Universal HRM and the Gulf Leadership Style - The Perils of Best Practice. Grace (ed) Cases on...

Grace C. KhouryBirzeit University, Palestine

Maria C. KhouryIndependent Researcher, Palestine

Cases on Management and Organizational Behavior in an Arab Context

A volume in the Advances in Logistics, Operations, and Management Science (ALOMS) Book Series

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Cases on management and organizational behavior in an Arab context / Grace C. Khoury and Maria C. Khoury, editors. pages cm Includes bibliographical references and index. ISBN 978-1-4666-5067-1 (hardcover) -- ISBN 978-1-4666-5068-8 (ebook) -- ISBN 978-1-4666-5069-5 (print & perpetual access) 1. Management--Arab countries--Case studies. 2. Organiza-tional behavior--Arab countries--Case studies. 3. Leadership--Arab countries--Case studies. I. Khoury, Grace C. II. Khoury, Maria C. HD70.A64C37 2014 658.00917’4927--dc23 2013037500

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DOI: 10.4018/978-1-4666-5067-1.ch001

Chapter 1

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Universal HRM and the Gulf Leadership Style:

The Perils of Best Practice

EXECUTIVE SUMMARY

This case study aims to allow students, using various business dilemmas, to explore differences in approach between the most commonly taught “universal” models of human resource management (HRM), mostly based on Western culture and practices (Brewster, Farndale, & Ommeren, 2000) and a more contingent HRM predicated on the leadership culture prevalent in the Gulf Cooperation Council countries (Scott-Jackson, 2008). It aims to generate discussion of strengths and weaknesses of these different approaches to leadership and HRM as well as some recognition that there is a valid, distinctive Gulf Arab Management Style that is worthy of study and provides an alternative to more commonly recognized approaches. The support-ing research was carried out between January 2011 and June 2012. It was largely based on interviews with 50 Gulf Arab leaders, together with action research and advisory work in 5 large Gulf companies (including the family conglomerate form-ing the basis for this case).

William Scott-JacksonOxford Strategic Consulting, UK

Jonathan MichieUniversity of Oxford, UK

Universal HRM and the Gulf Leadership Style

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ORGANIZATION BACKGROUND

The case is based on a large family conglomerate founded in the early 60s by the present Chairman’s grandfather. Many of the senior directors and leaders of the various sub-businesses were sons, grandsons and relatives of the father, together with one daughter who led a medical subsidiary. The business was formally owned by two brothers, the elder acting as Chairman and the younger as Chief Executive Officer (CEO). The business was originally founded to provide basic industrial sup-plies to the burgeoning oil industry, acting as an agent for several western brands. In the previous twenty years, utilizing capital generated from the original business stream, the firm had diversified widely into very different sectors, often based on the interests of members of the close family, including luxury cars, a school, medi-cal supplies, a hotel, fish farming and property investment. There were thirty-six subsidiaries, of which only one had more than fifty staff. Many of the subsidiaries were built around well-known western brands, including a mineral water company and a security company. The total group employed just over five hundred people (~400 expatriates and ~200 nationals).The subsidiaries were all run by nationals (almost all relatives) except a construction subsidiary. A western Managing Direc-tor (MD) was recently recruited, through a recommendation from a friend to the Chairman, in order to increase revenues ten-fold in three years using group capital to acquire and grow market share.

The group as a whole had maintained steady revenue growth overall, enjoyed profit margins of around 20% (although individual company performance varied significantly) and had £20m available for investment and acquisitions. Reporting was relatively informal. Company accounts were produced for review by the main board annually but information on subsidiary activities was mainly obtained by visits from the brothers and informal discussions with a range of personal contacts at all levels. The chairman says “you can’t rely on systems – people can always fiddle systems – you have to get out and see for yourself, you have to ask people their opinions and build informal networks of friendly contacts to get a feel for things”.

The group was organized in principle as a holding company, where the center mainly makes investment decisions and leaves day to day management to the subsid-iaries. However, the CEO and his brother, the Chairman, retained a high degree of personal authority including, for example, check signing for any payment over $3000. They tended to get involved in the management of subsidiaries to a greater or lesser degree depending on external pressure or interest (particularly from members of the ruling family), problems with important customers or their own personal interests. Certain acquisitions have been left largely independent and, given the individual


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and family wealth of the owners, there was no formal assessment of contribution to group profits, reserves or dividends. The Chairman spent most of his time working with one of the senior members of the ruling family. This was seen as a great honor and crucial for the reputation and success of the company. In principle, the Chair-man focused on new acquisitions and investments while the CEO ran the group’s day-to-day operations.

