Emirati Companies’ International HRM Strategies

Abstract

This paper dwells upon the use of international HRM strategies at Emirati companies. Practices used at Al-Futtaim Group and Friends Provident International are considered with a specific focus on expatriates’ recruitment, performance management, training, and compensation techniques employed. Al-Futtaim Group is a large Emirati company operating in such spheres as real estate, retail, electronics, automotive, financial, and general services. The organization has divisions in the UAE, countries of the Middle East, Europe, Asia, and Africa. Friends Provident International is an international company providing insurance and financial consultancy services.

A brief analysis of HRM strategies employed at both organizations suggests that the two companies utilize efficient HRM techniques. The two organizations benefit from the use of expatriates, and they also manage to hire (and develop) a significant number of highly qualified locals. At the same time, Friends Provident International utilizes more comprehensive and efficient strategies when it comes to compensation and training. Therefore, it is possible to recommend Al-Futtaim Group to employ Total Reward Strategy and a more transparent compensation model to improve employees’ satisfaction and performance.

Introduction

Effective international human resources management has become a key concern for many companies, as more and more businesses operate worldwide. The United Arab Emirates is one of the countries where numerous international companies operate. These companies often resort to hiring expatriates, and, of course, they also employ locals. It is possible to trace peculiarities of the contemporary strategies of international HRM utilized in the UAE through analysis of policies of two Emirati companies.

One of the organizations to be considered is the Al-Futtaim Group. The group operates in several areas: financial services, automotive, real estate, engineering, retail, electronics, and general services (Group profile, 2015). The organization’s headquarters are located in Dubai, but the company also has subsidiaries and divisions in other Emirati locations, Saudi Arabia, Kuwait, Qatar, Singapore, Europe, Egypt, Bahrain, Pakistan, Syria, Sri Lanka, and Oman. The company promotes such values as flexibility, integrity, and responsibility. Al-Futtaim Group is one of the leading Emirati companies that has a well-established culture and efficient procedures.

The other company to be analyzed is Friends Provident International. This company provides insurance and financial consultancy services (Our heritage, 2015). It was founded 200 years ago in the UK, and now it has divisions in many countries, including the UAE. The organization has high ratings among companies providing similar services. This success is also due to efficient HRM. Hence, it is possible to consider the operations of the two companies in terms of a number of aspects of international HRM.

International Human Resources Management

International Staffing Methods

To analyze the effectiveness of the strategies utilized at the companies in question, it is important to consider major trends existing in the area. Thus, international staffing is an important aspect of international HRM. Tungli and Peiperl (2009) claim that hiring expatriates is a very old and effective tradition. Multinationals tend to employ expatriates to fill in the gaps in the staff when it is impossible to find locals with the necessary qualifications and experience and to facilitate knowledge transfer within the organization.

Nanda and Kumar (2012) note that expatriates can be especially efficient and valuable for the organizations (as well as cost-effective, so-to-speak) when completing short-term international assignments, frequent flyer assignments (irregular and highly specialized tasks), rotational assignments (which facilitate knowledge transfer) and global virtual teams (which are based on online conferences and discussions). At the same time, Mohmand (2014) stresses that many countries, including the UAE, strive for increasing the number of locals in their workforce, which is a governmental policy aimed at sustainable development of the region.

Training and Development Methods

It has been acknowledged that successful companies invest in the training and development of their staff, which translates into better performance of the entire organization (Niazi, 2011). Clearly, training is necessary for both groups of employees, locals, and expatriates. At the same time, there are certain differences as the major focus of training for locals is often the acquisition of particular qualifications and skills while expatriates need to know more about cultural (social, political, and so on) peculiarities of the region (Godiwalla, 2012). Ghafoor, Khan, Idrees, Javed, and Ahmed (2011) state that their model can be applied effectively in many organizations, and the research shows that the performance of expatriates and competitiveness of the company improves after the use of such training and development techniques.

Barrett (2014) notes that many expatriates receive certain training before they get to the overseas company, which is an effective strategy, as they are more prepared to complete tasks in a new setting.

