Emerging Issues That Will Affect Business in the UAE
One emerging issue that businesses in the UAE must deal with in the future is localization. Multi-National Enterprises (MNEs) face the challenge of making their business operations local to effectively compete in the UAE business environment. There are laws in the UAE governing aspects of localization for MNEs.
However, their implementation is somewhat ambiguous. Thus, companies rely on the need to realize economic returns as a factor influencing their localization policy. Unfortunately, the present situation allows some MNEs to avoid the localization of their operations. Moreover, those that succeed in implementing localization may not go as deep as it is necessary to maintain their competitive strategies in the end.
Localization differently affects various companies. First, in the UAE, the government through its agencies is the biggest consumer of products and services in the economy. Companies that encourage the employment of UAE citizens and subcontract their work to native companies have a higher chance of doing business with the government.
The lucrativeness of government contracts in the UAE force many MNEs to hire local staffs. Not all MNEs will survive the dynamic market of the country if all they do is hire local staffs. The UAE continues to emerge as a force to reckon in the global business environment. As it rises, its citizens and laws also evolve to provide better control and management the economy.
MNEs that early adopted the concept of localization have an advantage over new companies, which are copying an already existing trend. For the former, their need to realize economic gains prompted them to develop strategic plans in accordance with their strength and weakness analyses. However, the latter only adopt localization policies to copy their competitors.
Copying strategies of another company in the same industry does not guarantee the effectiveness of those strategies in the future. The late adopters of localization have to deal with the emerging risk of becoming irrelevant in the changing market. The UAE is likely to develop professional bodies and associations that will stress the need for the adoption of local practices among MNEs. Thus, the companies that fail to support the localization projects are already jeopardizing their future operations.
Management should understand that the achievement of external legitimization by recruiting native nationals reduces their risks as they compete with homegrown firms (Forstenlechner & Mellahi, 2010). For example, in the financial industry, the human resource pool of resident banks now contains a significant number of local nationals.
By default, the banks have a greater appeal to local customers. The indigenous appeal overrides customer levels of investment or their financing needs. It has only been a decade since the same banks had a staff pool made up of foreign nationals (Forstenlechner & Mellahi, 2010). Therefore, localization is a challenge for multinationals seeking to have a lasting presence in the UAE. They should concentrate on the long-term rather than blindly copy their peers.
Another emerging issue for business in the UAE is finding a cultural balance between their expatriate workforce and their local counterparts. Most multinationals doing business in UAE come from western countries whose liberal culture is different from the Islamic culture of the UAE.
Adaptation to local cultures is the key to successful marketing of products and services of a given company. Unfortunately, most expatriate workers are not keen on changing their cultural behavior while working in the UAE. The rigidity to change presents public relation managers of these companies with a challenge of defending the local aspects of the MNE brand.
Over 80 percent of the UAE population consists of expatriates. The high number of foreigners working in the country presents companies and organization with challenges of not only coping with local cultures, but also adapting to the cultures of the various foreigners in the country.
People from dissimilar parts of the world have their own ethical attitudes. While the attitudes of all the foreigners may be the same towards business, they are different in terms of community values, leadership preferences and favored forms of compensation. Human resource managers have to grapple with the issue of attracting top talent from a diverse population of both foreign and local nationals.
The economic development of the UAE creates new industries and transforms existing industries, as they become more mature. The development results into an increase in the demand for skilled workers. As the demand rises, businesses realize that their preferred nationals do not possess all the skill-sets needed for particular jobs.
Thus, the businesses have to recruit staff from different nations other than their own. One consequence of external recruitment is the change in the business culture, which might affect how the business delivers products and services.
Moreover, the inclusion of employees from diverse cultures makes it hard for human-resource managers to motivate staff. The level of motivation corresponds to the resulting performance by employees in a firm. However, the multicultural dimensions emerging from the recruitment of diverse nationals and marketing products to dissimilar residents removes the possibility of using one strategy of motivation.
As a response to the above issue, management should not seek to impose new cultures on the market and on its workforce. Instead, it should place mechanisms within the organization that promote learning and cultural exchange. Feedback from the market should inform future marketing strategies to make sure that the company remains competitive and relevant. The inclusion of different nationals should also happen at management levels as the company grows to ensure that it does not show prejudice tendencies.
