United Arab Emirates | Developing the Local Workforce in a Rapidly Growing Economy ‘SCOTT L. MARTIN AND WILLIAM M. SOLOMON Star Engineering was established in 1961 and is based in London.' The frm has nearly 5,000 employees located in 140 offices worldwide. The organization consists of civil, industrial, and environmental divisions. A strategic focus for the ivi division has been large transportation projects. The United Arab Emirates (UAE) has been a promising market, as the country’s rapid growth has required the development of significant transportation infrastructure including highways, bridges, ports, and rail networks. Star Engineering has had a presence in the UAE forthe last twelve years and has managed two or three small projects per yea. ‘Two years ago, the UAE's Ministry of Transportation (MoT) decided to proceed ‘witha large, state-of-the-art bridge project. In many industrialized countries, an agency within the government would serve as the overall program manager and ‘manage all of the consultants and contractors involved inthe project. However, given the complexity ofthis project, the MoT recognized that it didnot have the ‘experience or capacity to manage all ofthe coordination and contract interfaces. ‘The project was put out to bid, and Star Engineering was awarded the contract. ‘The contract was significant to Star for a couple of reasons. First, although most of the firm’s revenue is generated inthe United Kingdom and other industrialized countries, having additional sources of revenue is important, and this is particularly true given the recent downturn in the global economy. Second, having ‘one’s name on a landmark project such as this one would contribute tothe success ‘of future marketing and sales initiatives. Given the UAB’s rapid growth over the last few decades, the government is making a concerted effort to develop its own workforce. Thus, one of the conditions of the bridge contrat was that Star Engineering would develop UAE nationals so that they would be able to manage all aspects of similar projects in the future. This case study examines the strategies and challenges associated with developing UAE engineers in the context ofa large-scale project.Historical Background “The UAE was established in 1971. Living conditions up through the 1960s were fairly impoverished, with a heavy reliance on fishing, peatling, farming, and ‘wading for income and survival. Oil was discovered in 1960 off the coast of Abu Dhabi, the curent capital ofthe UAE, and the UAE began to receive significant revente from oi-related exports in the 1970s. The UAE has nearly 10 percent of the world’s known petroleum reserves. The UAE government had to develop the oilfields and build the supporting infrastructure. This work required expertise that was not available within the UAE, s0 the government needed to rely on international organizations to achieve its ‘objectives. This resulted in a major influx of expatriate labor. Among the current UAE population of about § million, it is estimated that 80 percent are expatriates. ‘The UAE is governed by heredity rule, and the rulers or Sheikh retain a great eal of power. For instance, unions and collective bargaining do not currently exist in the UAE. However, the rulers tend to be paternalistic and humane (Muna, 1980), The UAE government has been rather generous in distributing its wealth among UAE citizens. During the initial years of growth, UAE nationals were systematically placed into government organizations. The employment terms in the public sector were rather atractive including for instance, relaxed performance standards, high compensation, short working hours, and generous amounts of leave time (AFA, 2008). Thus, the discovery of oil has ed toa dramatic improvement in UAE lifestyle over a relatively short period of time. Expatriate labor has been used to build a modem infrastructure, and disposable income is among the highest inthe world Human Resource Background Despite the benefits associated with rapid economic growth, there are also major challenges. The heavy use ofan expatriate labor force places tremendous political ‘and social pressure on the UAE government and its citizens. From a strategic perspective, the nation is not able to independently manage is own affairs and future (Rees, Mamman, & Braik, 2007). Although UAE nationals may own ‘businesses and provide others with general direction, they often do not possess the ‘knowledge and skills needed to perform much of the nation’s work. ‘There are also Fundamental economic and employment issues. The population is growing, but government organizations have now become saturated (Forstenlechner, 2008). Ths has created the need to place UAE nationals in the private sector This is extremely challenging for UAE nationals, as they must now compete with an international labor force, and the employment terms are far Less attractive than those offered in the public sector.244 + Soot Martin and Wala M, Solomon ‘The UAE government has made a significant effort to support the transition of UAE nationals into the private sector, including a heavy emphasis on education and traning (Suliman, 2006). There has also been pressure on the private sector to hie UAE