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Expatriates’ Recruitment in Saudi Arabian Companies Report


Introduction

For Saudi Arabia, personal and idiosyncratic factors that rely on informal customs still dominate management practices in both private and public enterprises. The country is currently having a high population growth and is heavily reliant on foreign workers. It also has a negative stereotype of local workers and has social perceptions towards work in the private sector (Mellahi 88).

Private organizations have continued to prefer foreign workers because of the stereotyped view of local workers. As a result, organizations are often at loggerheads with ‘Saudization’ policies of the government. The other risk of hiring locals is that they are often immune to disciplinary practices that organizations use to influence appropriate employee behavior and work ethics. For example, many organizations have difficulty firing locals once they hire them. On the other hand, it is difficult to motivate locals to do manual jobs, which are considered as lower status jobs (Mellahi 90). Saudi Arabia has attracted foreign workers who are self-initiated. At the same time, it has some multinational corporations that have sent workers from other countries to their operations in Saudi Arabia. The major fields having expats are engineering, medicine and sales (Showali, Judi, and Smith 3957).

Foreign workers are non-national workers who are likely to exhibit different work attitude towards their jobs, the organization, and the worker’s behaviors. Non-Saudi workers make up about 90% of the private sector workforce in the country. The country is one of the largest sources of remittances to other countries (Showali, Judi, and Smith 3960). The Saudi society has an insular tribal society characteristic where blood relationships have the highest value. Saudi citizenship is only available for descendants of male Saudi citizens. Saudi Arabia Organizations rely on Saudi and foreign recruitment agencies for expatriate worker placements from countries like Bangladesh and Ethiopia.

Objectives

Based on the attitude, perceptions and expectations of organizations and foreign workers, this paper seek to establish perceived organization support and organization identification of expatriate workers in Saudi Arabia. It also seeks to examine role ambiguity and the feedback or information seeking behaviors of expatriate workers in Saudi Arabian organization. It seeks to identify attitudinal and behavioral factors grounded in management theory and their pragmatic implications for Saudi Arabia organization’s practice of human resource management (HRM).

Process of HRM in recruiting expatriates in Saudi Arabian organizations

Expatriate workers have no permanent residential status in a given country, and this paper considers workers employed in Saudi Arabian organizations. The workers expect to receive organizational assistance in managing culture shock. Inadequacies of assistance can be interpreted as temporary management failures that are correctable when a worker leaves the expatriate assignment. However, this expectation has also made many organizations lax in their approach to adjusting employees to new environments. Saudi Arabian organizations focus on employee productivity matters and leave most of recruitment to intermediaries in cases that involve expatriates. They pay fees in return for being matched with the best possible candidates for their available job positions.

Recruitment organizations and human resource departments acknowledge that social and business environments are characterized as internationalized with awareness of various cultural and economic elements. They are also globalized because of a steady flow of knowledge, information, products, services and people across borders (Bozionelos 111). Some of them are seeking an adventurous expatriation while others are pursuing a planned professional move. Organizations have to understand the motivations of the two groups of expatriate workers. The former is mainly concerned with cultural and general life experiences of a foreign country and is yet to launch a professional career (Bozionelos 113)

. Recruiting organizations have to make sure expat workers are trained cross-culturally. Expatriates require knowledge of values, norms and habits of Saudi Arabia. They use that to acclimatize to the local work environment. Thus both recruiters and employers train expats to help them tolerate differences in work and social practice between their home and their host culture. Studies show that for Saudi Arabia, most cross-cultural training happens under corporate sponsorship. The training comes from managerial ranks or executive ranks. They cover management duties where people have to deal with another group that has different rules and social expectations. Given than non-corporate sponsored expatriates do not do management jobs in most cases, they also do not receive corporate-sponsored cross-cultural training (Bozionelos 128).

The government limits hiring of expatriates in 19 job titles, which include the chief administrator of human resources and director of labor affairs. Overall, jobs relating to human resource functions are not open to expatriates (Habto par. 2). In addition, recruiting organizations must also provide employee wage information to the Ministry of Labor. The agencies must ensure that they attach new employees to jobs that pay at least the required minimum wage of SR2500 for private sector placements when providing third-party recruitment services (Saudi Gazette par. 1).

Recruiters are not responsible for making sure that an expat worker stays on the assigned job. For domestic workers, employers are required to offer food, medical insurance cover, and clothing allowance in other cases. Thus, recruiters must factor in these costs when negotiating salary contracts. Recruitment agencies deal with all arrangements for domestic workers and an expatriate can shift from one agency to another. Once attached to an agency, the agency is responsible for handling registration and employment negotiations on behalf of the expatriate worker in some cases (“Employing Domestic Help” par. 10).