The strategic intent of the two main owners (CEO and Chairman) was to preserve and enhance the good name and standing of their grandfather and the family name within the country, the region and, hopefully, globally. A second key objective was to provide the means for “our children and their children to survive and prosper”. Financial and growth targets were very important, but only as a means to achieving the first goal. The group originally grew through organic growth but had, in the past few years, acquired various disparate businesses in the GCC and Morocco (where the Chairman had a large villa) and had most recently purchased investment properties in London, UK. The CEO believed that most of these acquisitions had done well and contributed to the firm. None of the business lines have ever been closed down, although an early business in the food sector was allowed to run down gradually after the MD at the time decided to live abroad. A recent strategy workshop (facilitated by external consultants) agreed that the group should target revenue growth of thirty times current levels and “to become world-class at acquisitions”.

The growth of nationally-owned competing oil related businesses and the entry of major global suppliers into the market had increased competition and impacted revenues from the primary business streams. Several of the diverse subsidiaries had been very successful and mitigated this impact by producing good revenues. The school, for example, had taken advantage of its joint venture with a well-known UK school and was over-subscribed by wealthy nationals and ex-pats. However, several of the subsidiaries failed to generate profits and none of them had any significant market share in their relative sectors. The oil equipment supply business, for ex-ample, had one primary customer, the national oil company, and was not in the top ten suppliers for any of its products. On the other hand, the Group had exceptional brand recognition in the country and was viewed as a highly respectable, fair and credible provider for a wide range of services. Over 70% of current revenues came from government or government related contracts. Its automobile service center, for example, mainly serviced the royal family’s limousines.

Recent acquisitions, whilst still fairly small, addressed wider markets. The re-cently acquired JV construction company for example, was building a residential compound in Morocco and a shopping mall in Pakistan.


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SETTING THE STAGE

In terms of HR and people management, retention was extremely high (no nation-als had left in the past five years and only ten expatriates). A recent staff survey found very high levels of pride, engagement and loyalty, but also some frustration at poor processes and embarrassment at poor customer service. For example, the manager of a car showroom said: “people buy because of our name and the car’s brand and they will put up with some problems - but lately there have been too many”. Recruitment was generally carried out through networking and contacts. Recruitment criteria were fairly loose, but trustworthiness and loyalty were the most prized attribute, with direct relevant experience also being valued. Most new candidates were interviewed by the CEO and Chairman (sometimes several times). Contracts and pay were seen as confidential and there were no specific pay grades. Informal benchmarking on pay levels was carried out by the Chairman through his wide business contacts. Pay was negotiated personally and individually, especially at senior levels, and total reward often included unanticipated but significant gifts such as overseas trips. Training was carried out externally, normally overseas, and was seen more as a reward than as a development activity. No staff members (in-cluding ex-pats on contracts) had ever been dismissed. People who were seen to have performed badly were normally moved to other roles or even other companies within the group. There was no formal appraisal system and people were generally rewarded according to seniority or based on a view of their value by the COE/Chair-man. Expatriate contractors were generally treated as well as national permanent staff (albeit it with lower salaries) and many had very long service (20 years for example). Junior employees were almost all South Asian ex-pats, middle manage-ment were mostly Lebanese or Syrian ex-pats (with experience) and Indians (with qualifications). Except for the recently appointed western MD of the construction subsidiary, the other MDs were all related nationals.

A recent review by a western consultancy firm concluded that four out of twenty senior managers were performing badly (especially in ‘Head Office’), including some dubious relationships with suppliers, and that they should be subject to disciplin-ary processes, and dismissal if these processes proved ineffective. The Chairman dismissed these recommendations explaining that the people in question were loyal, long-serving friends of the family who had helped the grandfather and father build the business and who still had influence with the ruling family of the country. The Chairman also said that one of the most important objectives for the year ahead was to “ensure we have the best people at all levels”. As far as the MDs of the sub-sidiaries were concerned, the Chairman stated that “quality of MDs was good”. In explaining the apparent conflict between the consultant’s evaluation and his own, he


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said “sometimes you need the right personality rather than professional expertise, especially in a business like ours where we don’t have lots of rules. A good person is better than a great professional”. The role of the Group was not just to act as an investment manager but also to provide a source of pride for the subsidiaries and their people. “we work as a family and we were proud of the family - and people that work for us should feel the same”.

The CEO explained what kind of people should work for the group:

Loyalty is the key. So you have to recruit the right level of people - If you deal with an Einstein then they won’t listen because they are too ‘big’. But we need loyalty1, which is a new style for westerners for example. You start with enemies and friends like in your own house. If you treat them well then you create more friends and family. So we are about creating a bigger family of work. To achieve our goals we need really to create a new massive global family. Most staff members are our partners and friends in some way so we can expect their loyalty and we have some responsibility even for their families.

The Chairman and CEO had consulted various advisors in the past few years, mainly to try and resolve succession issues – essentially how to find meaningful roles for the sons of the present senior family members, to maintain continuity and enhance the good name and reputation of the family and grandfather. Various recommendations had included selling shares in parts of the business in order to raise capital and widen the shareholder base, formally assessing the suitability of offspring for various roles and breaking up the group into independent companies. None of these recommendations have been accepted or implemented. Consultants were generally respected but not really trusted by the brothers: “they take my money and leave. I take their advice as only part of my decisions. I want people to walk with me and be part of us”.

