Performance management in the gcc

MGT302 – Dr. Marie Waxin

Done by:

Muhammad Danish Azad44334

Ramzan Speen Jan45531

Abdussubhan Haji50271

Table of ContentsIntroduction and importance of PM in GCC - Danish.....................................................................2

Methodology - Danish.....................................................................................................................2

PMRS Goals - Danish......................................................................................................................3

UAE.............................................................................................................................................4

Sultanate of Oman.......................................................................................................................5

PA Criteria and Methods - Ramzan.................................................................................................6

United Arab Emirates:.................................................................................................................6

Sultanate of Oman.......................................................................................................................8

Kingdom of Saudi Arabia............................................................................................................9

Feedback & use of PA info - Abdussubhan.....................................................................................9

United Arab Emirates................................................................................................................10

Sultanate of Oman.....................................................................................................................10

Conclusion – Danish......................................................................................................................11

References.....................................................................................................................................13

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Introduction and importance of PM in GCC - DanishPerformance management is the “continuous process of identifying, measuring and

developing individual performance according to strategic goals” but is something that is lacking in the GCC region (Behery and Paton, 2008). This continuous strategic process comprises of having performance goals that are strategic, developmental or administrative. These goals are then meant to be kept in perspective as relevant criteria is chosen based on either results, competencies or behaviors. These criteria are then tested with appropriate performance appraisal methods as per the strategic needs of the organization. The information gained from these evaluations/appraisals also need to be used appropriately and timely feedback needs to be provided for it to be useful. All in all, these elements make a performance management system that can be eventually beneficial for organizations.

The GCC is a rising global hub of commerce that is attracting numerous organizations from all over the world while others are sprouting up from within the country. Arabian Gulf region is one of the fastest growing areas in the world with nominal growth of about 20 percent per year (de Boer and Turner, 2007, as cited in Moideenkutty, Al-Lamki & Murthy, 2010).An intricate part of a developed business world is the recognition of the need for strategic HR and PM. The UAE for example, has quadrupled in population in the last 25 years. This population consist of 80% expatriates from 125 different countries. This makes the UAE (and on a wider scale, the GCC) an extremely multicultural environment experiencing rapid commercial growth. There is a need to study PM in the GCC because “this demographic shift is going to pose some unique challenges, particularly in relation to PA, for UAE organizations, as will the need to manage within a multi-cultural environment” (Behery and Paton, 2008).

This paper keep in perspective this idea of a performance management system framework and studies literature in the GCC region. The purpose of this effort is to recognize the adherence in the GCC to such a system, where and how it’s applied, and the challenges faced in the region. In general, it will discuss where the GCC stands in reference to the performance management framework discussed above. It will go through; PM goals, criteria and evaluation methods, use of feedback and performance appraisal information and give conclusions of the GCC PM scene.

Methodology - DanishAs in any other literature review, the focus of this paper is to review other literature

published regarding the subject; thus, the methodology includes only secondary research. To begin with Managing Human resources in the Middle East by (Budhward & Mellahi, 2006) provided a good basis to launch further research. The book provides a chapter by chapter review of HR practices in the various GCC countries. Although, there was no specific information regarding performance management in this book it provided a good valuable overview of the HR

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scene in the GCC with the help of which we could make insights about the information found in other literary sources.

Additionally, journal articles were searched over the various academic databases through the AUS Library Summon system. To start off there were keywords included such as ‘PMS GCC’ and ‘Performance management in MENA’. At a failure, to collect ample valuable information the search was then modified to include broader terms such as ‘HR practices’, ‘HR research’, ‘performance study’, ‘performance appraisal’ and ‘assessment feedback’ alongside geographic tags of different GCC countries. A major challenge faced during the research was to separate benchmarking and KPI based performance related studies, to find literature specific to PM in the HR context. On a general note, it is imperative note that there is a serious lack of performance management literature in the region. Due to this, while discussions have been made in the general GCC context, specific research is primarily limited to articles from the UAE and Oman. Despite this, as mentioned in Moideenkutty, Al-Lamki & Murthy (2010); because the Arabian Gulf countries are all share a similar culture, this makes the implications of HR practices are quite similar throughout the region. Lastly, adding to literature review of databases, governmental websites, online federal databases and E-PMS in the GCC have been discussed. These were found due to either being discussed in a journal article or through a specified internet search. Their inclusion was significant because they provide a relevant insight into PM in the GCC.

