Talent Management in ADNOC

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Abstract

This study examines the business case of the ADNOC, one of the largest world oil exporters based in Abu-Dhabi, UAE. The company has 20 crude oil refining and distribution subsidiaries with over 60,000 employees. ADNOC proudly proclaims that it is a trusted employer that does everything it can to ensure the safety of its workers, including routine safety checks and educational heat management training for professionals who work at offshore drilling stations in high humidity and heat. This study aims to identify existing practices of talent management in ADNOC and provide comprehensive recommendations on how these practices can be improved. ADNOC has a robust talent management strategy typical of large manufacturing companies. ADNOC takes both approaches to talent promotion – inclusive and exclusive, developing talent and promoting the most gifted employees. Recommendations focus on improving perceived performance in operational and middle managers by implementing modern talent management strategies. In particular, it is recommended to implement two methods for increasing motivation through education to provide employees with critical skills that are important to the organization. It is proposed to focus efforts on two types of employees – those involved in bringing the company to the international market and interacting with European partners and those who work within the country and whose task is to ensure the quality of products and services. One of the most important recommendations includes advice to revise the standard package of strategies for changing the workplace environment since often large companies standardize the work environment under pressure from external circumstances and without considering the internal needs of the company. The second important recommendation is to follow the example of NFP companies, which are mostly focused on developing an organizational culture that increases motivation and clarifies the values, mission, and goals of the company. The third important recommendation is to ensure fair remuneration and flexibility in the work environment, including work schedule and chain of command. A unique workplace environment that matches the company’s goals will help motivate managers and change their contribution assessment.

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Introduction

UAE is the world’s sixth-largest proven reserves of oil that currently has 105 billion barrels in deposits. The Abu Dhabi National Oil Company (ADNOC) is a state-owned oil company with 20 specialist subsidiaries and joint venture companies known as ADNOC’s Group Companies, which provide 3% of global oil demand. Over 60,000 ADNOC employees work for these companies, producing 3.15 million barrels per day. The production chain covers all aspects of the hydrocarbon value chain, including crude oil and natural gas exploration, production, refining, processing, manufacture of petrochemicals, and marketing (ADNOC Group sustainability report 2015). The company’s total funding is $ 62.1 billion, which makes it one of the largest companies in the country with increased responsibility for the success of the national economy. Recently, ADNOC has come up with a $ 1 billion potential initial public offering (IPO) on the local stock market, strengthening its position (Reuters 2021). ADNOC successfully overcame the coronavirus crisis and reported a 7.6% increase in EBITDA in the first six months of 2020 compared to the first half of 2019 (Gulf Today 2020). In this business case study, the talent management strategies carried by the human resource division of the ADNOC will be discussed, and comprehensive recommendations on how to improve the talent management strategies will be provided.

Other research objectives include understanding talent management, evaluating the modern trends in talent management strategies, defining why talent management is important for ADNOC, and analyzing the current talent management strategies applied by the company. The suggestions and recommendations to improve strategies for retaining and developing talents constitute the central part of the research. Noteworthy, Taylor (2018) admits that talent management is often seen as part of broader HR practices such as general HR planning, and motivational and compensation strategies. However, there is a clear difference between HR resourcing, which includes the whole spectrum of approaches targeted at attracting, managing, and retaining talent, and talent management, which implies a narrower area of strategical application (Taylor 2018). Talent management practices, therefore, may include talent detection, talent education, talent promotion, and motivational strategies, like the ones that aim to create a friendly workplace environment. Talent detection and education can be performed in the view of exclusive or inclusive approaches. The first type of TM practice suggests focusing on the ‘high-flyers,’ or the most talented individuals with particular skills vital for the company. The inclusive approach implies that all staff is competent and can obtain the necessary crucial skills through education provided by the organization.