The brothers felt that some HR processes, for example, visa applications for ex-pats, could be greatly improved. Therefore, the Chairman decided to appoint an HR Consultant (HRC) to implement modern HR processes. Following normal practice, the Chairman asked friends for recommendations and was introduced to a UK lady who was moving to the country to join her husband. She had extensive experience in HR systems and change management in major UK companies and was fellow of the Chartered Institute of Personnel & Development (CIPD). She did not have GCC experience but this was not seen as an issue because the group needed up-to-date HR based on best practice. The UK was seen as a leader in the field. The brothers had never hired a senior lady before, but she seemed capable, and indeed forceful, in a telephone discussion with the CEO.


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CASE DESCRIPTION

The HR Consultant (HRC) had a full set of HR processes, which she retained from her last role, and began to implement from day one. There was no need to review the current HR arrangements as, in her view, none existed and it was very obvious what was needed. She also understood, from her husband, that it was difficult to get attention and decisions from senior managers in the GCC, so she decided not to bother them with questions but to just get on with it. She referred to various process guides (including CIPD 2005) to ensure compliance with best practice:

Mission, Vision, Values.

The recent staff survey had showed that employees were proud of the group. They understood the desire to protect the family name and to create a long-term reputation. However, there was no formal mission, vision and values, so the HRC organized an ‘away-day’ for the top 12 MDs, the Chairman and Group CEO. The Chairman and CEO agreed to hold the meeting but it was delayed several times and, in the end, was held during a weekend in Ramadan at the Chairman’s Villa. Four of the MDs were away or busy but eight of the top team did attend. The event was very successful socially, although the HRC herself did not attend the evening function. There was a major discussion on the value of specific strategy statements, with the team tending to favor a flexible and informal approach. In the end, the agreed mission was “to meet the needs of the country and its people”, the vision was “to be a global force in all our businesses” and the values were “be proud”, “equality in diversity” “respect our people” and “be productive”. The HRC was very pleased to have forced some clarity although not particularly happy with the actual statements. She arranged for them to be added to the web site and sent an email communication to all staff.

Communication

Communications were mostly verbal and informal. The Chairman, for example, invited people to his weekly majlis (traditional GCC meeting for raising issues with the tribal leader) and anyone with an issue could attend. Similarly, the group CEO visited the subsidiaries frequently, unannounced and informally where he let people know what was going on. The brothers gained views from individuals at all levels, but mostly people they happened to know. The HRC suggested introduc-ing a monthly newsletter and a web-based monthly snapshot survey of people’s opinions together with more formal ‘walk about’ meetings by the subsidiary MDs (as they were responsible for the businesses), instead of the unannounced visits by the Chairman. The first issue of the newsletter contained the new mission, vision


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and values as well as news of major deals and overseas property investments. She asked the MD of construction to write an introduction piece on what his first few months have been like.

HR IT System

Next the HRC decided to improve personnel administration by computerising per-sonnel records and administration using an ‘off-the-shelf’ HR software package. This also offered the facility for local management to review and update records as well as extract valuable information on data such as retention statistics. She also introduced a centralised payroll system which, again, provided data to local and group management. In order to minimise HR costs, she took the software company’s advice that local management could use the system to carry out many of their own HR functions, such as appraisal management. Her previous UK Company had used a similar system for 3000 staff, so she believed that the system should be very capable of handling only 500 or so. The implementation was advised to the MDs in an email from the Group CEO explaining the schedule and the facilities that the system will provide for them. The software company provided data entry help to convert the largely paper records to database records.

Next, she decided to help the organisation adopt effective people management processes including role definition and objective setting, appraisal processes, perfor-mance management, grievance and disciplinary procedures. She was concerned that all the processes were written in English but was assured that most of the Managers were bi-lingual and, if not, their PAs were usually capable of English.

Recruitment

Having made good progress on mission, vision and values, communication and IT, the HRC turned her attention to recruitment, which was ad hoc, informal and had no standardised process. She defined three recruitment methods for different levels in the group and agreed with the CEO that all recruitment had to be approved and managed by HR.

• Directors – Executive Search• Executives and specialists – Recruitment agencies• Staff – Advertising

She sent an email to all MDs stating that no recruitment could take place without a full job description, requirements specification and interview checklist of criteria. She provided template word documents in English for the forms.


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Performance Management and Appraisal

The HRC asked the CEO to instruct all Managers that each employee must have a competency-based job description and have received an appraisal interview within two months. She provided complete instructions on the process, including entering the data into the new HR IT system and carrying out the interview. She provided a set of forms (taken from those used at her last company). She also offered appraisal training, but only three Managers decided to take part so she cancelled the training day due to lack of need.

Training

Training had been used mainly as a reward for loyal people and involved overseas courses in nice locations on subjects that were not particularly critical for the job, and were not assessed. The HRC agreed with the Group CEO that all training should be approved and booked by HR and that the appraisal system would allow development needs overall to be assessed and therefore dictate training priorities. She suggested that training should not be used as a recognition tool as this should be more clearly demonstrated through a range of pre-defined small gifts and a for-malised bonus system based on measurable productivity or appraisal ratings (see Pay and Reward below).

