Introduction
The United Arab Emirates has experienced tremendous changes in the last five decades since the discovery of oil and its related resources. From a poor desert country in the Middle East, it has grown to feature in the top thirty richest nations in terms of Gross Domestic Product and among the top ten nations that have the highest per capita income.
Within this period, private and public sector organisations have grown tremendously after employing both domestic and foreign workers in large numbers. One of the most notable characteristics of the labour force in the UAE is that foreign workers take the better share of it (85%). With its tolerable welcoming of other cultures and nationalities, the nation has attracted over 200 nationalities (Northhouse 2013).
For this reason, the country’s economy that is fuelled by oil money and facilitated by the development of the internet and the associated technologies has emerged as a dynamic global financial system that is characterises by an influx of foreign ideas and practices (Dyer 2006). This global economy indicates the influence of global trends that touch on many areas of the social, economic, and political aspects of the Middle East nations.
Looking at the private and governmental organisations in the UAE, global influences on people management practices are evident. In this case, based on the global trends, the private and public organisations are grappling with a myriad of issues on areas that touch on human resource management, performance management, and psychological contract issues.
It is a known fact that, unlike other Gulf Nations, the UAE is more westernised. The country is viewed as the light through which the Middle East nations will emerge from different challenges that have been surrounding democracy and other repressive aspects that hinder its full potential into becoming a wholly globalised and liberal region.
However, despite these successes, the UAE’s private and public organisations are lagging behind in various areas of people management. These areas need to be updated to cope with increasing demand for localised workforce. Therefore, this paper critically analyses the statement that public and private sector organisations in the UAE region will have to change their people management practices to cope with the increasing demand for localisation of the workforce.
Understanding the Problem
In the last decade, Gulf Cooperation Countries (GCCs) have experienced exponential growth in their economies. The growth has put them in the map of the world’s richest countries. The enormous wealth of these nations such as the UAE has come at an advantage, with billions of dollars going to the development of excellent transport systems and infrastructure, hotels, cities, and other major developments.
In this rapid development of various sectors, the United Arab Emirates and its neighbours have relied heavily on expatriate labour, which makes up 85% of the nation’s population and workforce (Northhouse 2013). In the recent times, such a situation has become a major concern since it is untenable and that any disruptions to the labour market on the foreigners can easily leave the nation crippled.
Locals may not adequately take up the jobs that are carried out by foreigners. Overtime, the UAE has become very reliant on cheaper and more qualified foreign labour, which is lacking among the natives (Looney 2004). Consequently, in recognition of the importance of the national workforce in enabling a long-term sustainable economic growth, the foreign labour dependency has been identified as a major issue.
The government has embarked on various initiatives under the Emiratisation programme, which is the quota system that seeks to increase the number of natives in the private and public organisations while at the same time reducing the number of expatriate labour. As such, the demand for localised labour has increased. Hence, these efforts have faced a myriad of problems that can be placed on people management practices in the nation.
People Management Practices in the UAE
According to Hislop (2003), people management practices encompass all organisational decisions, actions, and resource allocation practices that are critical in ensuring professional service delivery in an organisation. These people management practices are directed towards human resources.
They are very critical for the success of an organisation (Hislop 2003). Good people management practices should constitute three important principles, namely employee-oriented, law-abiding, and equal and fair treatment for all personnel (Vyas 2009). By adhering to these principles, organisations can create a highly motivated and efficient labour force, which can give them a competitive advantage over their competitors.
Some of the main areas that relate to people’s management include psychological contracts, employee recruitment and retention, performance management, organisational culture, and organisational change management. In the last two decades, a lot of research has focused on the private and public organisations in the UAE to find out whether they conform to the calls for localisation of labour in their respective spheres of operation (Harry 2007).
As it stands, despite the push for localisation of labour in the UAE, the number of employees working in the both the private and public sector organisations are mainly expatriates. Consequently, this situation poses the question concerning why the situation is yet to change, despite the localisation demanded programmes or Emiratisation.
Why are the local populations unable to take up the available job opportunities that the government has ensured for them through the quota system? Why are expatriates dominating key sectors of the economy? What are the main problems and hindrances to the process of Emiratisation? To understand these problems, it is important to discuss the key tenets of people management practices with a focus on the private and public sector organisations in the UAE.
Psychological Contract
In the organisational and workplace environment, psychological contract refers to the explicit and implicit promises between an employer and an employee. The promises guide the perceptions on the relationship between the two parties. Unlike legal contracts, psychological contracts can be printed or inferred.
For instance, an employer can promise an employee job security and good working environment, while the employee promises to work hard to benefit the organisation to his or her ability (Suleiman 2006). In addition, the psychological contract may be implied through actions of each party. For instance, an employer may imply that the employer is entitled to an education allowance, if the same allowance is extended to another employee.
