The state of HRM in the Middle East: Challenges and future research agenda

As indicated above, the HRM literature in the Middle East is widely dispersed which directed us to adopt a structured review (Tranfield, Denyer, & Smart, 2003) for the search and selection of published literature based on the parameters of relevance, quality and recentness. In the first instance, and primarily focusing on the “relevance” parameter and to get an overview of the scene regarding the number of articles published, for which region/country in the Middle East they have been published and the kind of themes they represent, we used ProQuest for searching articles and studies that relate and focus on key HRM themes and terms relevant for our analysis. For this, each paper that is included for this analysis is peer-reviewed and available in full-text format. The search was conducted in January and February of 2018 and the details and steps of our search strategy is as follows. In general, we conducted a number of Boolean filter searches using relevant terms of our discipline topics of interest, regional variation and thematic areas. Table 1 shows nine titles used to represent the HR discipline across the Middle East. It shows that the number of studies is greatest when the search is kept general with terms such as “human resource management,” “personnel management” and “people management.” However, abbreviations, such “HRM” and “HR” and “HRD” [human resource development] return far fewer number of studies.

Table 2 shows more disaggregated searches along the different countries (for which we found more literature) from the region. For 10 individual countries, as representative cases, we show the number of studies that focus on HRM and the Middle East. Among these 10 countries, the highest number of HR-related studies are for Egypt, Jordan and Saudi Arabia whereas Bahrain and Qatar are on the lower side of the spectrum. The table also shows the distribution of studies for seven sub-terms of the broader title or function (i.e., HRM).

Table 3 illustrates the distribution of studies across the eight most occurring thematic areas within the HRM literature. This distribution is shown for three regions (i.e., the Middle East, including the GCC and MENA, and then the GCC and MENA by itself). The interesting and key highlights of these searches are that “gender and HRM” returns the highest number of studies, followed by “talent management” and “expatriates.” Quite surprisingly, and contrary to popular belief, at the low end of the spectrum we find themes such as “nationalization programs and HRM” (“Emiratization,” “Omanization,” etc.) and “factors including HRM” and “comparative HRM.”

In order to address the two parameters of “quality” and “recentness,” we further refined our search targeting articles published in journals listed in the Chartered Association of Business Schools (CABS) list, Australian Business Dean Council (ABDC) list and Social Sciences Citation Index (SSCI). On the homepage of each journal, the advanced search options were used to elicit relevant results. This time we extended our search to a variety of datasets including Proquest, ESBCO, and books and from the webpages of relevant journals. Building on our above presented search and analysis, we used the following keywords and themes in our search: “Middle East; management practices in Middle East; Middle East and HRM practices, policies, strategies, and systems; Middle East and HR planning, recruitment, selection, training, development, performance management, rewards, compensation, talent management; HR challenges in the Middle East; determinants of HRM/factors influencing HRM in the Middle East; comparative HRM and Middle East; nationalization programs and HRM; gender; expatriate management; Islamic principles and values and HRM; future research in HR in the Middle East,” in combination with each of the main countries in the region without limiting the time frame. The findings of the studies on the parameters of quality and recentness are summarized in Tables 4, 5, and 6 under the headings “The socio-business context of the Middle East,” “The challenges of future for HRM in Middle East” and “Recent thematic findings on HRM in Middle East” respectively. These findings are summarized in these three tables and are helpful to provide an overview of the state of HRM development in the region, reveal the institutional forces that contribute to such development and propose evidence-based directions for future research.

After analyzing the existing frameworks suitable for analyzing cross-national context-specific HRM (see Budhwar and Debrah, 2009; Budhwar et al., 2016 for a review of such frameworks), we focused our analysis on the reviewed literature related to the historical development of the HR/personnel function in the Middle East; the key factors determining HRM practices and policies (such as labor markets, national business systems, national culture, societal effects, competition, business environment, different institutions, etc.; following the above-discussed underpinnings of the institutional theory, see Powell & DiMaggio, 2012; Scott, 2008); the key challenges being faced by the HR function; and finally, the future of HRM in the region. An examination of these aspects should help highlight developments in HRM, as well as predict future practice trends, and generate research ideas for future investigations.

