatt.com
tel +971 50 1895816
fax +971 4 3640097

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