2006: Individualized Salaries Become the Norm
3 March 2006
Read by 2982 persons
In seven out of ten cases, companies activate variable pay elements
On a payslip, they can represent 20 to 50% of earnings
HR and logistics are up, IT is down
Is your compensation policy in line with market standards? The 2006 edition of Diorh's compensation survey offers an analysis of 120 positions. For each, several levels are broken down according to different criteria: age, training, experience, seniority, annual base salary, bonuses...
The main finding of the survey is the widespread individualization of compensation. Seven out of ten companies surveyed have an individualized salary system.
The first line of the payslip is increasingly fixed, while the share of variable elements increases. Generally, these represent 20% of a manager's earnings, and the higher up the organizational chart, the closer this proportion gets to 50%, confirms Essaid Bellal, CEO of Diorh. Compared to the first edition of the survey, this is a complete reversal of the situation, he explains.
As for the golden parachute, the famous bonus paid to the manager in case of departure, the practice remains marginal for now, even if there have been precedents that caused a stir in the Casablanca business world. What is certain is that companies that grant these golden parachutes do so discreetly, or even secretly.
To attract or retain managers, companies are willing to make concessions, especially for rare profiles with specific skills: days off exceeding what is provided for by labor law, loans for installation, marriage or housing, pilgrimage financing, incentives, stock options, exceptional bonuses, supplementary pension plan, etc.
For 2006, 68% of the companies surveyed expect an increase in the variable component, 29% an increase in the number of beneficiaries. On the other hand, the introduction of objectives with a term exceeding one year is still low. Only 4% of the panel predict it. The shift towards more qualitative objectives will gain momentum according to 46% of the companies surveyed. However, only 29% expect greater differences in bonuses between managers.
The survey clearly shows that certain functions are more in demand than others. Human resources and purchasing/logistics are undeniably gaining ground. In both cases, there is high demand in the market. "The problem is that we don't find enough skilled people with experience," notes the CEO of Diorh.
Result: the position is rejuvenated by the arrival of young HR managers "who work well but will only be excellent after 5 to 6 years of experience and training," adds Essaid Bellal.
What is certain is that the function is now at a strategic level. And this is reflected in the compensation. The gross annual salary of an HR manager increased by 5% in 2005 compared to 2004 (839,887 dirhams). Between 2003 and 2005, the annual salary of the HR manager increased by more than 170,000 dirhams.
The second beneficiary of the changing environment is purchasing and logistics. Due to the scarcity of expertise, firms have become aware that optimizing their flows and purchases is a real source of savings. "The company realizes that purchasing is becoming increasingly important and that this is the only way it can make profits. The buyer must know how to negotiate and have an international vision," explains the CEO of Diorh. Another featured function is that of quality manager. After a 2% increase in 2004, compensation increased by 9% in 2005. The gross annual salary increased from 565,000 to 623,600 dirhams.
The finance function is more than resisting this new competition and has continued its upward trend. According to the survey, a finance director earned an average of 953,300 dirhams last year compared to 839,330 in 2004, an increase of 12%.
Sales representatives also maintain their purchasing power, partly due to the evolution of the function. "There is a clear change in the required skills; a salesperson must not only know how to sell but also have marketing knowledge, master the design and use of a dashboard and collection," analyzes Essaid Bellal. On the other hand, the IT function has lost some of its aura after the frenzy of the 1990s.
Compensation varies depending on the diploma. However, the diploma is not the main criterion in setting the base salary. Specific skills, that is, specialized and rare expertise, account for 28% according to the survey. Then comes experience, not to be confused with seniority. Experience refers to mastery of an activity that has been practiced for several years and that is demonstrated in a real-life situation.
Certificates obtained in Morocco are less valued than those from major foreign business or engineering schools. Moreover, the majority of managers of Moroccan companies are graduates of these schools, especially French ones.
In general, and this is not new, the Moroccan diploma does not hold up against foreign titles from major business or engineering schools, according to the survey. Graduates of major foreign schools are the best paid and receive an average annual salary of 716,575 dirhams, while those trained in Morocco (bac+5, bac+6 and more) earn 466,810 dirhams.
Regarding young graduates, salary revisions are based on individual performance in 45% of the cases studied. The remaining 55% take into account individual performance as well as market levels.
Technical details
The survey only concerns a panel of 43 companies, which, in more than 9 out of 10 cases, are subsidiaries of multinationals (93%). These companies certainly belong to the upper range, but their economic weight makes them more representative. On average, they generate a turnover of 833 million dirhams and have an average workforce of 586 employees. The rest of the sample is made up of firms "that are beginning to structure themselves and to develop a well-defined and transparent remuneration policy," emphasizes Essaid Bellal, CEO of Diorh.
