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34 Escalating Research Volume 5 Issue 2 June, 2016

“Human Resource Management (HRM) Practices:

Saudi Aerospace Engineering Industries Case Study”

Muhammad Nabeel Siddiqui

Arabian Gulf Manufactures LTD

Jeddah- Saudi Arabia

[email protected]

Abstract

Saudi Arabia is known for its immense petroleum reserves and they are the largest and the richest nation in the Middle

East. Becoming a leading member of World Trade Organization (WTO) in 1999, their economic and political efforts

have flourished all the way specifically in the Middle East region. The present research work has considered a case

study approach in which a case of SAEI- Saudi Aerospace Engineering Industries was taken under consideration. The

reason behind carrying out the study, specifically on this sector was the fact that it was going through a process of

privatization that aided in obtaining information from both private and public sector simultaneously. Since the study

examined and found the impact of Arabian culture on the HRM functions, therefore the type of case study chosen was

an exploratory one. According to research conducted, it was found that Gulf countries, including Saudi Arabia consist

of a very young population, which is known for its intense hard work and voice of the country, eventually leading to

the success of a nation. The Kingdom of Saudi Arabia is well equipped and well managed by King Abdullah. He took

initiatives to reform the infrastructure of the country with cooperative management. To make a prominent recognition

in the global economy, Saudis are to be equipped with local contributors whilst reducing the foreign dependency,

hence having self-sufficiency will allow the contributors to become the global citizens. In this era, Saudi Arabia is

under an intense paradox of high unemployment and huge amount of resources and no direction to utilize them. There

are number of key factors that have driven to high unemployment: low motivation, less fringe benefits, lack of

satisfaction and high salary expectations. The question is will this Gulf region be able to regain what it has lost in the

way of progress?

Introduction

Saudi Arabia is a country that is deep rooted with

diversity. This region has a very important

significance due to religion and Islam and has a very

sacred image in the eyes of Muslims. The kingdom of

Saudi Arabia works on the basis of monarchy. The

king is the head of the House, Chief and the Head of

the government. The king is considered to be the most

powerful authority in the state and has the highest

commands. Saudi Arabia was founded in 1932 with an

estimated population of 27 million. Riyadh is the

capital of the cosmopolitan Saudi Arabia with an

estimated population of 4 million people; having a

world-class infrastructure. The concept of

Globalization has spread all over the world and has not

left any nation untouched, including Saudi Arabia.

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35 Escalating Research Volume 5 Issue 2 June, 2016

This region of the Gulf countries has an immense

potential to over-take the leading countries in the

world. The discovery of oil wells leads to major

changes in the economic and political structure of the

country. It was a path to a changed lifestyle. This

diversity has led Saudi Arabia in a complex situation

and managing this diversity is a big task. Hence, in

order to understand Saudi Arabia’s economic and

political situation, it is important to have a closer view

of its deep rooted traditions and religion. Saudi

Arabia’s official language and religion is Arabic and

Islam, respectively. The country is looking for ways to

bring advancements of the society into the social and

economic structure. However, this region is found to

be stuck between power struggle, modernization and

preservation of culture.

Literature Review

Ministry of Economy and Planning (2008) clarified

that human resource management structure of Saudi

Arabia is based on the following elements; economic

structure, political stability, the prevailing labor

market, the societal and national culture and the HRD

policies. Human Resource aims at employing

competent, dedicated and flexible workforce who can

join efforts and thrive to accomplishing organization

goals and objectives. The employees fulfilling the

above stated requirements and completes the structure

are recruited in the private and public sector.

The other dimension to be taken under consideration

is the collectivism-individualism strategies. It is

believed that organizations in the eastern region or

Middle East region are more prone towards

collectivism. For example; Chinese organizations,

influenced by collectivism, depends on the

bureaucracy and is run by their founders, whilst the

promotion is very much centralized, rules and

regulations are standardized. On the other hand,

Western organizations such as America follows

individualism, ran by a board of directors and usually

organizations are owned by a group of shareholders.

They belief in employee empowerment, staff

promotions are performance and competency based.

They share a more decentralized hierarchy of an

organization.

