A shortage of skills is driving up the cost of hiring specialised staff for the banking and finance industry, increasing the competition for talent.
In common with much of the economy, growth in the Middle East banking and finance sector is growing so fast that it is putting great demands on resources. In this case, however, the shortage is in skilled staff. As local banks expand into new services and multinational institutions move into the region, they will have to adopt new strategies to find and attract the right people.
Jennifer Telfer, HR leader, Deloitte & Touche Dubai, says: "Supply in the GCC region is very limited.
"Our recruitment is not just in banking and finance, but for accountants and auditors, and we've had to spread our net much wider than the GCC."
Cynthia Corby, partner, audit, Deloitte & Touche Middle East, agrees. "Besides going further for recruitment at all levels, there is a very specific skills shortage of Arabic speaking managers," she says.
"They seem to be incredibly difficult to find, or if you do find somebody worthwhile you'll end up in a battle on salary package because they know that they are very difficult to find so they are expecting quite a high premium."
Salaries are also a factor when it comes to hiring nationals, although Corby believes that more new recruits are now considering their prospects for long term career progression.
National employment quotas can present a challenge even to local banks. Fayrooza Mohammed Al Marzouqi, Emiratisation manager, human resources, National Bank of Fujeirah (NBF), says: "We have to give good facilities and benefits to attract nationals. As a small bank in the market, it's challenging."
NBF currently has an Emiratisation rate of 35% among its 400 staff, which it hoped to increase to 40% by the end of the year.
However, Al Marzouqi says Emirati ladies tend to prefer to work in the private sector, while most Emirati males want to work for the army, the government or an Islamic bank.
Omar Khalifa Al Gaiza, HR development & rewards manager, Emirates Islamic Bank, finds the same thing. "Locals do prefer Islamic banks," he says. "It's better religion-wise and they would not get pressure from their families as well."
EIB, which has a 36% Emiratisation rate at present, compares its salary and benefits packages with other banks in the UAE to check that it is offering an attractive proposition to new recruits.
"Every year we try to do a comparison with the market to see where we are with rewards," says Al Gaiza.
"Last year we started to give our employees share options."
Working for an international bank may not necessarily be an automatic choice for many Gulf nationals, but they may offer more opportunities to develop skills and pursue career opportunities than local banks. Sameeha Jayasundera, HR consultant, Lloyds TSB Bank, says: "I don't think there is a difficulty in attracting Emiratis. Of course they prefer national banks because they feel like they're serving their country, but it's a smaller bank, it's more visible and they will learn a lot. They will learn international skills, I think that is the biggest draw."
Lloyds TSB has created ties with local universities in order to tap into fresh talent, as have many other banks.
Mohamed Al Hammadi, Emiratisation officer, recruitment department, National Bank of Abu Dhabi, says: "We have a sponsorship programme with universities and colleges.
"We provide work experience, training and also part time work placements."
NBAD also invests in on-the-job training to develop its recent employees. "We give new employees a training programme if they want to improve their English or complete their education," Al Hammadi explains.
But the UAE bank with perhaps the biggest recruitment challenge is Noor Islamic Bank, which will begin operations in January 2008 and is building a team of more than 400 staff ahead of its start date.
"Our objective is to be the biggest Islamic bank in the world - more international than local," says Abdulrahman Fekri, head of human resources, Noor Islamic Bank. "We are looking to tackle the overseas market in mid-2008, including Asia, Europe and Africa."
Between 20 and 30% of Noor's staff on opening day will be UAE nationals, but Fekri knows that he will have to overcome some people's perceptions of banking to attract them.
"UAE nationals tend to have a fear of going into the banking sector," he says. "We have to educate them and let them know about the career path, the training, salaries and benefits. We need to have a retention programme."
Fekri believes that a major attraction for young Emiratis will be the chance to join the global leader in Islamic banking and grow with it. "We're saying we don't want you here for a job, we want you here for a career," says Fekri.
With such challenges, banks and financial institutions need to call on the services of recruitment agencies. Agencies can specialise in either search, which involves finding somebody who matches a particular profile and is usually used for mid-level positions, or selection, whereby the best people currently working in the market are headhunted.
Gulfbankers Executive Search does both, and is finding that demand for people with banking and finance skills is currently outstripping supply.
"There is a war for talent," says Adel Al-Alawi, CEO, Gulfbankers. "We need double or treble the number of candidates, especially in investment banking, and especially with the number of new banks coming up.
"International banks come with some of their staff, but do look for some people with experience of the region."