Performance Management of International Employees

Another important aspect of international HRM is the performance management of international employees. It has been acknowledged that expatriates’ performance can be assessed with the help of methods used for the evaluation of locals’ performance (Dowling, Festing & Engle, 2007). Thus, the most widely used techniques are scores, scales, observations. Of course, motivation is an important part of performance management, as employees need to be motivated to perform well. Deresky and Christopher (2011) state that financial motivation, as well as such strategies as promotion, recognition, additional benefits, can be applied to motivate both expatriates and locals.

Compensation Strategies for International Employees

Clearly, compensation affects expatriates’ performance and job satisfaction. It is also associated with various ethical dilemmas the organization has to address (Wurim, 2014). Reddy (2013) stresses that ineffective compensation can lead to detrimental effects and the company’s losses. One of the most effective compensation strategies that are acquiring popularity is Total Reward Strategy that includes all possible benefits an employee can get when working for the organization (Jiang, Xiao, Qi & Xiao, 2009). These benefits include salary, bonuses, training, and so on. The strategy is based on the existing trend in the world of the labor force as now people are not focused on salaries only, but they also need to know what kind of personal development they will get when working for the company.

Research Comparison

To analyze the HRM strategies utilized at the organizations mentioned above, an employee from each company was interviewed. Techniques utilized at the two organizations are quite similar though there are certain differences as well. Thus, both companies focus on diversity (gender, culture, and so on). It is noteworthy that Friends Provident International pays specific attention to hiring disabled people to displace any bias concerning disability.

The two companies employ both expatriates and locals while following governmental regulations on Emiratisation. At that, Al-Futtaim Group has its own internal quotas as well. The two companies hire expatriates to fill all kinds of positions, as there are no policies of assigning international employees to managerial positions only. When hiring expatriates, both companies focus on qualifications, experience, skills, and achievements of the applicant rather than his/her gender, ethnicity, or country of origin.

It is noteworthy that the two companies also have similar recruitment policies. Thus, when selecting international employees, HR professionals of both organizations use social networks and such engines as LinkedIn, Headhunters, and so on. They also use the services of recruiting companies. When hiring locals, the two companies often address various educational establishments to search for talents among graduates.

It is clear that expatriates are valued at the two organizations, and the two interviewees stress that international employees contribute greatly to the development of their companies. It is also necessary to add that expatriates work on-site at Al-Futtaim Group, while virtual groups are used at Friends Provident International. At that, in both companies, there were cases when expatriates were withdrawn. However, the employee of Al-Futtaim Group notes that withdrawal was a result of the inappropriate hiring process as the employees did not fit the necessary projects. Whereas, the interviewee from Friends Provident International notes that the withdrawal was a result of the termination of the project.

Both organizations pay a lot of attention to development and training. The techniques used are quite similar to on the job training as well as external training is utilized. At that, Friends Provident International collaborates with EIBFS (Emirates Institute for Banking and Finance Studies), and employees get the necessary training as well as certification (including degrees) there.

When it comes to performance management, the two organizations employ similar strategies. These include KPIs, rating scales, and observations. Both international employees and locals are motivated equally at the two organizations. Conventional strategies, including monetary awards, benefits, promotion, and additional training, are utilized.

As for compensation policies, they are also quite similar in both organizations. The companies use the geocentric approach. In other words, compensation depends on the level of salaries provided in this or that region. Apart from the compensation of the work completed, expatriates’ salaries include living allowance, transportation, health insurance.

Analysis of the Findings

It is possible to note that the two organizations employ major international HRM strategies that are widely used in the business world. For instance, technology (including social networks) are commonly utilized, which is an effective technique when recruiting international employees (Deresky & Christopher, 2011). Notably, both companies tend to hire graduates from local universities, which has various implications. Thus, companies manage to find young talents and foster loyal leaders. They also comply with the country’s policies on the employment of locals. The two companies reveal their sustainable approach as they contribute greatly to the development of the community when giving jobs to locals. Positive outcomes of such a strategy are apparent as companies benefit from hiring qualified employees and developing a favorable image.