Research Approach and Methodology

In this small-scale project, the Business Case method is used to present the findings. Business case research is a handy tool for small-scale projects when there is a need to focus on a particular area of the organization’s business and provide a detailed analysis of the practices in the chosen sphere. The narrower scope of focus allows for determining the existing problems more accurately and presents more insightful details and recommendations. This approach opens up new opportunities for further research and allows to illustrate in detail a specific topic and determine a more effective theoretical approach. Therefore, this methodology allows for research that will benefit by supporting sustainable organizational performance. The study results are not generally hypothetical but should be of interest to company leaders in practical application.

Secondary Research

The secondary research to implement the research includes preparing questions, conducting interviews with two ADNOC organization members, and submitting the literature review to evaluate the modern trends in talent management strategies. The questions for the interview are developed with the support of the relevant literature. It should be admitted that the current academic publications do not present an extensive base of knowledge that can be used to evaluate the current trends. The best evidence is mainly presented in academic books and the collections of essays dedicated to the current trends in talent management. Therefore, the analysis of the latter will be shown in the literature review.

Taylor (2018) presents the basics of talent management and provides valuable insights into the standard strategies and approaches. The scholar admits that modern talent management practices usually add value through HR management (Taylor 2018). The HR managers make strategic contributions to enhancing the business processes through delivering business objectives, providing administrative excellence, and acting as a champion for people management (Taylor 2018). Moreover, to deliver these results, the HRs use distinct perspectives that help them organize the TM processes.

There are four types of perspectives; a military-type perspective is goal-oriented and suggests utilizing a military approach by determining the business goals and identifying the means and ways to achieve these goals through talent management. An alignment-focused perspective suggests aligning the services provided by employees to the business aims (Taylor 2018). A future-oriented perspective is focused on the market’s future demands and has a lot to do with gathering a talent pool to withstand future competition. Finally, an employment market perspective assumes that the company needs to create a positive employer image to attract the most talented people in the future. Taylor (2018) adds that TM practices should be integrated with the rest of HR activities.

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Strategic compensation is no less critical for effective talent management (DeVaro 2020). They are awarded to employees for three categories of qualities – desire, skills, and mobility. The higher the desire to work in a particular company, the lower the compensation the employee will receive from this company. Further, having a unique set of skills required by the company increases the size of the payment, as does greater mobility or willingness to move, such as traveling or working at remote sites (DeVaro 2020). In the context of TM, the work environment plays an even greater role than compensations. Therefore, the better the workplace environment, the higher the compensating differentials the company has, allowing it to pay less (DeVaro 2020).

In talent management, the definition of talent is significant (Adamsen and Swailes 2019). Talent can be defined as a derivative of competence, contribution, and commitment demonstrated by a particular employee (Adamsen and Swailes 2019). Competencies can include cognitive, emotional intelligence, and social intelligence competencies. Specific skills are mainly important in the organizational context since organizational business goals determine skills. Importantly, managers should put less emphasis on personal characteristics and more – on educational programs that utilize more inclusive approaches to improve work outcomes (Adamsen and Swailes 2019). Values, mission, and team job determine the level of commitment, whereas only 30% of performance is based on employees’ personal qualities (Adamsen and Swailes 2019). Therefore, the work environment mainly determines the levels of commitment and contribution, and environments that require a mindset featuring curiosity, learning agility, flexibility, insight, and determination are the most successful.

The first interview question developed in the view of the theoretical knowledge presented was: How do you assess the company’s talent management policy at the operational management level? Employee 1, the operational management, provided some insights in this regard.

“I believe that ADNOC utilizes a highly effective strategy related to the operational management level. A significant part of the company’s management policy is focused on eliminating risks associated with job safety. For me, as the person responsible for operational processes, this is very important since the safety of employees is my responsibility. Practices such as the Heat awareness campaign, in which I participate, aim to monitor the well-being of workers who work in difficult conditions. It helps increase employees’ sense of security and job satisfaction. Scheduled inspections that are performed very carefully are also vital as they increase the level of trust in the organization and, as a result, commitment to its mission and goals.”

The second question was: How do you assess the company’s talent management policy at the middle management level? Employee 2, the middle manager, thoroughly answered the question.

