March 29, 2018
Effectual Human Resources Management Attraction, Retention and Employee Development Preamble
By Hisham Osman Elsayed
It was my pleasure to join a discussion forum last month which was conducted by DAM Forum , to join Dr Sabir Mohamed Elhassan the EX Bank of Sudan Governor and Dr Fareed from world Bank , to discuss The Impact of Inflation on Salaries , with Dr Abdelaziz Mustafa the DAM forum father who briefed the crowd of eager professionals on the topic.
The discussion started with Dr Sabir Mohamed Elhassan who has lived the golden economic age from 1997 until the secession of South Sudan in 2013 , he started explaining that the Inflation is a symptom of the economic chronic illness which float up on the surface and caused this distraction and the devaluation of Sudanese Currency we are living these days ,
he explained , the three ways of managing the exchange rate the first one is the fixed exchange rate which suites only those countries with big chunks of reserves like Saudi Arabia and the other Gulf Region countries the Second one was the Floating Exchange Rate which suites the currency that worldwide accepted and the country has to have strong exports , third one is the Managed Floating Exchange Rate system which require to put a range of two exchange rates with min and max and the max normally below/ equal to the black market rate ,this one has been used by the bank of Sudan to lessen down the dramatic increase of $ exchange to the Sudanese Giniah , also he indicated that all the tactical initiatives of controlling the exchange rate through control of the consumer liquidity and directing imports solely through the Bank of Sudan , will not sustain for long unless it is coupled with serious Macro policies to control the inflation through Monitory and financial policies and drastic economical and government structural changes.
More over Dr Fareed from the world bank argued that the financial , Exports and Monetary procedures ,which has been undertaken by Sudan lately due to huge jumps in the US dollar exchange rate is happened without any financial support from any international organizations( World fund Bank, world bank or the Islamic development bank, which add huge burden on the economy over all and on Sudanese people , he added also the Sudanese market is full of dummy suppliers and traders who exist in the value chain taking commissions on products and services without any meaningful effort which ultimately affects their prices and add the burden to the end users.
Also, he talked about the law income returns of the Sudanese economy and the huge government expenditure which need to be reduced to the minimum and the government should work harder to improve the production of goods.
With the confirmation of the three of us ,that the ultimate solution is at Macro level ( Economic and Government restructuring as well as monetary and financial policies) ,Moreover I have talked as an HR representative with compensation and benefits back ground on how companies can mitigate the impact of inflation on employees’ salaries , since increasing salaries to cover the COLA is not a solution even if companies can afford to pay such huge cost ,because this is normally will Lead to the increase of employers operating cost as salaries are posted to this cost item ,this is called the Cost Push Inflation which always cause spiral increase in the prices of goods and services as salaries increase ,and ends with increased production cost and so force.
However, there are some options available for Sudanese companies can adopt to minimize this negative impact on Salaries, one of them is an element of Total Rewards, which is the Variable Pay mainly the Shared Performance Plan, which is usually overlooked but it provides a tactical solution at the micro level, how? One of the major features of Performance Pay Plan is that the company will share the benefits of the improved performance through a plan that set specific financial or none financial targets such (EBITDA, cost optimization by %, reduced Utilities cost by %, .etc. ), communicate the employees clearly that if these targets achieved , the company will share the improved performance through pay out plan per the criteria that suites the company the beauty of such plan that it is Variable which mean the pay Vary by performance or results by Individual , unit or department and the plan fund can be obtained from within the operational targets set( Self-Funded ) in addition to that it can be applied with a small % increase in salaries or the company can use only this plan without increasing salaries , until Macroeconomic policies mentioned earlier , start positively affect the economy.
On the Other hand, one of the issues that put employees under the pressure of increased prices of Goods and services is that, their income Is fixed and as you know the disposable income is either for buying the usual needs of normal daily goods and services plus saving ,and as the employees’ salaries are fixed and under such high pressure of Prices dramatic increase they will not be able to subsist the Basic needs , so the Idea is to think of a way to diversify the employees low fixed income by adding variable income that changes with price changes ,through Micro finance projects for employees , How ? We need to have the Ministry of Human Resources to play the role of the Enabler by Facilitating a project of enrolling employees of different sectors through the banks specialized in Micro finance that’s will give them shares in projects such Milk farms, basic goods production and so force. This is should be supported by developing Specialized institute for Building Capacity and Managing the Funds and the projects will be developed on behalf of those enrolled employees.
What has been discussed was Inspiring specially the discussion raised from the attendees and there are a lot of more ideas that can add more.