Influence of culture on compensation and benefits in the Middle East

The cultural richness and variety of the Middle East are well-known worldwide. In such an atmosphere, cultural influences have a substantial impact on how people behave and what they believe about employment wages and benefits. Companies doing business in the Middle East need to know how culture affects these factors so they can create compensation plans that are both successful and respectful of local customs. This article goes into the common beliefs and practices of the Middle East, explaining how cultural differences impact financial rewards there.

Traditional values and social structure

Cultural norms heavily influence the traditions of giving and receiving money. Many communities in the Middle East place a premium on collectivism, respect to authority, and the closeness of family. Because of this value on authority, many firms have rigid hierarchical pay systems in which seniority and rank significantly impact salary. There is also a long-standing norm of avoiding disruption in social relationships, which may have an effect on how they discuss and distribute wages.

Relationship-based society

Social ties and interpersonal bonds are highly valued in the Middle East. This emphasis on interpersonal relationships and networks is also prevalent in the business sector. Trust, loyalty, and mutual respect are common foundations of productive business partnerships. Middle Eastern corporate culture often promotes a friendly atmosphere and highlights the value of good working relationships. People without established connections, especially women who may have less access to these networks, may find it difficult to break in due to the emphasis on family networks.

• Wasta is the practice of exploiting one’s personal network for professional or social benefit; it is common in the Middle East. When it comes to pay, wasta may have an effect on how money gets distributed. Those who have powerful connections may be given special treatment in the form of higher salaries, more responsibilities, and other benefits. Maintaining open and equitable pay systems requires an appreciation for and response to the impact of wasta.

A righteous respect for authority

Traditional Middle Eastern societies are very hierarchical. The respect accorded to seniority and authoritative positions reflects this hierarchical structure. There is a greater focus on obeying to authority figures and carrying out their directives, and decision-making may be more centralized as a result. These hierarchical beliefs are often reflected in Middle Eastern organizational systems.

Family and community involvement

In Middle Eastern civilizations, family plays a major role, and this responsibility extends to the workplace. There are a lot of family-owned enterprises in the area, or at least a lot of companies with strong family links. Organizational cultures are often influenced by traditional family values such as loyalty, respect, and support. In addition, businesses in the Middle East often show a high level of corporate social responsibility through supporting local causes.

Succession building

The father of a family-run firm is often the one to initiate succession planning and name the next generation of executives. Successors are often chosen with the father’s advice and input to ensure continuity of leadership and the upholding of family values and traditions.

Conventional gender roles

Traditional gender roles, in which men and women are responsible for and expected to do different tasks, persist in many Middle Eastern communities. Women are commonly expected to stay at home and care for their families. While males are seen as the primary breadwinners and decision-makers in society. The dynamics of the workplace and the leadership roles for women may be affected by these conventional gender norms.

Fewer women than men hold executive positions

In many businesses in the Middle East, men predominate in executive roles while women are relegated to lower ranks. Women may be less likely to advance to management and executive positions due to cultural norms and conventional gender roles. But in recent years there has been a trend toward fostering gender diversity and inclusion. More and more initiatives aimed at empowering and supporting women in the corporate sphere.

In some quantitative measures, women in the MENA region do worse than males and worse than women in most other regions. According to the globe Economic Forum’s 2023 Global Gender Gap Report, the Middle East and North Africa (MENA) area has the largest gender gap of any region in the globe.

The Middle East has the lowest parity score of any area, at 62.6%, much below the global average at 68.4%. This is a drop in equality of 0.9 percentage points from the previous report for this area. Yemen has the lowest level of equality in the area, behind Iraq, Syria, and Iran. However, five nations have seen a gain in their parity of 0.5% or more, headed by Bahrain, Kuwait, and Qatar. If we continue making development at the same pace, we will reach regional parity in 152 years.

The percentage of women in parliament has likewise risen significantly in many countries, but it has fallen in Israel since 2022. Only Bahrain in the Middle East has a female ministerial representation of over 20%, while Saudi Arabia and Lebanon both retain all-male cabinets. In the previous 50 years, no nation in this region—with the exception of Israel—has had a female leader.

Etiquette and sociocultural norms

Business interactions in the Middle East need special attention to cultural standards and etiquette. This involves things like greeting people properly and wearing the suitable clothing for the occasion. Adherence to these standards indicates appreciation for the local culture and helps build trust with customers, business associates, and other stakeholders. A rising awareness of the value of gender diversity and inclusion in the Middle Eastern business community has led to a greater focus on these issues in recent years. There is an ongoing movement to break down gender stereotypes, advance women’s rights, and give them more agency in the workplace. Policies that encourage a healthy work-life balance and programs that help aspiring female leaders get their feet on the leadership ladder fall under this category. This includes initiatives such as mentorship programs, leadership development for women, and policies that promote work-life balance.

