In May, health insurance giant Bupa won Saudi Arabia’s first ever ‘Best Work Environment for Women’ award. Sponsored by the Arab business newspaper Al Eqtisadiah, the award’s importance was underlined by the presence of a government minister and a member of the Saudi royal family at the presentation.
This article was originally published on 9 October 2009 and is not updated.
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One explanation for this endorsement is the drive among Gulf states to reduce their dependence on ex-patriots by increasing the proportion of their own nationals in the labour force. According to the World Bank, the Middle East and North Africa have the largest gender gap in employment rates in the world.
Another explanation is the impact globalisation is having on HR policies. Bupa has been active in Saudi Arabia since 1997, and its office in Jeddah now employs more than 450 people. John Handley, Bupa International’s HR director, says HR practices there are similar to those in the 190 or so other countries it operates in. “What we try to do is bring our values wherever we are, even where it does not sit with the norm nationally.”
In India, globalisation appears to be having a similar impact, although it is more closely linked to the country’s emergence as a world player in sectors such as IT and pharmaceuticals. The career of Alind Sharma, who gained an MBA at the Indian Institute of Management in 1996, mirrors this change.
Entry into HR
With no prior training in HR, he became involved in the profession when employed by a pharmaceuticals company. He was then recruited by a rival, Glenmark Pharmaceuticals, as senior vice-president for HR seven years ago, just as the company embarked on an international expansion programme. “That shift and the need for a more professional approach was primarily the reason that I got hired,” he recalls.
Glenmark now employs more than 4,000 staff and has manufacturing plants in Brazil and the Czech Republic as well as India.
Sharma reckons IT companies have been at the cutting edge of the HR transformation. “They would mostly have much better HR systems than non-IT companies.”
Entry to the profession is now often dependent on an HR-related post-graduate qualification. Sharma says: “Over the past four or five years, you can see how we have had young guys making an informed choice and wanting to get into HR. Before that, it was the last course they’d choose at management institutes or universities.”
However, Mark Thompson, who has just finished two years as Hay Group’s research practice leader in India, says HR’s status is still below that of other business functions such as marketing, finance and sales. He believes the profession still needs to tackle a tradition of promotion based on length of service. “That’s the premise behind many HR policies that still exist in big Indian businesses.”
Sharma agrees that modernisation of the profession is far from complete. “There are a lot of old-school guys who still occupy a lot of the senior positions,” he says. “They come from psychology, labour studies or social work backgrounds.”
Yet openings in HR are likely to expand rapidly thanks to economic growth and the corresponding need to both acquire and retain more talent and skills.
India has become one of the world’s over the past four years and, despite the global recession, the International Monetary Fund (IMF) predicts growth will be maintained at between 5% and 7% until 2010.
Although the Middle East is less buoyant, with an IMF projected growth rate of below 3% over the same period, its outlook is still better than the UK’s.
Thompson describes talent management in India as “an absolutely horrendous problem”. He says the approach to recruitment often amounts to just offering more and more pay. “The traditional management style has not recognised the change that has taken place in the economy and the impact that has had. The whole issue of having an employer brand is very new in India. It’s deep in the psyche that people are just lucky to have a job.”
HR’s developing role
In the Middle East, despite government endorsement of companies such as Bupa, inertia is still widespread. Jalaal Abdulaal, a Bahrain-based HR and training consultant, says HR is still very much a process function. “We have a long way to go in the educating of key players in the Bahraini business community in matters of modern HR practice.”
But Sheryer Ahmed, recruitment officer for Al Rostamani Group – the United Arab Emirates’ business conglomerate employing 5,000 people – denies that HR is still mainly viewed in terms of administration. In his own company, for example, ISO certification was gained last year to show that the HR department operates to a common international standard.
According to Hussain Ismail, president of the Bahrain Society of Training and Development, the value attached to a Chartered Institute of Personnel and Development qualification is particularly strong.
Abdulaal agrees, arguing that such qualifications will be crucial in further modernising the local HR profession. “Our hopes are pinned on the heirs of the rich and powerful, many of whom have studied in the west and are waiting to have their chance to practice modern management.
However, it would be wrong to characterise the HR profession in the Middle East and India solely in terms of catching up with and adopting western standards. As Ismail points out, managing HR is different in every country due to cultural and regulatory differences.
Although HR practices in Bupa’s Jeddah office are little different to elsewhere in the world, its local HR director still needs to be someone who fully understands their distinctiveness, according to Handley. Abdulaal says one area where Arab HR professionals are ahead of their UK counterparts is “our highly developed social networking to get what we need from our bosses at work”.
In India, Thompson highlights how technology companies have come up with innovative packages to attract former staff back without upsetting those that stayed. “If the UK went back to a situation of rampant pay inflation and chronic shortages of talent, we could learn a lot from India’s experience.”
Statutory employment legislation in India
- Discrimination is prohibited on grounds of sex, race, religion and caste, descent, place of birth and residence.
- Disability discrimination applies only to employers owned or controlled by the government or local authority.
Legislation governing working hours is enforced more strongly for factory workers than for other staff.
- Minimum wage levels are prescribed by law, together with equal pay.
- Women are entitled to six weeks’ maternity leave. There is no paternity leave.
- Redundancy pay amounts to 15 days’ pay per year of service where an employer has more than 100 employees.
- Claims for unfair dismissal are dealt with by the Labour Court which can order reinstatement or compensation.
- Collective bargaining agreements are common both in the public and private sector.
Annual leave entitlement applies to most employees, but varies according to industry sector and the state in which they are employed.
Source: DLA Piper
Key issue: Nationalisation of jobs
Although finding and retaining talent is a key HR issue for India, in parts of the Middle East it is often more linked to the nationalisation of jobs than rapid economic growth.
Neil Crossley, Middle Eastern head of employment, pensions and benefits for international law practice DLA Piper, says the region has become highly dependent on immigrant labour both for blue- and white-collar workers, and is now seeking to reduce this. In the United Arab Emirates (UAE), for example, businesses have to increase their quota of UAE nationals by 3% a year.
“Although there has been a rapid improvement in the locally sourced skills base, there is still a gap, and for many businesses it can be difficult to meet their skills needs,” he says. “If you fail to comply, you can be refused visas to employ people from abroad.”
Crossley adds that the talent shortages often resulting from job nationalisation can be exacerbated by job status. “Working in the private sector does not have the same cachet as the public sector, which is much more of a draw for Gulf nationals.”
In addition, the employment rights of nationals are often rigorously protected by law, he says. “In the UAE, you could not dismiss a national unless it was for gross misconduct, and then you would effectively have to get a ruling from the Ministry of Labour to let them go.”
Senior manager average salaries
(British pounds sterling, based on exchange rates on 10 August 2009)
United Arab Emirates
Source: Hay Group