Picking up the review of literature reported in Tables 4, 5 and 6, a variety of reasons can be identified for the poor economic performance of the region (with the exception of few countries like the UAE [United Arab Emirates]). For example, lagging political reforms; dominant and underperforming public sectors; underdeveloped financial markets; high trade restrictiveness; and inappropriate exchange regimes. Along with these, the slow economic growth in the region can also be attributed to a combination of other factors such as the so-called curse of natural-resource abundance (over-dominance of the oil sector in oil-rich countries); structural imbalances (traditional mind-sets and systems versus need for modernization); deficient political systems; slow integration into the global economy; inefficient public sectors; rapidly growing population and increasing unemployment rates; lack of access to quality education; lack of creation of employable skills; strong inclination of many locals in Gulf state countries to work only in public sector firms (hence defeating the purpose of the nationalization programs), and similarly, in managerial positions; over-reliance on foreign workforce; under-utilization of skilled women; and red-tape and adverse implications of indigenous practices like “wasta”—a relationship-based approach to recruitment and compensation (detailed below), among others (see Abdalla, 2015; Harry, 2016; Sidani et al., 2015).

Moreover, the kind of government system existing in the region seems to be contributing to the slow economic growth of the region. Traditional sheikhdoms and absolute monarchies dominate in virtually all of the Arabian Peninsula. The rest of the region has been dominated by military and other autocratic regimes claiming allegiance to socialist, Arab nationalist or Islamist ideologies. Some states have taken tentative steps towards forms of multi-party democracy in recent years, but widespread economic underperformance and the lack of opportunity for political expression have led to the conditions of war and conflict, mass migration and social disruption. Expectedly then the Middle East is the highest military spending region of the world. Such developments have serious implications for foreign direct investment (FDI) in the region, and due to serious concerns for security, a large number of multinationals have pulled out of the disturbed parts of the Middle East and there are also indications of “brain drain” taking place, leaving a significant vacuum in terms of economic growth. Also, these developments have many socio-economic and HR implications, such as dealing with increasing unemployment, retention of talent and overall human capital management (e.g., Goby et al., 2015; Singh & Sharma, 2015).

Emerging evidence (see Tables 4 and 6) suggests that most countries in the Middle East are now focusing on both HRD and organizational development (see Kolachi & Akan, 2014). In particular, the oil-rich countries have been making serious efforts to reduce their dependence on oil and develop other sectors, which need skilled human resources (e.g., Manafi & Subramaniam, 2015; Obeidat et al., 2014). Similarly, many countries in the region have been concentrating on the development of “locals” and reducing the number of “foreigners” due to the pressure of rapidly growing populations, and to provide jobs to their natives (see Goby et al., 2015; Matherly & Al Nahyan, 2015). In this regard, many countries, such as Saudi Arabia, Qatar, Kuwait, Oman and the United Arab Emirates, have been pursuing “nationalization/localization programs.” A key pillar of localization programs is direct labor market intervention with measures such as quotas and the allocation of certain job roles to be staffed solely by nationals.

The literature shows variations regarding the initiatives being offered across nations in support of the localization programs. For example, the region’s latest localization program has come from the UAE where a tier-based system of targets, with financial incentives and penalties designed to encourage firms to achieve higher levels of workforce localization, is being pursed. Under the new rules, allowing them to pay lower fees to process visas for their expatriate employees will reward companies achieving higher localization levels. In comparison, Bahrain effectively taxes the use of expatriate labor, directly raising its cost relative to the use of national employees. Oman stands out as an interesting case with respect to localization. Probably more than in any other GCC nation, Omanis have been willing to take jobs that would have been filled elsewhere by low-wage foreign workers (perhaps due to the fact that Oman is not very oil rich and job opportunities are fewer then other GCC countries (also see Waxin & Bateman, 2016).

With the exception of few notable successes, most localization efforts have failed to deliver significant growth in the employment of nationals in the private sector. Many local workers are simply not interested in private employment paying market rates that are below public service salaries and which offer more limited benefits than government jobs. Further, there are serious concerns related to employable skills of locals. Such developments have serious implications for the HR function in the region and in particular in relation to its role towards improving organizational performance (Iles et al., 2012; Mohamed et al., 2015; Waxin & Bateman, 2016).

As reported in Table 2, a significant chunk of this research in the region focuses on providing a country-specific overview. Our analysis highlights the emerging patterns of HRM, HR issues and related systems along with their key determinants in selective countries. In this regard, see work by Al-Hamadi, Budhwar, and Shipton (2007), Katou, Budhwar, Woldu, and Al-Hamadi (2010), Khan (2011) and Khan et al. (2015) on Oman; Aycan (2001) on Turkey; Elamin and Tlaiss (2015) and Mellahi and Wood (2004) on Saudi Arabia; Manafi and Subramaniam (2015), Namazie and Frame (2007), Namazie and Pahlavnejad (2016) and Soltani and Liao (2010)  on Iran; Omair (2010) and Singh and Sharma (2015) on UAE; Al-Enzi (2002) and Zaitouni et al. (2011) on Kuwait; Altarawneh and Aldehayyat (2011) and Syed, Hazboun, and Murray (2014) on Jordan; Tzafair, Meshoulam, and Baruch (2007) on Israel; Leat and Al-Kot (2007) and Mostafa and Gould-Williams (2014) on Egypt; and Branine (2004) and Ramdani, Mellahi, Guermat, and Kechad (2014) on Algeria.

