Emiratisation at Abu Dhabi National Oil Company - Case Study Example

Emiratisation at Abu Dhabi National Oil Company: Recommending a viable strategic plan Name: Class: Unit: Introduction Abu Dhabi National Oil Company (ADNOC) was established in 1971 with an aim of operating in all areas of oil and gas industry. Since the establishment, the organisation has broadened their activities in the industry establishing subsidiaries leading to an integrated oil and gas industry. The industry main operations are in the field of exploration, production, oil refinery, as processing petrochemicals, transportation in maritime and chemicals. Emiratisation has led to ADNOC changing their recruitment procedures to increase the locals in addition to the immigrants (Gérard Al-Fil, 2014). By 2015, the firm had added 7,500 new jobs. This was in line with the Emiratisation strategy and their ability to meet the capacity in oil and gas production. The Emiratisation started in 2009 where UAE started pushing for change in the hiring procedures for the companies. This is through coming up with laws which were aimed at encouraging the firms to hire the local UAE nationals in their expansion (Al-Ali, 2008). Through Emiratisation policies, there are taxation for hiring the immigrants and incentives for hiring the locals. The policy ensures that the organisations follow the job quotas which are aimed at increasing local employees. This has led to ADNOC coming up with measures to attract local employees (Emiratisationnow.com, 2016). This paper will analyse ADNOC Emiratisation strategy. The paper will look at the objectives, viability and achievements of the policy at ADNOC up to date. The paper will then look at ADNOC Emiratisation strategy strengths and weakness. Lastly, the paper will come up with viable strategic plan for ADNOC in implementing Emiratisation for the next 5 years. ADNOC Emiratisation strategy ADNOC has been a strategic partner for UAE government in their Emiratisation strategy. This is through offering unique employment opportunities to the talented UAE nationals using incentives, nationalisation strategies and development programmes (Gérard Al-Fil, 2014). Career development has been a very vital part in ADNOC Emiratisation policy. This has been a valuable strategy for ensuring that the trainees are offered a growth opportunity in the organisation. One of the main attainments in line with the Emiratisation strategy was the hiring of 1,000 local employees in the human resource authority (Emiratisationnow.com, 2016). In 2015, ADNOC was able to add 7,500 new job opportunities. At the moment, ADNOC has over 25,000 people. The firm has set a target of 30% growth in their labour force and production (Emiratisationnow.com, 2016). The firm target new employees who are mainly Emirati. This is through recruiting based on the ADNOC Technical Institute and the Petroleum Institute. This is a vocational college which is focused on meeting the future staff needs for ADNOC. The college was founded together with academic partners and industry. The firm had set a target to have their Emirati employees increased by 75% in 2014. By the end of 2014, the firm had boosted their total workforce to 32,500 workers. This is through adding about 12,000 new Emirati employees. This was a strategy that led to doubling its local Emirati employees and a reduction of expatriate workers who were replaced by Emirati nationals (Nazzal, 2016). According to Nazzal (2016), skilled workforce has been embedded in ADNOC vision while at the same time ensuring that they have an increase in Emirati employees. This is in-line with the firm Emiratisation strategy. The firm has been having plans to increase their oil production to 3.5 million barrels per day (bpd) by 2018. This requires having an increase in workforce for the firm. There is also need to replace the leaving employees who according to statistics amounts to 4% annually. The firm has then been forced to be employing about 6,000 new employees to replace them. This requires hiring about 2,800 employees annually where most of the positions are given to the locals. The firm has been obliged to support the nationalisation programmes which are spearheaded by the government (Emiratisationnow.com, 2016). Objectives The main objective of ADNOC Emiratisation program had been replacing the foreign labour with the local labour. The program would ensure that the money was kept in the country. Hiring of the foreigners has led to a lot of cash being remitted outside the country (Al-Ali, 2008). Through reduction of remittances, it was aimed that there will be job opportunities for the nationals and reduce the firm reliance on the foreign talent. The move was also aimed at reducing the level of unemployment in the country through absorbing local talent in the oil and gas industry. This was a move that would ensure that nationals have an active role in the economy (Gérard Al-Fil, 2014). Through Emiratisation, ADNOC has been focusing on encouraging the locals to join the labour market (Nazzal, 2016). Most of the population in the Gulf States are between 15-30 years old with higher education. This had led to an increase in the number of the jobseekers in the region. UAE number of the foreign workers was higher than the national workers. The Emiratisation program aimed at contributing to addressing the structural imbalance in the UAE labour market where the national workforce was outnumbered by the immigrants. To attain this effectively, ADNOC aimed at improving the educational opportunities through offering training and equipping the employees with skills needed in