I am frequently asked this question, is it the end of the road for ex-patriates in the GCC?

Given what is being written about ex-patriates and the economies of the GCC at the moment it is an entirely legitimate question – these articles by Simeon Kerr of the FT and Sarah Townsend of Arabian Business give a good overview of the issues. But the answer is not straightforward.

In some cases the answer is a resounding ‘yes’, it is the end for ex-patriates. But overall the picture is more complex and more dynamic than one might think.

The three cultural ex-patriate clusters of the GCC

To give an accurate answer I think we need to break the ex-patriate community down by region of origin and by what is going on in specific GCC countries. For example the experience of ex-patriate professionals is very different in the UAE to what it is in KSA.  

Broadly speaking ex-patriate professionals fall in to three clusters of origins: Western, Regional (Lebanese, Egyptian, Palestinian, Jordanian) and Asian.

What is happening to these three clusters is very different.

Twenty years ago the majority of senior talent that I used to recruit for the GCC was Western. It made sense then. And I think many ex-patriates did a great job in helping the local economies develop. Dubai is a great example of this. And yet today as a recruiter of senior level talent I rarely have a Westerner on one of my short lists.

Why is this? 

Where are the jobs of the future for GCC ex-patriates?

There is now an abundance of regionally produced talent that can do the jobs better than Westerners - for reasons of language and cultural affinity.  I think this is healthy. It shows in particular the success of multinationals in shaping a whole generation of regional talent. In particular I would point to the very positive contribution to the development of human capital in the region made by companies such as HSBC, Procter & Gamble, Unilever, Nestle, Mars and Pepsico – to name but a few.

Having said this there are still key industries such as commercial banking where there is likely to be reliance on Westerners in key functions for the foreseeable future.  There are also emerging activities such as Digital Marketing and Digital Technology where the talent will for a short period of time (5 years?) still need to be imported, particularly from the West.

My guess is that regional talent from outside of the GCC – most notably those from Lebanon, Jordan, the Palestinian Diaspora and Egypt will continue to play a critical role in the economies of the GCC. 

However opportunities will be less. Partly because of economic tightening, societal changes and the simple fact that they are outpricing themselves. 

What I have seen over the past 18 months is a significant number of Lebanese CEOs, CHROS and CFOs lose their jobs because of the tightening economy and not able to find new jobs because their salary expectations are too high and the job opportunities are too scarce. In Saudi Arabia whole layers of jobs that were traditionally held by non GCC regional talent are now being replaced by Saudi Nationals. Which, objectively, is the right thing for Saudi Arabia. 

But I have also noticed that in some cases – particularly, as it happens, with CFOs – that regional non GCC talent is starting to price itself out of the market.  For example it is often much better – in terms of cost and performance- for a GCC employer to recruit a CFO directly from Italy than it is to recruit a Lebanese, Palestinian, Egyptian or Jordanian because of outsized compensation and benefits expectations.  

The Asian professional class is one to which we all owe a debt. In the last twenty years I have seen time and time again the quiet dedication of those from the Indian subcontinent. I know how many organizations function because of the administrative backbone that professionals from India and Pakistan provide. All the signs are that they will continue to prosper and undoubtedly will find greater opportunities at the expense of more expensive ex-patriates. That said the challenge will be for greater numbers of them to break in to leadership roles where they are responsible for different nationalities. It is happening but I think there is still considerable room for growth. For this to happen they will need to develop universal communication skills and universal emotional intelligence and greater cross-cultural assertiveness.

This Forbes list of 50 Indians in leadership positions in multi-nationals and Arab companies shows it can be done.

The expat dream is over for those who are ‘superior’

So have we reached the end of the road for ex-patriates? The age of expats is over for those who come believing in their own innate superiority and the dream of the ‘expat’ lifestyle.  It is over as a significant factor in Saudi Arabia. It will however continue in the UAE for those who genuinely have something to contribute. Going forwards the recruitment of ex-patriates will be more selective and value focused.