Pay and Reward

The HRC commissioned a consultancy to review the pay grades in the Group and to compare them with the external market. They identified numerous grades and ad hoc arrangements across the businesses with no consistent policy or levels. Pay and reward at senior levels was dictated by the Chairman and was difficult to analyse as many of the senior people also had other external interests and the Chairman seemed to take these into account when negotiating pay. On average (but extremely variable) around 40% of the total annual reward for senior people had comprised informal gifts (including land and villas) for exceptional service, often based on success in some kind of relationship building and rarely based on performance as such. For more junior staff in subsidiaries, there were pay grades which compared across the businesses fairly well. However, in practice these were not necessarily adhered to. Many people were paid more than the top level of their grade. Nationals, in particular, seem to be paid at least 30% more than the equivalent expatriate and


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received longer holidays and other benefits. There was no annual pay review, no representation of the workers to negotiate pay and no agreed negotiation process. Each individual’s pay was reviewed in response to informal triggers such as threat of leaving, prolonged absenteeism, request by the individual or completion of a high profile project of interest to group management.

Work-Life Balance

One of the issues raised in the survey, particularly by the MDs and also by the lower grade expatriates, concerned work-life balance. The HRC had been in a company renowned for its approach and flexibility, so she decided this would be a good area to address. She interviewed the MDs to identify the main problems and summarised as follows: “For most of the MDs, there is no separation between work and family life. If the Chairman calls late at night at the weekend then they will take the call. If someone needs to meet an unexpected VIP during a day off then they will drop everything. Time and diary management is awful and this affects everyone. On the other hand, the Chairman and CEO are unreliable – the team don’t usually expect them in till after 10:00 and often the brothers will be doing some other activity which had nothing to do with work. It is very messy!” The main cause of the issues seemed to be time and diary management and lack of clarity about daily goals and schedule. The HRC decided to run a time management course for MDs and to train each of the PAs in a central diary system. She asked the Chairman and CEO to set a good example by turning up to meetings on time. They agreed and promised to do so if at all possible.

Grievance and Disciplinary Procedure

The HRC sent an email to all staff and also held site meetings to introduce a new, very simple, grievance procedure where the person first raises the issue with their line manager and then to HR.

She also included a disciplinary guideline (used in her UK company), explaining the process and the option for independent representation in the various meetings.

Manpower Planning, HR Strategy, Career Development

The HRC decided to leave these topics until the current changes were implemented fully as she knew that “people can only absorb so much change at once”.


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CURRENT CHALLENGES FACING THE ORGANIZATION

Six months after the implementation of the HRC’s recommended processes, the Group had suffered a 10% decrease in revenues, thirty employees left (including 3 senior Managers) and the annual staff survey showed a significant drop in engage-ment across the organisation. The following were some examples of reactions to the HR process implementations:

Mission, Vision, Values (MVV)

The mission, values and vision were communicated smoothly through an email to all staff and were incorporated in the Group web site. Managers were asked to discuss the new MVV with staff and the HRC also had some informal discussions. Verbal feedback was that the MVV was admirable and reflected the wise vision of the founder. However, graffiti appeared on the wall of the group’s hotel saying “we respect you when you respect us”, “no-one is equal in this group!” and “fair pay for fair work!”. Similar messages appeared on twitter and other social media, and in an anonymous letter to the local newspaper. The next snapshot survey (although with only a 5% response rate) showed a drop in engagement.

Communication

The Newsletter was well received with people saying they were proud of working for such a high-profile company. Some of the people had no idea which other companies were in the group and no idea that they were dealing with such important projects in the country. There were complaints about the construction MD’s article, suggesting that lower level expatriates had experienced a much less pleasant introduction to the company and the country. Very few people attended the subsidiary MDs’ new ‘walkabouts’ (except for 100% attendance in one subsidiary where attendance was mandatory) but many more people requested to attend the Chairman’s majlis to raise issues. One anonymous comment to the newsletter editor asked whether the Chairman had been deposed by his brother, as no-one had seen him for a while!

HR IT System

The system itself was implemented more or less on time and budget. Initial data entry was fine, with the secretaries in the businesses doing the data entry. However, it was soon apparent that HR would need to recruit several people to keep the system up to date, as none of the subsidiaries were entering any changes or new data. No data at all was being entered into the performance management or training modules


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and, in one subsidiary, where data was being entered, the HRC found that it was all written and retained on the original paper system as well as being transcribed into the database. Management information, which she had hoped would arise from the system, was completely misleading. Most data was inaccurate or misleading.