Countries across the globe are progressing towards an

economy where greater reliance is on the intellectual

capabilities than on physical inputs or natural

resources. Such economies are also called as

‘Knowledge-Based’ economies. This makes the

economy more strong and acute. For knowledge based

economies it is very important to progress an intensive

utilization of human capital. As stated earlier religion

is deeply embedded in this region of Middle East

(Saudi Arabia), and it plays an integral part as how to

carry out daily routines and obligations, yet most of

the researches seem to neglect this very influencing

part of the management (Randeree, 2012). Mellahi,

and Wilkinson (2014) believed that the reason behind

this negligence is that many organizations have a very

neutral overview for the religion and employees never

make a chaos over their beliefs at the jobs. However,

from the study of the literature of the Middle Eastern

countries, this assumption was proved to be wrong. A

Muslim is required to spend his day in accordance with

the teachings of Islam concerning with their behaviors

in the workplace (Randeree, 2012). The region of

Saudi Arabia is very much caught up in the battle

between modernization and yet maintaining and

preserving the traditional Islamic and culture values.

The societal culture is very much diversified as the

major population is the inhabitant that migrates in the

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36 Escalating Research Volume 5 Issue 2 June, 2016

search of a job. In Saudi Arabia one of the important

elements of societal culture is the Islamic work ethics.

The manager has to adopt the leadership styles

according to the Islamic teachings and this factor

overwhelmingly affects the job description of an

employee as discussed by Mellahi, and Wilkinson

(2014). The dilemma is that not much resistance will

be faced in the Arab as its principles are based on the

Islamic values but the Western philosophies founded

will hinder in the way of complete implementation.

Therefore, Saudi Arabia is required to keep a balance

between the collectivism-individualism in order to

maintain and preserve the diversified workforce

present in different parts of their industry. The

satisfied workforce will strive towards the better

accomplishment of the prescribed objectives of an

organization and on a longer term country’s economic

betterment (Saudi Arabian Monetary Agency, 2007).

Over the past 15 fifteen years Saudi Arabia has

invested immensely in Human Resource functions and

development (HRD). This effort was done in order to

raise an average skill level and to compete with the

recent developments in the labor markets and hence,

satisfying the employees for the better outcomes. The

most basic and essential Human Resource function is

recruitment and the advancements in the market is

forcing the Saudis to look for new ways of managing

HR and the manager-subordinate relationship. The

traditional culture is used to hire-fire the employees

and employ employees who fear the authority (Bhuian

SN & AbdulMuhmin, 1995). The new practices have

altered the organizational climate and is ubiquitously

leading to a new and advanced mindset towards

manager-employee relationship. The approach to

HRM which says ‘one size fits all’ is not valid

anymore in this Gulf Country Council (GCC) region.

For the time being, provided in the literature, the old

ways for recruiting and managing foreigners coexist

with new ways of adjusting the locals.

Methodology

This section begins with aim of explaining the best and

crucial methodology adopted for this research; to look

for the HRM practices and its impact on the societal,

political and economic culture of the biggest country

of the Gulf region, Saudi Arabia. The chosen

methodology was implemented based on the existing

literature on different sources. This research work has

been carried out through the case study due to

numerous benefits provided by this approach.

One of the benefits is that a case study results in the

ideal medium for examining the not known ideology,

such as Saudi Arabia and its newly adopted techniques

to benefit their employees. In addition, case study

provides a known environment of the investigation

which may not be exactly the same but a similar

surrounding, that is not possible with other

approaches. Moreover, the case study approach

provides an in-depth practical approach rather than

just a theoretical approach, which is one of the crucial

consideration in this research area.

Since this research is based on examining and finding

the impact of Arabian culture on the HRM functions,

therefore, the type of case study chosen was an

exploratory one. The unit of analysis or the sample

people were chosen to be the senior personnel of HR

that is HR managers, as they are people having an

insightful field knowledge and experience. Exploring

the vast subject of the research, it was evident that a

single approach could not be sufficient to satisfy the

research’s aims and questions. Therefore, the research

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37 Escalating Research Volume 5 Issue 2 June, 2016

found a mixed-methods approach to be the most

appropriate one. Each approach has its own pros and

cons that could be confronted through the utilization

of a mixed-method strategy.

After labelling the mixed-methods methodology, the

techniques developed by Miles and Huberman (1994)

were implemented to make the most out of the data

collection process, validating those findings and

testing the credibility and generalizability of the

process. Then, the participants of the unit analysis

were examined and the sample size was incorporated

for the testing of the quantitative part of the process.

