Strategic human resource management (SHRM) has become a dominant research topic in management theory. Even in practice, it can be acknowledged that many companies are keen to integrate the conceptual frameworks of SHRM in the management of the workforce. The HRM activities can be affected by many internal and external factors, especially for multinationals with large and diverse workplaces. The purpose of this research is to express how Abu Dhabi National Oil Company (ADNOC) addresses some of the SHRM challenges.
The scope of the research included the management of cultural diversity, which is majorly affected by the company’s local external environment. The United Arab Emirates (UAE) is one of the countries with a large foreign workforce, which means that ADNOC employs a culturally diverse labor force. Additionally, diversity is an SHRM issue because of its relationship with strategic facets of a business, including performance. The potential boundaries and constraints of this exploration are defined by the company selected, which is used as a case study. The key constraint is the accessibility of corporate data that is needed to accomplish the study.
Aims and Objectives
The aim of this research is to explore the SHRM challenges faced by ADNOC, specifically regarding the management of diverse workforces. Most importantly, the study examines how the company uses cultural diversity as a key strategic resource to drive its performance of the company. As a multinational, ADNOC handles both expatriates and local workers, which means that the main SHRM question is how to achieve both integration and inclusion. The specific objectives of the reports areas outlined below:
- To explore the extent of workforce diversity at ADNOC Group Abu Dhabi.
- To establish SHRM practices associated with diversity management at ADNOC.
- To offer recommendations on how to improve the value diversity management as an SHRM practice.
Cultural diversity in the workplace is a subject that has been studied extensively over the past few decades. In the context of SHRM, cultural diversity can be seen as a challenge for human resource managers. One of the most important theoretical foundations of SHRM is the resource-based view (RBV), which posits that businesses capable of exploiting valuable, nonsubstitutable, valuable, and inimitable resources can achieve a sustained competitive edge (Wright & Ulrich, 2017).
Therefore, it can be seen that the human resources of a firm are deemed to be key determinants of organizational performance. The link between SHRM and performance can be deduced from the definition of SHRM. According to Boon et al. (2018), SHRM entails how human resources are deployed in the pursuit of corporate goals. Such elements as skills and motivation of a workforce should be geared towards the production of results.
The literature on cultural diversity has revealed that this organizational aspect can be a double-edged sword in organizational performance. Such scholars as Shaban (2016) explain that workplace diversity can be both a source of strength and weakness, which means that the outcomes of managing a diverse labor force depend on the effectiveness of leadership. Businesses have realized that one of the best ways to best serve their customers is by coordinating the efforts of the employees.
The challenge for managers is the demographic differences across the workers regarding age, gender, ethnicity, culture, and even nationalities. All these variations in human characteristics have to be managed, and their skills and strengths harnessed to achieve the corporate goals. Failures can be a sign that an entity has failed to properly manage diversity.
Besides the need for internal policies and practices for diversity management, external forces may also play a pivotal role in defining the nature of this managerial challenge. Many countries across the world, for example, the United States, have implemented laws that prohibit discrimination against employees, which means that firms have to find means for inclusion when recruiting (Grissom, 2018). Other countries, for instance, the United Arab Emirates, have large numbers of foreign workers.
As expressed by (Warner & Moonesar, 2019), the UAE is the sixth country with the largest number of immigrants as of 2017, which means that both the private and public sector is naturally confronted by the issue of diversity. Therefore, strategic leadership is deemed to be a key requirement in the management of cultural diversity because it helps achieve cooperation, mutual understanding, teamwork, and exchange of experiences (Gharama et al., 2020). The bottom line is that regardless of the causes of diversity, the executives must be prepared to address the challenge.
As mentioned earlier, both the private and public sectors in the UAE are affected by cultural diversity due to a large number of foreign workers. From an SHRM perspective, such corporations as ADNOC are faced with the challenge of obtaining the best talent and selecting a team of workers who can complement each other to improve organizational performance. Studies exploring the diversity situation in the UAE highlight major management challenges, including language and communication, different employee perspectives on certain matters, and policy problems (Velten & Lashley, 2018). However, it is also expressed that shared experiences have helped overcome any barriers, which works to boost the output of the individuals and their collective efforts.
As the main purpose of this study suggests, the focus is on examining the SHRM challenges faced by ADNOC. The methodology selected for this research is a literature review, which can be defined as a systematic way of collecting and synthesizing past research on a subject (Snyder, 2019). This description means that the needed data is collected from past efforts in exploring the same or related subject as the one in question. However, the nature of this report means that not all data can be derived from past studies, especially regarding specific activities of the companies.
Therefore, the basic assumption made is that all written materials, including those found on the internet and online databases, are regarded as literature that can be used as sources of data. Several forms of literature reviews can be used, namely structures, semi-structured, and integrative reviews. The latter is deployed in this research because it allows for the assessment, critique, and synthesis to facilitate new perspectives and theoretical frameworks. No new theories will be developed, but the research highlights and critically analyzed the actions related to diversity management in the context of SHRM.
In addition to the literature review methodology, this study adopts a case design. Case studies often focus on a single research subject or phenomenon, which is known as the case. Therefore, the company being investigated is the case and subject of the research. The main advantage of this design is it allows for in-depth inquiry and understanding of the subject or phenomenon. ADNOC is one of the largest government-owned companies in the UAE, which should reflect the situation with all similar institutions. Therefore, the challenges in managing diversity at ADNOC can be used to infer the broader spectrum or context of SHRM in the UAE. The rationale for the use of a case study is that only one company is targeted, which makes it an obvious choice for the researcher.
