Omanisation: Comparative Perspectives from three industries in the private sector By Chloe Brookes As an intern at the British Omani Society, I was able to involve myself in a wide variety of the activities of the society.
One particular experience that stood out was an opportunity to observe a meeting of the Supreme Council of Planning. Central to their discussion was the goal of increasing Oman’s reliance on its indigenous workforce, while also complementing strategies towards economic diversification and growth. With the Oman 2020 Vision nearing its completion, this provides an ideal time to examine the progress that has been made towards implementing Omanisation. Interested to learn more, I decided to undertake a research project exploring the achievements and remaining challenges in the implementation of Oman’s labour indigenisation strategies. In September I embarked on a research trip to Oman where I conducted interviews with representatives of leading companies in three of Oman’s private sector industries. Each interview provided a unique perspective on Omanisation within the context of three different industries. Below I compare their perspectives on the achievements and remaining challenges in implementing Omanisation under the 2020 Vision.
Like many of its regional neighbours in the GCC, Oman has embarked upon a labour nationalisation project which seeks to address its reliance on foreign manpower and the demands of its growing indigenous labour force. Oman’s 2020 Vision outlines the centrality of labour indigenisation as one of its most fundamental objectives. A drive towards Omanisation reflects not only the replacement of expatriates with trained Omani workers but also indicates a move towards reduced external dependence and overall self-reliance in human resources. Human resource management and training programmes which seek to improve the qualification and competitiveness of the Omani people are thus identified as the cornerstone of this strategy.
While the 2020 Vision seeks to create employment opportunities for Omanis in both the public and the private sector, it aims to develop the role of the private sector as the major driving force of the national economy. Representing a major source of employment, the private sector has traditionally been made up of 91% expatriates. This historical preference for expatriate labour in the private sector reflects both discrepancies in the skill level of the Omani workforce and the relatively cheaper cost of employing foreign workers. Meanwhile, there is a strongly entrenched preference among Omanis for employment in the public sector, with its attractive benefits packages, shorter working hours, and favourable holiday leave and retirement policies.
This presents a considerable set of challenges to the implementation of Omanisation strategies, particularly for the private sector. The over-saturation of the public sector and the strong potential employment opportunities in the private sector reinforce the need to develop the leading role of the private sector. Yet incentives remain for Omanis to prefer public sector employment, as mentioned above. However, an approach to Omanisation which emphasises strong coordination between the government and private companies within each industry has led to promising new developments.
The financial services industry has successfully achieved the set targets for Omanisation, with Bank Muscat surpassing these targets. Across different industries in the private sector, success has been varied. Other industries such as oil and gas and professional services have taken significant steps to make Omanisation a central pillar of their corporate strategy. However, they have faced challenges in reaching the targeted rates for 2020. This report explores the perspectives of three private companies within these three industries.
At Bank Muscat, extensive investment into human resources and training programmes have been central to its long-term strategy of achieving Omanisation. Tariq Faqiri, head of learning and development at Bank Muscat, outlines the factors behind the bank’s success. ‘The central bank regulations mandate a 90% Omanisation percentage in banks. We are ahead of these targets, with approximately 94% employment of Omanis.’
The management approaches Omanisation as a long-term strategy which is seen as completely compatible with maintaining competitive financial performance. From a short-term perspective, however, there are some trade-offs. Creating employment opportunities for Omanis within Bank Muscat involves allocating considerable resources into learning and development. Developing the competitiveness of the Omani workforce involves confronting a skills gap between the qualifications achieved through higher education, and the standards required by the industry. An average of 18 months of training is required to bring fresh graduates to the standards of the industry.
This high level of investment into Omani employees continues far beyond the entry-level. Management trainee programmes and leadership programmes at Bank Muscat equip Omanis to occupy more senior positions, ‘creating a continuous pool of talented leaders within the nation.’ Many of the professional qualifications and leadership programmes are co-ordinated through Harvard Business School. ‘Various programmes of training at different levels, [which involve] some of the world’s best trainers, ensure that Omanis are able to operate in the best financial markets.’
This investment into the development of Omani talent is also reflected in the strategy of Petroleum Development of Oman (‘PDO’), the leading exploration and production company within the oil and gas industry. ‘It is like we are running a college within the company,’ explains Ghaliba Al Hinai, Head of Omanisation at PDO. Graduate recruits will go through three to four years of comprehensive training at PDO to match their qualifications and technical expertise with the demands of the industry. PDO’s model of human resource management and training has become so successful that, according to Dr Samir Radwan at the Supreme Planning Council, PDO trainers are now highly sought after.