Recruitment

The MD of the car repair business had become very ill and could no longer work. Like several of the CEOs, he had been in post for over twenty years. He had a large family and was a cousin of the Chairman’s father. There were no formal pension arrangements or sickness pay but the brothers felt they needed to look after him and his family. The car repair business employed forty people but made a significant loss – and had done for years. The brothers would have liked to save cost and make the business profitable. The Chairman had decided to find a new ‘acting’ MD for the car repair business. He had not launched a formal recruitment process but had recently been introduced to three candidates: an inexperienced but well-connected relative of the ruling family, a junior investment analyst, son of one of the brothers of the chairman, and a well-qualified and experienced Indian expat.

Meanwhile, the CEO told the HRC that a new MD was needed for the car repair business (although it was not entirely clear if the current MD had retired). She saw this as an opportunity to demonstrate the effectiveness of a proper recruitment pro-cess and called an executive search consultancy to make a proposal. The CEO was not happy to pay anything ‘up front’ but the HRC persuaded the Search Consultants that they should see the project as an investment for future business. The Search Consultants interviewed the CEO about the role and requirements, but he preferred to see some people and then decide between them. He said that the role was flexible and he would adapt it for a good person, so he did not want to be tied down. In the end he agreed a fairly loose specification based on specific industry experience and personal characteristics such as ‘loyalty’. The search consultants started to carry out their research but meanwhile the Chairman interviewed his nephew, who had been working as an investment analyst in the UK but wished to return to the country. The nephew was well-qualified with a master’s degree and had extensive private equity experience as well as successfully managing several restaurants, owned by his uncle, for two years when he first went to the UK. He had no direct relevant experi-ence in the car repair sector. Wishing to follow procedure, the Chairman invited the nephew to an interview with the CEO and HRC. In preparation, the HRC devised a structured interview and scoring sheet, based on the role profile she had designed. She carried out the structured interview part, while the group CEO asked questions about the nephew’s family and also about his experience in assessing private equity acquisitions. The nephew’s scores on the structured questionnaire were around 60%


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(the search company had been told not to submit anyone below 70%) but the CEO was very excited as he believed the nephew could not only run the subsidiary “as there was a good Indian GM” but could also work with the brothers on acquisitions and had the advantage of very good connections with a target country’s ruling fam-ily. Despite the HRC’s objections, the nephew was offered the role and the search company was dismissed with no payment whatsoever, to the satisfaction of the CEO.

Next, the construction MD needed to recruit a team of fifty workers and supervi-sors for a major project which would last at least six months. In coordination with the HRC, he decided to write a specification and to issue a request for tender to the most well-known construction industry recruitment agents. The Chairman, having read the HRC’s process, suggested that there was already essentially a preferred supplier list, which comprised one recruitment contract company owned by a friend of the family. This company had succeeded in meeting all previous requirements and any issues had been easily resolved. There was a lengthy discussion, as a result of which, the CEO agreed to the full tender approach. The existing supplier was included in the tender process but turned out to be 20% more expensive than a comparable service. The MD and HRC therefore appointed the new supplier. The CEO decided to also ask the original recruitment company for candidates as well, arguing that whoever found the person first would be paid.

One of the subsidiaries employed highly specialised experts. There were currently no nationals with this expertise but the government had introduced a quota require-ment which required the firm to employ at least two nationals in this subsidiary. The HRC started negotiations with the local universities to sponsor nationals for specific focused courses. Meanwhile, the CEO appointed two sons of a minister as ‘trainees’.

Performance Management and Appraisal

The Chairman decided that the top team and MDs of the group companies should not be formally appraised as this would be undignified and, in any case, if they were doing a bad job he would have told them.

At the end of the two months, fifty appraisals had been entered into the database (38 from the construction company). Twenty-four others had been sent to head office by fax and post but most had not been completed. During regular visits to the sub-sidiaries, the Chairman asked why they have not been completed and was generally told that the teams were too busy with urgent customer or financial matters. At the insistence of the HRC, the Chairman instructed several of the MDs that appraisal was top priority, but allowed some to leave the process till later due to other urgent matters. Managers generally delegated the form completion to their secretaries and in some cases asked their assistants to carry out the interviews on their behalf.; 90% of the appraisals that have been completed show a rating of 4 or 5 out of 5. A snap-


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shot of the appraisal forms revealed very few comments on performance – everyone was apparently doing a good job. As far as the development section was concerned, every appraisal recommended at least one training course with a leadership course in the USA being the most often requested. The HRC therefore reported that most of the company was doing a good job and that development was now taking place. She was particularly pleased that the manager of the hotel (a local) appraises all his subordinates, follows the procedure faithfully and gives several of his team ratings of 2 out of 5... She uses him as an example for others to follow.

Training

The training spend for the following year was only 10% of previous years which the HRC believed provided some support for her contention that the training budget was being wasted. On the other hand, overseas sales visits and company meetings have risen greatly.

