International HRM: A Cross-cultural and Comparative Approach

Chapter 12: HRM in the Middle East

Case Study: HRM in the Libyan Oil Industry

(Adapted from Weir et al 2006a,b; , Almhdie, Iles and Preece 2006; Almhdie & Nyambegera,

2004).

Libya is a country of growing importance in North Africa and the Middle East

as the previous dictatorship has been overthrown, UN sanctions have been lifted and
foreign companies are more interested in developing business investments. The public
sector is dominant in Libya at present, including oil and banking, but HRM policies and
practices vary. For example, public companies have particular restrictions as to who to
recruit into the organisation; in the public sector or in Libyan-owned firms, employment
has been characterised by lifetime engagement, seniority, and social cohesiveness.
Patronage is widespread, with managers intent on promoting in-group relationships as
compared to those outside the in-group. In the private sector and mainly foreign-owned
firms, workers are more likely to be held accountable.
HRM practices seem to be at a formative stage, as in most developing countries,
and are heavily influenced by a variety of factors, such as the socio-political context,
the Islamic religion and the family, which all play a major role in shaping the attitudes
and perceptions of employees toward HRM policy and practice. Many managers are
more concerned with creating social relationships at the workplace than doing the job
itself. In Libya, reliance is placed on personal contacts and getting people from the right
social origins to fill major positions. However, merit-based recruiting may be difficult
to introduce because of the significant role played by culture; people are expected to
help those related to them, and those that are well connected politically. Libya has been
instrumental in training locals to take up the management of her organisations.
Financial rewards and recognition may be more based on performance than seniority
and loyalty, and career paths may take new dimensions, as merit becomes the major
criterion in the future.
The Libyan oil industry is comprised of both Libyan and expatriate managers.
Many of those holding managerial positions have in one way or another been in contact
with western higher education, and hold values that may well influence their attitudes
toward HRM, though they are part of a larger society that is influenced by the societal
values and norms that define a Libyan. In spite of these influences, HRM in Libya is
practiced in a context that is different from developed countries; now that Libya has
started opening up to the West, one can expect an influx of foreign companies and
expatriates into the oil and gas sectors. These firms may bring into Libya aspects of
strategic HRM. Several issues that require a new approach include cost
competitiveness, the need to enhance organisational competitiveness, the need to
develop employee competence, and the need to recruit and retain high quality
employees.
Using a sample of managers from large Libyan oil firms, Almhdie, Iles and
Preece (2006) examined HRM policy and practices and managers’ perceptions of such
practices. Factor analysis revealed three key HR policy/practices: Strategic HR
Practice, Employee Influence and Performance Orientation. Strategic HRM was not
practiced in Libyan oil companies, especially those owned by the Libyan government.
Weir et al (2006a,b) found that all the oil and banking companies they studied had a
separate HRM/Personnel unit, but only around half reported a clear HRD strategy, and
even fewer reported that their strategy was derived from, or related to, their overall
corporate strategy. Resource planning and appraisal were reported to be the most
frequent HR activities, much more than reward and motivation, but only a minority
claimed to be engaged in these activities. Respondents in the oil sector were more
satisfied with meeting managers’ training needs, but dissatisfaction was widespread in
both sectors, despite these organisations being ‘leading companies’ in their sectors,
enjoying strong government support, finance and markets.
Strategic HRM approaches in Libyan firms seem largely limited to
multinational companies and progressive indigenous ones. Libyan organisations work
with more restricted levels of employee autonomy, a greater emphasis on the role of
the group over the individual, the paternalistic nature of relationships, and higher levels
of government intervention. Libyans, especially younger employees with foreign
higher education, may demand greater empowerment and participation in workplace
issues that affect them. With more Libyans acquiring higher education, it might be
necessary to reduce the number of expatriates working in Libyan organisations. With
more democratic space opening up, employees might demand more participation and
union involvement.
Questions:

1. How is HRM affected by cultural and institutional factors?