What challenges do HRDs face in the region?
The biggest challenge is to create more and better jobs, especially for women, young people and the most educated. According to recent reports, youth unemployment averages 25% across the region and in some countries is much higher. The most educated candidates are struggling to find jobs and there is a high level of unemployment in some of the major regional economies. Women are underrepesented in the workforce.
Part of the problem is that there is a mismatch between the skills that education systems provide and those that firms actually need. The private sector needs to be more involved in contributing to skills development. Sustainable job creation is further hampered by the disproportionate weight of the public sector in many of the region’s economies. Cost pressures stemming from the global and regional economic crisis add to the problem.
Clearly, localization initiatives are important and boards are urged to hire natives for senior roles. If you are an HR director, you must create well thought-out talent agendas and leadership development programmes – and get these onto the agenda of boards and senior management. Too few boards focus on talent and succession planning at this stage and many companies still struggle to attract the right top talent – with inadequate compensation structures often being partly to blame. Cultural history and strong relationships can also make it difficult for you to make objective assessments and find exit strategies for underperforming staff.
How does this vary between different countries?
Some countries’ demographics are more homogeneous than others. The UAE is ahead in the GCC because of the fluidity of the market and mobility of talent in terms of work permits, regulations, ease of applying for and finding work and free-zone set-up for start-up.
This particularly applies to Dubai, which is the hub for 95% of the regional multinational head offices. It also hosts the majority of industry events and shows, and tolerates more open debate – making it the top choice for talent and organizations from outside the region. It is easier to hire and recruit expats into the UAE, which makes your job as an HR director slightly easier than in Saudi Arabia, for example.
However, recent localization mandates are creating pressure to shift the talent pool to local markets. Saudi is very focused on providing employment opportunities for its nationals and procedures are tightening.
It’s now harder to get a simple business single-entry visa or work with companies in the country. There is a limit on work permits and visas for even Saudi companies as well as quotas for different classes of nationalities. Local talent has priority, even when no qualified pool of talent exists.
Is there a divide between public/private sector?
It depends on the country. In Saudi Arabia, government and government-related entities employ the vast majority of working nationals, creating a public/private sector divide between locals and expats. However, many government- related entities are operating at private sector level.
They are sophisticated and, in some instances, innovators in their industries but there is arguably a bigger gap between multinational and local company practices.
How can HR help more nationals engage with private sector employers?
There are many examples of government-related entities – such as Aramco, SABIC, Dubal, ADIA, Emirates and Etisalat – who have built over the long-term successful franchises and invested heavily in their people. Secondments are a good way to plant some top level public sector talent into private sector organizations. In several Gulf states – especially in Dubai – we have seen young talent being moved around between government, government-related entities and the private sector.
What HR capabilities are needed to drive growth?
Business partnering is essential, as is a genuine ability to gain your organization’s trust so that it sees HR as a true business enabler. If you are astute in building organizational capability, ‘institutionalizing’ the identification of high potentials and assessing or developing them to build a stronger pipeline of senior executive talent, you will be in demand. The region’s growth prospects are picking up and the ability to lead and drive change is highly prized.
head of ME financial services practice, Egon Zehnder
Mark joined Egon Zehnder in 1993 and is a member of the Global Financial Services Practice Group, formerly based in Dubai. He previously worked at Goldman Sachs and Saudi International Bank.
Middle East practice leader, Egon Zehnder
Eduen heads the Middle East practice of Egon Zehnder and is based in Dubai.