Work-Life Balance

The Time Management Course was booked with a top trainer from the USA and the CEO agreed to make it mandatory for all MDs. In the event, only 60% turned up, three were over an hour late due to urgent crises, one had to leave for an urgent meeting and three had to take urgent calls during one of the most important ses-sions. The PAs, however, told her that the diary system was a great success. The HRC decided to check the system and found lots of events entered but only for meetings in the past or for the next day or so. The PAs stated that there were so many amendments that they didn’t normally enter dates until the day before, or most often after the meeting had taken place. They were pleased with it as a recording system, so they knew what meetings their boss had attended - and with whom. The next management meeting was postponed as the Chairman and CEO had been asked to join a delegation with the prime minister. In any case, they had met with all of the MDs informally during the month so were fully up to speed. An informal poll of MDs suggested that work was still taking place over weekends and at all hours, following one weekend where, at the suggestion of the HRC, the Chairman didn’t call anyone but several MDs called him, thinking he must be ill or they must have fallen out of favour.

Grievance and Disciplinary Procedure

Within two weeks, the HRC received four grievances lodged by direct reports of the hotel manager. In accordance with the process, the HR Director interviewed


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the complainants who all stated that they find the appraisal process demeaning and insulting and they believed their ratings were based on personal dislike, bias or ra-cial prejudice. They stated that the manager did hold a short appraisal meeting but simply assigned the grades. They believed this was a management ploy to reduce their salaries and/or force them to quit. The HR Director was in a difficult position as the hotel manager was her best example of carrying out the appraisal process.

Following the new procedure, a recently appointed western manager had sacked several locals for poor performance and misconduct, after two previous warnings. The manager called them all into his office together, told them to leave within two hours and announced the decision to the rest of the staff, suggesting they should learn from this example. One of the sacked nationals was a nephew of a minister, and major government customer, who had called the Chairman to complain. The local press had also heard the news and had started an on-going series of comments and editorials. The expatriate staff members had used this opportunity to air several grievances about pay and conditions and were threatening to stop working. They held a meeting with fifty lower paid staff and appointed a ‘representative committee’.

SOLUTIONS AND RECOMMENDATIONS

There were clear differences between the style and processes of people management adopted by the group to date, led by the Chairman and CEO, and the HR Manage-ment processes being introduced by the new HRC. The HRC was introducing what she believed represented ‘global best practice’ as she saw the previous practices as representing ineffective management and inadequate processes leading to nepo-tism, bad treatment and inequity in the workplace. She now believed that such bad practices were endemic across the region.

However, as noted by several authors (e.g. Budhwar, 2001), ‘global best practice’ HRM (predicated on a western model) may not be suitable in different cultural and leadership contexts. In the context of the GCC, Scott-Jackson (2008) has suggested that the Gulf Arab Leadership Style could have a significant impact on the effective-ness and relevance of various HRM processes.

The definition of the Gulf Arab Leadership Style as defined in Scott-Jackson & Michie (2011) comprises the components shown in Figure 1.

It was suggested that these components could impact many areas of HRM, es-pecially where the organization adopts a fluid strategy, with managers and employ-ees working towards a shared vision but not necessarily with tightly controlled objectives or plans. Potential impacts on aspects of a contingent GCC HRM include:


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• Recruitment: Where loyalty might be a more important criterion than tech-nical capability and where personal introductions might be preferred over impersonal CV selections.

• HR and Resource Planning: Where an emphasis on priorities rather than timed schedules makes it difficult to, for example, predict precise resource requirements. In this context, HR could focus on building certain capabilities in order to achieve looser strategic objectives (Scott-Jackson & Druck, 2011), similar in concept to ‘strategic intent’ as described by Hamel and Prahalad (1989).

• Learning and Development:Where learning from a ‘father figure’ may be more valued than formal training and where courses might be used as rewards for loyal service, rather than to instil knowledge.

• Performance and Reward: Where, once again, loyalty may be valued more than efficiency and the achievement of objectives set twelve months ago might be seen as irrelevant compared to the needs of the present. Also, sub-ordinates might be expected to carry out any tasks (as ‘younger relatives’) re-quested by an elder ‘father’, so tightly defined role descriptions might also be unhelpful. Given the important obligation of the ‘Head of the Family’ to look after employees, then disciplinary processes, especially leading to dismissal, might need to be reconsidered in this context.

Figure 1. Gulf Arab Leadership Style components


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• Employee Relations: The idea that ‘workers’ and ‘bosses’ were two oppos-ing forces which must be balanced through collective bargaining, worker rep-resentation and so on, was not consistent with a leadership style, and world view, that sees everyone in an organization as being part of the same family, albeit with the expected arguments and differences that might arise within such a structure. Criticism, especially in public, and especially by coordinat-ed groups, would be seen as an anathema, and, more importantly, senior lead-ers would probably not be socialized to respond in any kind of positive way.

In the context of the case-study group, for example, although the newsletter had been successful, other changes in communication had not worked well. The Gulf Arab Leadership style stresses relationship building and paternalistic informal influ-ence and data gathering by the leader. It has also been reported (Punshi, 2012) that people working in GCC organizations prefer to obtain information through seeing and hearing the most senior person (e.g. the Chairman) rather than their direct manager. In this case, the sudden change in informal communications had unsettled the employees, at least one of whom believed the Chairman had been deposed! The replacement of the informal, relationship-based communication system with a formal process may need to be reversed.