Nadia DREF
Published in L'Economiste on 13/02/2006
www.leconomiste.com
On a payslip, they can represent 20 to 50% of earnings
HR and logistics are up, IT is down
Is your compensation policy in line with market standards? The 2006 edition of Diorh's compensation survey offers an analysis of 120 positions. For each, several levels are broken down according to different criteria: age, training, experience, seniority, annual base salary, bonuses...
The main finding of the survey is the widespread individualization of compensation. Seven out of ten companies surveyed have an individualized salary system.
The first line of the payslip is increasingly fixed, while the share of variable elements increases. Generally, these represent 20% of a manager's earnings, and the higher up the organizational chart, the closer this proportion gets to 50%, confirms Essaid Bellal, CEO of Diorh. Compared to the first edition of the survey, this is a complete reversal of the situation, he explains.
As for the golden parachute, the famous bonus paid to the manager in case of departure, the practice remains marginal for now, even if there have been precedents that caused a stir in the Casablanca business world. What is certain is that companies that grant these golden parachutes do so discreetly, or even secretly.
To attract or retain managers, companies are willing to make concessions, especially for rare profiles with specific skills: days off exceeding what is provided for by labor law, loans for installation, marriage or housing, pilgrimage financing, incentives, stock options, exceptional bonuses, supplementary pension plan, etc.
For 2006, 68% of the companies surveyed expect an increase in the variable component, 29% an increase in the number of beneficiaries. On the other hand, the introduction of objectives with a term exceeding one year is still low. Only 4% of the panel predict it. The shift towards more qualitative objectives will gain momentum according to 46% of the companies surveyed. However, only 29% expect greater differences in bonuses between managers.
The survey clearly shows that certain functions are more in demand than others. Human resources and purchasing/logistics are undeniably gaining ground. In both cases, there is high demand in the market. "The problem is that we don't find enough skilled people with experience," notes the CEO of Diorh.
Result: the position is rejuvenated by the arrival of young HR managers "who work well but will only be excellent after 5 to 6 years of experience and training," adds Essaid Bellal.
What is certain is that the function is now at a strategic level. And this is reflected in the compensation. The gross annual salary of an HR manager increased by 5% in 2005 compared to 2004 (839,887 dirhams). Between 2003 and 2005, the annual salary of the HR manager increased by more than 170,000 dirhams.
The second beneficiary of the changing environment is purchasing and logistics. Due to the scarcity of expertise, firms have become aware that optimizing their flows and purchases is a real source of savings. "The company realizes that purchasing is becoming increasingly important and that this is the only way it can make profits. The buyer must know how to negotiate and have an international vision," explains the CEO of Diorh. Another featured function is that of quality manager. After a 2% increase in 2004, compensation increased by 9% in 2005. The gross annual salary increased from 565,000 to 623,600 dirhams.
The finance function is more than resisting this new competition and has continued its upward trend. According to the survey, a finance director earned an average of 953,300 dirhams last year compared to 839,330 in 2004, an increase of 12%.
Sales representatives also maintain their purchasing power, partly due to the evolution of the function. "There is a clear change in the required skills; a salesperson must not only know how to sell but also have marketing knowledge, master the design and use of a dashboard and collection," analyzes Essaid Bellal. On the other hand, the IT function has lost some of its aura after the frenzy of the 1990s.
Compensation varies depending on the diploma. However, the diploma is not the main criterion in setting the base salary. Specific skills, that is, specialized and rare expertise, account for 28% according to the survey. Then comes experience, not to be confused with seniority. Experience refers to mastery of an activity that has been practiced for several years and that is demonstrated in a real-life situation.
Certificates obtained in Morocco are less valued than those from major foreign business or engineering schools. Moreover, the majority of managers of Moroccan companies are graduates of these schools, especially French ones.
In general, and this is not new, the Moroccan diploma does not hold up against foreign titles from major business or engineering schools, according to the survey. Graduates of major foreign schools are the best paid and receive an average annual salary of 716,575 dirhams, while those trained in Morocco (bac+5, bac+6 and more) earn 466,810 dirhams.
Regarding young graduates, salary revisions are based on individual performance in 45% of the cases studied. The remaining 55% take into account individual performance as well as market levels.
Technical details
The survey only concerns a panel of 43 companies, which, in more than 9 out of 10 cases, are subsidiaries of multinationals (93%). These companies certainly belong to the upper range, but their economic weight makes them more representative. On average, they generate a turnover of 833 million dirhams and have an average workforce of 586 employees. The rest of the sample is made up of firms "that are beginning to structure themselves and to develop a well-defined and transparent remuneration policy," emphasizes Essaid Bellal, CEO of Diorh.
Nadia DREF
Published in L'Economiste on 13/02/2006
www.leconomiste.com