Results and Discussion
Summary of Results
Being a government-owned institution, ADNCO’s top executives are all local personnel, as shown in the organizational structure in the appendix. Additionally, most subsidiaries, both local and foreign, are headed by people from the UAE. ADNOC hardly releases any information regarding the composition of its workforce. However, information can be obtained from other sources to show how the company handles its human resources. Unfortunately, job reviews do not paint a good picture of ADNOC and how it handles foreign workers.
Expatriates have been seen complaining about multiple elements, including the lack of career growth and unfair treatment regarding employment termination. Other reviews describe the working environment for the foreign workers, with most highlighting such issues as racism. Expatriates are continuously reminded that they are only there to serve the locals. In terms of remuneration, the salaries depend on the passport held, where European attract more pay than the South-Asians. Despite this disparity, however, many acknowledge that the company offers good wages.
Diversity management is a serious concern for which the company can be perceived to have failed. In addition to the above problems, it is claimed that 20% of the expatriates are forced to handle 80% of the workload. Biases against foreign workers, including allocation of leadership positions, are the main problem because all top positions are occupied by locals. Unprotecting corporate politics also works against expatriates. The bottom line is that ADNOC has failed to acknowledge that cultural diversity can be a major competitive strength. However, some positive progress has been made regarding certain diversity aspects, especially the inclusion of women in leadership positions.
For a culturally diverse country, one of the main challenges in achieving equality and inclusion in the workplace. In the UAE, such concerns are hardly prioritized by businesses because most of them seek to obtain affordable labor. Immigrant workers can find themselves in peril because the HRM practices of the country are not aligned with their needs and interests. In literature, the failure to effectively manage diversity may result in a company failing to achieve the full potential of the human capital at its disposal. The RBV approach, as explained by Wright and Ulrich (2017), holds that workers are key resources that can be utilized to achieve higher performance and competitiveness. At ADNOC, the treatment of expatriates is an indication that the company fails to perceive cultural diversity as a source of strength. As multinational, cross-cultural experiences can help the company create a better and more powerful global image and brand, which would increase its competitiveness in the international markets.
Several elements can be considered when addressing the issue of managing diversity, which includes gender. Across the world, many countries are making deliberate attempts to empower women through inclusion not only in the workplace but also in leadership positions. While many Western democracies have virtually achieved this objective, the UAE and other Middle East countries have lagged. Therefore, the fact that ADNOC, with the support of the UAE government, is seeking to improve gender equality in government corporations shows positive strides. From an SHRM perspective, such activities can only be deemed fruitful when positive changes in leadership are realized. Utilizing the capabilities of women in leadership could help the company make better decisions. Most importantly, it can be argued that as more women progress in their careers, they will make ADNOC one of the most attractive companies for the country’s top talent. The progressive culture through such HRM activities can be an indicator that HRM can be aligned with corporate strategies.
The main observation from ADNOC is that the human resource practices are not necessarily aligned with the corporate strategy. As a government-owned company, it can be argued that the interests of the government come first before any other. Additionally, the diversity of the country is the result of immigrant labor, which has less bargaining power as compared to the local workforce. While other countries have cultural diversity comprising of citizens from different ethnicities, it can be argued that the UAE does not consider immigrant workers are part of the country. Therefore, it can be argued that this group of workers is used primarily as a means to fill any gaps left by the local labor force, in which case the HRM activities pay little attention to them.
According to Shaban (2016), diversity can be a source of strength or weakness. At ADNOC, the weakness is observed when the workers take to social media and other platforms to complain about their treatment by the company. It would become difficult for ADNOC to attract top talent with such negative reviews.
Managing diversity is a major SHRM challenge for modern corporations. In the UAE, foreign workers comprise a significant portion of the labor force, which would require companies to implement the necessary measures to address diversity. The case of DNOC does not offer any hope of effective diversity management practices. The main concern is that the company has failed to acknowledge that the demographic differences can be exploited for competitive advantage. The current HRM practices hardly offer any incentives or motivation for employees to improve productivity. Besides the higher wages and inclusion of women in management, the company does not have adequate SHRM frameworks.
ADNOC has been portrayed as a company that does not pay adequate attention to diversity management. The first recommendation is the development of cultural integration program to address this deficiency. The role of such a program will be to improve cross-cultural cooperation within the company and its subsidiaries. The rationale is that the experiences, knowledge, and skills of people from different nationalities and ethnicities can be utilized to help the company perform better in the global market.
Today, those businesses that have effectively embraced diversity can attract top talent across national borders. A cultural integration program will be an opportunity to help foreign workers settle and become productive. Additionally, job satisfaction can be achieved through cultural integration because cross-group cohesion coupled with cultural, age, and gender diversity improve employee experiences (Lee et al., 2017; Shama, 2017). Such an approach encompasses major HRM reforms and the creation of an SHRM framework.
The second recommendation is the development of career growth opportunities for expatriates. Many of the complaints among the foreign workers involve the lack of career growth and progression. Therefore, ADNOC cannot successfully compete for the best workers at work, which means the firm loses the critical competitive advantage. However, the main assumption in this recommendation is that ADNOC competes with international companies as opposed to domestic firms. Therefore, the HRM practices need to adopt a global outlook and embrace the best SHRM practices to help its growth and expansion.
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Appendix: Organizational Structure of ADNOC