Nicolai Tillisch, author of Effective Business in the Gulf, shares his reflections with CLO on the state of Human Resources in the region and the challenges and opportunities going forward.
HR has come a very long way in the Gulf over the last ten years. Top management of local companies have generally come to realise the importance of the discipline. Multinational corporations typically recognize that it takes extra effort to handle the associated tasks in this part of the world.
However, most of the region’s HR departments are highly occupied with operational issues, such as personnel administration and maintenance of basic procedures. There is little time and resources to engage in the strategic aspects of HR; for instance ensuring the right capabilities for the increasingly competitive and ever-changing future. The operational parts do of course come first, as they are necessary for running the business on a daily basis.
More organizations are running special programmes for high potential talent. Likewise, nationalisation programs are becoming the standard for government-associated companies in the region as well as for larger organisations, especially in Saudi. Yet there is a bias towards predominantly using externally bought training courses. With all due respect, there is much more to learning, as well as to strategic HR, than this.
I know several HR professionals who would be delighted to have a structured overview of the human capital in every strategic business area of their company, and a several-year plan for reaching desired levels of improvement through a combination of recruiting, nurturing and use of business partners. They would prefer to work towards making the organisation’s internal capabilities largely self-sustaining, instead of having to try to speed-hire external talent every so often. In this way they could create competitive advantages for their company over time, instead of having to desperately try to find the required talent after a strategy plan has already been put together.
The limitations of international best practices
HR professionals and their executives, who aspire to lift their organizations to a higher level and are willing to make the effort, face another dilemma. What should guide them in this pursuit? The so-called best practices, which are heavily inspired by the United States, seem to be the natural answer. However, they are far from perfect for the Gulf. There are three reasons, in particular, for this.
First, HR has achieved, after decades of advocacy, a seat in the top management of almost every large Western corporation but the victory is still somewhat empty. Only a small minority of these new platforms have been used to levitate the respective companies to any extent. The success of General Electric is widely quoted and more cases have lined up behind it, but not in an overwhelming number.
Instead, the common practice amongst the best international companies is that HR only has a limited voice in shaping the corporate agenda and serves more as a responsive helper focusing on selected aspects of the implementation. If you, as a HR professional, follow the international trends, then you are likely to end up in the backseat from where you can hardly affect the steering wheel.
Second, many HR professionals pay much more attention to completion rates of mandatory forms and compliance with rules and procedures than they do to their impact on the business. The field of HR is partly to blame for this, as it has developed into multiple parallel areas of specialization, just like engineering, but without evidence of what actually works. Large organizations are complex. Causes and effects are difficult to isolate over time. The more sophisticated HR has become as a discipline, the more weight is put on its historical assumptions. Old dogmas are kept alive in the codes making up the support software.
This leaves a big door open for new fact-based research and big data studies that will shake currently rock-solid assumptions within HR, as is already seriously happening. An example is the work of psychology professor Mihaly Csikszentmihalyi, who surveyed thousands of individuals and, amongst other things, concluded that optimal performance is closely associated with “immediate feedback”. This is quite different from the annual or semi-annual appraisal rounds, which the HR textbooks prescribe and that have become the lowest common denominator for line managers in many organizations.
Third, the challenges associated with human capital in the Gulf are completely different and much more fundamental than those that HR professionals are fiddling with in the Western world. The traditional Gulf Arabian way of doing business and the mainstream methods found in international businesses are worlds apart with no natural middle ground. The private sector in the region has the world’s most multicultural workforce made up of expats from most nations with their own perceptions of how to lead and deliver, while Gulf nationals are small minorities in their own countries.
Path-finding in the Gulf’s unique environment
When large corporations took their shape in Japan, India and China and started to expand internationally, management were faced with a similar dilemma. The Western management theories and practices could provide inspiration but were far from suited to addressing all their needs. In each of these three countries, distinctive approaches to HR have evolved reflecting their unique cultural circumstances.
The same has not happened in the Gulf, which probably can be explained by the strong dependency on foreign expertise within the HR domain as well as throughout the entire private sector. I doubt it will ever happen, as the Gulf’s most successful organizations are following very different recipes in terms of management styles. Saudi Aramco was created with strong American involvement, while there are distinctively British aspects in the inner working of Emirates Airlines and yet other companies are clearly rooted in the Indian way of leading and doing business.
How will HR evolve in the Gulf? HR does not just have to facilitate incremental improvements like- relatively speaking – it did in Japan, India, and China, But it must enable a shift of the GCC countries business models from dependency on oil and gas to models that build largely on human capital, similar to those of other economies around the world. The GCC governments efforts to get more nationals employed in the private sector represent the most ambitious societal tansformations ever initiated by any wealthy nation. -The good news is that there could be time for two or three generations to overcome this challenge. The bad news for many companies is tht they will bite the dust during the journey, because their meritocracy hinders them from adapting to the tectonic shift.
In general, HR must work very differently here in the region – both compared to the past and other regions. Those HR professionals who manage to do so will set one of the future benchmarks for HR internationally.
Seven simple principles for making progress
When my partners and I help executives and HR professionals develop their organization’s internal capabilities and achieve greater success, there are seven principles that particularly work:
- Take small steps that make a big difference by paying careful attention to the specific organization’s starting point, instead of becoming distracted by the sophistication of other organizations’ methods, which have been built up over a long period of time elsewhere in a very different context.
- Understand the business and its people in conjunction with each other, as there is a high risk of underestimating the people side of this equation if it is addressed separately after everything else is settled.
- Work indirectly through the organization’s management body of executives and line managers, as they are the only ones in the entire organization who can make things work, and likewise they could kill any new initiative if they are not leading the way.
- Select the key people for any new initiative based on their mindset and eagerness to make a difference, as much as academic degrees and corporate titles.
- Focus on a few improvements at any given point in time as individuals might not be able to cope with too many simultaneous changes: they need time to shape their mindset and adopt new habits.
- Be painfully persistent, as people and organizations can easily absorb new progress and then contract back into their previous comfort zone, seeking the familiarity of doing things the way they were always done.
- Evaluate and learn all the time, as the circumstances will be unique and it takes time to find the optimal path.
Nicolai Tillisch is the author of ‘Effective Business in The Gulf: Mastering Leadership Skills for Greater Success’ and the founder of Dual Impact, the Dubai-based consulting and coaching company (www.dual-impact.com).