It is necessary to note that compensation strategies are similar, but Friends Provident International tend to employ a more sophisticated approach. They use the so-called Total Reward Strategy, which implies they focus on all the benefits the employee can gain, including awards, recognition, training, and development (Jiang et al., 2009). This is a more holistic approach as employees can actually see what they can receive from the company in return for their effort and qualifications. At Al-Futtaim Group, the compensation policies are less transparent, which can lead to employees’ dissatisfaction and tension in the working place (Dingyuan & Lu, 2012).

Training and development strategies are also central to procedures utilized at the two organizations. On the job training is seen as primary at both companies. Notably, researchers agree that this is an efficient way to train expatriates (Ghafoor et al., 2011; Barrett, 2014).

Again, Friends Provident International tends to use a more comprehensive strategy as they collaborate with EIBFS and enable expatriates (as well as locals) to gain certain skills, knowledge, and degrees. This can be seen as a part of the Total Reward strategy. Clearly, the motivation of employees at this company is higher than that of employees of the other company. Of course, it is still unclear whether the companies pay sufficient attention to training associated with cultural peculiarities of the region. Both companies tend to provide training to make all employees fit into the company, but it is unclear whether this training involves particular attention to cultural issues. Godiwalla (2012) stresses that such training is crucial for successful integration and high performance of the expatriate.

Conclusion

In conclusion, it is possible to note that Al-Futtaim Group and Friends Provident International utilize efficient international HRM strategies. The two companies strive for diversity and hire both expatriates and locals who contribute to the development of the organizations in terms of their qualifications and experience. It is noteworthy that expatriates are regarded as facilitators of knowledge transfer within the organization as well as fillers of the gaps existing in the national workforce. At the same time, Friends Provident International employs more progressive and comprehensive techniques, especially when it comes to training and compensation. These strategies have proved to be effective as the company is one of the leaders in the area. Of course, Al-Futtaim Group can also consider using some of these strategies to improve the performance of its divisions.

Recommendations to Improve HR Practices

As for Friends Provident International, their HR practices are efficient and successful. The only recommendation is to pay more attention to training associated with the cultural peculiarities of the region. Expatriates should understand social, political, cultural peculiarities of the region to better fit into the diverse workforce. On the job training and specific training sessions on particular topics (etiquette, cultural issues, legislature, accounting in this or that region, and so on) are necessary.

As far as Al-Futtaim Group is concerned, the company should employ a more transparent compensation strategy. At present, the company uses a geocentric approach as it focuses on the level of people’s income in this or that region. Of course, this approach can be used in the future as well. However, it is better to provide employees with information on possible options when it comes to compensation. Thus, employees can have a specific salary (for expatriates, it should include dwelling, transportation, and healthcare insurance), but they should also see that they can get certain financial awards for a particular performance.

Training and development should also be a part of this compensation policy. For instance, when they score at a certain level, they can get this or that benefit. At that, those who have particular qualifications, certification, degrees can get higher scores, which can translate into higher monetary awards.

As far as training and development at Al-Futtaim Group are concerned, it needs certain improvements. Hence, the company should start a collaboration with an educational establishment that will provide employees (both expatriates and locals) with the necessary knowledge, skills, qualifications, and certification. Of course, on the job training is also important and should be held in the future. At the same time, the company has to pay more attention to expatriates’ training associated with cultural peculiarities. These innovations can help companies improve their performance and retain their leading positions in the market.

Reflection

This assignment has given me an in-depth insight into the issues that are important for international employees. In particular, these people should accurately evaluate their strengths and weaknesses, especially their ability to meet the requirements set by the company. It is quite possible that they may not be fit for a particular job, but they may spend much time, effort, and money on the search for a potential vacancy. This is one of the risks that should not be overlooked. Apart from that, they need to consider the terms which are set by the company. For instance, one can speak about the compensation scheme, severance package, or benefits that this enterprise is obliged to offer. This knowledge is important for avoiding potential conflicts with employers. Overall, this suggestion is based on the premise that these people may find it more difficult to protect their rights in a foreign country. This is one of the points that should be taken into account.