the industry. ADNOC aimed at coming up with a more successful training program for the emirates nationals. There was also need to attain a healthier and safer working environment for emirates employees joining the field. Through Emiratisation, ADNOC aimed at attracting the most competent UAE nationals to work in the firm (Gérard Al-Fil, 2014). Viability The viability of the Emiratisation program at ADNOC has faced several challenges. Despite being a noble program, not all UAE nationals have the required skilled targeted by ADNOC. Also, the control on the migrant labour has led to an increase in business risks. This is due to fact that ADNOC had in some cases been forced to compromise on the needs of the labour market with an aim of meeting the Emiratisation targets. Based on the policy, ADNOC had to employ local talent instead of employing the talented foreign workers. Also, the government required quotas are high which implies that a lot of experienced foreigners may be locked out of the ADNOC job positions (Gérard Al-Fil, 2014). The immigrants to UAE have higher educational qualification and skills than the locals. In fact, studies have proved that 65% of the immigrants to UAE have educational qualifications beyond bachelor degree compared to 45% of the locals (Emiratisationnow.com, 2016). Without appropriate training, the policy would not have been viable for ADNOC to implement. The change process also presented another viability challenge. The firm was supposed to meet a target for hiring the nationals in a predetermined time. They were also supposed to list the job opportunities that they had kept for the talented locals. The firm thus faced a limited time in providing the positions for the nationals. This was a change required in a limited time while the number of immigrants was high. Changing the hiring procedures in a limited time leads to viability issues especially when the firm had a high number of emigrants (Al-Ali, 2008). UAE education system is another issue that led to viability challenges. The school curriculum has been based mostly on the basic training with less focus on the advanced methods which includes technology and problem solving. With most of the firms being used to hiring the expatriates, there have been low focus on the training led employment in the UAE (Gérard Al-Fil, 2014). Most of the UAE nationals thus lack the required training to join firms such as ADNOC. Emiratisation has had points of conflict and controversy which have affected implementation. This is especially the conflict between the federal government, nationals and the domestic politics. While ADNOC has benefited a lot from the free labour market, the government has forced the national workforce which is less competitive than the immigrants. Also, foreign workers have been highly cost effective compared to the national workers. In some cases, it is common for the national workers to request for high wages even in positions which they do not qualify (Nazzal, 2016). Also, research has shown that there is high turnover among the national workers. In addition, the Emiratisation program was rushed without looking at the long term impacts. There was need for addressing the education needs that would have helped in ensuring the program continuity. There was poor analysis of the policy targets which may have also affected the viability. Another issue is the rigid social structure. With the rapid economic development, the society had become rigid. This led to challenges during the implementation of Emiratisation policy. Most of the UAE nationals view the blue collar jobs as suitable for expatriates and not them lading to low intake (Al-Ali, 2008). Also, most of the nationals have safety nets from their families and state. This makes it hard for the nationals to worry about having employment. The availability of the safety nets has also affected the incentive to work and their work ethics. This makes the perception of the suitable occupation to change. For the ADNOC, there exists a dilemma between firm development, economic progress and Emiratisation (Nazzal, 2016). While both development and Emiratisation is important for the firm, the viability of the policy matters a lot. Achievements to date Despite the challenges in the viability of the Emiratisation policy, ADNOC has been one of the most successful firms in increasing their UAE National employees (ADNOC Distribution Careers, 2016). This is due to their ability to accomplish a strategic plan aimed at increasing the total percentage of the UAE employees. The organisation Emiratisation program is followed by all groups of companies affiliated to ADNOC. This includes ZADCO, ADCO and GASCO. ADNOC group of companies have been highly recruiting UAE nationals who have university degrees, higher college diplomas, certificates and diplomas. In addition, the organisation has targeted graduates from their ADNOC Technical Institute. To attract the nationals, ADNOC and its affiliates have been creating unique working environment with trust and inspiration. The staff are made valued by the organisation and made to feel worthy and happy. A highly motivated workforce which is highly accommodated has attracted a lot of UAE nationals to ADNOC (ADNOC Distribution Careers, 2016). For the affiliate firms such as GASCO, they were able to take advantage of employing 1060 employees’ leading to 61.5% rise in Emiratisation level in 2009. The organisation has been pursuing Emiratisation in an aggressive manner through hiring high qualified locals in all areas of the organisation. The success of Emiratisation has been through training, development