UAE and UK Human Resource Strategies Comparison

Introduction

The aim of this report is to focus on the comparative benchmark cases in the United Arab Emirates and the United Kingdom and to analyze and evaluate the human resource strategies adopted by the two countries. As a result, this paper will describe the background and history of the problem, compare the human resource strategies, highlight the difference between the implementation of the employment and labor laws and workplace environment laws of the UAE and the UK, and discuss the key arguments. In addition, this research will also define the working environments of the two countries, assess the governance issues, examine their HR strategies, appraise their relative performances, review the main issues and problems in the two countries, and finally, put forward a discussion and future plan.

Description: History and background information

In every society throughout the world, the need to manage the human resources with a variety of strategies emerged with the rise of the capitalist era. In ancient times, entrepreneurs learned to exploit some capital and generate profit; however, they also learned that their profits could be maximized if the production costs were being kept lower and the sales prices were increased. This simple strategy of the entrepreneurs resulted in the drowning fate of the laborers because their wages were part of the production costs, and lowering production costs meant lowering their wages.

After that, corporate leaders started to exploit workers in the same way, but in long run, business owners realized that they need proper strategies to better handle the workers, make them more efficient, increase their output, boost their job satisfaction, and ensure that the trained laborers keep working on their work positions for a longer time. Since then, the academicians and certain well-experienced business leaders started to formulate a diverse range of HR strategies. It is notable that these practices began long ago in the UK, because UK has a historical background of capitalism, but in the UAE, they started in recent decades because businesses grew in the UAE in modern times.

Environment

Organizational Environment in UAE

Khoori (1) stated that the major part of human resources in the UAE is unhappy and unsatisfied for many reasons, such as disrespect in workplace, inconvenient schedule of work, cultural differences, lack of motivation, and so on; therefore, they failed to perform with positive attitudes, which created serious problems to improve overall performance of the organization. Al-Jenaibi (10) stated that the government of UAE tried to solve the problems related with workplace environment by implementing labor laws and recommending employers to follow all the provisions to protect environment for the employees; however, as 90% people of UAE is expatriate from the Indian sub-continent, workplace diversity becomes a great concern to the government and organizations.

However, Al-Jenaibi (2) conducted a survey on diversity management system in UAE and the survey result showed that UAE has unique working environment for which intercultural communication and diversity strategies play important role; moreover, employees of the organizations said that effective working environment could be ensured by learning and accepting other people’s cultures to communicate with coworkers.

On the other hand, employers of the UAE organizations thought that staff turnover rate is low as expatriates work hard and are able to adapt UAE culture easily; in addition, they said demand of workers is higher than supply, but expatriates need jobs; thus, employers only focus on competence and effort. At the same time, Khoori (1) further added that the employers should do more for the employees, particularly expatriates, to avoid conflict in the workplace; for example, religion and politics should not be an issue of discussion at the time of work, individual problems must be resolved, and break-time should be given for prayer. At the same time, small private organizations in the UAE still involve discrimination, victimization, and so on; UAE organizations need to implement very good HR strategies, enact suitable laws for the expatriate management, and ensure equal opportunities for males and females.

Organizational Environment in UK

On the other hand, Shena (5) stated that cross-cultural and multicultural workforce is a common thread in the UK; there are many oldest and most common diversity problems in the UK organizations, such as sex discrimination, ethnicity, and culture and so on. The UK Government Equalities Office conducted a survey on diversity management and identified that there is no single solution to ensure outstanding workplace environment; however, the government, employers and policymakers had passed legislation, and implemented different strategic plan to create a great workplace.

At the same time, Shena (7) further added that women and ethnic minorities were neglected at the time of recruitment process, evidence of discrimination also were found in the UK public sector; however, the concept of internationalization and globalization had played vital role in change of the scenario. At present, Shena (12) stated that both public and private organizations in the UK demonstrated positive attitude and realized the importance of diversity to increase productivity and enhance performance of the employees; therefore, the employers frequently arrange training program to attract and retain the best people.