Apart from that, these people should make sure that various businesses can learn about the skills and competencies that they possess. Modern companies often rely on social networks such as LinkedIn in order to find potential candidates.

So, workers should consider the role of social media as one of the factors that can increase their employment opportunities. Additionally, these people should learn more about the cultural, legal, and social peculiarities of the country in which they will work. In particular, they should learn about the regulations that influence labor relations. For instance, they need to get a better idea about the regulations governing the termination of contracts. So, they need to examine the labor laws, established in a particular country. Furthermore, they should learn about the cultural and behavioral norms established in the community. This knowledge can be important for establishing relations with colleagues and avoiding misunderstanding.

Overall, these people should anticipate conflicts between international workers and their employers. These conflicts can be caused by various factors related to the workplace environment or legal disputes. Additionally, they should make sure that potential employers can easily contact them. This task is particularly important for people who want to find employers abroad.

There are several things that I found rather challenging while working on this assignment. At first, I would like to speak about the need to show how the answers of the respondents can be applicable to the theories and concepts related to human resource management. The interviewees discussed the questions only from a practical viewpoint. However, they did not consider the theoretical aspects of their recruitment decisions. Admittedly, they could be knowledgeable about theoretical issues, but they did not mention them during the conversation. Nevertheless, these tasks proved to be very rewarding because I was able to see the correspondence between HRM concepts and everyday practices of companies. Moreover, it was necessary to identify a list of questions that could prompt managers to give elaborate and detailed answers. The experiences of these people can be critical for students because they can show how some theoretical principles can be implemented.

Additionally, I had to spend much time in order to identify the best practices that various businesses could adopt. The problem is that there were too many studies related to this topic. Moreover, it was vital to evaluate these research articles and single out the most appropriate ones. This process was very time-consuming. However, these activities were important for improving the quality of this research and developing recommendations that could benefit the selected companies. These are some of the details that can be identified.

Overall, the findings of this research will considerably shape my outlook on international employees. These results can shape my professional activities. In particular, it is possible that I may need to hire international workers. So, I will keep in mind that these people can be affected by various challenges such as the need to accommodate to the new company, cultural or linguistic barriers, and many concerns about the terms of their employment. In turn, business administrators should address these issues in order to improve their performance. Admittedly, it may be necessary to invest in orientation programs for new hires. Nevertheless, these costs can be justified because these initiatives are important for the retention of the best candidates and reducing the cost of recruitment.

Additionally, I will remember that the recruitment of international workers is a more expensive task. Therefore, it is important to establish partnerships with reliable recruitment agencies that can select candidates who are most suitable for a particular job. The cooperation with these agencies is important because employers should eliminate unfit candidates at the early stages. Moreover, it is quite possible that I will act as an international employee. I will have a better idea about the challenges that such workers can encounter. For instance, I will not overlook the impact of cultural and legal factors on these people and their relations with employers. So, it is possible to argue that this assignment has been both informative and thought-provoking. It will certainly influence my professional activities.

References

Barrett, B.G. (2014). Training global managers to prepare and train expatriates for more efficiency and effectiveness. Journal of Economics, Business and Management, 2(3), 196-201. Web.

Deresky, H., & Christopher, E. (2011). International management: Managing cultural diversity. Frenchs Forest, NSW: Pearson Higher Education AU. Web.

Dingyuan, Q., & Lu, Z. (2012). Compensation disparity in MNCs in China based on doubly demotivation. Advances in Information Sciences and Service Sciences (AISS), 4(11), 302-310. Web.

Dowling, P.J., Festing, M., Engle, A.D. (2007). International human resource management. London, UK: Thomson Learning. Web.

Ghafoor, S., Khan, U.F., Idrees, F., Javed, B., & Ahmed, F. (2011). Evaluation of expatriates performance and their training on international assignments. Interdisciplinary Journal of Contemporary Research in Business, 3(5), 335-351. Web.

Godiwalla, Y.H. (2012). Training and development of the international US executive. Journal of Modern Accounting and Auditing, 8(1), 32-39. Web.

Group profile. (2015). Web.