One age closes. Another dawns – how do you see that new dawn?

 

Please share your views in the comment box below and follow me on Twitter

 

Published in Insights

Guest blog by Mr Ihsan Bafakih, CEO, MASIC

What skills will the new generation of Saudi chief executives need?  This was the question posed to me by Mr Metin Mitchell when he asked for my views on What makes an Outstanding Saudi Chief Executive? (you can download the full report here).

He started by talking about the ambitions laid down in Saudi Vision 2030 and what the role of leaders in the Kingdom will be in achieving these.  Here I share more from our discussions – including thoughts on how future CEOs will acquire the skills they need.

What are the challenges facing Saudi chief executives?                                                                                                                                                          

One thing we have to do is anticipate things differently.  We now have the variables of the economy slowing down, government spending slowing down and more interventions and decrees.  These are new aspects to factor in – the economy, GDP, money supply and reforms coming in over time. 

So chief executives will have to anticipate these reforms and there is more to come, however with more efficiency comes more opportunity.  Yes in the short and medium term we have to anticipate seeing smaller margins as a result of paying taxes.  We see it in other countries also.  In Oman where they started taxation a lot of businesses were slowed down.  We might see it here and have to structure our businesses differently.  However, we are moving from an exceptional situation to a normal one practiced by many countries around the world.  Good businesses still flourished despite having these reforms which have become norms.

What is different about being a CEO in Saudi Arabia, as opposed to other parts of the world? 

We are a country in a transitional period. These next ten years are very critical for Saudi history with the transformation ahead and a dependency on issues other than oil. Communications are becoming more important. We have social media, an increasing openness of the media and far more tolerance of the government to see people speak out – more than at any time in our history. The environment of the Arab world and our neighbours makes what we do here unique – it is not the same for somebody sitting in California, the mid-West or Korea. We are going to strive to become an economy of efficiency, of productivity.

What will Saudi CEOs need to do differently in the coming years?

In the short term, we need to look at our forecasts.  Some of the plans were created in an environment where the macroeconomic aspects were more positive – they are going to need adjustment.  That is just in the short and medium term. 

In the long term, what has been postponed is taking place.  We always knew there would be a time in our country and our economy when we would have to let go of our dependency on oil.  I wish we had thought this way in the good years – it is always better to do this sort of change in the good years – but people always do things under pressure.  It is in our nature to wait until we really have to and now I think the government is showing the population what has to be done.  It’s a little bit severe and it’s painful, but it is putting everybody in a state of mind that change is coming.

What personal attributes will tomorrow’s Saudi CEO need, versus what was needed in the past?

We are a country on a learning curve.  In other countries, they have probably gone through what we are going through now – and the State has moved on from some of our issues.  We are going to strive to become an economy of efficiency, of productivity, rather than the stereotype of laid-back and dependent on oil and the government and with the government taking care of everybody.

We need the next generation to come with their merits and knowledge.  In the past, a lot of people on boards have been honorary.  We are beginning to see people appointed now for their merit, where they have a track record and proved themselves – in ministries and in business.

In the future I think we will see fewer people being appointed because of their family and more because they come equipped.

What are your thoughts on the best way to become a CEO?  Any particular route you favour or champion?

MasicI was a CFO before I became a CEO so I guess that is a pretty good route. When you have good people who grow within the organisation, that is a good way to determine a good CEO.  A good company makes good CEOs and I think the natural transition is the better one for the company.  Most of the CEOS we have, have grown within our companies. 

It can be good bringing in somebody who has spent time elsewhere and brings in different knowledge that he can apply to your business.

Is there a place in Saudi for a ‘Harvard Business School’?

I think our universities are good and I know most of my colleagues have graduated from them, but they don’t do enough on applied knowledge or on the job work.  When you go to Harvard Business School, you are analyzing current markets and coming to morning meetings where you are briefed on what’s going on with the stock markets and currency markets around the world. So you apply knowledge through doing and practicing. 