Some of the issues also seem to be due to poor preparation and change manage-ment, lack of understanding of user wishes and capability, and so on. It is clear, for example, that the business leaders do not see enough benefit from the IT system to offset the effort and costs of entering the data. The HRC interviewed one of the MDs to ask why he didn’t value the system and he explained that he preferred to be hands-on and get a feel for issues and problems direct from talking to people, rather than from systems. He also said he liked to ‘see the eyes’ of staff, not just read about data. So the IT system was simply a less effective and incomplete source of information as far as he was concerned. When asked about the ease of record-ing data such as address and pay details he maintained that he knew all his people personally and had visited most of their homes.

In practice, the group was successful under the previous regime, while the new ‘best practice’ changes have caused major problems. In contrast to the view of the HRC, Scott-Jackson and Michie (in prep), for example, have taken a more positive view of what can be described as a ‘Gulf Arab Leadership Style’ and others have discussed potential utility of components of this style, such as ‘wasta’ (influence) and the view that priorities should drive use of time (Scott-Jackson 2008). Various other authors have argued for the utility of wider definitions of leadership style in-cluding ‘Arab’ (Muna 2003) or ‘Islamic’ (Adair 2010). Based on interview analysis


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with fifty Gulf Arab Leaders, Scott-Jackson (2008) argues that the Gulf Leadership Style is a valid, functional and definable model (as valid as, say, the American or the Japanese style), has specific application in GCC family-owned firms and may even hold useful lessons for western organizations.

As described above, Gulf leaders have described management of organizations as being ‘like a family’ with strong downward obligations to look after members of the organization and even stronger expectations of loyalty upwards. Public criticism is not acceptable (although private criticism is OK if respectable). This might explain the positive verbal feedback about the mission, vision and values. Of course, most Gulf Arab organisations are mainly staffed by expatriates and the graffiti did appear to have the hallmarks of one overseas group in particular. The ‘hands-on’ style of the Chairman was entirely consistent with his informal role as ‘head of the family’. The Chairman had often communicated a more spiritual and less ‘business-like’ vision to staff and managers but the new values seem designed to inspire criticism. The HRC could usefully consider three potential areas of improvement for these, and, future implementations:

Deploy GCC Specific HRM Processes

The HRC had implemented ‘best practice’ HR processes which were unsuitable for the context. She should have taken account of the cultural variants on leader-ship and organizational culture, with reference to relevant process models and HR tools, rather than simply implemented incompatible western practices. Dessler and Ariss (2012), for example, provide a whole range of Arab-tailored HR processes and Scott-Jackson and Michie (in prep) point out many of the areas where the Gulf Arab Leadership Style might have a significant impact. For example, if loyalty is valued above pure performance, then the processes of appraisal and performance management are likely to require some adjustment compared to a process deployed in an individualistic, productivity-oriented culture such as the USA. Similarly, recruitment criteria would need to take account of the capabilities and attributes required to succeed in the specific (Gulf) organizational context where relationship building, for example, might be a primary requirement of many roles. In a strate-gic context, the Gulf Arab Management Style could be seen as a differentiating strategic capability (DiSC) (Scott-Jackson 2008, Scott-Jackson et al 2011) able to provide sustainable competitive advantage by meeting the criteria proposed in the ‘resource-based’ view of the firm (Barney et al, 2001) i.e. rare, valuable, inimitable and ‘owned’ by the firm.


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Focus

The HRC had tried to implement a whole range of (western) best practice HR pro-cesses at once, without any apparent consideration of the tactical or strategic needs of the business. From a tactical short term perspective, the Chairman had already raised several short term issues which need effective resolution: the visa process was not efficient, several key posts needed to be filled and there were significant governance issues affecting at least four of the businesses which need to be miti-gated. The HRC should have carried out a fast review to check if these were the main tactical priorities and put in place immediate plans to resolve them, as well as corrective actions to ensure any endemic underlying process problems were cor-rected for the long term.

Strategically, the business was very successful but facing significant change in many of its markets and increased competition even in those markets that were stable. The HRC should have devised a strategic plan to state how HR will build the strategic capabilities (Scott-Jackson et al 2011) required, in the GCC context, to ensure these challenges can be overcome and the organization’s goals achieved. Once this plan was approved then the HRC could decide on an implementation plan, including process changes designed to achieve those objectives.

Use Change and Project Management Process

The HRC does not seem to have used a Change Management or Project Manage-ment methodology to implement the various projects. As with any other change, the current situation needs to be fully understood so it can be ensured that the change will succeed. MacPhee (2007) suggests that a change is more likely to succeed if it:

• Will provide visible positive outcomes for employees (for example, it was difficult to see the value to employees of the new MVV).