Saudi Arabian organizational inducements to the expatriates

Despite resistance, firms in Saudi Arabia are adjusting their recruitment policy to comply with the 75 percent Saudization target. They are also giving female workers four weeks of maternity leave and six weeks after childbirth. They pay 150 percent of the regular wage for overtime work. They are also granting all workers a minimum of 15 days of vacation annually. Some firms have also arranged for babysitters to take care of children when there are more than 50 female workers. They also provide 21 days of minimum annual leave (Mellahi 92). Wages and salaries in Saudi Arabia are often higher than what expatriates would earn in their home countries.

Challenges expatriates have in Saudi Arabia and its organizations

Expatriate workers moving to Saudi Arabia from other countries that have a different culture usually experience culture shocks. As they adjust, they have to make special provisions for their families also to do so. Many researchers into the adjustment of expatriate workers into the Saudi Arabia lifestyle and culture show that the differences are sometimes so apparent that it is difficult to adjust completely. Therefore, cultural adjustment remains as the biggest barrier to successful organizational utilization of expatriate workers in Saudi Arabia. Many foreign workers after working for some time in the country begin developing feelings of not belonging, and this negatively affects their work performance (Showali, Judi, and Smith 3958).

Some recruitment agencies are unscrupulous. They bring in workers and evade regulations to underpay them and have them work in unfavorable conditions. The employers get the bad reputation and in some cases experience high employee turnover due to unbearable work and compensation conditions caused by the recruitment agencies. Countries with excess labor force, such as Bangladesh, have signed agreements with Saudi Arabia about the process of recruitment (“Challenges in Sending Domestic” par. 2). The provisions of such agreements limit the opportunities available to recruiters, which make it difficult for them to meet recruitment quotas and still operate profitable businesses. Mainly, the agreements limit the amount of money recruiters can charge employees or employers for the service. Some of them find illegal ways of extorting expatriates to recoup their costs.

The Saudi recruitment companies that are replacing foreign-based companies are failing to attract a substantial number of expatriates because many countries are no longer allowing free flow of manpower to Saudi Arabia. Thus, many recruiting agencies are facing the challenge of convincing host companies to pay higher salaries to attract expatriate workers (Staffing Industry Analysts par. 4-7). They also have to work within the stipulated period of 60 days for each recruit process and must ensure costs are lower than the accepted maximum threshold for recruitment (Staffing Industry Analysts par. 6-7).

This implies that expatriates who successfully go to Saudi Arabia often do so in a hurried way and do not adequately settle their domestic affairs. In addition, many expatriates have to remit money to their families and they will incur high transfer costs when relying on financial intermediaries when they are not using the formal bank system. Expatriates are tied to their contracts and recruitment agencies, often without opportunities to negotiate salaries after they get the job. They receive treatment as second citizens, often failing to receive social support from their employers who expect to maximum the expat’s labor output.

Advantages and disadvantages of recruiting expatriate

For the Saudi Arabia case, expatriate workers cost less in salaries compared to domestic workers. The minimum salary for expats is SR2500 while that of local workers is SR5300. Expatriate workers allow Saudi Arabia to fill its employee gaps in crucial sectors of its economy, including schools, hospitals, government sectors, and private companies (Al Mulhim par. 3). Saudi Arabians are wealthy and enjoy a per capita income of $31,000. Many of them are not fluent communicators in English; thus, their private sector companies and those that are foreign owned rely on expatriate workers to compete effectively in a globalized economy. It costs more for employers to hire locals because they have to train them for at least three months. In comparison, expatriates mostly join jobs when they already have the necessary training (Khan par. 4-7).

Expatriates come with experience in working in similar or related job positions in other countries. They transfer their expertise to the host organization in Saudi Arabia and allow it to access rapidly competitive advantages associated with human resource assets. As a result, the cost of training on the job and matching skills needed in the marketplace is less for a company opting for expatriates. However, this rule stays only when the expatriate is already experienced in the job he/she is getting. A good example is in technical jobs like nursing, engineering and plumbing where workers come on board with technical skills and knowledge of standards and equipment or protocols that allow them to fill a gap in the required expertise in an organization quickly.

The biggest disadvantage of going for expatriate workers is the liability of breaking the law and being penalized. The Saudi government is keen on its 75% hiring policy for locals. Firms that prefer expatriates have to justify their move, often citing lack of local labor. They are penalized in various forms, and this affects their stability and competitiveness. Secondly, expatriates need time for adjustment to local conditions. As the analysis of challenges that expatriates face shows in the previous section of this paper, the adjustment might even take a year or more. During this time, the organization continues to compensate the worker fully while the worker is unable to offer a full return for the compensation. As a result, there is a skewed relationship in worker compensation, which drains the organization’s financial reserves. Failure to provide adequate adjustment assistance for workers eventually leads to a situation where the organization is paying higher real wages than the market demands, and this can be noted as a failure of HRM.

