HR Assignment

Introduction 3 The strategic role of the Human Resources Management (HRM) departments in Saudi Arabia # 02 Human Resource Management The current state of HRM in KSA 4 Macro Factors 4 Mesho Factors 6 Micro -Individual Factors 8 Conclusion 9 Refer ences 10 Outline Introduction The role of Human Resource Management (HRM) is to ensure the convergence of three factors – human capital, organizational resources and management. The human capital of the organization possesses the actual and potential resources (such as knowledge, skills and capabilities) that can be harnessed through effective management policies to achieve short as well as long -term organizational goals and objectives (Nankervis and Compton and Baird and Coffey, 2011). HRM as a concept and a practice has evolved over a period of time, changing to adapt to the varying environment in which the organizations op erate including social, economic, cultural and government regulations. Though the concept of human resource management is not a new one the modern history of HRM began with the arrival of the Industrial Revolution. The sudden explosion in the number of lar ge factories required a significantly increased workforce. The priority during this era was on faster and cheaper modes of production (History of Human Resources Management). Labor and human resources utilized in the industrial sector of the time were cons idered as one of the modes of production rather than a valuable resource for the organization. The industrialist mostly recruited doc ile workers hired on hourly wages and dependent on the good will of their employers. These workers were conside red mere machines (The War between Capital and Labor). However, today the HRM concepts have changed dramatically with main focus of HRM is towards effective and efficient overall management of human capital so as to achieve the organizations desired object ives and goals. The functions of HR that include, recruitment, human resource development, performance appraisal, and remuneration, are considered to be integrated components of the overall HRM strategies (Nankervis and Compton and Baird and Coffey, 2011). The methods which are used by an organization to manage its human resources can have a substantial impact on many organizationally relevant outcomes (Delery, 1998). Researchers and practitioners have always argued that the hum an resource of an organization is a source of sustainable competitive advantage that any organization can obtain (Ramlall and Al -Amri and Abdulghaffar , 2012). Similarly as Torofdar stated that companies can achieve a competitive advantage by utilizing the workforce and by maximizing their expertise and creativity, and having a clear goal of reaching the organization’ s objectives (Torofdar and Yunggar, 2012). There are different approaches to HR policies and practices that each country follows which are bas ed on the varying socio -economic circumstances of the country. For instance, Mellahi and Wood reports that the human resource management in Saudi Arabia are formed by the structure of the economy, the political structure, the labour market conditions, the national HRD strategy, and Page 01 national culture (Mellahi and Wood, 2001). This paper builds upon the previous research and experience by analyzing HR practices in Saudi Arabian companies to determine that the strategic role of the Human Resources Management (H RM) in the Kingdom of Saudi Arabia (KSA) has become critical to the success of organizations. The current state of HRM in KSA Macro Factors Since the beginning of the new millennium the world and especially the business world has been subjected to spiral of events and changes. Many of these factors are related to globalization and its impact that have presented new opportunities a well as challenges on business organizations forcing many firms to adopt to the new changes (Shammot , 2014). Saudi Arabia is also among those countries that have to adapt its HRM practices with the changing macro factors. As a developing country, Saudi Arabia’s workforce is growing rapidly. In 2016, the Authority of Statistics of Saudi Arabia reported that Saudi’s population sto od at around 31 million with an average growth of around 2.7% year over year. According to the analysis conducted by the economics reporting unit of Al -Eqtisadiah newspaper, the number of expats stood at 33% while the Saudi population covered 67% (Arab New s, 2015). Researchers have highlighted that Saudi Arabia ha s undergone through major development in adopting western HRM practices as a result of the increasing numbers of multinationals in Kingdom. However, these studies have also showcased that there are various complex factors, such as religious ideals and cultural norms, that must be considered in managing human resources in Saudi Arabia (Ramlall and Al -Amri and Abdulghaffar , 2012). Furthermore, in April 2016, the Saudi government announced the Saudi Vision 2030, an ambitious plan that focused on strengthening the country’s human resource capabilities and express the long - term vision for the country. Among the various planned initiatives to attain the objectives of Vision 2030 is to formulat e and introduce a green card scheme for expatriates and new labor laws. The aim of this scheme is to attract skilled workforce as well as investment in the Kingdom of Saudi Arabia. The details and mechanics