national, such as quotas for UAE nationals and additional fees placed on the use of expatriates. The systematic effort to recruit and develop UAE nationals to reduce the country's dependence on an expatriate workforce is referred to. “Emiratization.” However, given the country's rapid growth, the educational systems were not competitive with those in most industrialized nations. Thus, UAE nationals often lack the skills needed to succeed in the private sector (AL-Ali, 2008). Skill deficiencies tend to revolve around critical thinking, mathematical reasoning, and writing. UAE nationals are also generally unprepared forthe levels ‘of motivation and disipline that are required in the private sector (AI-Ali, 2008). The previous cohort experienced fairly relaxed working conditions in the public sector. As a result, young adults have little prior experience with the demands of a global economy. In addition, UAE nationals tend to have negative attitudes toward engaging in manual Isbor (AL-Ali, 2008; Suliman, 2006). Such negative perceptions often extend to many lower-level positions and any routine or non- intellectual work. This is likely duc, atleast in part, o the fact that the UAE, along ‘with many other Middle Eastern countries, is considered a “high-power-dstance” culture (Carl, Gupta, & Javidan, 2004; Hofstede, 2001). In other words, the power difference between leaders and followers is more dramatic than ii in many ‘other countries. In high-power-dstance cultures, leaders are expected to make virtually all major decisions and maintain a degree of distance trom followers. UAE nationals risk losing status or prestige if they engage in work tha is typically conducted by those at lower levels of society. As a result, despite many job ‘opportunities in the private sector, UAE nationals often remain unemplayed owing to skill deficiencies or an unwillingness to accept positions that are perceived 1s overly demanding or demeaning. Thus, despite a rapidly growing economy, employing and developing UAE nationals remains a significant strategie challenge for the UAE government The Bridge Project ‘The project involved designing and building a bridge over a lage chenne! of water ‘The contract also required building approach freeways, ramps, and interchange structures to connect the bridge with existing highways, The project was expected to take two years to complete. All major decisions regarding transportation issues ‘were made by the executive committee ofthe MoT. This committee consisted entirely of UAE nationals. The executive committee relied on a managing director, an expatriate ftom the United Kingdom, to provide technical guidance and serve as the operational leader for all major projects. All consulting firms and contractors ‘working on major transportation projects reported to the managing director,Unto Arb Emirates » 245, Given the visibility and complexity of this project, the executive committee and managing director wanted to hire & leading global frm to serve as the program manager. As a result, the request for proposal (RFP) was circulated internationally ‘The executive committee and managing director had two general eritria for evaluating proposels. First, they were seeking design and building expertise related to this speifie project. Second, they required a clear plan for developing UAE nationals so that they would be able fo serve as program managers for similar projects inthe future. The RFP indicated that UAE nationals should gain experience on all aspects of program management, The RFP also stated thatthe execttive committee would select the UAE nationals for this project and that the UAE nationals would be employees of the MoT. Thus, ahough the UAE nationals ‘would work withthe contractor ona daily basis, they would be paid by the MoT and would receive all government benefits such as those related to holidays, vacation, and sick leave. ‘Star Engineering was eager to submit a proposal as this project was aligned with its strategic objectives. The technical aspects of Star's proposal were slid, as it ‘had completed similar projects in the United Kingdom, Hong Kong, and Japan, ‘The proposal gave significant attention to the development of UAE nationals. ‘The proposal included the establishment of a new project office in Abu Dhabi to accommodate a total of forty employees. The organization structure had four core funetions: finance, contracts, engineering, and construction. The proposed organization chart included five UAE nationals, with one reporting directly to the head of each ofthe four functions and one reporting directly to the general ‘manager, who served as the head ofthe entire project. The proposal also indicated that Star would provide all ive UAE nationals with cross-functional taining on topics such as contracts, design, and project management. THR support fr this project would be provided by Star’ regional office located in Dubai. This office included five HI generalists that focused primarily on ‘compensation, visa, housing, and employee-relations issues for Star employees. Star recognized that it needed adaitional HR expertise to support the development ‘of the UAE nationals. The proposal indicated that a taining and development