It is a given understanding as recapped above that performance appraisal (PA) is only one element of overall performance management (PM). Yet, it is imperative to note again that due to the undeveloped nature of strategic HR in the GCC the differentiation between these two is not made very clear. Due to this these terms are often wrongfully seen to be used interchangeably and thus while citing these sources we might use them interchangeably to stay true to the source material. Perhaps the authors have avoided using the term performance management because proper performance management systems barely exist in the region. Thus it would make sense to assume that they simply kept the present performance appraisals as the focus of research. It is also important to keep in mind some abbreviations; balanced scorecard (BSC), performance management (PM), performance management system(s) (PMS), and performance appraisal (PA).

PMRS Goals - DanishAn implication of PM research being limited to mostly PA related articles is that there is no literature that we found specifically pertaining to performance management goals. With that being said, the conclusions arrived to in the following section have been made on inferences we made ourselves through relatable articles and categorized accordingly. As mentioned in the introduction, the focus of this literary review will shine most on UAE and Oman because these are the two countries from where published articles in the fields of management and HR were primarily found.

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An overview of the general GCC literature available on performance management goals goes to show that most of the region’s HR is concentrated on administrative PM goals. While our framework divides performance management goals into the categories of strategic, developmental or administrative we notice a clear prioritization of this in the GCC context. Most GCC countries prioritize PM goals as administrative, strategic and developmental respectively. The purpose why most GCC countries are conducting performance appraisal is primarily due to administrative. Strategic goals are noted to be addressed as important in some places but not seen in practice. Lastly, as for developmental goals there are some examples that can be classified as developmental based PM/PA goals. Although, due to the lack of an integrated PMS/and extreme lack of feedback to PA (discussed later), the PM scene in the GCC is quite unsuitable for developmental purposes.

UAEWhen we say the PM/PA being prioritized for administrative goals, it opens a vast

number of reasons that could be applicable to being an administrative goal. A study by Behery and Paton (2008) to study the relationship between performance appraisal, culture and organizational outcomes in the UAE. The findings of the study noted that performance appraisal in the UAE context, can be used to boost employee commitment, satisfaction and retention when employees feel like it PA is closely linked the informal organizational culture. If we consider commitment, satisfaction, and retention as elements of administration we can conclude that the goal of PA in this case is administrative. On the other hand, if organizational culture is a reflection of company’s strategic values/goals then performance appraisal goals could also reflect strategic PM goals if we try to tie PA goals with OC, as per this article.

After the first article, Behery has another publication regarding PM in GCC with Jabeen and Parakandi in 2013. This article discusses the traditional PMS versus a contemporary balanced scorecard system (BSC) and transition from the traditional to the new system. This article specifically discusses the importance of strategic PMRS goals in the UAE context. It states that the traditional PMS systems that are prevalent in the small to medium sized firms in the UAE are accounting based, thus have the administrative goals of cutting cost structure, handling operational budgets and increasing financial productivity (e.g. through activity based management etc.). It states that these methods does not align strategic objectives with PMRS goals which is imperative for an efficient PM system. The findings of the article go ahead to discuss small to medium sized firms that have employed BSC/new PM systems understanding the importance of strategic alignment. Although, it adds that these initiatives have been taken by individual work units but not from the company as a whole. Thus, there is a growing awareness for PM goals being strategically aligned, but this approach has to be applied centrally for companies to finally achieve higher levels of performance measurement to enhance organization performance (Behery, Jabeen & Parakandi, 2013).

Lastly, in the UAE context Al-Raisi, Amin & Tahir (2009) have published an article that discusses the application, effectiveness and attitudes pertaining to E-PMS systems in the UAE

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government sector. They cite a 2004 UN report stating that the UAE has been ranked as one of the top performers in the willingness to become an e-performer in MENA. Moreover, this article brings to light; administrative, strategic and to a small degree even developmental PMRS goals. The findings are quite relevant in terms of the strategic and administrative PMRS goals achieved through E-PMS. According to the findings of the study, E-PMS greatly helps aligning company objectives because it provides a decentralized system that can deliver to employees exactly what is expected of them and enhance accountability for their actions. This sort of efficiency in communication and information sharing enhances productivity policy making in the government sector which also contributes to fulfilling strategic goals. Apart from strategic goals, the enhanced accountability of employees and the bypassing of bureaucracy through an openly communicated E-PMS system enables achievement of adminstrative goals such as; improving service delivery, reducing corruption and retaining good talent.