of the proposed green card scheme are still under discussion with no significant details available currently. These are concerns are primarily related to the impact of Green Card scheme on the Saudization system and threats to Saudi workers. To manage people in private, public and international sectors, one should understand the labor laws of Saudi Arabia. These laws are continuously being updated in order to keep them aligned with the changing socio -economic conditions of the country as well as to fix various loopholes in the current Page 02 schemes. These evol ving labor laws affect the way organizations operate their businesses. One example is the Saudization scheme, which was introduced to encourage hiring of Saudi talent in the private sector and to strike a balance with expatriate workforce. With the Saudiza tion system a company should be registered in Nitaqat program. The Nitaqat program has four categories or zones (excellent, green, yellow and red). These categories have been developed by the Ministry of Labor to classify private sector organization accord ing to the level of Saudization. The Ministry of Labor has provided the Saudization targets for every industry sector. Organizations that have achieved the required level of Saudization in its sector are classified in the excellent and green zones. Organiz ations that are lagging behind the required rate of Saudization or have not hired Saudis into their workforce according to their industry sector requirements are classified in the yellow and red zones. Organizations that fall in the yellow and red classifi cations are required to restructure and meet the criteria of Saudization in order to move to the green or ex cellent zones. In addition, companies that are in the excellent or green zone also have flexibility and motivation in requesting any app rovals for hiring of expats besides fulfilling the legal requirements to do so (Sevilla, Henelito, 2014). The Saudization program thus serves as a catalyst to allow Saudi talent to be recruited as well as groomed by the private sector and is viewed positiv ely by the Saudi citizens. On the flip side, the Saudi government tends to provide other alternatives for the expats, as we mentioned previously, the green card scheme. Conversely, for now, many of the expats are under the sponsorship system which had cau sed a major issue known as Tasatour. The term Tasatour refers to the businesses that are essentially financed and managed by foreigners however it is licensed under a Saudi citizen’s name who is provided a fixed fee. The Saudi citizen in this case acts as a null sponsor. This results negatively for the gross domestic product of Saudi Arabia which is caused mainly due to the increased hiring of non -Saudis by these businesses and streaming the job market with unskilled workers. In this case, the Saudi governm ent introduced a new labor law against the Tasatour system, which blocked several undocumented business activities and detailed many illegal expat business owners and workers. For example, in 2015 Arab news reported that the Riyadh police department had arrested 866 illegals expatriates involved in undocumented business operations. The government of Saudi Arabia in 2014 introduced a slightly more flexible system of ‘Ajeer ’, which literally means a person who works in return for wages (Khoja & Aljoaid, 2015) . The Ajeer system offers three main schemes to non -Saudis who are currently staying illegally in KSA. The three main schemes: (i) Ajeer for Business Services (B2B), (ii) Ajeer for Dependent Services (ADS) & (iii) Ajeer for Guest Services (AGS). The B2B service allows companies to temporarily Page 03 transfer their employees to client sites. The ADS allows dependent of expatriate workers to legally work in selected approved industry sectors and AGS allows temporary work status to previously illegal expats. With Ajeer B2B individuals and commercial companies can employ workers who are not under their sponsorship without violating the laws of labor and residency. Companies that do not fall under the red category are allowed to lend its employees to other companies. The government has also identified sectors, for example construction, real estate and maintenance, where this is applicable. The Ajeer ADS aims at regulating the work of dependents of expatriate workers in the education sector. Ajeer grants special permis sions to qualified dependents which permits them to work in education sector without fulfilling the requirement of transferring their Iqamas. Currently this rule is applicable for foreign schools, private schools and kindergartens. Ajeer for Guest Services (AGS) is aimed primarily at the Yemeni brothers who reside in the Kingdom irre gularly before the date of 20/06/1436 AH (after correcting their status), and the Syrians who are in the kingdom in a systematic way (regardless of date of entry) to work according to the Saudi labor regulations. The Ajeer system is still in its initial stages and further plans are required in order to expand it to cover more industry sectors as well as include wider range of expatriate population. The above examples illustrate the various legal frameworks within which the HR of an organization has to operate. HR teams in organizations in Saudi Arabia need to understand these legal frameworks in order to utilize them to their advantage in recruiting the best