specialist from Star's home office in London would assist by conducting initial, orientation and needs analysis meetings with the UAE nationals, The taining specialist would also conduct quarterly follow-up meetings with Star's leaders and the UAE nationals to assess progress and provide additional guidance as needed. ‘The proposal was based on “time and materials” rather than a fixed fee, so staffing adjustments could be made later without jeopardizing the financial vibility ofthe project. ‘The managing director and executive commiltee reviewed a large number of proposals and selected five firms, including Star Engineering, to make formal presentations, After further review, Star Engineering was awarded the contract. "The managing director indicated the decision was based on Star's design expertise relevant to this specific project and the integrated plan to develop UAE nationals,246'+ Scot Matin and Wil M, Solomon Developing UAE Engineers Consistent with Star's proposal, the executive committee selected five UAE nationals to join the team. These placements were considered prestigious assignments and were assigned to candidates who were viewed as having significant leadership potential. There were three males and two females. Star's leadership team was pleased to learn that all five held four-year engineering degrees, with one earned in the UAE and the other four earned inthe United States or the United Kingdom, Stars leaders were, however, surprised to lear that none of the UAE nationals hhad previous work experience related to engineering. This would be acceptable for entry-level positions, but it was not consistent with the level ofthe postions in the proposed organizational structure. Star's general manager raised this issue withthe ‘managing director. The managing director indicated that none of the candidates had prior work experience and that it was difficult to find UAE nationals with prior experience. After much debate, Star decided to maintain the proposed structure, withthe UAE nationals reporting to the general manager and four function heads, but it was clear that the job responsibilities would have tobe simplified to match their lack of experience, ‘The arrival of the UAE national at Star's new project office was a postive experience fora involved. The expatriates were intrested in gaining additional {exposure to the local culture and weleomed the opportunity to help others learn about the execution of such a large project. The UAE engineers were also pleased to join the project. Large infrastructure projects tend to be a source of pride inthe UAE, and being directly involved in such a visible projet was rather prestigious, The training and development specialist arrived from London during the first week. He conducted in-depth meetings withthe UAE engineers to assess skill levels and interests. He also met with Star's leaders o provide guidance with regard to coaching and developing the UAE nationals. The training specialist spent considerable ime working with Stars leaders to idemtfy assignments that ‘would be suitable for entry-level engineers. This was somewhat challenging, but it appeared there were enough entry-level tasks for the UAE engineers to play @ ‘meaningful role inthe projet ‘The general direction to Star's management team and all of the other expatriates \vas fo treat the UAE nationals as they would treat one another, Star Engineering hd an excellent reputation and received international awards for having bigh performance standards and a supportive, team-oriented culture. As a result, Star's Philosophy was thatthe UAE engineers should be treated the same as Star's own employees. ‘The expatriates found working with the UAE nationals to be enjoyable. The UAE hatfonals were extremely respectful and seemed genuinely interested in buildingted Ars Emirates = 247 strong interpersonal relationships. The UAE nationals seemed bright, as they ‘were abe to grasp new, complicated concepts with relative ease. Initaly, the UAE nationals joined Star employees on a numberof site visits, and this seemed ‘productive for ll involved, The interaction was pleasant, and the UAE nationals were clearly engaged in conceptual issues related to engineering and financial matters ‘The UAE nationals were particularly helpful to Star employees in a couple of| respects. Fist, they provided useful insights into government issues in the UAE, Second, when Star employees visited government agencies to request information ‘or seek approvals they were given instant credibility if they were accompanied by UAE national However, after a few weeks, itwas apparent that the intial plan regarding the ‘UAE nationals was untenable. The UAE engineers failed to complete many of their assignments, The UAE nationals had some skill deficiencies that were more serious than Star's inital estimates. For instance thir ability to write technical ‘memos or reports was well below standard. However, the primaty issue revolved largely around the lack of motivation, The official work houes forthe UAE nationals was from 7:00 a.m, to 3:30 pam. but they often arrived late and left early. The expatriates often worked twelve or more hours per day to meet project deadlines. The UAE nationals were