An additional information was given regarding the

participants for the accuracy of the generalizability. A

sample size of 200 was selected, as the organization

approved to include majority of employees in the

study. Detailed descriptions of the interview templates

and questionnaires were designed on a large scale

during the data collection process. The interview and

questionnaire designs were completely based on the

literature findings, as this is an exploratory research.

Discussion and Analysis

Once the suitable and appropriate framework and

methodology was finalized for the study, the data

collected from the former process can commence

producing findings. This process is carried out to

facilitate the comparisons between the data collection

findings and the previous findings existing in the

literature. This process began from the distribution of

the questionnaires till conducting the interviews from

the unit analysis samples. This step is crucial from

every aspect as it entails the tools required for the

research to move to the next and final stage that is

conclusion and outcome. Furthermore, this research

has been conducted to investigate the impact and

effect of HRM practices on the multiple sectors of

Saudi Arabia instead of just comparing the sectors

against each other. As mentioned previously, this

research was based on an aim of exploring the

impactof HRM practices on the societal, economic and

political culture of Saudi Arabia. Those five HRM

functions include; recruitment, sources, performance

appraisal, training and development, compensation

and benefits, job desirability. This research is carried

out within the public and private sectors of the industry

through a case study approach. A case study was

chosen on the SAEI- Saudi Aerospace Engineering

Industries. As this sector was going through a process

of privatization, the time the research was conducted,

therefore, it provided information from both of the

sectors.

The research questions were produced in such a way

that it assisted the efforts of the investigation by

answering the desired questions and accomplishing

the set objectives. This study basically had four main

objectives and this research has helped in achieving all

those four objectives. These objectives included

studying the impact of societal culture of Saudi Arabia

on the five HRM functions, having an understanding

of the initiated HRM practices in private and public

sectors from the case study of SAEI, comparing the

currently in place HRM practices and policies in this

particular industry from the existing literature

available. The questions included in the questionnaire

basically targets the main objective and aim of the

study, the other questions augment the Saudi societal

culture and the HRM functions in practice.

This research is carried out with the main target of

objectifying the outcomes of the data collected from

the case study of the Saudi Aerospace Engineering

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38 Escalating Research Volume 5 Issue 2 June, 2016

Industries. Moreover, the findings of this research will

be helpful in utilizing the outcomes and fulfilling the

research aims and answering the questions. This study

will possibly be helpful for the future as it provides a

much generalized framework and contains those

crucial pointers which are essential to be considered

by both the sectors of the industry that is private and

public sector.

So, basically this study was carried out with involving

the participants through the interactive interview and

by identifying how those participants were qualified

for the investigation. The first practice of HRM that

was explored was the job desirability. The department

which requires to fill out the vacant position advertise

the desired skills in an applicant. These set of desired

skills were forwarded to the HR department to look

into the applicant’s database and match the ideal

candidate. Furthermore, the HR managers revealed the

factors that increase the job desirability; high and

competent salaries, free travelling allowances and job

security. Moreover, the element of collectivism

increases the chances of filling the job vacancy sooner

as revealed by the Saudi applicants. This means that

team work is more preferred over the individualism.

This aspect matches with the ideology of the higher

management of the SAEI, which strives towards the

promotion of team work and unity among the

employees to achieve organizations’ objectives.

The second element is the recruiting sources, the

interview process identified the most strong source is

the direct online application which the candidates fill

out by going through the requirements. This source is

considered to be quick and easy moreover, the cost is

minimum as it is online. However, the local applicants

have shown preference over recommendation and

reference friends and family members. HR mangers

stated that the recruitment sources could be figured out

by the organization if they find a suitable candidate for

the vacant positon. The recommendation source has

shown a strong relation between Saudi culture and

recruitment sources (Saudi Arabian Monetary

Agency, 2007). One HR practice that did not show any

affect upon it by the Saudi culture was the

performance appraisal process, revealed by the

findings. The HR management stated that appraisal

process has a standardized stance throughout the

organization with minor amendments depending on

the department conducting the performance appraisal.