Our universities are not doing that but they don’t fall short on giving knowledge – on the principles of accounting, economics, finance.  That is being taught well here.  What differentiates us is that we don’t produce Wall Street bankers in the universities.  We produce people with a good education – there is a difference.  Look at the recent development when the Ministry of Commerce & Investment went to the US and signed up PWC and other companies to have a college here, teaching people practical knowledge.  You would have good standards in audits with accounting from a practicing company here.  Those institutes are something we need here.

What do you think Saudi Arabia will look like in ten years from now?

In ten years, Saudi will be more efficient and less dependent on oil; more results-driven; a more efficient government.  Also less inefficiency and less money wasted.  And, I hope, in ten years from now we can see the dependency on oil is less than 50% of the GDP.  We will see more contribution to our economy from less exploited areas such as: other mineral mining, industries, religious tourism and logistics.  We will see more of a service-driven economy and an efficiency-driven economy. 

On the social side I hope we will see even more tolerance, as our version of the millennials grows up.  Hopefully we will see a more absorbent society that is more tolerant and understands the differences each person has and sees that we have diversity as a plus. 

Published in Chief Executive
Tuesday, 13 December 2016 16:19

Are Saudi leaders born or made?

I mentioned in an earlier blog that I have had the privilege of interviewing a number of Saudi chief executives to ask for their views on ‘What makes an outstanding Saudi chief executive?

One of the questions we discussed was how best to groom the next generation of Saudi leaders. A large percentage of today’s Saudi chief executives are of course in family businesses and that also raises the time-old question of – are leaders born or made?

If you Google this phrase, are leaders born or made, it produces six million results! It is an issue that leaders often struggle with in terms of how much can you develop someone to become a leader and to what extent do they need to have natural leadership qualities?

An article on the Forbes site says that leaders are both born and made: “It turns out that both camps are right. Researchers have found that leaders come by their talents partly through genetics but mostly through hard work and persistence. In fact, one study from The Leadership Quarterly on heritability (that is, the innate skills you bring to the table) and human development (what you learn along the way) estimated that leadership is 24 per cent genetic and 76 per cent learned.”

What did the leaders who I interviewed think – and what did they think are the best ways to develop future leaders? We will be sharing this information in our report, out shortly, but here are some of the highlights from our discussions.

1. Education is an essential for future leaders

The general view was that the next generation of Saudi CEOs need to have a strong basic education, but they also need a breadth of experience from working in different areas of a business.

Many interviewees are excited at how this education is now extending beyond that of America and Europe, recognising the Far East will bring new thinking around business models, marketing strategies and operations.

There is a real desire for the Kingdom to do more in the way of business school education to help leaders – and perhaps to do more to adapt this to the needs of the country.

2. On the job learning

Several of those interviewed mentioned how they had worked in most departments of their family business to gain grass roots understanding of each area and how they fitted together. This was generally seen as essential for future chief executives - they need to work their way up.

Inevitably there were differing views about which skills and experience actually have the most value for the final chief executive role – should they have held the chief financial officer role, be very good at strategy or be highly skilled in business development?

As a recruiter, I know that good chief executives can come from all disciplines but a good head for finances is essential and also the ability to get things done – I emphasised this in a recent article on creating Saudi leaders; there is a particular need in the Kingdom for chief executives who can make things happen. I don’t think there is any particular discipline that will produce this ability.

There was considerable discussion around how ethics and governance are becoming increasingly important. There is an issue in terms of education – are business schools up to speed – but also our interviewees felt there is a need for a formal plan to develop these skills while working.

3. Mentoring and coaching

Mentoring and coaching is still a relatively new concept in business. Good leaders have always coached and developed those around them, but businesses are increasingly putting formal plans in place to ensure this is done thoroughly – and to teach people how to coach their junior members.

Coaching was often raised by those I interviewed and a few referred to having hired professional coaches for themselves – this was definitely seen as a good thing.   Many referred to the loneliness of being a chief executive and having a coach can help to keep a perspective on the job.