A breach of on the ‘psychological contract’ promise can affect the employer-employee relation, which can in turn affect the productivity of the employee and consequently the organisation. In the United Arab Emirates, private organisations operate under close monitoring by government on their adherence to the localisation quota system policies that seek to increase the number of the local employees in the country (Budhwar & Mellahi 2008).
Under this policy, the government requires the private and public organisations to set aside a certain percentage of the available positions to the local Emirati population. These localisation policies are more evident in the private system, where the organisation may face serious sanctions from the government in case of any violations.
However, localisation initiatives have been hardly successful. Since their introduction in more than a decade, only 0.34% of local labour has been utilised in the private sector. Despite some sectors such as banking showing promising results where over 25% of the sector employees are Emiratis, there is a long way to go before the local population can contribute a large percentage of the workforce in the country (Mellahi 2006).
Many of the challenges that are facing the push for localisation can be attributed to the local people’s attitude and other factors that affect the ability to have a good psychological contract between employees and their employers. Firstly, the level of skills or experience that is required in the highly advanced private sector organisations is average.
This observation is not well correlated with the skills that the local populations can offer. The education system in the UAE has not been able to produce enough qualified graduates to take over jobs in the place of expatriates. The number of graduates from the UAE education system has increased. Although initiatives have been undertaken to prepare students for the job markets, the progress has not been very impressive.
Over 75% of university students and graduates in the UAE have never undertaken any activities such as volunteering, paid internships and career training workshops among others in preparation for the job market (Vanhala & Ahteela 2011). Consequently, while the number of graduates has increased, they (graduates) are not ready for the job market. This situation is a reality that the private sector has had to face.
Lack of adequate skills, mistrust on the ability of local personnel in the workplace, and high salary expectation greatly hinder the successful establishment of a psychological contract between the employee and employer (Beerel 2009; Avery 2004). For a successful psychological contract to be established, it is important for the employer to believe in the skills of the employee and for the employee to feel treated in an equal and fair manner.
However, this situation is not the case since many employers feel that the Emirati nationals are not adequately prepared for the tasks they are assigned. In addition, salary expectations for the local employees are very high as they base their salary expectations on the trends as set by the public sector organisations (Tiwari 2012). For instance, fresh graduates are guaranteed an entry-level salary of 22500Dhs (US$6125) in the public sector organisations compared to 8000Dhs (US$2170) that is available in the private sector organisations (Tiwari 2012).
Consequently, from the start of their engagement, the battleground for mistrust between the employee and the employer is already set. Another major problem is that due to the quota system, employers feel that they have no option. Therefore, they employ the local population as a way of fulfilling the government’s expectations, but not out of the need to fill vacancies that the locals are qualified for (Campbell & Stonehouse 2001; Armstrong 2011).
In addition, the quota system makes the local employees feel like they are entitled of their positions. Hence, they do not regard their employment as an opportunity. Such an approach greatly jeopardises the possibility of a good working relationship and psychological contract, hence resulting in a myriad of problems.
In many cases, local employees quit as they fail to fit into the organisations due to their high expectations and their inability or difficulty in fitting into the organisational culture or environment that is dominated by foreign workforce (Cummings & Worley 2001).
Recruitment, Selection, and Retention
Recruitment, selection, and retention of employees are major tenets of people management practices in the workforce. Recruitment and selection involve the process of identifying people to undertake specific roles in an organisation. They involve matching individuals, their experiences, and qualifications with the available job positions in an organisation (Tzafrir & Dolan 2004; Mello 2002).
Consequently, as the first step in the staffing process, the two elements form a very important aspect that requires total organisational commitment. Without such commitment, an organisation may end up getting the wrong people to its detriment. Retention involves various steps that organisations take to maintain their qualified and experienced employees in the workplace.
In the United Arab Emirates, many expatriates are recruited through third parties, namely recruitment firms. This plan is especially very common in the construction industry, where skilled or unskilled foreign labour is highly demanded (Ciprian & Dodu 2005). In other organisations, direct recruitment, especially for local labour or expatriates who are already in the country, is preferred.
In the push for localisation, the recruitment of qualified local labour has faced numerous problems, especially due to the unwillingness of local populations to take up jobs in the private sector (Stefan 2003; Woods 2001). In the public sector, the recruitment of local population does not face many challenges since employees at the entry-level are majorly recruited fresh from college.
To address the problems that are encountered in the recruitment, selection, and retention processes, there is a need for the government to review its localisation programme. Firstly, the quota system cannot offer a long-term solution to the problem of immigrant workers in the nation since it does not address the key problems that prevent the participation of the local population in the private sector.