If we consider retaining of good talent in term of developmental goals, this source also states that employees reported high satisfaction with E-PMS system due to the fact that readily provided feedback and aptly delivered what was expected of them (Al-Raisi, Amin & Tahir, 2009). This goes in line what is stated in Behery and Paton with regards to the organizational culture in the UAE. Behery and Paton (2008) talk about Hofstede’s cultural dimensions of ‘power distance’ and ‘uncertainty avoidance’ which run high in the UAE culture. This makes the employees of this culture to welcome the hierarchical structure and instructional authority. In essence, it means that employees of the UAE culture ‘like being told what to do’, thus developmental usage of PM would be welcome in the region. Despite this, we have not found literature stating PM systems used with the goal of employee development or training except from one small mention. Al-Raisi, Amin & Tahir (2009) make a small mention that the UAE government uses E-PMS to enforce development and training of UAE national to reduce dependency on expatriate population.

Sultanate of OmanThe PM literature in Oman is quite smaller in comparison to the UAE and is limited to

two main articles that we found. While one has a larger focus on HRM practices in general, the other while focusing on PM talks specifically about PV Petroleum in Oman. We will discuss the two articles found respectively. First to begin with Moideenkutty, Al-Lamki and Murthy (2010) conducted research regarding the relationship between high involvement HR practices and organizational performances. Although, the focus was HR practices in general, the authors clearly state that one of these HR practices include highly selective training and performance management practices. This in turn helps elaborate on the developmental based goals of PM goals. The authors state that the current culture of the Arabian Gulf and Oman is reluctant towards internal skill development and prefers acquiring them externally. They go on to state that the findings of the study are encouragement for companies in Oman and the GCC at large to pursue training/developmental goals through high involving HR practices (including performance management practices). Moreover, this article backs up Behery and Paton (2008) on

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the Hofstede’s cultural dimensions of ‘power distance’ and ‘uncertainty avoidance’. The article states that these dimensions are shared by Oman and hierarchical structure is embraced by the employees; thus, as mentioned above use of PA for development would be welcomed by employees.

. The second article by Khan (2010) recognizes performance management systems as a congruent system instead of strategically unaligned PA. Although, the article is a case study based on Oman’s PV Petroleum company it uses PV’s PM systems to exemplify the applications and related challenges of a good PM system. The article elaborates strongly on strategic, adminstrative and developmental goals of PM. It stresses the need for horizontal (across the organizational departments) and vertical alignment (with corporate strategy) of all PM efforts. This sort of alignment would include all three types of PMRS goals. Khan gives an example of PV; as it boasts corporate values of

“providing reliable quality services at a competitive price, health, safety and environmental excellence in all services, to be at the leading edge of technology, continuous performance improvement, to sustain growth and corporate success, respect values and expectations of all stakeholders, to provide opportunities for the growth and self-development of all employees” (p.4).

All PM efforts are aligned to these values providing goals for the company to work and rework their performance management efforts towards. When employees undergo appraisal they are tested on the values mentioned above, management of the company follows a similar strategy and even the development of the employees is aligned. This sort of horizontal and vertical alignment is one exemplary instance of appropriate PMRS goals in the GCC.

PA Criteria and Methods - RamzanUnited Arab Emirates:

Faculty of Abu Dhabi University conducted a research study to explore the transition from traditional performance management system (PMS) to a modern one and note the issues related to the transition in a single enterprise classified as fast-growth small to medium enterprise (FGSME). The research was limited to the boundaries of the United Arab Emirates and concentrated on a single FGSME and the enterprise employees more than 16000 workers across the nation. The research highlighted the importance of moving from financial based performance measurement solely into more modern PMS through a design of a potential balanced scorecard (BSC) and strategy mapping. The conventional management accounting system used quantifiable financial data as an index to measure performance while the contemporary accounting system used a mix of financial and non-monetary performance indicators measure individual performance at various levels of

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the organization. The study found that the Balance scorecard (BSC) program was prevailing in the company but not effectively implemented and linked. BSCs are vital tools employed to measure and control the organizational performance that consist of four perspectives namely financial, learning and growth, customer and internal business process. Furthermore, BSC could be also used to develop and evaluate organization’s strategy and not merely performance evaluation as mentioned by the authors. The study concluded that initiative to adoption of the new modern performance system if combined collectively and aligned with the HR practices and overall objective and strategy of the firm can result into better performance measurement and organizational performance. The study also indicated that the modern system is very useful in addressing issues productivity and expansion issues (Behery, Jabeen, & Parakandi, 2014).