For example, an analysis by Al-Jahwari and Budhwar (2016: 115) highlights that “HRM is a growing phenomenon in Oman but its practices are still largely traditional and reactive. The various HR processes are often designed with Western practices in mind, but when carried out, the practices are often not well aligned to business strategies, they are implemented for narrow administrative purposes and remain loosely connected to each other.” It seems that a mixture of Islamic principles and Western approach to management of HRs seem to be influencing HRM in Oman. This is further evidenced from Aycan, Al-Hamadi, Davis, and Budhwar’s (2007: 30) analysis, where “on the one hand, there is an increased emphasis on Omanization and adherence to Islamic principles yet, on the other hand, globalization imposes pressures to adopt global standardized HRM practices and policies.”

Other themes emerging from our analysis include an emphasis on training and development in general and management development in particular, the effects of regulations on HRM in the Saudi Arabian private sector (Mellahi, 2007) and on employment policy in Kuwait (Al-Enzi, 2002), the impact of HRM on organizational commitment in the banking sector in Kuwait (Zaitouni et al., 2011), the efficacy of high-performance work practices in Algerian firms (Ramdani et al., 2014), the impact of HRM practices and corporate entrepreneurship on firm performance in Turkish firms (Kaya, 2006), talent management strategies in the UAE (Singh & Sharma, 2015), the impact of cultural value orientations on preferences for HRM (Aycan et al., 2007), HRM and labor productivity in Libyan oil companies (Mohamed et al., 2015), HRM and innovation in the Iranian electronics industry (Manafi & Subramaniam, 2015) and career development in Oman (Khan et al., 2015).

Raheem (2016: 77), concluding her analysis about the scenario of talent management in the Middle East, argued that “recent trends in the demographics of the local population, intensified demand for talent, the changing aspirations of the youth and women and the limited application of sound talent management practices, all make talent management issues even more challenging for organizations in the Middle East than in other parts of the world.” She further elaborated that “historical precedents of talent management in the region have further hampered the sustenance of equitable working environments for both locals and expatriates. This combination of institutional and organizational factors has, in turn, put immense pressures on the criticality, development and implementation of talent management systems for organizations operating in this region.”

Over the past quarter of a century or so (also see Table 6), there has been a consistent emergence of gender-based studies in particular dedicated towards women in management-related issues, in the context of Middle Eastern countries. For example, see research by Ali, Malik, Pereira, and Al Ariss (2016) on work life balance of Muslim migrant women in the West. Also, see the works of Abdalla (2015) and Tlaiss (2015) for career success/facilitators and barriers for women in an Arab context; Sidani et al. (2015) for female leadership advantage and leadership deficit; Marmenout and Lirio (2014) for female talent retention in the Gulf; Metcalfe (2008) for women in management in the Middle East in general and in particular for Bahrain, Jordan and Oman; Aycan (2004) for Turkey; Metle (2002) for Kuwait; and Izraeli (1987) for Israel.

Apart from gender, another theme which our analysis highlights (see Tables 4, 5 and 6) is that of the influence of Arab culture and values on its management systems (e.g., Ali, 2010; Dirani & Hamie, 2017; Mellahi, 2003). A related focus of research has been to examine the impact of Islamic values, Islamic work ethics and Islamic principles on the management of human resources in the region (see Branine & Pollard, 2010; Budhwar & Mellahi, 2010). Islam places great emphasis on work and views work as a necessary means to achieve equilibrium in one’s social and individual life (e.g., Ali, 2010). Islam also places emphasis on work ethics, management and leadership. The Holy Quran speaks about justice and honesty in trade, fairness in employment relationships, encourages new skills to be learned, co-operation in work, consultation in decision-making and to do work that benefits the individual and the community (Branine & Pollard, 2010). Such prescriptions have a strong influence on how human resources are managed in organizations, work-related values, the expectations of employees as well as the behavior and approach of management (Aycan et al., 2007).