Besides adjustment challenges, expatriate workers will often seek to impose their culture on locals as a way to adjust. This is contrary to the expectation. When this happens, there can be conflicts in the workplace that erode gains made by HRM in developing an attractive workplace environment. Workplace politics may set in where the different backgrounds of expatriate workers are used as reasons for fights among them. Thus in addition to failing to adjust to local conditions, expats fail to adjust to their colleagues who are also foreign to the local conditions. In this regard, Saudi organizations need to be careful in their recruitment approaches to ensure they are not importing cultural conflicts among different expatriates to their workplaces (Bono and Van Der Heijden 186-187).

Trend in workforce

The number of expatriate workers in private sector is likely to remain high because of general population increase of Saudi Arabia, which presents higher numbers for the accepted ratio of expats. In addition, many Saudi’s are yet to acquire required skills for employment in private sector organizations. Many private companies have been unable to increase their levels of local workers to meet the government ‘Nitiqat’ requirements and are relying on the “Ajeer’ system to continue hiring expats (Lawrence and krudewagen par. 8-10). The private firms pay more to the recruitment agencies, but find it easier and faster to do so than recruit and train locals. Saudi schemes for job shadowing that should help locals acquire necessary job skills will take time to deliver substantial results. In the coming years, companies will continue being reliant on expatriates.

Conclusion

Saudi Arabian organizations have the same functions of HRM as their global counterparts. Nevertheless, they face unique challenges and opportunities that determine their collective practices. While differences exist in respective industries such as service and manufacturing companies, the underlying circumstances of the country continue to shape HR practices. Issues of employee motivation, employee turnover, organization commitment, compensation policies are affected by government labor policies, mainly the Saudization policy. This paper has presented advantages and disadvantages of recruiting expatriate workers in the Saudi context. It has also explored the challenges that Saudi Arabian organizations undergo about their HRM practices.

Works Cited

New Age 2015. Web.

“Employing Domestic Help in Saudi Arabia.” 2015. Anglo Info – The Global Expat Network. Web.

Al Mulhim, Abdulateef. 2013. Arab News. Web.

Bono, De Silvio, and Beatrice Van Der Heijden, Managing Cultural Diversity. Dubai: Meyer & Meyer (UK) Ltd, 2008. Print.

Bozionelos, Nikos. “Expatriation Outside the Boundaries of the Multinational Corporation: A Study with Expatriate Nurses in Saudi Arabia.” Human Resource Management 48.1 (2009): 111-134. Print.

Khan, Fousia. Arab News 2013. Web.

Lawrence, Sarah, and Ite krudewagen. “Top Employment Issues in the Middle East in 2014 and Beyond.” DLA Piper 2014. Web.

Mellahi, Kemel. “The Effect of Regulations on HRM: Private Sector Firms in Saudi Arabia.” The International Journal of Human Resource Management 18.1 (2007): 85-99. Print.

Saudi Gazette. Alarabiya 2014. Web.

Showali, J. Sammy, Mclean Parks Judi, and Faye L. Smith. “Foreign Workers in Saudi Arabia: A Field Study of the Role Ambiguity, Identification, Information-Seeking Organizational Support and Performance.” The International Journal of Human Resource Management 24.21 (2013): 3957-3979. Print.

Staffing Industry Analysts. “Saudi-Arabia – Recruitment Companies Boycotted.” Daily News 2015. Web.

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IvyPanda. (2020, July 7). Expatriates' Recruitment in Saudi Arabian Companies. Retrieved from https://ivypanda.com/essays/expatriates-recruitment-in-saudi-arabian-companies/

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"Expatriates' Recruitment in Saudi Arabian Companies." IvyPanda, 7 July 2020, ivypanda.com/essays/expatriates-recruitment-in-saudi-arabian-companies/.

1. IvyPanda. "Expatriates' Recruitment in Saudi Arabian Companies." July 7, 2020. https://ivypanda.com/essays/expatriates-recruitment-in-saudi-arabian-companies/.


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IvyPanda. "Expatriates' Recruitment in Saudi Arabian Companies." July 7, 2020. https://ivypanda.com/essays/expatriates-recruitment-in-saudi-arabian-companies/.

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IvyPanda. 2020. "Expatriates' Recruitment in Saudi Arabian Companies." July 7, 2020. https://ivypanda.com/essays/expatriates-recruitment-in-saudi-arabian-companies/.

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IvyPanda. (2020) 'Expatriates' Recruitment in Saudi Arabian Companies'. 7 July.

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