There is a particular shortage of people with local knowledge and international skills. Nermine Moussa, team leader, Gulfbankers, says: "The need for Arabic speakers is higher than before. In the sophisticated financial sector, like a trader in commodities for example, it will be very hard to find an Arabic speaker because it's new to the market. You can only get them from London."
Haifa Ghodhbane, team leader, adds: "Compliance and AML is a new area in the region. It's very difficult to find people who have two to three years' experience with a strong background in AML or compliance."
The scarcity of locally-based candidates with these skills has naturally driven up the salaries in areas where supply does not meet demand.
"Salaries have risen dramatically," says Barbara Van Meir, director, financial services, WoodHamill Ingram.
"There has also been a change in the structure of salaries." Salaries in investment banking in Dubai, and to a lesser extent the rest of the region's banking industry, now have a greater emphasis on performance-related pay rather than guaranteed components.
Lucrative packages, as well as low or non-existent tax rates in many Middle East countries, are undoubtedly an attraction for many people coming from overseas, but Van Meir says that people increasingly come to develop their careers, rather than just their bank balances.
"Boutiques as well as banks are now developing more and more interesting services and products, and that is attracting people.
"Professionals now see Dubai as an interesting career move, rather than just a lifestyle choice," she says.
"It's no longer so that Dubai is the end of the road. In the past, people wouldn't necessarily have expected to be able to step back into the London, Frankfurt or Singapore markets, but I don't think that is necessarily true anymore.
"I think the attraction for professionals who is still building their careers has increased. People come here with a much longer term perspective now."
Deborah Webster of Korn/Ferry points out that candidates who are attracted purely by a high salary are unlikely to contribute to the long term stability and success of an organisation.
"It's a very dangerous strategy to attract someone just for compensation," she says. "Better people tend to stick a lot longer and be more careful in the moves they make.
"We guarantee our people for 12 months. This is a small market and reputation is very important. We can't put people in who don't stick."
Retention is especially important in the Middle East, which has traditionally tended to have a large expatriate workforce that may not have long term commitments to the region. "No one questions why you're leaving," says Al-Alawi of Gulfbankers. "It's healthy and it's putting pressure on banks to improve salaries."
Fierce competition from other banks is also causing organisations to offer retention bonuses to their staff, or to include a payment on joining that must be paid back if the staff member leaves within a certain period of time.
"Banks have been forced to pay portfolio managers to keep them where they are," explains Al-Alawi.
Although salary should not be the number one factor in attracting staff, it can be important when recruiting people who already have challenging and rewarding jobs in mature markets.
Multinational institutions face the tough task of drawing experienced individuals away from regions like Europe and the US to fill positions in the Middle East that require world class skills. "You don't want a situation where you have the A team in London and the B team in Dubai," says Korn/Ferry's Webster. "It has to be an international organisation."
Unfortunately, some organisations have made misjudgements in their recruitment in the past.
Zoran Marinkovic, senior consultant, Stanton Chase International, says: "Investment banking and private banking companies hired so much in the last two years and now they see that they made mistakes. They paid people too much, they even asked people to attract between US$50m and $100m in investment the first year they came here to Dubai.
He adds: "They know that they made mistakes, and now they want to attract talent but they want to take their time in order to be sure. They don't want to spend a lot of money on someone who doesn't deserve it."
Manel Blau Rifai, senior client partner, Stanton Chase International, says that a lack of human resource planning has caused problems for the region's banking and finance sector.
"A lot of catastrophes have happened in terms of how candidates are dealt with, how they were recruited," he says. "It's amazing to know that a lot of banks here don't have human resource planning. We have to help them on that.
"Recruitment in the Middle East is generally seen as a mass production process. We don't see it this way, we see it as the most efficient way to help clients find a solution to management problems."
If the battle for talent seems tough now, it is unlikely to become any easier in the near future. A recent study by management consultant AT Kearney found that Islamic banks in the GCC will need to find people to fill 30,000 new positions over the next decade.
Dr Alexander von Pock, manager, AT Kearney UAE, says: "Most of the jobs will be required in the areas of product development and sales rather than operational areas. A large part of these 30,000 people will need retraining because specifically in these areas you need to have Islamic banking know how."
He believes that the lack of skilled potential employees in the sector could be overcome by closer cooperation between universities and financial institutions.
"I think there are two major measures and actions that could be taken," says Dr von Pock.
"One is on the educational side - more universities should include Islamic banking and finance in their curriculum.
"The other is that Islamic banking institutions can partly cover this themselves with specific vocational training programmes, potentially in collaboration with specialised institutes, which is happening now to a certain extent."
The recruitment challenges for Middle East financial institutions may have been identified, but it remains to be seen how they will be overcome.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.