and integration of the UAE national staff. The organisation used training and development policies which were written in a manual. The manual became a vital tool in training the nationals and providing a guideline. For the firms such as ADCO which acts as a subsidiary of ADNOC, they have already attained over 75% of the local employees (Emiratisationnow.com, 2016). There has been a lot of emphasis on ensuring that there is flow of information and transfer of employees with an aim of gaining more skills. To ensure that UAE nationals are well equipped in workforce, ASCO which is part of ADNOC have a technical training centre. This helps in giving the UAE nationals a competency based training using the leading technologies. There is an environment where national employees are able to learn on the workplace values ad work ethics (ADNOC Distribution Careers, 2016). By 2017, ADNOC had set a target of 75% of Emiratisation as a strategic goal. This has been attained through the use of annual recruitment plans which look at both male and female UAE nationals. The firm was able to attain this target through a series of steps. For example, in 2012, the ZADCO had obtained 44% of their employees as UAE nationals (Emiratisationnow.com, 2016). The firm also came up with their own formula for calculating Emiratisation. At the moment, most of the employees working at ADNOC and its affiliates are Emirati. Most of them are recruited through the ADNOC Technical Institute and the Petroleum Institute. The vocational colleges were founded with an aim of helping ADNOC meet their future workforce needs in technical staff in line with Emiratisation. Through coordination of all subsidiaries with the ADNOC National Recruitment Committee (NRC), it has been possible to gradually increase the number of UAE nationals working for the organisation (Emiratisationnow.com, 2016). ADNOC group has continued to ensure that the growth of UAE nationals is undertaken in the industry. This is through fully committing to the policy while at the same time ensuring that the UAE nationals have the right skills and training to fit in the organisation (ADNOC Distribution Careers, 2016). ADNOC continues adding the number of employees annually (ADNOC Distribution Careers, 2016). This is done while at the same time ensuring that over 50% of the new hire are UAE nationals across the ADNOC group. According to reports, the firm committed back in 2010 to be adding 800 national employees annually where 15% would be female at ADNOC and all groups of companies affiliated. In a country that has a large population of expats, the emirates makes up a small percentage (Emiratisationnow.com, 2016). The increased efforts to nationalise the labour force has had a great impact on the expatriate community. This has led to a lot of expatriates opting to leave since it has become too expensive for them and there is no job security. There is low placement for the expatriates in the country. The talks of layoffs and nationalisation had led to foreigners leaving their jobs due to uncertainty. It is expected that by 2020, there will be about 250,000 graduates looking for employment. Most of the jobs in the UAE are offered in the private sector with oil industry playing a major part (Al-Ali, 2008). Despite this, the current market conditions require training more national employees. Although ADNOC has made some progress through Emiratisation, it is hard to evaluate both tangible and intangible outcomes. There is scarcity on the literature that documents the financial resources used on the policy implementation. Strengths and weaknesses Strengths One of the main strengths of Emiratisation policy at ADNOC is the ability to keep the jobs within the country. This is a policy that ensured that the level of unemployment was reduced in the country through replacing the foreign labour with the local labour. Through reduction of the foreign workforce which had formed a large part of the country’s population, it was possible to reduce overreliance on foreign talent (ADNOC Distribution Careers, 2016). The move made it possible for organisations such as ADNOC to utilise the local labour and also have skilled talent within their borders (Emiratisationnow.com, 2016). The policy made it possible for the locals to gain vital skills that are required in the industry. In addition, the Emiratisation policy is an important tool in the restructuring of education system in UAE. This helped in creating more jobs in the country. It was also possible to enhance the investment of the UAE nationals in the active economic roles (Modarress, Ansari & Lockwood, 2013). Through Emiratisation, it has been possible for ADNOC to increase the number of women in the national labour force. Women have been able to gain employment in firms such as ADNOC where it would have been hard to get a job. This has also led to women earning more than they were previously earning. The move has also led to a work culture among the nationals. At the moment, the nationals have been given a priority over the non-nationals in employment (ADNOC Distribution Careers, 2016). ADNOC cannot employ foreign workers when there are unemployed nationals who can hold the positions. This change in the labour laws has ensured that the level of unemployment is low. At the moment, the country has been able to control the flow of immigration in a better way to protect nationals (Al-Ali, 2008). Weakness Despite being a noble policy to end unemployment, there have been several weaknesses that have hindered the success at ADNOC. First, the policy failed to look at the level of education and training