• Gingell (1) pointed out that key problems of work in the UK organizations include bullying and harassment in the workplace, discrimination, victimization, uncomfortable working hours, significant legal costs, false allegation, prohibition of making personal phone calls in some offices, and unfair dismissal; however, staff turnover rate is comparatively high in this country. On the other hand, the Government of the UK has enacted many legislation according to this problem (for example, Equal Pay Act, Sex Discrimination Act, Human Rights Act and Employment Act, etc.);

Governance

Governance System in UAE

In 2009, the Securities and Commodities Authority (SCA) had introduced new corporate governance system in UAE, which was largely based on international standards; all the listed companies were bound to follow the provisions of the governance code and Government owned institutions don’t need to comply this code; however, financial institute regulated by the Central Bank (Bainbridge 1). The key issues of corporate governance are-

• Minimum one third of directors has to be independent directors;
• The board has to form two committees, for instance, an audit committee, nomination and remuneration committee; each committee should contain three non-executive directors, among them two would be independent directors;
• The board is responsible for ensuring strict internal control system to assess financial risks, audit reports, compliance of Corporate Governance Code and legislation;
• Listed companies have to comply and submit annual reports, which must contain details of remuneration of the directors. Such companies are governed by the Disclosure Resolution; the new CG code keeps the provision of financial penalties and suspension for non-compliance of the provision of this code though penalties differ for private and public sector; however, penalty imposed on Dubai jeweler Damas and Shuaa Capital for market manipulation;
• On the other hand, listed companies may seek permission to hide confidential information; any person who holds more than 10% share of any listed company he must inform the Market;
• The Central Bank of UAE had provided some rules for the companies to differentiate the power of the board, executive directors, CEO, Chairman, committee, and so on; it also fixed the functions of the general management and stated recruitment procedure of independent CEO;
• The Internal Audit Department is responsible for scrutinizing conflicts of interest, major losses, and wrongdoings in managing of capital reserve of bank;

Kerr (1) reported that some of the listed companies followed new code in some extent, but most of the companies ignored major issues; thus, UAE corporate governance has fallen soon due to non-compliance of rules and regulations; for instance, companies are not interested to recruit independent directors and many companies have not published annual reports as well. Theoretically, there are provisions of penalties in the new code, but practically listed companies are able to conduct fraudulent activities and create economic crisis; Kerr (1) further added that Mobily suspended its CEO for major error in the audit report, which removed more than US$5 billion of its market value; however, it was not treated as corporate scandal.

Governance System in the UK

The development of the UK corporate governance system started from 1992 to ensure transparency, accountability and long-term stability, for example, Cadbury, Greenbury and Hampel report contributed to enhance leadership and effectiveness; however, revised CG code had published in 2014 and emphasized following issues-

• Board should be consisted of sufficient number of directors, and independent non-executive directors; members should have skills, experience, independence and knowledge;
• The board is accountable for making sure that directors are independent, for example, directors should not have close family ties with other directors, or they should not have been employees of concerned companies for the last five years;
• The new code focuses more on the leadership, effectiveness and accountability issues;
• The main function of NED is to assist in developing proposals on the strategy, inspection of management’s performance, determine appropriate levels of remuneration for executive directors, and appoint and remove executive directors;
• According to the report of the scholars, the CG code maintains high standards and the UK is ranked second in a table demonstrating average governance performance by organizations in different nations;
• There is a provision of penalty for non-compliance, but many large companies have not focused on this issue; consequently, they may cause global financial crisis.

Strategy

HR strategy in the UAE

At this stage of the paper, it is important to discuss and compare the human resource strategies between the United Arab Emirates and the United Kingdom. It is notable that the history of the emergence of the human resource strategy in the UAE is not quite old because the theoretical and practical use of human resource management developed in the UAE only recently. Since the UAE started to generate budget surpluses due to utilization of its oil reserves, it started to renovate itself as a part of the modern and capitalist world. After that, many large multinationals began to enter the UAE market and expand their business in various regions within the country.

In addition, by taking lessons from the multinational companies, some local entrepreneurs and investors started to build new corporations, which had large organizational structures like the multinationals. After some years, the capitalist practices reached the highest peak and the tourism business turned out to be flourishing as well. Due to this growing trend of capitalism and the presence of so many large companies, the need for managing the human resources emerged. As a result, the academicians suggested that the development of human resource strategies started to appear in the UAE corporations and educational institutions only before a decade or so.