available talent for the organizational goals. These legal environment and systems present the exterior factors that the HR can not modify but there are other factors that the HR can manage and change. Mesho Factors According to Torofdar and Yunggar (2012), many researchers have stressed the importance of the effect of the organization structure on HRM policies. Ramady states that many companies in Saudi Arabia are established as family businesses which follows a centralized structure (Ramady, 2005). A centralized structure is one in which decision making responsibility lies with very few individuals in an organization and tasks are assigned downwards by the higher authority in hierarchical level. As a result, many Saudi companies were affected by having a high tur nover rate. Many had listed that such structure had caused job stress, lack of commitment in the organization, extensive job pressures, job dissatisfaction, low wages, powerlessness, organizational instability, poor personnel, toxic workplace environment, poor Human Resource Management policies and procedures, and lack of motivation in the company (Alshanbri and Khalfan and Maqsood, 2016). Page 04 I agree with this opinion and can also confirm my own personal work experience. In my job as a PM, one of the tasks involved following up with the clients and updating them with the progress of the project however I was not allowed to do so except with the authorization from the management.. This had led to frustration with the job as not only did it slow down my progress but also took away the joy of telling the clients that I’m successfully progressing with their project. The HR department plays a critical role within the organization’s structure to help avoid conflicts. Alshahrani and his colleagues conducted an invest igation of the current state of human resource management in Saudi Arabia through a case study of Saudi Electricity Company. The study found that Saudi Electricity Company management aims to appraise employees productivity and performance, enquire employee s development needs and in parallel to the job performance, clarify the required procedures that is needed for job performance development, and foresee annual increments or promotions based on job performance of the employees in respect to the organization ’s regulations (Alshahrani and Alqahtani and Alshahrani, 2016). Therefore, in Saudi Electricity Company the performance management system has been followed through under the HR supervision and authority. To ensure the accomplishment of the comp any’s objectives the HR is required to plan, orient, develop, enhance and appraise the employee’s job performance. This develops a culture where all employees from top management to individuals accepts the responsibility for ongoing development of company business and enhancement of their skills and capabilities so that company targets can be efficiently achieved. As an example, in one of the private companies in which I was hired as a project manager, I was hired not only because of my qualifications but also because of being a Saudi. The only other Saudi hired in that organization was the expeditor who functioned as the HR manager for the company. There were several conflicts, primarily because of the absent HR function in the company. The company did not offer any breaks for prayers nor Ramadan timings were observed, which caused many problems and ultimately pushed me to resign. On the other hand, in another organization, where I worked as an assistant PM, had an active HR department. A professional HR de partment, in my opinion, was able to evaluate my performance with transparency, offered an annual bonus through my manager’s recommendation and provided training. However, after working for four years with this company I had to leave because the head of de partment was against a female PM working in a construction field. This highlights another point related to the cultural issues in organizations in Saudi Arabia. The Saudi manager in that organization was against females working in construction fields due to beliefs and safety. Even though thi s was not against the company policies, the HR believed that they couldn’t do anything as he was the head of operations. In most Page 05 Page 06 firms, HR departments work primarily to meet the demands of the managers and head of departments rather than working towards providing amiable work environment and policies for the entire staff. Even though they have the authority to manage the basic system and implement governmental laws but the department are not adequately empowe red. Micro -Individual Factors As recent studies showcased that the main responsibility of HRM is to ensure that each firm should have the right amount of the following - right number, types and skill mixes of employees to meet present and future requiremen ts (Nankervis and Compton and Baird and Coffey, 2011). Ultimately, my goal is to demonstrate that the individual factors plays a major role in a company’s success which brings to a notion that recruitment is very critical element. Recruitment can be identi fied as “a knowledge acquisition technique ” which includes the determination of requirements related to organizational knowledge and the aspects of selecting and hiring of individuals who view such knowledge (Alshanbri and Khalfan and Maqsood, 2016). As co mpanies thrive to succeed