Processes and Techniques to Override Resistance to Change
To minimize resistance to change, there should be adequate communication channels between management and employees. Proper flow of information within the company leads to timely resolution of disagreements. In addition, it makes it easier and faster to announce changes that affect the entire company.
Although companies have various reasons for their existence, the main reason is usually the making of profit. Profit making comes from the sale of solutions that fulfill a market need. Today, knowledge transfer and new technology remove the barriers of entry to the manufacturing business.
Existing companies have to develop additional values for their products in order to remain marketable. To make the organization ready for change, management should construct value-added service-awareness processes in the operations of the company. Every staff should understand the company’s desire to enhance its value in the market.
The management should approach the change process as a partnership with its staffs or customers. Therefore, it should ask them to offer suggestions that will ease the transition from product orientation to service orientation. Having the customer on board gives the impression that the company values them.
The impression is in line with the overall objective of the change process. During consultations with employees and customers, the management should talk about past behaviors of either party. Thereafter, it should embrace what is common and use that to drive an alliance for change.
All parties need to know that change is a gradual process in large organizations, and this will help reduce any reluctance when there are no immediate results to show. Competition depends on more than the price of products. Changing the interaction with consumers will only work when a change in the organizational culture accompanies the process. Thus, the leadership should lead by examples. To infuse new habits to the organization, there should be oversight management in every interaction point in the company.
Moreover, during the implementation of change, management should control the flow of information. For instance, information concerning failures of certain processes or negative remarks about the intended results needs proper handling. Mistakes and other challenges need a well-managed crisis response to prevent panic and withdrawals (Bacon, 2007).
Clear communication and often leaves little room for mistakes and quashes resistance. Management should understand and embrace the following three levels of transition. The first stage should be to destabilize the existing behaviors in the organization.
During this phase of the change, all communication and management tasks should focus on unlearning the past culture of the organization. Here, management presents staffs with an opportunity to understand the prevailing behavior patterns so that when it comes to changing, they know the points to tackle.
After the unlearning part, management moves to the second stage of moving staffs or customer to new behaviors and expectations respectively. In this instance, the strategies that infuse different behaviors will be helpful.
The company leadership can modify reward systems and management styles to reflect the fresh direction of the company. For example, managers can introduce a bonus system that prompts employees to test new approaches and offer relevant feedback to earn points. They would redeem the points using various options such as off days or lunch with senior leadership.
The last part of the change process involves the cementing of new behaviors and processes. Novel codes of conduct, work procedures and communication channels should become part of the institution. Management can announce to employees, and to the market that the company has changed. Thereafter, every aspect of the company structure and brand should embrace the new customer orientation.
During the change process, employees, management, customers and shareholders will behave as groups. Communication should prevail among the various groups on how changes will affect them. The best way to reach each group is by using narratives that will stimulate dialogue.
Although it is a slow process, the resulting dialogue allows management to remove all preceding behaviors in the group and introduce new ones. In addition, narration through various forms such as literature, audio and video are memorable. Therefore, it is possible for management to refer to them in the future as a way of handling any resistance that emerges (Bjurklo, Edvardsson, & Gebeur, 2009).
Managers should avoid fighting the symptoms of resistance that come up during the transition. The handling of symptoms presents immediate results but still leaves the transitional process vulnerable. Therefore, workers should work on solving structural problems that will eradicate symptoms and increase efficacy and output.
Management should believe in the economic potential of offering more services and encourage their employees to create apt means of extending the proposed service component. Thus, the firm should free its employees from current business tasks and move them to service delivery. Properly assigning employees their roles reduces the risk of product quality deterioration due to the transition (Gabauer & Friedli, 2005).
A company may follow the processes outlined above; however, if it does not perfectly define service, then all transition efforts will be futile. There should be a clear distinction of product and service within the company and the definition of the latter should provide a tangible and meaningful association for employees.
Having a transition system allows the firm to achieve the significant differentiation of products as platforms, which enable the creation services as the value-in-use that the customer experiences. The systems enable the application of deeds and processes that give meaning to service (Bjurklo, Edvardsson, & Gebeur, 2009).