often absent. In addition, there was aso a lack ‘of attention to detail, so much of the significant detail work had to be re-checked by expatriates. Asa result, virtually all work was transferred to expatriates, ‘The UAE nationals also became frustrated. They wanted to make a meaningful contribution to the projet and requested more interesting work assignments. The ‘UAE nationals argued that they had engineering degrees and should be focusing ‘on “thinking and learning” rather than “executing routine work." The UAE nationals complained tothe exeeutive committee and managing director that they ‘were bored and not being properly developed by the projet team, The situation was also challenging for Sta leaders, who were being held accountable for completing a major project under tight time constraints and for developing the UAE nationals. Star's general manager complained to the ‘managing director on multiple occasions. The managing director was sympathetic and indicated he understood the issue. However, he emphasized that development of UAE nationals was a critical aspect of the project and Star was responsible for ‘managing the issue. The managing director indicated that he didnot want the UAE nationals complaining o him or anyone else that they were bored or not being properly developed. The managing director reminded the general manager thatthe contract was “time and materials” so Star should do what was required to complete the project and develop the UAE nationals. Star made a couple of major changes to achieve its overall objectives. First, it hired additional experienced engineers to handle the workload that was initially28 + Soot Mat and Wall Solomon assigned to the UAE nationals. Second, Star leaders transferred much of the day-to-day responsibility fr training the UAE nationals tothe training function. Additional training specialists were brought from the United Kingdom and assigned to this project ona full-time basis. The specialists designed a range of formal training seminars on topics such as concrete trafic management, salty, quality control, and contract management. There was also increased pressure 10 document the development ofthe UAE nationals, so the training specialists made a ‘more concerted effort to document attendance and learning atthe seminars. ‘The bridge and related infrastructure are neat completion and on schedule. The costs have exceeded the initial proposed budget owing tothe additional engineers and training initiatives. The expatriates do not believe the UAE engineers would be able to manage similar projets in the future. The UAE nationals believe they have been exposed tothe major aspects of the project and could provide the appropriate direction on future projects. Case Study Questions and Activities 1 Role play exercise: Form groups of three and have one person play the role of Star leader, one the role of a UAB engineer, and one the role af the managing director. The Star leader should begin by coaching the UAE engineer on efforts she might consider to contribute to her own development. The UAE. engineer should respond by sharing her perspective, The Star leader and UAE engineer should have an opportunity to respond to each other. After hearing both sides, the managing director should offer suggestions to both the leader and the UAE engineer on how each might contribute to the development of the UAE engineer. What issues do the three agree on? What differences remain? How might such differences be resolved? 2 Assume you have an opportunity to rewrite Star's proposal forthe bridge project. What might you suggest to facilitate the development of the UAE nationals? You may consider all aspects of HRM, such as stafing, structure, performance management, compensation, and training/development, 3 What role do actual work experience and accountability play in learning and career development? In other words, what (if anything) do we lear from ‘actual work experience that is often not leamed from training programs? How ‘might developmental experiences be modified to reduce the amount of time or effort required? 4 What isthe general view of training versus developmental experiences in your country? How might training programs be modified to produce the learning and development that are typically gained from actual work experience? Are there learning objectives that require actual experience and cannot be achieved ‘through formal training programs?Unite Ara Emirates» 249 5 What long-term, stratezic recommendations might you offer for developing UAE nationals? Do any of your recommendations conflict with a high-power- distance culture and a reluctance to engage in lower-level work? Ifs0, how might you address sueh cultural issues? Note |The name ofthe organization and several other inconsequential cts have been changed. References AL-ALi 3. (2008). Emiretisation: Drawing UAE nationals ito their surging economy. Iuernational Journal of Sociology and Social Policy, 289/10), 965-379, Cal, D., Gupta, V.,&Javidan, M. (2004). Power distance. In RJ. Hous, PJ. Hanges, M. PW. Dorfman, & V. Gupta (Eds), Clare, leadership. and organizations: The (GLOBE study of62 soctaies (pp. S13-563). 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