Emiratis good for business, says study

An UAE University professor and a team of researchers interviewed 48 managers of multinational companies to determine the benefits of hiring Emiratis.

Private companies that hire Emiratis become better at navigating bureaucracy, winning government contracts and interpreting ever-changing labour laws, according to a new study. Because of their deep social networks, Emiratis have connections and access that expatriate workers do not, says the report. "There are tangible benefits for employers to hire Emiratis," said Ingo Forstenlechner, an assistant professor at the College of Business and Economics at UAE University, who headed the research.

He told the story of a manager who found that a backlog of work visas was cleared in a matter of days after he hired an Emirati employee. The reason? One of the Emirati's cousins worked in the immigration department. Prof Forstenlechner and a team of researchers interviewed 48 managers of multinational companies to determine the benefits of hiring Emiratis, who often command higher salaries than expatriates with similar qualifications. "When you look at Emiratisation, it's not all gloom," he said.

It is estimated that less than one per cent of the private-sector workforce is Emirati, in part because most nationals prefer to work in the better-paying public sector. The unemployment rate among Emiratis is about 13 per cent. The report, Gaining Legitimacy Through Hiring Local Workforce, was prepared with the support of the Emirates Foundation. It will be published online in the next month and in the Journal of World Business in 2011.

Connections are important in the UAE and the GCC, and Emiratis can tap into networks that are off-limits to those who are newly arrived, according to the study, which was co-authored by Kamel Mellahi of the University of Sheffield Management School in Britain. Ammar Shams, the head of human resources for HSBC in the region, said most Emiratis were connected by family or friendship. "I know everybody," he said. "Therefore, who is a better option?"

Also, laws, enforcement and regulations in the UAE can shift quickly, and Emirati employees are often more aware of changes. "Changing laws are normal in a developing economy," Prof Forstenlechner said. "Emiratis tend to have a better connection to those who write and apply those laws." Companies that took Emiratisation efforts seriously also found it easier to secure government contracts, he said.

Albert Momdjian, the managing director and head of investment banking in the Middle East and Africa for Calyon bank, said: "We see more contracts if we hire more locals, of course." The international bank tries to hire the local populations of the countries in which it operates as a matter of policy. "We need to have locals because they can get us to better understand the country," Mr Momdjian said. "They understand the risks and can direct us to good counterparts and warn us of bad counterparts."

In addition, expatriates tended to shift from one country to another, he said, and nationals were needed to "defend the fort and continue the business". However, Mark Eaton, the managing director of Hay Group, a management consultancy, doubted Prof Forstenlechner's findings. "It depends quite a bit whether [the Emirati employee] happens to know the system well enough that he can steer through it," he said, adding that it was unwise to generalise. "It's not certain that they have the organisational awareness to be able to do it," he said.

Prof Forstenlechner said his study found that soft tactics, such as granting tenders to companies that promoted Emiratis, were often more effective at promoting Emiratisation than government regulations and quotas. "We're not saying this is necessarily best practice, or that this is ethical. But there are tangible benefits for employers," Prof Forstenlechner said. [e-mail]