Three Factors for Consideration When Adopting a Particular Leadership Style
In a particular session, the leadership style is a summary of the behavior patterns that one shows when dealing with a specific group. Repetition of the equivalent leadership style when dealing with the same group or related groups of people results to a dominant leadership style. The following are factors to consider when assuming a particular leadership style.
First, the leader should understand that followers react according to how they perceive a particular style. Therefore, leaders should put into consideration, not what they believe is their leadership style, but what it means to their followers.
Leadership in organizations revolves around the attainment of anticipated results from followers, thus factoring in their perception of the style is mandatory for one to expect the desired cooperation. Before choosing a leadership style, the leader must understand the concerns of his or her followers. The sustainability of the group led by the leader depends on the perception of satisfaction by its members.
Second, the leader must know the level of maturity his or her group is before choosing a style. There are several stages in the development of groups. In between stages, groups rely on others and have different leadership needs. Typically, a group will move from being dependent, to counter-dependent and finally independent.
In the first phase, the group solely relies on the leader. Here, the group members need guidance on what to do and how they should serve the group. In the next phase, there are power struggles and faithful rebel against the leader’s authority. Individual members in this stage try to lead their colleagues. Finally, in the last phase, the followers are mature and work together to achieve common goals of the group. Individual efforts receive the desired recognition, and the need for leadership is minimal.
Third, the personality of the leader matters when he or she is choosing a leadership style. People tend to choose a leadership style that identifies with their preferences and behavioral tendencies. Even when one receives the necessary exposure to different leadership styles, they would still use a specific style in all situations if they feel that it serves their roles. Often leaders will go with the style that they are already known for, so that they do not appear to be pretending.
For example, when considering group maturity as a factor, a leader can choose an autocratic style or a task-directed style because a group depends on its leader. In addition to providing direction, the leader uses a hands-on approach to supervise tasks and handle inquiries.
The dependent group has many queries and requires powerful gestures to maintain civility; hence the option of choosing an autocratic leadership style. On the other hand, for an independent group, there is a slight need for leadership. An autocratic or task directed style would work detrimentally to the progress of the group. Instead, a democratic style that allows members to assume temporary leadership roles would be beneficial to the independent group.
Another example in accordance with the first factor presented above comes from research done by Ehige and Akpan (2004) in Nigeria. The scholars found out that the leadership style of a particular organization determines the effectiveness of rewards offered to employees.
In the study, the scholars confirm that the perception of employees on the leadership style matters when it comes to their motivation. When employees perceive the leadership style of the organization to be mindful of their concerns, they are likely to work well with minimal reward systems. On the other hand, if the leadership style is out of touch with employees, then the organization will need additional rewards to receive the same level of cooperation from employees.
Using the above findings, the researchers recommend that organizations should train their leaders to use low maintenance styles if their organizations have the funds to offer high rewards to their employees. Conversely, if there are insufficient funds for great incentives, then the organization will have to rely on the perception of the employees on leadership as a way of motivating them. In this case, the leader should adopt a high-upkeep style, which assures employees that their needs are always under consideration (Ehige & Akpan, 2004).
Bacon, T. R. (2007). Driving cultural change through behavioral differentiation at Westinghouse. Business Strategy Series, 8(5), 350-357. doi: 10.1108/17515630710684466
Bjurklo, M., Edvardsson, B., & Gebeur, H. (2009). The role of competence in initiating the transition from products to services. Managing Service Quality, 19(5), 493-51. doi: 10.1108/09604520910984346
Ehige, B. O., & Akpan, R. C. (2004). Roles of perceived leadership styles and rewards in the practice of total quality management. The Leadership & Organizational Developmental Journal, 25(1), 24-40. doi: 10.1108/01437730410512750
Forstenlechner, I., & Mellahi, K. (2010). Gaining legitimacy through hiring locals at a premium: The case of MNEs in the United Arab Emirates. Journal of World Business, 46(4), 455-461. doi: 10.1016/j.jwb.2010.10.006
Gabauer, H., & Friedli, T. (2005). Behavioral implications of the transition process from products to services. Journal of Business and Industrial Marketing, 20(2), 70-78. doi: 10.1108/08858620510583669