It is necessary to argue that UAE companies required implementing very good human resource strategies, as workers in the UAE are mostly expatriates who come from various diverse backgrounds and ethnicities. In practice, however, the nature of HR strategies in the UAE companies is not quite refreshing for the workers themselves. The most vital problems of the strategic practices are the failures of the HR strategy to deal with the lack of equal opportunities, tortures, abuses, and the vast amount of racially aggravated assaults and biases in the workforce management (Human Rights Watch 36).

The UAE companies more often recruit the local workers in the top and middle levels, whilst the expatriates are recruited as labors. While the Muslims from rich families, local people, and European workers are treated with respect and worth, the poorer expatriates suffer from exploitation, poor and unsafe work place environment, job dissatisfaction, low wages, hard labor, and neglect (Human Rights Watch 53). There are various laws of employment in the UAE that give protection to workers against all these biases within the statutory terms, but in practice, UAE companies fall short of fair implementation of those laws.

HR strategy in the UK

According to Marchington and Adrian (6), a number of factors have influenced the materialization of human resource strategy in the UK and today these factors are shaping the HR strategies adopted by the UK. The authors suggested that in the UK, HR strategies started to evolve since 1980 and during that period, various scholarly researchers contributed significantly in shaping and formulating the hypothesis for the HR strategies, which the UK based multinational and national companies have modified and adopted overtime.

The researchers have stipulated wide range of HR strategies in their works, which include HRM practices, implied and precise tools of organizing and suppressing labor, and other modus operandi used by HR managers. Marchington and Adrian (7) also noted that in the UK, the discussion originally concentrated on the difference between the rigid and the flexible versions of HR strategies, and clarified that the rigid version of HR strategy emphasizes on the connections between the corporate strategies and HR strategies and on the decisive significance of the tension amid these two strategies.

In the UK, the rigid version of HR strategy focuses on the ‘resource’ feature of HR management and deals with workers in a much harsher way, and never conceals its rigid nature with any higher principles or morals, rather treats labor as nothing more than mere commodity in most of the situations (Marchington and Adrian 8). Marchington and Adrian (9) further added that in the UK, flexible versions of HR strategies concentrate on the ‘human’ feature of HRM, and presuppose that workers are worthy resources that help companies to gain competitive-advantage over the competitors via their proficiencies and aptitudes, and it is important to state that many scholars described this as the best possible HR strategy.

In the present era, most of the large and medium sized companies in the UK have adopted a modified version of the flexible HR strategy, and customized that strategy for their own workforce. As a result, in the UK, the way in which different companies manage, administer, and formulate the strategies for the human resources vary extensively. For example, while one multinational corporation deals with the workers in an authoritative manner, giving the least importance to their viewpoints and personal ideas, the other organizations delegate the authority to the low rank human resources and give a good value to their views and ideas.

It is understandable that in the first type of companies (which have adopted a rigid strategy to handle the human resources), the workforces (that are the entire group of people working for the company), find themselves unacknowledged, neglected, demoralized, unimportant, and unwanted, because their skills are not appreciated, and their views and feedbacks are not valued. This causes the fact that such companies in the UK suffer from high labor turnover, and they need to spent loads of funds on training and recruiting new workers.

On the other hand, in the second type of companies (which have adopted a flexible strategy to handle the human resources) the workforces find themselves appreciated for their personal successes. These workers assess that they have achieved job satisfaction, and this in turn helps to lower the labor turnover in those companies in the UK and so, the retention rates of the skilled workers are quite high. However, it is important to state that the UK employment laws successfully ensure equal opportunities of every worker in the companies, and there are very few cases of workplace biases and racial assaults.

Problems in HR strategy in UAE

The key problem of human resource strategy in the UAE is that although there are various laws of worker protection, the implementations of them are not ensured. As a result, the migrant workers face violence, bias, poor wage, hard labor, neglect, unsafe work place environment, and exploitation and in turn there are no guidelines that could ensure their safety. Consequently, most of the UAE businesses fail to retain workers for a long time, and this imposes the high cost of labor turnover on them because training and recruiting every new set of workers is quite costly.