Also, faculty from UAE University conducted a study to see the relationship between self-rated performance and supervisor rated performance in the United Arab Emirates (Suliman, 2003). To do so, the researcher generated a sample of 1062 questionnaires self-administered from 29 random organizations that were suitable for analysis among which 829 were employees and 233 were managers. The study mentioned to have used 1-5 point likert scale in its questionnaires and did not disclose what criteria was based on the performance evaluation whether results or other. The results indicated a clear disparity between the perception of employees about their performance and that of their manager’s perception. The findings in this research indicate that employees in the UAE tend to evaluate themselves more favorably than their immediate supervisor. Also, the study shows that the false perception that supervisor in the UAE have a habit of underestimating their subordinates performance (Suliman, 2003).

In another study, academics from University of Dubai did a study the impact on employee fit by performance appraisal and organizational culture and the link between them. The criteria for the study to explore the influence of the fit in terms of outcomes of an organization were turnover, job satisfaction and commitment. They study surveyed 200 middle managers randomly from the chamber of commerce listing among them were 60 percent bankers, 25 percent from insurance and remaining from real estate. The study mentioned to have used five point likert scales in the surveys issued. The survey sought to take their opinions on the extent to which they emphasize with appraisal. The results of the study revealed that job satisfaction may be optimistically linked to extend to which an employee

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consider assessment and culture aligned and also commitment is influenced by perception of self-organizational fit by employees (Behery & Paton, 2008).

In the UAE, the government initiated a strategy to be implemented during 2008-2010 that consist of integrated system of performance management to receive the progress and results of the various entities across the nation. This PM system was called ADAA. The OM system turned to be very useful, consequently the Prime minister’s office developed ADAA which was formerly just performance measurement system into ADAA 2.0 which shifted into performance management system in the year 2012. This developed PM system turned to be very effective in managing performance of the UAE public sector employees and bodies. In addition, ADAA 2.0 is the first integrated system in Arabic and is the updated version of the first Arabian PM software. Its main purpose is to give complete support to sustain development in order to raise efficiency and effectiveness by using the new and best practices of performance management systems (PM magazine, 2014, p31). The official website stated that the PM system is based on goal achievement and a mix behavioral and competency measures to evaluate the performance of the intended individual. However, the website does not mention what method of performance appraisal is used to measure the criteria mentioned above (moca.gov.ae).Sultanate of Oman

One of the largest oilfield services companies in Oman was studied to discover and analyze the tools that are used in terms of performance management. The oilfield service company was established in 1980’s by the name PV Petroleum which was not the actual name of the company but pseudo one as mentioned in the article to maintain confidentiality of the information supplied by the company. The company has a workforce of around 2000 employees of which 80 percent consist of Omani national locals and intend to raise the Omanization bar up to 90 percent. The aim of the company is to provide a “One-Stop-Shop” experience in terms of oilfield services and also deliver cost effective field expansion and management (Khan, 2010).

PV petroleum initiated its performance appraisal at the introduction stage of its life cycle when the company was new to the business of petroleum services. It used performance appraisal tools to identify the strengths and weakness of every employee. Also, PV petroleum purpose to use performance appraisal was to recognize the gaps prevailing in the skills and competencies of each individual. The criteria used or the appraisal form

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conducted at PV is a trait based evaluation with a combination of behavioral and result based assessment. In addition, PV petroleum employees were evaluated individually on basis of 1-5 rating scale on the results or overall performance in contrast to his/her work prerequisite. The performance evaluation is only one type, i.e. paper based system in PV petroleum for all of its 2000 employees and contained factors of appraisal such as interpersonal skills, trustworthiness, efficiency, quality, well-being awareness, creativeness, policy obedience, improvement desires and so forth. It also contained comment columns to permit two way feedback and employees can put their observations for their development. However, this whole process was a mechanical one and every employee perceived the evaluation as figurative analysis. Hence, the study concludes that PV’s performance management system is neither aligned with the HR practices nor integrated with the strategy of the business. And PV is not competent enough to reap the benefits of a good performance appraisal system that help a firm attain feedback and alignment in order to reach its desired goal (Khan, 2010)