“You know that ADNOC pays a lot of attention to the safety of employees, and given the specifics of our work, these are extremely important first-priority measures. However, I believe that the company should pay more attention to leadership and talent development at the level of middle management. Implementing such universal talent management practices across all business units could significantly increase commitment and job satisfaction among the white collars. At this stage, the pressure of the market, oriented at European standards, has led to the fact that the company is introducing fairly typical global practices to create a safe and friendly work environment. Some aspects of this global standard are good, such as a commitment to technological innovation, gender equality policies, CSR, and environmental protection strategies. However, it seems that ADNOC has gaps in the management and motivation of employees at the middle management level. Due to the lack of sufficient attention to day-to-day processes, we are faced with a growing level of bureaucracy, which I consider to be an extremely negative indicator.”

Primary Data Analysis and Findings

ADNOC implement several complex TM and HRM practices. The most important approach is to ensure the safety of workers who are exposed to extreme humidity and heat while working on rigs offshore. Routine safety audits are essential, and ADNOC conducts 120 such audits annually with three integrated levels governing the health and safety performance (ADNOC Group sustainability report 2015). In addition, the company launched the Beat the Heat campaign, which trains workers on how to prevent dehydration in hot conditions. Remarkably, ADNOC pays sufficient attention to the education of its employees, including full-time, part-time workers, and sub-contractors. ADNOC has a partnership with three academic and training centers that provide a skilled workforce (ADNOC Group sustainability report 2015). It also oversees four research and innovation centers that cover all aspects of ADNOC’s petroleum value chain.

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According to research, there are also spheres where ADNOC should improve its performance. In particular, it was found that the company’s middle managers generally perceived their job performance as low, whereas involvement, consistency, and missions were perceived as moderate (Al Dahnahani and Abdullah 2019). In addition, scientists provide extensive demographic data research, according to which ADNOC has fair age and improving gender distribution in management roles, including middle level, top-level, and operational level management. Specifically, it was mentioned that 41.6% of women and 58.4% of men take managers positions, among them 27.7% aged 25-34 years and 23% – 35-44 years; 52.2% had a University or 1st degree, and 33% – high school or less (Alhammadi et al. 2020). Therefore, ADNOC should focus on the areas of good practice like effective operational management and exceptional educational opportunities for all employees. Besides, there is a need to improve the TM practices at the middle management levels and give middle managers a more explicit purpose.

The practice of preparing the future employee in advance, by utilizing the educational centers is widespread in European international companies. This practice is highly beneficial in the talent pool and talent retention and creates a significant competitive advantage for ADNOC. Work safety is a crucial component of the workplace environment; therefore, health and safety programs are vital to increasing job satisfaction and employee motivation. However, it looks like white-collar workers do not receive enough attention from the talent management perspective, given the research findings presented above. Therefore, there is a need to introduce new practices to improve motivation and working conditions for white-collar personnel.

Recommendations and Suggestions

Given the observations presented above, there is a need to develop unique talent management strategies for the white-collar workers and middle managers, as this group currently does not receive enough attention. Adebola (2019) names several theories applicable to talent management. According to the Human Capital Theory, HR managers should assume that people’s skills and capacities, especially learning abilities, are comparable to other production assets. Therefore, when managers and HRs effectively utilize this resource, it provides plenty of benefits to the company (Adebola 2019). Then the Institutional Theory brings valuable insight into the adoption and diffusion of management practices. It implies that, often, when developing the TM strategies and creating the workplace environment, “to remain competitive, organizations must entertain and accommodate the expectations of their business environments even though these expectations may have little to do with organizational performance” (Adebola 2019, p. 194). Therefore, the first recommendation for the ADNOC is to implement workplace environments that meet its unique expectations.

The second recommendation is related to the scientific findings that middle managers in ADNOC mainly assess their job performance as low and the organization’s mission, values, and motivation as moderate. This situation can be observed due to the external pressure from the global business environment discussed by Adebola. The scholar states that such pressure can be very high; therefore, it is likely that the need to correspond to some generally accepted business standards can create confusion and distortions in the workplace for middle managers and their subordinates. Therefore, ADNOC should rethink its strategies and create a safe workplace environment that focuses on the unique needs of employees in white-collar positions.

