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Success Story | Beyond Data

How one oil and gas company is refining its approach to pay

By Kerem Tuzlaci | June 13, 2024

See how a combination of data, based on multiple custom-analytics solutions, led to a refreshed approach to salary structures.
Compensation Strategy & Design|Employee Experience|Ukupne nagrade
Beyond Data

A swiftly changing and increasingly competitive economic environment is driving many Saudi Arabian organizations to review and revitalize their rewards and talent strategies, and the region’s oil and gas industry is not an exception.

A client in the oil and gas sector came to us expressing concerns about their ability to attract and retain employees in an intensely competitive environment. They needed a clear picture of their total rewards position as well as their pain points.

We conducted an analysis, which included insights based on our experience with other industry companies in Saudi Arabia, to provide benchmarks for the client’s needs. We compared their employees’ broad-based compensation and benefits against their peers and found that the company’s salary structure was behind that of their market competitors.

We approached the project with a unified, end-to-end combination of several custom analytics solutions:

  • Salary benchmarking analysis: Including a benchmark analysis of the company’s current salary structure and employee pay against a peer group
  • Executive compensation analysis: Competitive assessments of salary and annual incentives among the company’s top executives
  • Benefits and HR policies benchmarking and analysis: Comprehensive picture of benefits and HR market practices to serve as a reference in revising the company’s existing benefits offering
  • Salary budget planning practices: Data and insights from our salary budget planning surveys to supplement the analysis with timely, relevant market trends on actual and forecasted salary movements as a basis for revising the overall salary structure

Analysis of existing internal pay practices

The organization’s internal compensation practices were analyzed to assess their alignment with internal equity standards and identify any potential issues. This review included an evaluation of salary ranges and pinpointing the position of employee salaries within each range. We found that 95% of non-executive employee salaries fell within the ranges identified within the company’s practices, indicating that internal equity was stable.

We also computed the client’s internal medians to assess the correlation between their actual pay practices and their established salary structure. We found that their practices were approximately 10% lower than their salary structure, suggesting an underutilization of the structure. Optimizing the way the structure was applied could enhance pay competitiveness.

Analysis of the external market

Once the internal analysis was done, we assessed the organization against a peer group of oil and gas companies. We found that the client’s existing salary structure midpoints were below the peer group median. To remain competitive, the organization needed an increase of more than 10%.

We also measured employees’ actual pay against the peer group and found that the organization’s non-executive employees received almost 20% less than other employees in the market. Plus, that difference increased in upper salary grades.

We delved more deeply into the various levels and departments across the organization to identify bottlenecks around pay competitiveness. This found that core departments, where there’s a higher concentration of employees and key talents, were significantly affected by the misalignment with competitive pay in the market. This underscored the dysfunctional impact of the client’s salary structure, consequently leading to attraction and retention challenges for core jobs.

Conversely, our executive benchmarking analysis revealed that the client’s executive compensation packages were more closely aligned with the market. This alignment was imperative to maintain, given that executive roles typically wield a significant influence on the organization’s overall success.

When it came to benefits practices, the client’s offering was mostly aligned with market practices. However, there were areas of opportunity to improve their competitiveness:

  • Long-service awards: The organization needed to consider increasing the policy based on length of service, with differentiation being reflected every few years of tenure.
  • Health coverage: There was an opportunity to expand healthcare coverage by including retirees and their dependents as well as increasing the sub-limits of optical and dental coverage.
  • Sign-on bonuses: The client could gain an edge in the market by offering sign-on welcome bonuses, as half of their peers were providing this benefit to new hires.
  • Company car: The client could improve their competitiveness by offering a company car benefit to senior positions, including local managers.

Refining current practices

After the analysis was conducted, it was clear that a strategic focus on pay competitiveness across the organization was going to be key to attracting and retaining top talent. We recommended that the client:

  • Review and update salary structures for non-executive employees to better align with their peer group
  • Adjust employees’ salaries as needed to ensure their competitiveness, especially in core functions where existing compensation was the least competitive

These recommendations have two critical points. First was to keep up with market movements by closely following market practices. By constantly monitoring market trends and development going forward, the organization would be able to ensure that their salary structures were up-to-date and aligned with their peers.

Second, the recommendations emphasized the importance of considering budget limitations and, if necessary, adopting a phased approach to bring employees to a competitive position. Doing this would allow for a strategic and sustainable adjustment process that aligned with financial constraints while still ensuring employees are fairly compensated in the long term.

The organization came to realize that, to ensure a comprehensive total rewards package, it would be essential to uplift allowances and benefits based on market practices. This would position the client as an employer of choice, particularly in areas where it was falling behind the market. The organization’s attractiveness to potential talent would be enhanced by aligning with or surpassing market standards. It also would reinforce the company’s commitment to employee satisfaction and retention.

There is no one-size-fits-all approach to employee attraction and retention. However, by taking a bespoke approach to understanding an organization’s issues both internally and externally, a clear strategy that is based on data-driven insights and customized for each unique situation will provide the best results possible.


Rewards Data Intelligence Leader, Saudi Arabia

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