Future thinking

The people of the Middle East tend to think in the long term, prioritizing the development of strong bonds with others and steady economic progress. This long-term outlook is reflected in the region’s business culture, which prizes steadiness, patience, and tenacity. Companies in the Middle East frequently put more emphasis on the long term and spend more in their workers’ training and advancement, which has a positive effect on employee loyalty and dedication.

Financial factors

• The recruiting price is rather high. It may be expensive to hire and train new staff members. Because of the high expense of replacing workers, businesses in the Middle East strive to hold on to their most trained and experienced workers.
• Talent pool limitations. It is possible that there is a dearth of capable workers in some fields. To keep ahead of the competition and support further development, it is essential to hold on to your best employees.

For sustained success in the Middle East’s changing business environment, companies place a premium on long-term orientation and employee retention in order to establish strong, dedicated teams, protect institutional knowledge, and guarantee stability and continuity.

Moral and religious factors

The Middle East is a religiously diverse region, with Islam playing a particularly prominent role. According to Islamic beliefs, they must value justice, fairness, and equality highly. Thus, companies may look to Islamic principles for guidance in developing and implementing fair remuneration schemes consistent with Islamic ideals. This includes things like not engaging in interest-based practices, sharing wealth fairly, and encouraging civic engagement via philanthropy.

In the Middle East, Islam is the main religion. Hence, its fundamental principles and practices have a considerable impact on business practices and ethics. Islamic ideals like honesty, integrity, justice, and social responsibility typically shape organizational ethics. The ideals of Islam may find common ground with business practices and policies. In areas such as ethical trade, charitable giving, and the encouragement of workplace fairness and equality.

Morality in the workplace

1. Sincerity and openness. Respecting the rights of all parties involved in a commercial transaction, being ethical in all dealings with crucial facts.
2. Righteousness and justice. Fair treatment of workers, customers, suppliers, and shareholders. As well as the maintenance of equitable policies and procedures in key areas including hiring, contracting, and pricing.
3. To maintain your position away from interest (Riba). Avoiding all forms of interest in financial dealings. And instead, looking for profit-sharing and equity-based structures that are in line with Shariah law.

Charitable initiatives

1. Payment of Zakat. In Islam, they only require this type of charity. To help those less fortunate, organizations collect and distribute Zakat contributions to pay for food, clothing, shelter, and medical treatment.
2. Sadaqah. encouraging generous activities for the benefit of nonprofit organizations. Examples are: contributions to social welfare programs, financial backing for orphanages, grants for higher education, and investments in community improvement.
3. Waqf establishment and care. It is a term for charitable donations thaht helps organizations with a moral or ethical mission. One way to do this is via the establishment of charitable trusts or foundations, whose proceeds fund projects that are consistent with Islamic values.

These exemplified behaviors are consistent with Islamic ethical standards but may seem different depending on the individual’s cultural background. In order to guarantee that philanthropic endeavors and other ethical endeavors are consistent with Islamic principles, advice is sometimes provided by Islamic organizations and academics.

Labor policies and regulations set by the government

Government restrictions and local labor laws can have an impact on compensation and benefit policies in the Middle East. Minimum wage levels, work schedules, and access to social services are frequently areas where local governments take a leading role in the region. And to maintain compliance and equitable treatment of workers, employers must traverse various legal frameworks while taking cultural norms into account.

Influence of financial conditions

Economic variables including oil prices and market circumstances heavily influences compensation and benefit practices in the Middle East. For instance, countries in the area that are wealthy in oil are able to provide better pay and perks than their neighbors. Salary ranges, bonus structures, and perquisites may all shift as the economy does. To keep their remuneration packages competitive and appealing, businesses must adjust to the realities of the economy and take cultural norms into account.

Conclusion

Organizations doing business in the Middle East would do well to study the cultural impact on pay and perks. A wide range of elements influences the way they structure and understand pay. Such as cultural, religious, organizational, governmental, interpersonal, and economic aspects. Organizations may recruit and keep top personnel in a region by designing pay plans that are in line with local standards. In this way, they foster a sense of fairness, and are competitive with other employers in the area.

Organizations working in the Middle East must understand and respect these cultural factors. When businesses make an effort to be culturally sensitive, they may improve morale, boost employee engagement, and solidify connections with regional stakeholders.