Commentary

Why the UAE restaurant industry lacks leadership talent: Bias in pay, benefits (Part 1)

This five-part series explores why the restaurant industry in the UAE lacks top talent.

April 27, 2017 by Murad Alnasur — Managing Director, FranchiseME / Restonalysis

After spending 20 years in the US working for a company that focused on cultivating high-quality leaders, I moved back to the GCC (Dubai) in 2006 ready to bring that same type of strategy.

I was in for a surprise.

When I had first left the region in the 1970s, the restaurant business was nonexistent, and the F&B industry was not something we (Arabs) had any interest in venturing into.

Upon my return, I was surprised at the progress that the industry had made and shocked by the number of foreign franchises that were operating at high level of professionalism. Seeing brands such as Chili’s, KFC, TGI Fridays, Pizza Hut and Fuddruckers, which I came to run, gave me a reason to slow down and tone down my arrogance, and watch to see how true my first impression of the industry was.

It did not take long for me to find out that while great brands were present, the industry was not as developed as I thought. In addition, most operators were racing after qualified talent in order for them to be the first ones to improve their operations and bring their standards in line with the international standards.

Now turn the calendar to 2017. The talent recruited in 2006 and 2007 is still the only talent that is driving most successful F&B companies.

So, what happened? Why is the talent pool still lacking? Why is the industry still behind in so many ways? What is keeping the operators from recruiting new fresh talent that is qualified to keep the momentum going?

To answer these questions, we need to understand the recruiting process and the lack of systems to pre-qualify recruits.

That, in addition to many other factors, I will address in five parts. Park 1 is below.

Part 1: Bias in pay and benefits

When we recruit, we are more concerned about the salary than the actual ability and experience. Since there is no way to measure the recruit’s worth using a pay scale used all over the region (GCC), we tend to use the wrong standard for deciding on pay and benefits.

One big mistake we make is to base our pay scale on the nationality of the recruit, which is totally absurd. That creates five to 10 pay scales. This practice creates resentment, especially when the boss is less qualified than the subordinate, yet making double his income.

Paying based on nationality happens because of many reasons. The first is the bias of the decision maker and his/her desire to hire from his own nationality. Why? Because of emotional decision making, which may cloud judgment.

Secondly, comfort with language. I can speak with my own nationality better than other nationalities. In addition, I can talk with my own people and others will not know what I am saying. (The secret codes).

Thirdly, I know if the boss I recruited is from my own nationality, I can leverage that to get a raise or a promotion much easier than if I hire someone from another nationality.

The last reason to base the hiring on nationality is the false perception of the investors, that one nationality is much better than all others when it comes to running the F&B arm of their investment.

Western expats dominating leadership roles

We all notice the dominance of the western expats in the leadership role of the industry. Why do you think that is? It is because of the false belief that they are more experienced than others and can run our business much better. That perception is not true. From my first-hand experience, I have hired many very qualified western expats, as I did nonwestern expats. The ratio of success or failure to perform at a high level was the same.

Look at the top 50 companies in the F&B industry in the region, and you will find that the top 3 levels of leadership is the same and has been the same for the past 10 years. In addition, that tier of leadership is dominated by western expats. We just change companies and trade places. Keep in mind that we change places due to either not being able to perform or for an increase in pay. The one who did not perform also get a pay raise when the trading of places happens.

I am not against the recruiting and hiring of the western expats and do not wish to make it an issue. As a matter of fact, let us leverage this as a strength. Let us apply the western model of compensation in this region by structuring our pay scales the same way they do in the west.

You get a base salary and a bonus. The bonus is 40 percent of your total pay. If you do not deliver results, you will end up working for a low salary. I am sure you will not get more than 25 percent of the top talent to stay.

To all my friends from the western expat community, please do not take this as an attack on you; it is only an attack on the way we look at compensation. I am sure that you agree with me in that the great operators amongst us will continue to prosper and strive. Only the ones who do not deliver at a promised performance level and hide behind their false security based on nationality should be called out.

Allow me to note that the top 3 tiers of leadership are not the ones who decide the success of the venture. It is the team working under them. When workers see that the leadership is compensated based on their nationality and not qualified to lead, they do their best to sabotage them. While I do not condone that behavior it is a reality.

We create the lack of talent

I started this article talking about the lack of talent. The lack of talent due to pay and benefits is made by us. It can be stopped by us as long as we change our way of compensating the talent. We should establish a pay scale only based on performance at least for the top 3 tiers of leadership. Leave the nationality aside and decide on deliverables. The performers will stay, and the ones who fake it will end up leaving.

Part 2 of this series will run Friday.

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