HR CHALLENGES IN UAE & GCC

Presented By: Pooja Varma

ABOUT MIDDLE EAST Gulf Cooperation Council GCC formed in 1981, initially with a political and

strategic mission. GCC Members: Saudi Arabia, UAE, Kuwait, Bahrain, Qatar and Oman (Yemen has intended to be a member by 2016). All members have similar political structures–traditional monarchy. National treatment to all GCC firms and citizens in any other GCC country.

Employment Scenario: High unemployment rates: Saudi Arabia at 13%, UAE at 14%, Bahrain at 15%, Oman at 15% (2008 numbers). Most of the unemployed are below 30 years of age and are women (31% of Saudis and 33% of Bahrain is in age group 25-30 are unemployed)

Expatriate Population Expats form a major part of the work population in private

sector in GCC. Expatriate numbers have gone up from 9mn in 1990 to 13mn in 2005. Saudi Arabia, Oman and Bahrain have a higher local working population than expats whereas the case is opposite for UAE, Qatar and Kuwait where expats form a majority of the working population.

Social division of labour: Local Arabs hold the highest platform in social hierarchy, followed by Westerners and the Arabs from other countries and then the Asian.

Local Talent GCC has reached the ‘demographic window’ in 2010 when its

young population will enter the working population providing an immense amount of opportunity to the governments to progress.

Individual national markets are very small, at below 8mn (except Saudi Arabia at 28mn), but population poised to hit 53mn by 2020 with majority below the age of 25

CHALLENGES The process of ‘nationalization’. What it signifies is replacing

bought in foreign talent with home grown talent wherever possible. There is a rule that has been made by the government of UAE that there has to be a certain percentage of local people working within an organization. The problem with this rule is that there is a talent shortage to meet this number in the market.

The focus on "Localization" is changing the talent pool and mix. The GCC countries remain major recruiters of outside labour and talent. In the last five to six years, though, unemployment levels among the indigenous population have reached unprecedented levels, encouraging governments to adopt localization wherever possible

Employee retention is an inherent problem in the Gulf countries because of the high number of expatriate workers. Most of these foreigners view their stay as a temporary posting of three to five years rather than as a permanent career move. Employers will have a difficult balancing act between encouraging the right expatriates to stay and developing sufficient local talent.

During a time of layoffs, human resources management may not be thinking about employee retention. But now is one of the most critical times to ensure that companies are holding on to critical skill sets and top performers. When the economy recovers, human resource management organizations will have a harder time rehiring these essential workers.

Higher Income: One of the traditional attractions of the region for expatriates was that their net income was significantly higher than at home, thanks to excellent salary packages, low or zero tax rates in the Gulf countries, and a relatively low cost of living. These pull factors are no longer so important. Continued weakening of the US dollar against many currencies has led to a steep decline in real income and purchasing power for many expatriates. Companies are forced to pay higher packages to employees to make them stay. In the past two to three years, other emerging economies such as India have become more attractive to the same talent pool.

Motivation: Due to the whole Nationalisation/Localisation process the present manpower is de-motivated as they see this as a threat to their jobs. They also see that the local manpower is paid more than what they are paid for a similar job. This leads to a de-motivated staff.

Talent Shortage: As companies lay off employees due to economic conditions, the main concern for HR is talent shortage. Due to the government also having strict restrictions in terms of their visa periods (which normally extends between 3 to 5 years) the talent is always rotating.

Work Force Management: For the past 3-5 years, the focus across the GCC has largely been around expansion, growth, and hence, large scale, maniacal recruitment. Many organizations and HR teams are at a loss in terms of changing gears from hiring to now managing with an existing workforce, looking at aspects such as productivity, efficiency, flexibility, changes in employment practices, etc.

 

Building Performance Differentiation: In a culture of growth, abundance and surplus performance measurement, management was typically considered more an adherence to process than a business necessity. But in the current landscape, goal & KPI setting and objective performance appraisals which differentiate amongst talent is absolutely critical. Capability to set goals and to measure them needs to be built amongst all levels in the organization, which is currently missing.

 Focus on Leadership: The dual pressure of streamlining costs while driving performance and growth may be the single biggest challenge. Does this mean that we need different leaders or a different set of competencies? Not necessarily. The challenge in the GCC is to coach and work with the current leaders to deploy their leadership capabilities appropriately.

The National Agenda: There is a renewed need to focus on the coaching and development of nationals, to take on current & future challenges. Many countries are placing restrictions on laying off locals from private sectors, in the current trend of workforce reduction. Many jobs/roles played by other nationalities may need to be taken over by the locals, hence job enrichment and learning and development may be absolutely essential.

  Compensation Management: Typically, most

organizations in the Middle East have been fairly unstructured and sometimes ‘generous’ while making compensation decisions –for new recruits, expatriates’ packages, increments and incentive payouts. Much more discretion around managing compensation is required, and key processes need to be institutionalized. For example, there is need for the clear articulation and implementation of a pay for performance philosophy.

Building the HR Team: The capabilities of the HR team may need to be honed from a largely recruiting and HR operational set up, to being a true business partner. This would need a focused execution of the human aspect of the business strategy, managing the workforce, communicating and driving change effectively, ensuring maximum effectiveness and cost optimization. Management teams are also evaluating effectiveness of HR teams (employee per HR ratios etc.)

Back to the fundamentals: During these difficult times HR must focus on excelling at the fundamentals of the HR function: Restructuring the organization, delivering on recruiting and staffing and mastering HR processes.

CONCLUSION If the Middle East area has to come in to

the Global arena, they need to sensitize the regulations to a more global perspective.

The upcoming local talent needs to be aware of the corporate world in a more global perspective.

Training to the local staff to be more culturally sensitive to their colleagues. This needs to be done by the Government.

The whole notion of HR being a strategic partner needs to be accepted.