Jiang, Z., Xiao, Q., Qi, H., Xiao, L. (2009). Total reward strategy: A human resources management strategy going with the trend of the times. International Journal of Business and Management, 4(11), 177-183. Web.

Mohmand, S. (2014). HRM strategies & issues with reference to UAE market practices. International Journal of Scientific Research, 3(9), 236-237. Web.

Nanda, S., & Kumar, A. (2012). International staffing: Factors, issues and alternatives. Journal of Human Resource Management and Development, 2(2), 56-64. Web.

Niazi, A.S. (2011). Training and development strategy and its role in organisational performance. Journal of Public Administration and Governance, 1(2), 42-57. Web.

Our heritage. (2015). Web.

Reddy, A. (2013). Compensation strategies & impact on employee & organisational performance in UAE public sector companies. Asian Academic Research Journal of Social Science & Humanities, 1(8), 1-16. Web.

Tungli, Z., & Peiperl, M. (2009). Expatriate practices in German, Japanese, U.K., and U.S. multinational companies: A comparative survey of changes. Human Resources Management, 48(1), 153-171. Web.

Wurim, B.P. (2014). Ethical dilemmas in international compensation. International Journal of Business and Social Science, 5(3), 118-125. Web.

Appendix

Questionnaire

  1. How long have you been involved in international human resources operations?
  2. Does your company pay any attention to diversity (gender, cultural, ethnic and so on)? Are there any quotes?
  3. What positions do expatriates usually occupy in your company (top managers, trainers, employees of IT, financial, marketing department and so on)?
  4. What searching techniques do you use when recruiting expatriates? Are they similar to methods used to hire locals? Why?
  5. Do you find hiring expatriates effective and beneficial for your company? Why or why not?
  6. Have there been cases when expatriates were withdrawn from projects and returned home? If so, what were the reasons for that?
  7. Does your company hire expatriates to work on a variety of projects? Is there a specific area that requires recruitment of expatriates?
  8. Do you pay attention to ethnicity (or country of origin) of the expatriate? In what cases? For instance, some companies prefer hiring people from the USA. Is this is the case with your company?
  9. What qualities (including professional skills, experience, features of character) do you seek in expatriates?
  10. Has your company developed the so-called virtual teams when people collaborate with the help of computer-based technology?
  11. Do you think it is important to provide training to expatriates? Why or why not?
  12. Does your company provide any training to expatriates? If so, how often? Do all expatriates get training?
  13. If the company provides training, what methods are usually used? Which method is preferred on-the-job (supervising the work of trainees) or off-the-job (lectures, discussions, role playing and so on)?
  14. Which of these methods do you find most effective and applicable in your company?
  15. Do you develop any training sessions or participate in training expatriates? Why or why not?
  16. Do you personally provide particular training to help the expatriate to adapt to your company? Why or why not? Would you like to participate in this process?
  17. Do you launch teambuilding activities that aim at integrating expatriates into the company? Are these activities efficient?
  18. Does your company employ particular performance management techniques to evaluate effectiveness of expatriates? For example, have the following methods been used: rating scales, checklists, critical incident methods (critical incidents are recorded and evaluated), observations, performance tests?
  19. Do you find the methods utilised efficient? Why or why not? Which technique would be the most applicable in your company?
  20. What motivation strategies do you use to enhance expatriates’ performance? Are these the same strategies used to motivate locals? Why do you think these methods are used in your company?
  21. What components do salaries of expatiates in your company include (for example, living allowance, health insurance, transportation, schooling and so on)?
  22. When recruiting (or prolonging contracts) which factors concerning compensation do you focus on in your company? Is it solely salary and bonuses? Are there additional values (for instance, benefits, prestige of the company, friendly atmosphere and so on)? Explain your choice.
  23. Do salaries of expatriates differ from location to location in different facilities of your company? For instance, some companies offer expatriates salaries that are the same or insignificantly higher than the ones of locals (of course, all expenses (housing, transportation) are usually paid by the company)?
  24. Do you find compensation strategies employed in your company effective? Why or why not?
  25. Have you developed recommendations as to improvement of expatriates’ performance? Why or why not?