• Compliments existing values and beliefs.• Is associated with manageable risk.• Builds on current practices.• Is simple.• Allows local adaptation.• Maintains trust in leaders.• Pulls people towards an advantageous outcome, rather than pushing.• Allows some share in decision making and.• Preserves, or even enhances, existing social networks (disruption of such

networks ‘often triggers grief reactions’ ibid: 406 (for example where the Chairman no longer ‘walks about’).


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From a project management perspective, implementation seems to have taken place with little planning or monitoring. The HRC seems to have simply implemented a set of prescriptive western practices with no investigation or understanding of the culture, stakeholder intentions etc. The projects should follow the basic steps of project management (e.g. Reh 2012):

• Problem definition and benefits.• Stakeholder analysis.• Define the scope.• Determine available resources.• Check the timeline.• Assemble the team.• List and quantify the big steps.• List and quantify the smaller steps.• Create the plan and gain approval.• Monitor and amend the plan as needed.• Document the project and progress.• Keep everyone informed.• Celebrate success..

CONCLUSION

This case study has illustrated the inappropriate implementation of universal best practice HRM processes in a GCC owned firm. It has tried to explain some of the mismatch between the leadership and organizational culture of the organization and the cultural assumptions underpinning universal HRM. As such it suggests that, firstly, there may be a distinct, valuable Gulf Arab Leadership style capable of definition, and indeed teaching, and secondly that a modified contingent HRM, specific to the GCC but within larger clusters of Arab, Islamic and Middle Eastern HRM practices, may be more effective. The case study deliberately leaves much of the explanation and detail of the various challenges for discussion and consideration by the users of the case study.


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REFERENCES

Adair, J. (2010). The leadership of Muhammad. London: Kogan Page.

Barney, J. B., Wright, M., & Ketchen, D. J. Jr. (2001). The resource-based view of the firm: Ten years after 1991. Journal of Management, 27(6), 625–641. doi:10.1177/014920630102700601

Brewster, C., Farndale, E., & van Ommeren, J. (2000). HR competencies and profes-sional standards. Cranfield University: Centre for European HR, 44.

Budhwar, P. (2001). Human resource management in developing countries. London: Routledge.

CIPD. (2005). People and performance: Designing the HR processes for maximum performance delivery. London: Chartered Institute of People Development.

Dessler, G., & Ariss, A. (2012). Human resource management: Arab world ed. London: Pearson.

Fojt, M. (1996). Managing change in the workplace. Management Decision, 34(5), 1–68. doi:10.1108/00251747199600001

Hamel, G., & Prahalad, C. K. (1989, May-June). Strategic intent. Harvard Business Review. PMID:10303477

MacPhee, M. (2007). Strategies and tools for managing change. The Journal of Nurs-ing Administration, 37(9), 405–413. doi:10.1097/01.NNA.0000285138.34247.5b PMID:17823574

Muna, F. A. (2003). Seven metaphors on management. Aldershot, UK: Gower.

Punshi, I. (2012). Qudurat: HRM in the Middle East. Aon Hewitt Middle East.

Reh, J. (2012). How to manage a project. Retrieved from http://management.about.com/od/projectmanagement/ht/ProjMgtSteps.htm

Scott-Jackson, W., & Druck, S. (2011). HR’s global impact: Building strategic dif-ferentiating capabilities. Strategic HR.

Scott-Jackson, W. B. (2008). The Gulf Arab management style as a source of strategic advantage: Building global strategic capabilities on the foundations of local culture. In Bridging the Gulf: Theories and Practices for Learning Across Organizations, Sectors, and Cultures, Society for Organisational Learning (SoL). Academic Press.

Scott-Jackson, W.B., & Michie, J. (2013). The Gulf Arab leadership style: A case for contingent HRM. Submitted to International Journal of Human Resource Management.


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Tlaiss, H., & Saleema, K. (2011). The importance of Wasta in the career success of Middle Eastern managers. Journal of European Industrial Training, 35(5), 467–486. doi:10.1108/03090591111138026

Wolff, H. G., & Moser, K. (2009). Effects of networking on career success: Longitu-dinal study. The Journal of Applied Psychology, 94(1), 196. doi:10.1037/a0013350 PMID:19186904

KEY TERMS AND DEFINITIONS

Contingent vs. Universal HRM: Universal HRM assumes that a set of ‘best practice’ human resource practices will work in any culture or situation and the job of researchers is therefore to identify the set of universally effective best practices. Contingent HRM suggests that HR practices need to be specific and distinct in dif-ferent cultures and situations and the job of the researcher is therefore to identify the main factors which would determine the best HRM for any given condition. Of course, reality is likely to be a combination of both, where some HRM practices may provide value in any circumstances but others may need to be contingent.

GCC: Gulf Cooperation CouncilGulf Arab Leadership Style: The leadership style espoused by senior GCC

leadersHRM: Human Resource Management

ENDNOTES

1 Loyalty, in this context, suggests that the person would publically support the leaders and the firm itself, would not criticise the firm or its leaders and would take any opportunity to express support for the vision and leadership of the founder and current offspring.

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