of the UAE nationals. Training and education for the emirates nationals have been lagging that of the expatriates and immigrants (SitesPower Institute, 2011). When the policy was made, this was not considered which made it increasingly difficult to employ nationals in top roles. Another weakness is the fact that the policy came with a lot of controls which made it costly for business. The policy failed to fully take into account the needs for the labour market and skills levels that the emirate workers had. Also, the approach used on the policy made them initially to be unpopular among the expatriates and nationals. In fact, most of them looked at the policy as a form of taxation (Al-Ali, 2008). Emiratisation policy becomes viable where there are competitive firms which are servicing the domestic market (Nazzal, 2016). This includes firms such as construction, telecommunication and educational sector. This is due to fact that these business benefits from the government support and in most cases are owned by Emiratis. The costs of Emiratisation policies have had a great impact on the on the implementation especially by the private sector. This is another area that the policy had overlooked in coming up with the policy. Without government strict enforcement, it would have been highly difficult for ADNOC to succeed. Another weakness is the practice of visa trading which had a negative impact on the implementation of Emiratisation. This was due to high demand for the foreign workers visas which had outstripped the supply for a given type of jobs. This led to some of the nationals setting up fake firms with an aim of getting work permits and later selling them to the migrants. Despite the severe penalties, the practice has continued hindering the success of Emiratisation. The policy had failed to fully address this challenge and the government control has been poor (Modarress, Ansari & Lockwood, 2013). Another weakness is the fact that the policy did not address Wasta and nepotism fully. Wasta involves use of influential power to gain prestige or honour (Barnett, Yandle and Naufal, 2013). The person gaining favour is expected to pay back in future. Through Wasta, discrimination and preferential treatment are implemented in the job environment (Modarress, Ansari & Lockwood, 2013). This leads to priority being given to people based on Wasta rather than focusing on the corporate goals. While Emiratisation policy was made, it failed to look into ways in which it can tackle Wasta and ensure that all nationals are given a fair opportunity. The Emiratisation policy was thus dragged into misadministration in such organisation as well as defective management (Nazzal, 2016). When hiring nationals, it is possible for the job applicant to influence the employer using Wasta irrespective of their qualifications. The unlawful and unfair method of hiring rose with the rise in hiring of nationals through Emiratisation. This is a counterproductive means for an organisation. This is a process that has weakened the Emiratisation policy through eliminating well educated nationals for fair and transparent hiring. Wasta also leads to negative social capital since it is against good governance and reforms such as Emiratisation. The government avoided using the resources to tackle the negative Wasta issues that are still prevalent in the hiring of the nationals (Barnett, Yandle and Naufal, 2013). Another weakness is the fact that Emiratisation did not fully address cultural barriers that would impact its implementation in organisations such as ADNOC. Islam plays a major role in UAE customers, roles and responsibilities (Barnett, Yandle and Naufal, 2013). In addition, national culture has an impact on the organisation culture. Failure to fully address the cultural issues which has an impact on the policy led to few women being absorbed in the labour market. Emiratisation faced a major weakness in the fact that it failed to come up with adequate incentives to retain locals in their workplace (Nazzal, 2016). This led to a situation that employees would suddenly leave even after training and investment in them. This led to high costs for the organisations that had made major steps in Emiratisation like the ADNOC. Also, failure to have appropriate mix among the locals and expatriates leads to weaker workforce. This is due to fact that there is more innovation in a diverse workforce. The policy would lead to reduced innovation and creativity if all foreign workers were to be eliminated (Al-Ali, 2008). Also, most of the national workers were more inclined to work in the public sector than the private sector. Viable strategic plan for the next five years For the next five years, it would be vital for ADNOC to adopt a strategic plan that will counter the current challenges. This strategic plan is aimed at growing the UAE nationals’ workforce to 90% of the overall ADNOC employees. This presents about 15% rise of UAE nationals on the ADNOC workforce. The new employees will have to be recruited from ADNOC vocational college as well as industry and academic partners. The leaving expatriates will have to be replaced with the local employees. The strategy will also be supported through a robust career development which must be part of the policy (Modarress, Ansari & Lockwood, 2013). The UAE nationals will have to be given valuable growth opportunities to successfully attain their target position at ADNOC (Emiratisationnow.com, 2016). For the next five years, ADNOC must focus on training the locals on the technical and high skill jobs where there are few qualified personnel (Informa Middle