So to sum up, today’s leaders all recognised the challenges facing the Kingdom as it aims to achieve Saudi Vision 2030 and the importance of having outstanding chief executives. Will these leaders of the future be born or made – everyone agreed they need to be made. This will be done through a mix of education, learning on the job, being coached by current leaders and also bringing increased expertise in new areas such as governance.

The verdict from these interviews was that leaders are most definitely made.

Published in Chief Executive

Last month I wrote a blog on Will Saudi’s chairmen of 2030 need to look different from today? I have had a number of comments and discussions on this, both when I have been in the Kingdom and also online - and one comment in particular got me thinking.

 

Mohammed Abdul Gaffar of KFB Holding Group said “It is not just the chairmen who need to look at business differently from today” – and of course he is absolutely right. He continued: “The idea of Vision 2030 has to be trickled down to each and every individual in an organization. Proper communication of the Vision 2030 to everyone and encouraging participation from all groups is paramount to achieving success. Just my 2 cents.”

 

Well they are a good two cents and lead nicely into what I have been thinking about concerning the skills that will be needed for chief executives to achieve Saudi Vision 2030.

 

What will be the biggest challenges for Saudi chief executives?

In my view the toughest challenges for chief executives will be how they cut costs without harming businesses.

 

Just last week, Reuters reported that “Saudi Arabia will cut ministers' salaries by 20 percent and scale back financial perks for public sector employees”

 

Inevitably oil prices are having an impact in the Kingdom and the ability to make these tough decisions wisely will be critical for the long term success of both companies and the country.

 

But the biggest challenge is achieving operational efficiency through cuts – and also knowing when to keep innovating and investing. Great leadership is about achieving this balance and also bringing employees with you so they can see the better future in return for a more difficult time now.

Building a pipeline of skills

You might say that anyone can cut costs. The harder task is to manage through a recession and still build the skills needed for growth.

 

To do this, salaries are going to have to be more aligned to performance and – another tough decision – not reward people who have not performed. That is going to take a big culture change in many organisations, but bonuses have to be earned.

Connectivity with employees

In the next few years, chief executives are going to have to ask their employees to work longer hours and find new ways of doing things to be more efficient. Leaders need to create a team spirit of everyone pulling together and getting people to rotate around departments to learn these wider skills.

 

This is where Mohammed Abdul Gaffar’s comment is so important – leadership that will bring a future vision alive and encourage every employee to participate fully in the company.

We must not lose the existing outstanding qualities of Saudi chief executives

Whenever we look at change and new futures, there is always a danger of forgetting to identify and keep what is outstanding about the present.

 

In the case of the Kingdom, many Saudi chief executives are extremely compassionate towards their employees and often look after them secretly to ensure they are supported and they do the right thing.

 

There is also another very special attribute in Saudi leaders which the West would do well to learn from – they think about and plan for the longer term, looking 10, 20, 30 years ahead or even generations.

FT article on Paul Polman

I loved an article in the FT this weekend. When Paul Polman became chief executive of Unilever in 2009, the FT article says “He immediately said that he only wanted investors who shared his view that Unilever needed to shepherd the Earth’s future as carefully as it did its own revenues and profits. As one of his first acts, he announced that the company would no longer publish quarterly profit updates, as they encouraged short-term thinking. Simon Zadek, a long-time British sustainability campaigner….[said this was] more than just tinkering or public relations, it was a new business model.”

 

Well the Middle East is way ahead in this respect. Muslim teaching is that every individual must protect the Earth’s future and Saudi leaders take this long term vision and planning very seriously. It is not just talk but a daily reality.

 

If the Kingdom of Saudi Arabia is to create more businesses that are globally competitive, its leaders will have to balance retaining the best parts of their culture with the need for tough decisions and still investing for the future. There is a clear strategy to do this – we just need to find the leaders who can achieve this.

Published in Chief Executive

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