Problems in HR strategy in UAE

In the UK, however, the companies greatly comply with the worker protection laws and so the rate of worker abuse or racial biases are insignificant. Some British companies treat workers with authoritarian leadership, while others allow democracy, delegate tasks, and appreciate workers’ views.

Organization

Oldman (7) argued that there are about 5 million private organizations in Britain where more than 24 million of people work. Human resources of the UK include older and more multi-generational, and more female worker; on the other hand, participation of female employees in the UAE is the highest among other GCC countries.

Performance

With a result of world’s tenth largest oil and gas, the non-oil sector of UAE had been flourishing in a remarkable rate although most of the largest companies were owned and administered by the rulers and royal families and contributed 70% to the GDP. However, Khoori (5) reported that the bilateral trade between UAE and UK has pointed to more than £10 billion with strong entry of 4000 UK firms in the UAE oil, gas, banking, education, training, and service sectors while some Emeriti companies are opening branch offices in the UK.

Discussion

In the UK, strategic HR management is influenced by several factors, such as, social, cultural, economic factors, labor market situation, organizational competitive strategies, and leadership quality of the employers, demographic situation, and rate of female employees in the organizations. However, the employers of the UK make possible adjustments for the disable employees, arrange training program for diversity management, give more opportunities to express the points of view of the workforce, develop good communication system in true sense, concentrate more on knowledge, capabilities and skills of labor force; besides, listed companies follow disclosure rules in greater extent.

On the other hand, the Government of UAE and employers showed positive attitude to enhance corporate culture, but they failed to resolve traditional and common HR problems; in addition, most of the employees come from developing countries and they need jobs. This gives the opportunity to the employers to exploit the employees and provide unequal treatment in all issues.

From the above discussion, it can be said that the Governments of UAE and UK have taken several initiatives and implemented strategic plans in order to develop a framework for human resource management system and to improve the performance of the local and foreign employees. Most of the organizations in the UK are able to pursue CG code and maintain high standards of CG for which the UK ranked second in a table; however, the employers valued their employees to develop competitive, profitable, and effective organization.

It is arguable that UAE should focus on improving and upgrading their HR strategies in a number of ways because there are many ways in which UAE lags behind the UK in terms of proper implementation of labor laws and fair strategic practices within the HR management.

Way forward

The employers of UAE should not force the employees to work under hazardous environment with serious workload; in addition, the government should enact strict legislation to provide equal salary scale for expatriates and local employees, ensure comfortable working hours with attractive salary range, flexible visa facilities, and so on.

• Organizations in UAE have to focus more on traditional HR problems as UAE companies failed to promote participation of female expatriates in the labor force; so, government should simplify visa rules for female expatriates, enact new laws, and develop a safe platform of work;
• As 90% of the total workforce in UAE comes from distant locations, they often feel isolated, experience stress and anxiety; the government and employers should provide a supportive environment. Government of UAE should develop a professional and social environment to attract and retain talented, educated, and skilled labor force; they should conduct more research to develop the situation;
• According to the survey report of Khoori (15), employers are satisfied with the performance of the employees and they agreed that employers can easily adapt for local culture; therefore, UAE government and other relevant authorities should focus more on the problems of the employees and they should conduct more research in this field;
• On the other hand, the employers of the UK have already understand that ineffective diversity management increases conflict, employee turnover rate and lower organizational performance; thus, they appreciate their employees, but still employers of private companies need to ensure equal opportunity for female and ethnic labor force.

Works Cited

Al-Jenaibi, Badreya 2012. The scope and impact of workplace diversity in the United Arab Emirates – A preliminary study. Web.

Bainbridge, Alan. Corporate Governance for UAE companies. 2011. Web.

Human Rights Watch 2014. I Already Bought You. Web.

Kerr, Simeon. UAE corporate governance falls short. 2013. Web.

Khoori, Ayesha. Awareness required to improve multicultural environment in UAE workplace. 2014. Web.

Marchington, Mick and Adrian Wilkinson 2008. HRM strategy and the global context. Web.

Oldman, Tim 2014, How Britain Works: Key Trends in a Workplace Environment. Web.

Shena, Jie 2009, Managing diversity through human resource management: an international perspective and conceptual framework. Web.