For instance, there is a need for the private sector and government to embark on training programmes that are aimed at preparing local Emiratis to attain the qualifications that are required in the private and public organisations (Vyas 2009). The success of such initiatives is well documented, especially in the banking sector, where pre-career training by the government and banking institutions have increased the employment rates of the locals in the banking sector to 22%.
This figure represents the highest percentage of local employees in all private sector organisations. The same initiative by the Ministry of Labour has seen the number of employees rise to 60%, which represents the highest percentage among the public sector organisations in the UAE (Hider 2006). Consequently, as the government implements the quota system, there is a need to initiate other training programmes, which can ensure that local people are qualified and motivated to take up the jobs in the private sector.
Performance Management
Performance management is a major tenet in the people management practices for any organisation. Performance management is a continuous process that involves a close monitoring of the employees to ensure that their engagement with the organisation is contributing to the organisational goals at all times (Holbeche 2001).
Without performance management, it is difficult for organisations to know the degree of an employee’s contribution to the organisation’s goals as dictated by his or her contract with the organisation (Abdalla 2006). Consequently, performance management goes beyond the annual review. It requires the monitoring of the day-to-day performance of employees in their positions.
With a rapidly growing economy, the UAE has experienced enormous changes its workplace environment, both in the private and public sectors. The rapid development, which has placed the country as one of the rapidly modernising nations in the GCC region, has also placed a lot of pressure on the existing human resource management practices since the country tries to become globally competitive in all its areas of the economy (Tsaur 2004).
As such, the performance of the human resource is central to this journey, and hence the rapid need for change in the performance management practices of the different sector organisations to reflect the best practices or trends in the world. To many critics of the current HR practices in the nation, the performance management approaches are ineffective and do not in any way assist the organisations in ensuring continued performance improvements, which can allow them (organisations) to compete with others in the globe (Goldsmith 2010; Cameron & Green 2004).
In addition, various studies that have been carried to measure the perception of employees on the existing performance management approaches have indicated high levels of dissatisfaction and distrust concerning the effectiveness and fairness of the performance measurement processes that are utilised by employees.
To address this issue, the first step is for organisations to understand that performance management requires the participation of all key stakeholders to ensure that such measures are unbiased and/or can reflect a fair judgement of each person’s performance (Saunders, Millmore & Thornhill 2007). Further, it is worth noting that the workplace environment is rapidly changing and hence the need to review the effectiveness of the performance appraisal process that organisations have adopted.
Lastly, organisations must be prepared to motivate their employees through training and benefits. It is difficult for an individual to maintain performance for a long time. Without the much-needed motivation, this case may become a major problem, which may derail the performance of even the best employees (Mondy & Gowan 2005).
In this case, instead of organisations solely depending on already-made expatriate workforce for fear of spending on trainings and other motivational initiatives, it is important for them to change this stance. They can recruit fresh talents from the local populations, continuously train them, and/or offer good working conditions that will not only allow the organisations to achieve sustainability in the workforce but also ensure high performance in the workforce (Weir 2008).
Consequently, training and other benefits can be occasionally reviewed to create a highly motivated labour force, which is a key factor in ensuring performance of the workforce, and thus a competitive organisation in the respective sector.
Culture and Organisations
Organisational culture reflects the sum of practices, values, and activities that create a given identity and a sense of belonging to the stakeholders. Developing an organisational culture takes time since it is a mix of different factors, including the culture in the society where the organisation exists, the sector of an organisation, and the different interactions of the people within the organisation.
Looking at the cultural influences of organisational cultures, it is evident that local Islamic culture and expatriate cultural influences have played a major role. In addition, there is an evident difference between public and private sector organisations (Johnson & Scholes 2008). For instance, the high number of expatriates in the private sector has ensured that the predominant culture in this sector is foreign and hence a factor that determines why many local workers fail to fit since they often find themselves alone and/or surrounded by hundreds of foreign workers (Khurshid 2006).
On the other hand, the public sector has a higher concentration of local citizens. Therefore, it becomes more preferred to the private sector. Another major issue that indicates the influence of culture is the ratio of women to men in both the private and public sector organisations. In this nation, most employees are male. They represent almost 80% of the workforce (Weir, 2008).
Further, men also predominantly hold the positions of leadership. Such issues can be attributed to cultural insinuations of male superiority in the Muslim population. To ensure the success of the localisation programmes, there is a need to address these insinuations of organisational culture such as through affirmative action and other initiatives to ensure participation of both women and men in all sectors of the economy. There is a need to increase slowly the number of qualified locals who can be employed effectively in the local private sector.
Conclusion
Comparing the private and public sector organisations, it is evident that they face a myriad of challenges, despite their major distinctions. Therefore, it is important for the nation to move forward with its localisation programmes. It needs to put forward initiatives that are geared towards important changes in the people management practices in the private and public sector organisations.
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