In another study independent study, researchers from Sultan Qaboos University desired to examine the relationship between high involvement human resources management practices and organizational performance in Sultanate of Oman (Moideenkutty, Al-Lamki, & Murthy, 2010). Furthermore, unlike previous research studies, this study surveyed 87 privately held organizations selected from companies listed in the Muscat Securities Market and responses were subjected statistical and regression analysis. The method used to measure high involvement HRM practices was a compound measure that consisted of four components namely highly selective staffing, extensive training, performance management and empowerment. In terms of measuring performance management, a total of eight items were incorporated into the survey on 1-5 likert scale. However, the study does not cite the type of performance measurement criteria used to test the responses. The results of the statistical analysis showed that high involvement HRM practices were positively correlated to organizational performance (Moideenkutty, Al-Lamki, & Murthy ,2010).

In 2009, Public Authority for Electricity and Water (PAEW) in its effort to remain committed to Oman’s strategic Water Plan, PAEW has achieved a number of mile stones. Among them as mentioned in their official website are implementation of performance management system, integrated computer software which records all manuals and procedures, human

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resource development as well as appraisal and introducing quality management system (PM Magazine, 2014, p34). The authority uses a mix of methodologies such as behavioral along with goal achievement evaluation criteria but does not specifically indicate which methods are used to evaluate the intended individuals (paew.gov.om). Kingdom of Saudi Arabia

In KSA, the federal authority of government has Employee Performance Management System (EPMS) that was integrated to trace the link between incentives given, training etc against performance at work for all of its federal ministries and authorities. The criteria for EPMS was structured on the basis of the outcome achieved through output of employee in a specific year and the tools or procedures used to make employees complete work. That is, the system uses objective scores or goal achievement and competency rating as basis for employee evaluation. The performance system uses mix methodologies of BARs and rating scales for evaluation of employees as noted from the article (PM magazine, 2014, p. 27).

Feedback & use of PA info - AbdussubhanAccording to all employees and firms, feedback on specific performances is a necessity

around the world these days. This is due to the fact that training and personnel development has developed to a large extend and the employees have more power, control over the firm than before. Feedback is when the supervisor, employer gives a report to each employee or a group of employees on how they have performed on particular tasks and how to improve and on what areas they should concentrate to strengthen their weakness. Different firms have different types of evaluation methods and types of feedback; but at the same time there are companies/ regions that gives less priority to feedbacks and performance management feedbacks. For example in the Middle East, according to a business website, bayt.com, 50% of the people claimed that they never got a feedback from their employer. During our research, we found out that 46% of the company respondents stated that performance appraisal system did not improve the performance management of employees and the company (Hartley, 2009). Performance appraisal is a systematic process that evaluates an employee’s performance taking some criteria and company objectives into consideration. According to Zureikat, 29% of employees do not receive any performance appraisal, especially in today’s economic climate (Hartley, 2009).

United Arab Emirates Studies now show that PA information is useless without feedback – “timely and valued feedback is critical to success” (Behery and Paton, 2008). As we all know that feedback has positive motivation within the organization and these level of motivation sometimes work as a key factor within the employees and it might end up in increase in productivity. This is because feedback and employer-employee interaction will enhance employee commitment towards the

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organization. As mentioned earlier, this will only help the organization and the employees would feel as a part of the firm and that they are responsible for the growth of the firm. In the case of UAE culture, well to be honest not only the emirates but also the Middle East, the culture here is very different from the westernized world and here they prioritize more on hierarchy and power. But in the US and Europe, even the employees have the same power as the higher level management. For example if a normal employee has a suggestion or complaint, he is able to go straight to the head of department and convey the issue and its normal there; however in the Arab countries like UAE, OMAN they use power and monarchy based system here. So in that case the UAE culture would prefer feedback due to their interest in hierarchy and due to this economic situation, at this globalized period the competition level in s very high and therefore without these immediate changes, they won’t be able to survive. In this case of performance management, it should be implemented across the whole organization and not only the performance appraisal.