and grow, the selection of individuals who carry the qualified skill and the right attitude is critical for creating knowledgeable teams and achieve harmony. These individuals differ from one another in many areas such as educatio nal background, work values, beliefs and attitudes. The professional HR could see those differences and help in examining and selecting the right person for the right position. To relate the above to Saudi companies, one famous example is Saudi Aramco. Th e company hires mostly from engineering and science backgrounds, which determines their educational criteria of the employees of the company. Another factor that is considered important in hiring and that is gender (at macro -level), where females hold 9% positions as compared to 91% by males. Through this we can conclude that Saudi Aramco emphasize on hiring a particular group. Despite that Saudi Aramco is considered an international company that operates under governmental sector (public). In contrast, Sau di Electricity Company has practices that are quite the opposite to that of Saudi Aramco do. Saudi Electric Company hires the best regardless of what certificate they hold. Their focus on adopting best human rights practices is evident from their mission statement, which is as follows; “We are committed to provide our customers with safe and reliable electric services, meeting the expectations of our shareholders, caring about our employees, and ensuring optimum utilization of available resources” Alshahran i and Alqahtani and Alshahrani, 2016). Another critical factor in the micro -individual framework is motivation. Employee motivation comes either in the form rewards or recognition or both. In my first company, I was awarded with both reward as well as reco gnition. My manager would send a recognition letter through email to all company’s employee. At the same time I was given a bonus every year depending on my yearly evaluation. However, in my current job, as there is no formal HR department, there are no mo tivation plans implemented. Therefore a comparison between two organization which are in complete contrast to each other can highlight the importance of a HR department in the overall well being of the organization’s employees. Conclusion The current sta tus of HRM in KSA and the practices that have been adopted by the companies highlight that Saudi Arabia views HR as a core strategy for improving organizational performance. With the focus of the Ministry of Labor on improving all aspects that falls under the umbrella of individuals prospect and rights, they have developed The Human Resources Development Fund (HRDF) which focusing on providing grants for qualifying, training, and recruiting Saudis in the private sector (Torofdar and Yunggar, 2012). The main aim of this fund is to to develop and increase the competitiveness of the national workforce in partnership with the public and private sector through: • specialized and distinguished training • up skilling and employment programs, that satisfy beneficiaries’ (customers’) needs, provided by qualified human resources, advanced information systems, and integrated knowledge and research methodology (Hrdf, 2013). Considering the current situation with regards to HR models and practices currently in Saudi Arabia, my view is that the most optimal model of HRM practices is the Harvard model. This model proposes that HRM strategies, policies and processes can be categorized into four broad categories. These are: • Involvement of Em ployees and Their Influence: This refers to the consultative approach in which employees are encouraged to participate in organization’s decision -making process • Human resource flow: This refers to the sequential steps of HRM functions that are involved in management of employee. These steps include HR planning, job design, recruitment and selection, performance review and termination • Rewar ds systems: The reward system comprise of the monetary and non -monetary methods which are used to remune rate the employees and recognize their contributions. Page 07 Page 08 • Work systems: This involves development of policies and work environment which forms the most optimum fit between the employees and the workplace. This includes technology being used for work, design of workplace and structure of teams. HRM has evolved into a multidisciplinary area over the period of time. The role of HRM is becoming more strategic with the changing work environment as well as the changes occurring in the socio -economic situation. The practices and policies developed by HRM directly impact the workplace environment, employee motivation as well as the organizations bottom line, as well as its contribution to the long -term objectives of the country. The HR practices that are being impleme nted today in organizations in Saudi Arabia, both local as well as multinational, will play an important role in helping the country reach its long term objectives. The most optimum HRM practices will assist KSA in realizing its goals that have been outlin ed in the Saudi Vision 2030 that was announced this year. References A. (2016, April 25). Saudi to introduce expat 'green card' Retrieved from http://www.emirates2 47.com/saudi -to-introduce -expat -green -card -2016 -04 -25 -1.628313 Alshahrani, S., Alqahtani, M., & Alshahrani, S. (2016). 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