Questions:
1. Can the countries of the Arabian Peninsula become Developed without Westernizing? 2. Compare and Contrast the Global HR practices in view of Business Life Cycle in Saudi Arabia and Dubai 3. From the Social Responsibility and Economy Stability stand point, what is Saudi Arabias role in business sustenance in the Middle East?
Case Summary This case talks on the possibility of Saudi Arabias efforts to modernize, without
really westernization. The country is abundant with rich history starting from the rise of Prophet Muhammad, the founder of Islam, to the current scenario where stock markets and oil exploration are leading the nation. The voyage to economic development started with oil exploration some 80 years back. The Country never looked back after that. The oil has become Saudis biggest asset helping her becoming largest oil exporter in the world with second largest oil reserve and sixth largest gas reserve. These reserves are predicted to get over in next 70-80 years, therefore to reduce over dependency of their economy on oil exports the government has undertaken various reforms for economy, education, employment and welfare of its citizens keeping the kingdom at par with its international counterparts. The case also explains the international relations set up by the kingdom under the ever changing political scenario and how the government is committed to shift the economys dependence from oil to other sustainable growth factors. Country not only has good relations with neighboring Islamic countries but also with western counterparts to lead the sustainable development. It has initiated various economic reforms by opening up Foreign Direct Investment (FDI), focusing on market liberalization, and diversification. The country will continue with its globalization and liberalization as long as its benefitting its kingdom and the people and not clashing with the foundation principle of the country i.e. Islam. Lastly the case discusses about the social pressure Saudi is facing from the ambitious extremist group Taliban and challenges that future will present to this kingdom.
Answer 1: Saudi Arabia has always iterated that Development and Westernization are two different terms for them yet people have often mixed both the terms together. Westernization simply refers to
the process of adopting or getting influenced by western culture wherein the citizens of a country change their perception, philosophies, values, language, lifestyle etc. according to the culture prevalent in the western world especially US. Development of a country, on the other hand is
measured in terms of economic factors generally like GDP, per capita income, purchasing power parity etc. Broadly speaking, the concept of a countrys development involves improving the life of its residents. Development adheres to key issues pertaining to standard of human life for example health, education, and infrastructure and has nothing to do with Westernization. There has been various countries in the past who have directly incorporated the western culture thinking this would help in the development process. But development in Saudi is done in such a way that they do not disturb their customs and practices. The country has kept the faith of the citizens intact by aligning countrys businesses with their own culture. They have opened up FDI and worked on market liberalization to let market take care of itself. No business in the world want government intervention in the market because economics suggests that market will come to equilibrium in the long run. This concept has been absorbed by businesses and government bodies of Arabian Peninsula. They have taken the growth strategically by working on several key sectors like education, welfare etc.
Answer 2: The key differences between HR practices of Dubai/UAE and Saudi Arabia are:
1. HR practices in Dubai/UAE: There is one big misconception that Dubai/UAE is all about oil but in reality this is actually not the case and other sectors are thriving too. Dubais tourism, infrastructure and services are giving way to majority revenues. It has also emerged as a cosmopolitan metropolis and has become huge business and cultural HUB for the entire Middle East and Persian Peninsula. Dubai presents HR practitioners and organizations with a war for talent that is very challenging. Expats make 90-95% of employees in the private sector. Therefore there is a clear need to maintain balance between locals and expats. For example in banking sector, there is a requirement to increase the percentage of Emiratis in the workforce that consists of only 4% Emiratis. Some issues related to social and cultural issues have led about 10% UAE nationals resign their jobs per annum and also because low-trust is an impediment for employees here in UAE. To address these issue, UAE national employees are treated fairly, justly and consistently. The Emiratis also take participation in decision making, their suggestions are acted upon, and feedback is provided for their performance, empowerment, and recognition. Nepotism is very prevalent in UAE. Systematic criteria like psychometric, learning and aptitude tests are done to tackle Nepotism. There is open-
door communication policy and measures to reinforce and retain top talents. Higher salaries are offered to local employees to recruit and retain them which are a complete contrast to strategy elsewhere. Many UAE employers have started to look into this and are now implementing total rewards concept as they realize they need more than just compensation to recruit top talents. 2. HR practices in Saudi Arabia: In Saudi Arabia HR department is usually entrusted with the job of handling the headcount and ensuring that the regulatory obligations associated with them are fulfilled in a timely manner. They are assigned the task of hiring and firing of employees, maintaining databases, handling public renewal of personal documents like passports, driving license etc., preparation of payrolls, calculation and disbursement of allowances, issuing notices to employees, filing of regulatory returns and in some cases ensuring their safety and security. But some other companies do not take HR seriously. To tackle the issues of Expats and Locals, Saudi Arabia has incorporated a policy known as Saudization to replace foreign workers with local workers.
Answer 3. Saudi Arabia being one of the most important Middle East country has the
responsibility of taking entire Middle East forward towards economic development holding the hands of the society with it. The countries in GCC are united by their fundamental foundation, faith in Islam and the monarchial governing order they share. All the Middle East countries like Oman, Iraq, Iran and others look at the Saudi Arabia for implementation of key policies for the development. Saudi Arabia thus has become a role model for the GCC countries. Country has deployed various key instruments to keep check on various terrorist activities and is fully committed to do whatever necessary to tame this beast which has threatened this country post September 2001 US attacks. Creation of various councils and authorities to foster businesses has resulted in massive development in the country. Country has shown the difference between modernization and westernization which were regarded as synonyms earlier. It has kept its social and cultural faiths intact even after modernizing. Any wrong event that happens in the country will have a trickling effect in the entire Middle East region and it will send uncertain signals to the businesses forcing them away from the region. There is a rising fear of Taliban and other extremists in the region which Saudi Arabia has to check. Government is fully aware of this huge task in hand. Oil exploration will keep on generating revenues for the country for the next
70-80 years but is certain to come to an end sooner or later. There is one problem with oil that it does not generate jobs. Revenue generation will help the government in funding several key policies but its incapability of generating jobs is a bigger problem as Saudi Arabia is facing a surge in educated youth population which wants jobs. They have started developing sectors like infrastructure, tourism, transportation, communication, education etc. to tackle problems of jobs and generating employment.