Sultanate of OmanAs mentioned before, performance management feedback to appraisals are very rare in GCC countries. According to Khan (2010), Oman is more of an administrative approach which is back desk office work on daily basis and nothing more and the decision are more centralized here so therefore it was hard for the lower level employees to give any input of their own and out of that, why is there a need of PA? (Khan, 2010). This is why the managers in the firms lack information about the performance of their employees. According to Oman performance adopted is proven to be very subjective and biased. This is when; paper works are manipulated due to certain individuals. This is where my other point will come in place. The term “wasta’, this word a very famous word used across Arab countries which relates to influence in firms to get jobs done faster, or to get something that is not possible. Due to wasta, the equality will be lost in the region and the firms working in that area. Another point researched in Oman was that the employers prefer a collective approach and dislike face-to-face interrogations. They feel group decision making is better than one individual taking it by himself and it’s the sake of common good approach.

It was found out that PV petroleum, one of the largest petroleum company in Oman, uses just the performance appraisal as a method of performance evaluation exercise and it is just done once a year and according to the respondents, they started that they tend to forget the report after a while due to the fact that it is done once a year and then they don’t keep track of it. Oman companies does not have a strategic objective and they concentrate mainly on administrative objective rather than developmental and strategic. These mentioned objectives are performance management system goals. Firms and what type of goal used differ the company from one another use it. For example, most of the Middle Eastern companies use administrative goals and not developmental and strategic. According to them performance management appraisal creates a lot of paper work and it is a bi waste of time; this is why developmental goals cannot be implied

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within this region. As I mentioned PV petroleum, even though they use PA once a year, at least they are doing something on top of rewards and training.

Conclusion – DanishFirst and foremost it is imperative to point out again that literature regarding PM

management is extremely limited. All inferences drawn in this paper are based on sources found majorly in UAE and Oman, which are relied upon due to the culture similarity in the GCC. While strategic HR is a growing phenomenon in the region, strategic PM is yet to be part of it to be seen vastly in its developed form.

In essence performance management consists of PMRS goals, criteria and evaluation methods, and effective use of feedback and PA info. Our literature review of the GCC showed that when it comes to the PMRS goals there is an awareness of the need for strategic goals leading the PM efforts in administration and developmental goals. Although, despite this awareness only one company in Oman (PV Petroleum) was noted to have achieved a fully well-rounded PM system. Other literature regarding goals is still highly administrative, ineffectively strategically aligned (if at all) and not suitable for developmental purposes.

The criteria and evaluation methods are a reflective function of the PMRS goals. Where clear goals are set way see appropriate movement to new PMS systems for example; convergence from traditional PMS systems in the UAE to BSC methods to encompass strategic PM objectives. Furthermore, surprisingly almost all articles found on PM in the region hold/state the importance of timely and constructive feedback. Despite this, feedback and PA info is used very inappropriately as shown in the Bayt.com research. Good examples of feedback included PV Petroleum in Oman who use it appropriately to develop employees. Additionally, E-PMS systems in the UAE government sector proved extremely beneficial and were welcomed by the employees. High acceptance of constructive feedback is also a trait found commonly across the GCC due to the shared cultured dimensions of high ‘power distance’ and ‘uncertainty avoidance’ which induces an inclination for hierarchical structure and specific orders/feedback.

Another worthy point of elaboration is vertical and horizontal alignment of PM systems. The overview of the research shows that while PM alignment is generally lacking it is more prevalent vertically (or at least there is awareness for vertical strategic alignment) rather than horizontally. As mentioned, in the UAE applied PM systems in small to medium sized enterprises were adapted strategically by some units but not across the organization as a whole. Other examples including E-PMS in federal organizations showed quite good vertical alignment to strategy by having leaner e-communication but evidence of good horizontal alignment of HR practices with PM was not seen in the UAE. The only example with vertical alignment of PM with other HR activities and strategic alignment with corporate strategies was seen in Oman in the case study of PV Petroleum.

All in all, it goes without saying that there is a vast void where research needs to be done regarding the subject. A lot of the articles picked up for this literary review had their own limitations. While some were focused on a single company others surveyed only the affluent

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population of the country. A more elaborate study of application of PM and its related challenges is called for in the countries of the Gulf Cooperation Council.

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