As a leading company in the industry of oil and gas, investments into the development of Omani talent at PDO have a major impact on the ability of smaller companies to achieve Omanisation. Al Hinai explains that Omani workers trained by PDO often become sought after by smaller companies and new players in the industry. ‘One of the major challenges within such a small market is to continue to grow our own team while retaining them. It’s a small country, and there are many oil and gas companies coming up from every corner and it is already a small labour pool. It ends up that it is the same pool that all these oil companies are trying to attract. It gives us the challenge of trying to retain all the expertise that we are building in our company.’
While this presents a unique challenge from the recruitment perspective, Hassan Barwani, Omanisation and Recruitment Talent Manager at PDO, views this as a broadly positive indication of PDO’s leading role in building the national labour force. Seeing PDO-trained Omanis go on to occupy senior positions in other firms is indicative of PDO’s central role in leading Omanisation through creating competitive national talent. PDO’s extensive investment into the training of Omani graduates augments the limitations of smaller companies which seek to attract Omani talent yet may not have the resources to invest as significantly into training.
Within the professional services industry, companies like Ernst and Young (‘EY’) have also internalised Omanisation as a central pillar of their corporate strategy. According to Zaid Al Hadhrami, head of learning and development for Ernst and Young, important strides have been made to increase the coordination between private companies, the Ministry of Manpower, and institutions of higher learning.
Despite challenges in reaching the set targets for 2020, Al Hadhrami looks at the increased awareness of private sector opportunities as an important sign of progress. ‘The target for the professional services industry is above 50%,’ explains Al Hadhrami, ‘we have been struggling for a number of years to reach even close to 50%. The Ministry realise that the challenges on the ground make it difficult to reach these targets, so they work in co-ordination with us. We have meetings with the Ministry of Manpower several times a year, and Omanisation is one of the main topics.’
There is also increased co-ordination in the recruitment process. Omanis looking for work can register with the Ministry of Manpower, and these applicants are directed to Ernst and Young by the Ministry. This process of negotiation and discussion has created greater awareness of the particular challenges within the industry. This process has also drawn more attention to the need for engagement with universities to address the skills gap of Omani graduates. ‘I believe we can take even more [Omani applicants], but this requires more training. Gulf nationals who come to EY with just a bachelor’s degree often go through three years of training.’
‘The competencies required greatly differ for professional services vis-a-vis other industries such as banking. For example, looking at a pool of graduates, the bank may find eight out of ten that suit their requirements, although we may find only three.’ Some universities have introduced new courses to align their programmes better with the entry-level standards of the public sector, reducing the need for extensive training. However, there is a lot more room for engagement with the higher education system to address this skills gap.
‘We need to develop on the initiative of Omanis from an early age,’ suggests Al Hadhrami. A range of internship opportunities for young Omanis at EY is part of a strategy to create greater interest and awareness of private sector opportunities from a young age. Because of significant investment in training programmes and internships, opportunities in the private sector are gaining greater visibility. Correspondingly, Omanis are also experiencing greater upward mobility within the private sector. ‘There remain the obstacles of training and other qualifications to be achieved, and for some it is overwhelming. Yet for those who stay and complete the training process, they may go on to find secondary job offers on the market for double the pay. We lose people, but it is not negative because [those we train] are our investors into the nation. CEOs, CFOs and Chairmen of other companies can say they started out at Ernst and Young.’
Faqiri at Bank Muscat also notes this shift in incentives to work in the private sector. ‘Traditionally, there were some gaps in terms of pensions and other packages but I think with both government and private sector efforts, these gaps are closing very fast. The graduates who are patient to stay in the financial sector and grow to the higher levels, they will definitely be getting packages which are much better than the government. It is only about how much you are patient to stay and develop.’
Each industry within the private sector faces its own unique challenges in implementing Omanisation strategies. Despite varying success within the private sector in reaching set targets for 2020, there are many indicators of progress which suggest that the Vision 2020 has set a substantial foundation for future success. Leading private companies have demonstrated the capacity and vision to take a leading role in developing the competitiveness of the Omani labour force. While these strategies have short term trade-offs, Omanisation is widely seen as compatible with longer-term financial success. The increased visibility of opportunities for Omanis in the private sector also represents an important step towards achieving Omanisation.