Human Resource Management in the Middle East - Case Study Example

? Human Resource Management in the Middle East - A Comparative Analysis Introduction This report compares human resource management policies and practices between the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE). Also, this report explains certain human resource management related challenges that could be faced by a manager, are also highlighted. In order to properly compare and contrast current human resource management policies between KSA and UAE, this report analyses three articles in this regard: First, “ Stereotyping of citizens in an expatriate-dominated labor market: implications for workforce localization policy,” which is written by Mohammad Al-Waqfi and Ingo Forstenlechner; second, “ The effects of regulations on HRM: private sector firms in Saudi Arab,” which is written by Kamel Mellahi; third, “ Self and supervisor ratings of performance,” which is written by Abubkakr Mohyeldin Tahir Suliman. This report provides an overview of these articles. And, it is followed by a description explaining human resource management related similarities and differences in the UAE and The KSA. Subsequent to that, concerning human resource management related issues, what they can learn from their individual experiences over their respective HR policies and practices, is also discussed. In the end, some of the basic managerial challenges that could be faced by HR manager, are also made part of this report. Overview of the articles This article “Stereotyping of citizens in an expatriate-dominated labor market: implications for workforce localization policy,” is fundamentally based on the impacts of Emiratisation over the local and foreign workers living in the United Arab Emirates. This article first focus on the public sector then it moves towards private sector employment. Some 40 years ago, the arrival of oil exploration pushed the respective governments of Gulf Cooperation Council (GCC) to adopt a liberal human resource policy towards the foreign workers. The UAE Government adopted the same and since then and till now it avoids intervening in human resource policies of both public and private sector. The article continues and says that soon after this liberal foreign workers policy, the UAE government initiated the policy of Emiratisation, which requires hiring more nationals than the foreign workers. Hafez (2009) contends that still only 0.43 percent (or 13,000 employees), which is 3 million private sector work force, represents the nationals. At the same time, TANMIA (2006) reports that in 2005, more than 35,000 UAE citizens were unemployed. In the public sector side, the UAE government has a policy to recruit nationals. As a result, public employment reached a saturation point (Government of the UAE,2007). Subsequently, the article highlight some of features of private sector where, the author carried out a survey over the aggregate impacts of Emiratisation, and its impacts over work environment and aggregate organizational and individual performance. The survey highlights that diverse culture inside organizations has some negative impacts over the organizational and individual performance as most the employees prefer to have stronger social group identification over the work or organizational groups. Additionally, findings from the survey reveal that most of the respondents term Emiratisation as ineffective. Majority of the respondents contend that except promoting a quota system and at the same time not working over the skill development of locals, Emiratisation would not be able to achieve its ultimate objectives. Furthermore, the findings suggest that most of the private sector employers resist quota system and resort to the use of ghost working creating paper employment. In the end, the author is of the view that due to this huge presence of expatriates, the local people have become foreign in their own country. The article, “The effects of regulations on HRM: private sector firms in Saudi Arab,” is based on two fundamental themes- Saudisation and International compliance with the labor related issues. Historically, the Kingdom had a very lax human resource policy and there was less governmental interference in human resource related policies in the private sector since 1969. Due to inappropriate human resource policies and exploitation of foreign workers, and heavy criticism from the International Labor Organization (ILO), in the early 2000, the Government of KSA issued a legal framework to regulate the management of employees in the private sector. Subsequent to that, in the article, the Saudi Government introduced labor laws such as welfare of Saudis and expatriates about their annual leaves, health and safety issues, maximum working hours, maternity leave and safe work environment for female employees. Among its points, the new labor laws requires the private sector firms to replace the foreign workers with the Saudi nationals. After that part, the author explains the human resource management of Saudi Arabia in its political and legal contexts where it elaborates the political system and legal structure that provides a basis to run the state affairs of the Saudi Government. Taking into account the teachings of the Holy Quran and the sayings of the Last Prophet Muhammad (the Sunnah) these are two fundamental sources providing sharia laws. The author provides some reasons why the Government heavily pursues the process of Saudisation. First, birth rates in Saudi Arabia are estimated at around 4 percent annually which is considered to be one of the highest in the world (Mellahi, 2006). Consequently, the country has a young population with around 60 percent under the age of 21 (Mellahi and Wood, 2002). This creates a massive employment pressure over the Government. In order to provide employment to its people, it has two sectors that can be used for the purpose of employment- public and private sector. In the article, the author has mentioned the public sector has touched its saturation point in the Saudi labor market. The private sector is mostly filled with the manual foreign workers. This heavy influx of foreign workers is caused by some reasons. First, the private sector employers look for cheaper labor which is easily available in the shape of expatriates in comparison with the locals who tend to demand more in terms of salaries, employment benefits, and annual leave and so on. Second, the cultural thinking and social status bar many locals to join the private sector. In the Saudi culture, parents do not prefer their offspring joining private sector or doing the so called “odd job” within their context. Third, in comparison with the foreign workers, the locals seem to be less hard working and at the same time are having insufficient necessary skills. Aggregately, after a long pressure from international organizations such as ILO and World Trade Organization (WTO), the Saudi Government has regulated human resource management policies and practices, as a result, it became the member of WTO in the year of 2005. This article “ Self and supervisor ratings of performance,” is based on some performance appraisal