Succession planning is vital as baby boomers retire
Author: Criselda Diala-McBride | Date: 17 Feb 2016
Looming skills gap could put UAE organisations at risk, especially in the financial sector
Experts are warning that organisations in the UAE are expected to soon feel the pinch of a retiring baby-boomer generation if proper succession planning is not put in place.
A new study by human resources consultancy Robert Half UAE underscores the impact the retiring workforce will have on organisations, particularly in the financial services industry. The study found that more than eight in 10 of the finance leaders surveyed expressed concern about a looming skills gap over the next two years.
Around 83 per cent of the respondents also forecast that, over the next five years, there will be a negative impact from the departure of baby boomers – those born between the end of World War II and 1965.
“As the [baby-boom] generation heads closer to retirement, there is a concern that valuable employees will leave, creating a knowledge gap within organisations,” says Gareth El Mettouri, associate director of Robert Half UAE. “With the region already facing a skills shortage, it’s important for organisations to start developing a robust succession plan now, with a strong emphasis on attracting and retaining skilled professionals in order to maintain competiveness.”
Alan Hynes, senior consultant at Morgan McKinley, couldn’t agree more. “Succession planning is something that has largely been overlooked in the Middle East compared to [the United Kingdom and other parts of] Europe. We have seen that, in key positions– particularly at head of department level in banking and financial services – organisations have looked externally to replace skilled staff,” he says.
Recent regulatory changes imposed by the UAE Central Bank and the Dubai Financial Services Authority (DFSA) have also put mounting pressure on banks and financial institutions to make the right hires, quickly, as vital roles cannot be left vacant, adds Hynes.
“This can put the organisation at risk of penalties, fines and increased scrutiny from the regulators if the correctly skilled personnel are not in place at top senior level,” he warns. “Succession planning is not only important with the retirement of baby boomers, but also with the low price of oil affecting the UAE economy. Banks can ill afford to replace staff with the extra costs associated with hiring externally – so there is greater imperative invest in internal talent to ensure they have the right people to fill these impending gaps.”
According to the Robert Half UAE survey, 36 per cent of UAE organisations are already preparing to address the baby boomer skills gap by increasing training and professional development programmes. Other measures that are being adopted include enhancing employee benefits (32 per cent); increasing mentoring programmes (29 per cent each), hiring senior-level talent to replace retiring employees (28 per cent); developing succession planning strategies (23 per cent); and offering flexible and/or part-time work arrangements to attract and retain baby boomers (13 per cent).
Hynes believes the most effective way to address the issue is to focus on developing existing staff, by earmarking high-calibre employees at mid-management level and investing in their training.
He cites examples such as Citibank’s mehnaty (career) programme for UAE nationals, which has allowed employees to move around various functions of the bank in six-month segments to help prepare them for future management roles.
DFSA’s TRL (tomorrow's regulatory leaders) programme involves ‘informal coffee discussions’ with banks’ heads of departments three or four times a month. It provides a platform for less-experienced employees to discuss aspects of the leadership role with their superiors. “This can greatly prepare potential senior managers for roles that lie ahead,” says Hynes.