Providing feedback is also non-related to the societal

culture of the Saudi Arabia. Managers stated that

feedback is provided through the e-mail as it is the

most practical and convenient way, thus confirming

the weak relation between the two aspects of the study.

The compensation and benefits’ element illustrated a

strong relation with the Saudi culture. The HR

managers revealed that the available choice of rewards

and benefits are given to the employees. The

employees form a preferred type of rewards and they

choose freely. These rewards combine the both types

that is; financial and non-financial benefits. However,

the studied, that on the long run, employees prefer

financial benefits over the non-financial ones.

Another theme exhibited the same relation with the

societal culture, training programs. HR managers

noted that societal culture plays a crucial part in every

aspect of training programs. One of the commonly

practiced training program is the linguistic skills

training. As Arabic is the native and local language in

Arabia so employees are given training to have an

expertise on the English language to perform more

efficiently and effectively.

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39 Escalating Research Volume 5 Issue 2 June, 2016

Moving forward to the questionnaires,this was filled

out and involved 200 engineers from the SAEI. The

first element that was taken under consideration was

the job desirability. In this element various aspects

were considered which included the most important

aspects candidates consider when looking for a job.

The highest priority was given to the compensation

and benefits offered by the organization, with job title

having a second priority. The second aspect was how

employees preferred to accomplish a task. More than

half that is 65% employees preferred working in

teams. Now the focus is on the second element that is

recruitment sources. In this element two themes were

considered that is whether the employees prefer

personal sources or impersonal sources. Personal

sources were over-powered by 88% of the employees

hence, leaving behind the impersonal sources with

12%. The second theme which was focused was the

sources the unit analysis personnel look for when

looking for a job. 33% of the applicants preferred

direct online application and the second source

appealing was the recommendation by friends and

family members, having 23% votes (Ministry of

Economy and Planning 2008).

The third element studied was the performance

appraisal methods. The first aspect studied under this

element was the selection of the performance appraisal

methods. Majority of the engineers chose direct

method based on the performance and objectives,

having a 66% preference, while 34% chose an indirect

or informal approach. The second aspect focused was

whether engineers prefer to be appraised individually

or in a group. The investigation revealed that majority

prefer to be appraised individually, that is 54% while

the rest 46% voted for group appraisals.

The fourth element of questionnaire was the most

important aspect in the eyes of an employee,

compensation and benefits. The theme was the type of

compensation system to be adopted in an organization.

Majority preferred equality in the system 81% and the

rest of 19% preferred equity. The second aspect of

compensation and benefits was the type of rewards

engineers preferred. 74% of the unit analysis sample

voted for the financial rewards over the long run, while

26% chose non-financial rewards (Ministry Of

Economy and Planning 2008). According to the

findings of this particular study, that is based on the

three basic questions of the investigation and in an

effort of answering the second two questions, the

investigation has successfully been able to find out the

relation between the impact of the societal culture of

Saudi Arabia and HRM practices. As for the third

question, this study has explored the preferred HRM

policies and practices within Saudi Arabia culture.

Moreover, the research objectives were covered with

consistent efforts throughout the research. The core of

this research was to have a know-how about the major

impact on HRM practices of Saudi Arabia societal

culture.

Furthermore, this research consisted the investigation

of the HRM practices within the public and private

sector of the Saudi industry, based on a single case

study of the SAEI, through the assistance of semi-

constructed interviews and questionnaires. As for the

third aspect of this study, it consisted of the currently

used and deployed HRM practices and policies,

particularly the five targeted HRM practices, which

would be useful in the further process of this study.

The final and the last aspect or objective of this study

can be utilized to compare with the existing literature

in order to improve the current HRM practices.

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40 Escalating Research Volume 5 Issue 2 June, 2016

Constructive conclusion could be derived out with the

help of this study and it could prove to be very helpful

in the near future in case to compare the study with the

existing literature. This study contributes to the

investigation carried out to study the impact and effect

of HRM practices on the GCC; Saudi Arabia. This

research covered the core and basic elements of HRM,

which includes; HRM functions, the employee

relations with the management, the level of

satisfaction employees get while working in a

particular organization, the structure of rewards and

benefits and how contented an employee as well as the

client is from the practices of HR. Moreover, most

importantly the role of HR in the biggest country of

Middle East; Saudi Arabia is studied significantly

throughout the investigation (Forstenlechner,2010).

