Case Study 1: 10 Marks

Emiratization as a strategic HRM change initiative: case study evidence from a UAE petroleum company

Company A is a joint venture semi-private domestic and commercial marketing company located in the United Arab Emirates. It operates across a variety of sectors including petroleum retailing, aviation refuelling, lubricants marketing and bulk liquid terminalling. In response to government and social pressures, the Board of Company A formally approved the Workforce Nationalization Project in late 1998. A dedicated Emiratization team, the Nationals Development (ND) department was set up in April 1999 and in the same year one of Company As strategic objectives included the achievement of 50 per cent Emiratization of non-retail staff over a five-year period. On 1 January 1999 there were only 55 UAE nationals employed by Company A, which constituted 11 per cent of the workforce. A serious commitment was made through the allocation of a budget of 47.7 million AED (approximately 7 million GBP) to cover expenses related to recruitment, training and development, overall substitution costs and the payroll cost of nationals during their formal training period. In addition, the Emiratization plan was also publicized through the local press. The ND team were responsible for driving and supporting Emiratization through the provision of competency profiling, recruitment activities and providing specific training and development solutions.

According to Company As Workforce Nationalization Project, recruitment strategies were to be proactive, with an emphasis on generating well-qualified applications from targeted recruitment sources. The main focus was on the nationalization of managerial positions; the rationale being that a national manager adds major impetus to the nationalization process by his/her own commitment and activities. However, recruitment efforts also involved multiple entry channels for graduates and secondary school technical graduates. Competency profiles were to be developed not only for the Rees et al.: Emiratization as a strategic HRM change initiative 41 recruitment but also to identify individual development needs. Training and development activities were specific for each national employees individual development needs. Once a UAE national trainee was competent in the core competencies of the target position this would be realized by replacing an expatriate employee with the competent national. This action would not take place without the cooperation of the existing workforce. In order to create an air of cooperation, incentives were put in place to encourage staff to buy into the Emiratization process by offering replaced staff the opportunity to be re-deployed within the group of companies or by offering attractive redundancy packages.

In 1999, Company A made a number of strategic commitments to achieve the ambitious Emiratization target of 50 per cent non-retail staff by the end of 2003. The scope of the target became more specific after the 2002 manpower review, where the committee agreed that the said 50 per cent should only encompass jobs at the professional and management levels; however, this would not diminish commitment to recruiting and developing nationals in all levels of the business. This commitment was reflected in Company As strategic objectives, which included the achievement of 50 per cent Emiratization of non-retail staff over a five-year period. Company A also put in place measurable polices and objectives for the development and progression of UAE nationals. The companys in-house documentation indicated various ways in which the management team had sought to demonstrate their commitment to the Emiratization project. For example, a specific and substantial budget was allocated to fund the project. In terms of HR activities, the documentation revealed that manpower plans were aligned to business, cost and Emiratization targets. The companys performance management documentation explicitly included Emiratization as a management performance indicator in the performance management cycle. Training and development documentation revealed a formal attempt to empower Emirati staff by providing appropriate learning and development opportunities, for example management training, specifically for Emirati staff. In addition, the commitment to Emiratization by Company As management team was documented through various press releases in the countrys major newspapers. Company A became known within the UAE as one of the pioneers of Emiratization; senior members of staff were regularly invited to attend local human resource forums to present the Emiratization model they had designed and implemented. The overall proportion of UAE nationals to non-nationals within Company A increased at a positive rate after the inception of the Workforce Nationalization Project producing an overall trend of 22 per cent, 24 per cent, 26 per cent, 26 per cent and 24 per cent in the successive years from 1999 to 2003. However, the proportion of nationals employed by the company started to drop in 2002. This was explained by a large number of transfers (ten nationals) to other companies within the group. In addition, Company A claimed that it was vulnerable to poaching of highcalibre nationals, a factor that was the predominant cause of attrition in 2003. As a result, Company A adopted a retention strategy which in essence provided preferential terms and conditions for nationals. These preferential terms included competitive salaries for nationals as determined by benchmarking with other organizations. It also included succession planning specifically for Emiratis; in the words of Company As HR Policy Manual: Recruitment preference is given to citizens of the UAE and where a vacancy provides a promotion opportunity and/or development opportunity; internal (national) candidates are reviewed and receive priority. However, although Company A implemented this active retention strategy, it was not applied to individuals with inadequate performance and behavioural issues. In these cases, Company A did resort to termination of employment in order to ensure integrity, a healthy working environment and performance excellence.

The preceding information indicates that Company A succeeded in fulfilling its vision of occupying a position of leadership in terms of Emiratization. However, it did not succeed in its initial objective of 50 per cent Emiratization, although further information obtained from the company revealed that it did manage to achieve 50 per cent Emiratization of jobs at the professional and management levels.

Questions:

Explain how strategic HRM of Company A was linked to the corporate social responsibility, sustainability, and ethics within UAE? Include an introduction and conclusion.