activities. First, the author has explained some performance evaluation steps taken by supervisors and employees. and in order to understand performance evaluation, the author has used the instrument of interview to carry out the process of primary research within the firms operating in diverse employment cultures such as the United Arab Emirates. The author tries to explain certain performance measurement theories such as Individualist and Collectivist. The former theory reflects the performance appraisal practices in the Western countries and the latter represents the approaches adopted and practiced in the Asian countries or from the context of Asian culture. Some of the major findings in the article, mentioned by the author, are: Emirates employees tend to rate their performance higher in comparison with their immediate supervisors. Some reasons for this description are: first, employees know that organizational rewards are linked with higher performance. Second, Arab culture (Individualist culture) plays a highly critical role in developing employees perceptions of their own work performance. Second, individual motivation rather than group motivation, which is one of the basic pillars of Arabic management (Suliman, 2000; Al-Faleh, 1989, Muna, 1980), inspires employees to inflate their performance ratings. HRM-similarities Numerous similarities can be traced in the HRM policies and practices in the UAE and KSA. The former has embarked on Emiratisation and the latter has followed the strategy of Saudisation. in the public sectors of the both countries, the government owned institutions face the problem of saturation point. And, in both countries, nationals have priority rights when it comes to hiring over the expatriate hiring. On the other hand, the private sector seems to have different human resource policy. Majority of the employers prefer to hire expatriates. They follow this policy to save their costs and pay minimum wages to expatriates. Additionally, nationals of both countries demand more salaries, employment benefits, and annual leaves. Besides, in comparison with the nationals of the respective nations, the expatriates are well skilled and demanding lesser salary and fewer employment benefits. According to the analysis from the first two articles, the social status and culture of both countries tend to have same beliefs and social practices. For example, people in both countries highly estimate and value their social status. And, their social status is only depicted from their zeros in their salaries, the circle of social friends, the employment organization. HRM-Differences Some human resource management differences clearly differentiate between these two countries. First, in the UAE, the quota system is functional pushing the respective private sector to hire a particular number of the UAE nationals; on the other hand, in the private sector of the Kingdom of Saudi Arabia, the employers have been given a target of recruiting 75 percent of their employment within their organizations from the Saudi nationals. For that purpose, the new legal framework requires the private sector employers to replace the current expatriates with the competent Saudi nationals. This brings the fact that the Saudi government looks keener to change the aggregate employment index in the country by pushing the foreign workers to return towards their respective countries. On the other hand, the UAE government looks some lenient over such issue. Although Emiratisation is one of its fundamental objectives, yet its visa policy and more liberal outlook in comparison with the Kingdom of Saudi Arabia authenticate this fact. Learning Both countries seem to have same sort of experience in terms of human resource management policies and practices. From the KSA human resource history, the UAE may learn that inappropriate human resource policy may bring criticism from the international organizations such as the ILO and WTO and this could severely damage the country’ labor related policies. And from the experience of UAE, the government of KSA may learn that introduction of a quota system and does not enabling the locals with the necessary and required skills may not support the cause of spreading saudisation in the private sector. Managerial challenges Diversity tends to challenge more than any other things. In the traditional style of management, where most the workforce having less cultural, religious and traditional diversity, a human resource manager would face less amount of challenges as there would be less divergent opinions and feedback can be observed from the work force. During the process of studying above mentioned articles, it surfaced the fact that a diverse workforce may bring some compromises over the organizational and personal performance of the work force. To clearly comprehend this phenomenon, the following example is of much relevance, which is particularly relevant to the context of UAE based employers. In UAE, most of the expatriates belongs to developing countries such as India, Pakistan and Philippine. In the international political relations, both India and Pakistan are considered to be hostile to each other and the same is true about their respective nations. In that context, if a UAE based firm hires an Indian manager and he is assigned to supervise the work of a Pakistani worker. Here, this workforce diversity may work at the expense of the organization as they represent a hostile history and culture to each other. Under such situations, the manager is required to comprehend such aspects while performing his or her job related tasks. Works cited Al-Waqfi, Mohammed, and Ingo Forstenlechner. “Stereotyping of Citizens in an Expatriate-dominated Labour Market: Implications for Workforce Localisation Policy,” Employee Relations 32.4 (2010) : 364-381. Web. 12 June 2011. Suliman, Abubakr Mohyeldin Tahir. “Self and Supervisor Ratings of Performance: Evidence from an Individualistic Culture.” Employee Relations 25.4 (2003) : 371-388. Web. 12 June 2011. Mellahi, K. (2006) ‘Human Resource Management in Saudi Arabia’. In Budhwar, P.S. and Mellahi, K. (eds) Managing Human Resources in the Middle East. London: Routledge, pp. 97–144. Mellahi, K. and Wood, G. (2002) ‘Desperately Seeking Stability: The Making and Remaking of the Saudi Arabian Petroleum Growth Regime’, Competition and Change, 6(4): 345–62 Hafez, S. (2009), “Ministry confirms ban on sacking of Emirati workers”, The National, February 17. TANMIA (2006), Human Resources Report, National Human Resource Development and Employment Authority (TANMIA), UAE. Government of the UAE (2007), “The official web site of the United Arab Emirates”, available at: www.uaeinteract.com (accessed June 2011). Al-Faleh, M. (1989), “Cultural influences on Arab management development: a case study of Jordan”, Journal of Management Development, Vol. 6 No. 3, pp. 19-33. Muna, F.A. (1980), The Arab Executive, St Martins Press, New York, NY Suliman, A. (2000), “The relationships between perceived work environment, commitment and performance in Jordanian industries”, unpublished PhD thesis, Liverpool Business School, Liverpool JM University, Liverpool. Read More