East, 2015). This may start with a 2 year plan training courses in the technical and high skills jobs. This should be coupled with an action plan that focuses on absorbing more UAE nationals in technical and high skill jobs (Al-Ali, 2008). ADNOC should also enhance their cooperation with the government and higher educational institutions. This would highly promote UAE nationals employability. During the 5 years period, it would be important for ADNOC to enhance awareness on Emiratisation. This may include organising fairs, events and workshops with an aim of promoting the policy. ADNOC strategic plan must develop human resources with main focus on the young people. This may include creation of more vocational and technical centres (Modarress, Ansari & Lockwood, 2013). There is need for training and developing of the managers and directors to make it possible to attain Emiratisation goals. Through educational resources, it is possible to further develop labour in the UAE market (Al-Ali, 2008). ADNOC strategy must be aligned with a skill based Emiratisation strategy. This is through ensuring that there is optimal utilisation of resources (Informa Middle East, 2015). To attain this, ADNOC should focus on transfer of expatriate skills in their organisation to the emirate nationals in a gradual manner within the five years. This is a strategy that can ensure that the UAE nationals who are less preferred in the job market gain the vital experience required (Modarress, Ansari & Lockwood, 2013). In fact, the main priority of the ADNOC group strategy should be developing the national Emiratis skills and making it possible for them to compete in the labour market (Emiratisationnow.com, 2016). Another area that the strategy should focus on within the 5 years is knowledge retention. As the organisation ramps up its capacity in production, the number of Emirati nationals should be on increase. This can only be attained if the firm has appropriate job retention abilities (Al-Ali, 2008). The number of employees leaving ADNOC must be reduced through appropriate means such as use of incentives and better working conditions. Lastly, the strategy must be rooted on strong partnership between the government, ADNOC and the industry players. This will ensure that the relevant skills are developed for the industry (Modarress, Ansari & Lockwood, 2013). Conclusion To sum up, ADNOC group is one of the most successful organisations in the implementation of Emiratisation policy. In fact ADNOC has become a strategic partner with the government in the implementation of the policy across UAE. This is through offering the talented UAE nationals’ job opportunities in the organisation. The organisation has used incentives, nationalisation and career development to attract the UAE nationals. The policy has attained an increase in the UAE nationals in the workforce. At the moment, the organisation has a higher number of UAE nationals compared to migrant workers. The organisation has been adding the number of UAE nationals in the workplace through set targets which has made them attain over 75% mark target. Despite this, the policy had faced viability challenges. This includes lack of qualified workers, time limits, educational system, high turnover among the national employees and the rigid social system. The policy also faces several weakness identified in the report. This includes nepotism, Wasta and failure to address cultural barriers. The main strength is the ability to keep the jobs within the country and increasing the number of women employees. The most viable strategy for ADNOC in the next five years must focus on growing the local workforce to surpass 90%. The strategy must focus on the young people and skill transfer from the expatriates to the UAE nationals. This should also focus on reduction of UAE nationals’ turnover rates to enhance job retention. References ADNOC Distribution Careers. (2016). Emiratisation. [online] Available at: http://careers.adnocdistribution.ae/en/who-we-hire/emiratisation [Accessed 24 Dec. 2016]. Al-Ali, J., (2008). Emiratisation: drawing UAE nationals into their surging economy. International Journal of Sociology and Social Policy, 28(9/10), pp.365-379. Al-Ali, J., (2008). Structural barriers to Emiratisation: Analysis and policy recommendations (Doctoral dissertation, Victoria University). Barnett, A., Yandle, B. and Naufal, G., (2013). Regulation, trust, and cronyism in Middle Eastern societies: The simple economics of “wasta”. The Journal of Socio-Economics, 44, pp.41-46. Emiratisationnow.com. (2016). ADNOC to add 7,500 new jobs. [online] Available at: http://www.emiratisationnow.com/2010/11/adnoc-to-add-7500-new-jobs.html [Accessed 24 Dec. 2016]. Gérard Al-Fil. (2014).Emiratisation: Abu Dhabi National Oil Company (ADNOC) recruits UAE nationals. [video] Available at: https://www.youtube.com/watch?v=9oqrcB8D9zw [Accessed 23 Dec. 2016]. Informa Middle East. (2015). Hessa Al Ghurair Latest Emiratisation Trends. [video] Available at: https://www.youtube.com/watch?v=trviC0IS6kg [Accessed 23 Dec. 2016]. Modarress, B., Ansari, A., & Lockwood, D. L. (2013). Emiratisation: from policy to implementation. International Journal of Human Resources Development and Management, 13(2-3), 188-205. Nazzal, N. (2016). ‘Emiratisation has its own challenges’. [online] Available at: http://gulfnews.com/news/uae/education/emiratisation-has-its-own-challenges- 1.1500609 [Accessed 24 Dec. 2016]. SitesPower Institute. (2011). CNBC Arabia - Emiratisation Strategy in the UAE. [video] Available at: https://www.youtube.com/watch?v=nb80wiBEyZU [Accessed 23 Dec. 2016]. Read More