Conclusion and Recommendation

This study was initiated with the aim of investigating

the impact of Saudi Arabian societal, political and

economic culture on five basic HRM practices that is,

Job desirability, recruitment sources, performance

appraisal, compensation and benefits, and training

programs. This aim was achieving through the set of

questions and interviews which were semi-

constructed, and covered the research objectives. The

questions of this research started with investigating

and studying the effect of the Saudi Arabian culture on

the five HRM practices within the public and private

sectors of the industry, which are consistently

highlighted in the comprehensive literature. In a

summarized context, three questions were put up in

this research, the second and third question played a

part of sub-questions in order to have a clear-cut

answer to the first question. The second sub-question

was constructed in such a way to find out the relation

between the societal culture of Saudi Arabia and the

basic five HRM practices within the organization in a

public and private sector. As for the third question, it

enquired about the preferred HRM practices with both

the sectors.

Several objectives were constructed in order to answer

the various research questions. The research objectives

were comprised of four main factors. The first

objective was to investigate the impact of Saudi

Arabian societal culture on the five HRM practices

based on the single case study of SAEI. Second, look

into the practiced HRM functions in both public and

private sectors, which was explored in one

organization, as SAEI was in the phase of transition-

from public to private- it was made possible to have an

overview of both the sectors under one roof. Third, to

complement the analysis conducted in the second

objective, that is to review the practiced HRM

practices and used it against the findings of the

existing literature. Fourth, to utilize the findings and

the analysis from the case study, develop

recommendations for future improvement of the HRM

practices within both the sectors of the economy that

is public and private.

This research comprised of a set of questions that were

asked through the semi-constructed questionnaire

from the individuals selected from the SAEI, basically

engineers. Initiating the research from the introduction

which comprises the HRM functions and the Saudi

Arabia society, that is quite diverse and is difficult to

follow ‘one size fits all’ approach throughout the

organization. It consisted the societal culture of this

particular Gulf country, within the public and private

sectors of the industry. The introduction also clarified

the main aim of the research. Looking at the research

questions and objectives closely the second dimension

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41 Escalating Research Volume 5 Issue 2 June, 2016

was to review the existing literature which was studied

after highlighting the research boundaries. This area

included the investigation of the impact of religion on

the work ethics and the impact of Saudi Arabian

societal culture on the HRM practices and covering the

collectivism-individualism dimension. This study

covered the five basic HRM practices; job desirability,

recruitment sources, performance appraisal, training

programs, and compensation and benefits. The third

aspect included the methodology adopted for this

investigation. A combination of mixed-method

approach and single case study was adopted. The best

organization to have a case study was considered to be

the SAEI. This organization was going through the

transition phase-public to private sector. Therefore, it

was easy to have and overview of both the sectors from

one organization. Mixed-method approach consisted

of three aspects; semi-constructed interviews, having

the employees fill out the questionnaires and visiting

the organizations in the region in person.

The research comprised of several stages. The first

stage included the development of research, selecting

an appropriate methodology to conduct the research,

covering the set research objectives, and constructing

the framework. This stage led to stage two which

comprised of data processing tools, gathering data and

analyses. The final stage included the findings of the

research, drawing conclusions and focusing on the

recommendation for the future research work.

Moreover, the validity of the research and particularly

the questionnaire was taken into consideration and it

was assured that the questionnaire is covering the

aspects from the ethical point of view.

Hence, in conclusion it can be stated that there is a

strong link between the societal culture of Saudi

Arabia and its impact on the HRM practices. Though

with the vast usage of e-Business this impact could be

minimized, as then the role of HR is not immense.

While the other aspect of this study could be seen with

massive transformation of the Saudi infrastructure,

there has been a need of employing the foreign

workforce into the country. This phenomenon has

made the link between the two comparing factors

weak. The foreign workers bring along their own

values and behaviors.While conducting this research,

at various stages opportunities to conduct future

research at this type of body, considered. The very first

and foremost level developed an opportunity to utilize

this framework and use it for the future reference with

any other organization. It is recommended to conduct

the study on a regional organization so that it could

contribute towards the unsorted regions. The second

and third level recommends, by utilizing this

framework for the local and international

organizations. This could give an idea of collectivism-

individualism and privatization process.

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