Following are some relevant Islamic principles and their relevance to HRM (Branine & Pollard, 2010; Budhwar & Mellahi, 2010): (1) “Ehsan” (kindness) emphasizing on good deeds and forgiveness. Managers scoring high on this principle are expected to pursue involvement and participation; (2) “Taqwa” (being mindful of Almighty God) to behave in a just and steadfast manner; (3) “Al-Amanah” (trust) in relationships leading to accountability; (4) “Adl” justice) emphasizing on equality and fairness having implications for most HR functions; (5) “Al-Sedq” (truthfulness) to the best of one’s knowledge leading to honesty and trustworthiness as core features of effective management; (6) “Etqan” (self-improvement) which provides the basis for one’s striving for self-betterment in order to do better work. In HRM this would translate to do better, work harder and improve the quality of their products and services through the learning of new knowledge and skills; and (7) “Shura” (consultation, social harmony and respect). Consultation is one of the main leadership values in Islam. Accordingly, Islam may influence workplace behavior with values such as respect for age and seniority, loyalty, obedience towards leaders and looking to seniors for direction, consultative decision-making, trustfulness both between superiors and subordinates (Al Ali et al., 2017; Namazie & Tayeb, 2006; Namazie & Venegas, 2016).

As expected, due to socio-cultural similarities, a number of countries (such as Egypt, Morocco, Turkey, Kuwait and Qatar) tend to be similar on various aspects of cultural value orientations, such as strong on group orientation, hierarchical structures, masculinity and following Arab traditions and weak on future orientation (see Kabasakal & Bodur, 2002). Mellahi and Budhwar (2006) revealed the influence of high power distance on managers’ perception towards the delegation of authority to lower levels of employees and interaction with employees in countries like Morocco, Kuwait, Saudi Arabia and Egypt. They also highlighted that in such contexts and socio-cultural and traditional set-ups, loyalty to one’s family and friends is expected to override loyalty to organizational procedures and this often results in the use of inequitable criteria in recruitment, promotion and compensation. Ali (2004) and Mellahi (2006) further highlighted that the influence of the principle of shura is manifested in consensus-based decision-making styles, respect for authority and age, and concern for the well-being of employees and society at large in countries like Kuwait and Saudi Arabia. On the contrary, Ali and Al-Kazemi (2006) revealed that several ideal Islamic values such as equity and fairness are often not adhered to in practice. This explains the widespread adoption of some HRM practices in the Middle East that are not compatible with Islamic values, such as the use of nepotism in recruitment and compensation, known as wasta in GCC countries and “piston,” “m’aarifa” and “k’tef” in North African countries. Similarly, Iles et al. (2012) highlighted the challenges for effective management of human resources in the public sector in the Middle East where the impact of wasta is strong.

Scholars have been examining the issue of transfer of management from the West to the Middle East. For example, Anwar (2003), while comparing American and Arabian culture, highlighted a number of differences between the two and how the American management philosophy and styles in the US multinationals operating in the Middle East are adapted to suit the cultural context of the UAE. Analysis by Saleh and Kleiner (2005) gives a similar message (i.e., if American companies want to be successful in the Middle East then they should develop an understanding of the culture, politics and people of the region). With regard to the transfer of HRM practices, the results are similar. For example, Elmuti and Kathawala (1991) examined the extent to which Japanese HRM practices can be transferred to their subsidiaries in the Arabian Gulf region. Their investigation revealed that either largely modified version of Japanese-style management or a brand-new management style composed of elements of local and Japanese management practices were successful in the given context.

Further, a number of trends are emerging from our analysis which seem to be shaping the practice of HRM in the region. They include (1) increased presence and influence of multinational enterprises (MNEs), through FDI, and so forth; (2) the moving away of traditional practices by local players with global ambitions (towards globalization); (3) the rapid growth of global business schools to the Middle East—both as foreign subsidiaries as well as local partners; (4) reliance on management consultants and “gurus,” especially on experts from developed countries; and (5) dominance of Western textbooks and best-sellers (see Budhwar & Mellahi, 2016; Ramdani et al., 2014). Although the jury is still out on the effectiveness of MNEs’ practices in the Middle Eastern context, there is evidence that they are shaping HRM practices in the region as they have done for other regions such as South-East Asia (Thite, Wilkinson, & Shah, 2012). However, our knowledge of the extent to which and the manner and speed with which MNEs’ practices are diffused locally is very limited. More research is needed, especially research examining local firms’ absorptive capacity to identify, absorb and apply MNEs’ HRM practices. Such challenges facing the HRM function in the Middle East and the resultant future research directions are presented in the next section.