The third recommendation is to use the advice developed by the international Chartered Institute of Personnel and Development (CIPD) and adopt new talent management practices, considering the ADNOC’s unique needs. The fourth recommendation is to adapt these standardized practices for the local UAE context. Although global patterns can be attractive, cultural differences are always crucial to employees working in the national business environment. Adebola (2019) mentions that external environment pressures may often include governmental advice on practices. Therefore, the fifth recommendation is to implement independent corporate-oriented talent management strategies free from government pressures.

The standardization in developing the organizational culture is usually characteristic of big for-profit companies. In contrast, non-for-profit organizations often avoid this trap as they pay more attention to their mission and values, thus enhancing the employees’ motivation. Given that research results showed the low to moderate assessment of the ADNOC values, mission, and motivation by its managers, there is a need to focus on enhancing the perceptions in this field. Therefore, the sixth recommendation is that ADNOC should use the non-for-profit organizational experience and approaches to improve the employees’ perceptions of its mission and values.

In particular, Brewster et al. (2017) admit that non-for-profits tend to apply a more inclusive approach to talent management. It is also stated that NFPs attract talent beyond the locally available staff. The first observation can be helpful, given that ADNOC already tries to implement a more inclusive approach to talent management, unlike the typical manufacturing big for-profit companies. Then, Brewster et al. (2017) also note that NFPs focus a lot on their mission since they are judged by themselves and by others on “how far they are able to make progress on their mission” (p. 2). For now, ADNOC has a clear mission of delivering energy worldwide, but, probably, they could develop some values to which their white-collar employees could relate better, like values stemming from the CSR practices.

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The seventh recommendation considers the global character of ADNOC’s business; Minbaeva and Vardi (2019) state that the talent analytics tool can be irreplaceable on the global market. This tool is helpful since it helps make better evidence-based decisions, enhances the value of HR, and builds a sustainable performance culture (Minbaeva and Vardi 2019). Talent analytics usually features identifying pivotal or strategic positions and identifying the talent pool. HR managers also use analytics to monitor performance and actively manage retention. Therefore, bringing the analytics insight to life adds value to the talent management practices.

Reference List

Adamsen, B. and Swailes, S. (2019) Managing talent, understanding critical perspectives. Palgrave McMillan.

Adebola, S. (2019) ‘Why do organizations run talent programs? Insights from UK organizations’, in B. Adamsen and S. Swailes (eds) Managing talent, understanding critical perspectives, Palgrave McMillan, pp. 187–213.

ADNOC Group sustainability report (2015), Web.

Al Dahnahani, A. and Abdullah, N.H. (2019) ‘Influence of organizational culture and employees’ job performance: an empirical study of Abu Dhabi National Oil Company’, International Journal of Business Management and Economic Review, 2(5), pp. 38–53.

Alhammadi, YHJH, Tham, J. and Azam, S.F. (2020) ‘Leaders’ behavior and situational factors on the organizational performance at Abu Dhabi National Oil Company (ADNOC)’, European Journal of Management and Marketing Studies, 5(2), pp. 38–73.

Brewster, C. Jean-Luc Cerdin, J.L. and Sharm, K. (2017) ‘Global talent management in the Not-for-Profit sector’, in C. Machado (ed) Competencies and (global) talent management, Springer, pp. 1–24.

DeVaro, J. (2020) Strategic compensation, and talent management. Cambridge University Press.

Taylor, S. (2018) Resourcing and talent management. Kogan Page Publishers.

Gulf Today (2020) ‘ADNOC reports Dhs910m profit in HI’, Web.

Minbaeva, D. and Vardi, S. (2019) ‘Global talent analysis’, in D.G. Collings, H. Scullion and P.M. Caligiuri (eds) Global talent management, Routledge, pp. 179–199.

Reuters (2021) ‘Reuters exclusively reports Abu Dhabi oil giant ADNOC considers IPO of drilling business’, Web.

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