Abu Dhabi Islamic Bank in the United Arab Emirates - Case Study Example

HUMAN RESOURCE MANAGEMENT individual 2 UAE (Course Instructor) (University Affiliation) (Student’s Name) Date Introduction Human resource management can be defined as all the activities that are associated with the management of people in the organization. Based on the definition of human resource management, most researches on human resource management have been focusing on a multiplicity of roles instead of single and isolated management activities. Human resource management practices in most organizations are classified based on the recruitment process, selection and retention of employees, development and talent management, training, motivation and enhancement of performance, teamwork and staff participation, job security, performance based compensation and planning of communication (Cooke, 2001). The competitiveness of any organization in a dynamic business environment is the ability to manage a very effective human resources system to be in line with the strategies of the organization. In todays, banks, the choice of the human resource practices is playing an important role in influencing the financial position of the organization. The banking sector is categorized as a service industry and no serious risk management can be done without an efficient and knowledgeable human resources (Cooke, 2001). This essay is focused on the Abu Dhabi Islamic bank in the United Arabs Emirates. The essay will start with a description of the organization as well as its human resource function. The paper will also deal with the human resource function within the organization play a ‘strategic role’ as defined by theory. Lastly, it will give human resources specific steps that could be taken to enhance the effectiveness of the human resource function within my organization. A Brief History and Background of the Organization Abu Dhabi Islamic bank is an Islamic bank based in Abu Dhabi city in the United Arab Emirates (Huidobroet al 2007). Founded in 20th may 1997 as a public joint share company through the Amir Decree number 9 of 1997, the organization officially began its operations on November 11th 1998 and was officially inaugurated by Abdullah bin Zayed, the then United Arab Emirates minister in charge of information and culture on the 18th day of April in 1999. The company’s operations are carried out in accordance to the Islamic religion’s Sharia principles (Huidobroet al 2007). The Human Resource Department in the organization The Abu Dhabi Islamic bank’s human resource management department was established at the time when the bank officially started its operations formally in 1998. The main task of the department has always been to carry out recruitment process, selection and retention of employees, development and talent management, training, motivation and enhancement of performance, teamwork and staff participation, job security, performance based compensation and planning of communication (Huidobroet al 2007). Being an Islamic institution, the bank’s operations have been tailored to meet the requirements of the Sharia principle which are a set of rules subscribed to by the Islamic religion. However, the organization like others in the industry has always faced a major human resource challenge (Huidobroet al 2007). The Islamic banking industry has been growing at an encouraging pace, but the market was established to have a deficit in the human resources who have been trained on a banking system that is Sharia compliant. This meant that Islamic staff had to be sought from non Islamic institutions to offset the deficit although they did not have knowledge of the Islamic financial system as well as the culture. In response to this, the United Arab Emirates in 2000, forced all the domestic banks as well as the foreign owned banks to significantly increase the number of Islamic employees in their banks in what was known as the Emiratization policy where only UAE nationals were hired (Huidobroet al 2007).. As a result of this policy, the Abu Dhabi Islamic bank enforced the policy by placing Islamic financial system trained managers in all their branches and rolled out a training program for its existing workforce on the management of Sharia compliant banking operations (Huidobroet al 2007). Abu Dhabi human resource department is headed by a human resource head and also a number of functional heads working under him in enhancing employee performance in the organization. This has led the company into scooping a number of awards as a result of their efficient human resource practices. The company has however been criticized for their lack of diversity as far as promoting integration with other religions is concerned (Huidobroet al 2007). However, it’s clear that the financial success of the company has in most cases been directly attributed to its human resource practices that have established a smooth human resource management practices that has acted as a catalyst to organizational performance (Woka & Ihuah 2014. The organization has in the recent past a number of accolades for their soft Hrm approach. Human resource management has two major approaches, ie; the hard and soft approaches. The hard human resource approach is where the organization treats employees as the resources of the business, much like the machines and buildings (Woka & Ihuah 2014). Employee opinions are negligible and their wages are just enough to sustain them. Soft Hrm practices, practiced by Abu Dhabi Islamic bank on the other hand, treat their employees as an important organizational resource and a catalyst for organizational competitiveness. The focus is on the needs of employees and their views are well considered in a structured manner (Woka & Ihuah 2014). The company has in the past been shifting its Hrm practices from transactional to transformational. Transactional practices involve having a focus on the day to day running of the organizations with no regard to the strategies of the future. Transformational on the other hand, focuses less on the routines and focuses on the strategies aimed at aligning the human resource functions with the goals of the organization (Woka & Ihuah 2014). Does the HUMAN RESOURCE function within my organization play a ‘strategic role’ as defined by theory? The Human Resource Function plays a ‘strategic role’ within Abu Dhabi Islamic bank as defined by theory. The human resource management refers to the activities that are associated with the management of the human resources in any organization. Based on this, Abu Dhabi Islamic bank’s human resource practices have focused on a number of management activities instead of just focusing on a single human resource management activity. The organization human resource department has also focused on the relationship that exists between the performance of the employees and the performance of the organization (Cherian & Farouq, 2013). In Abu Dhabi Islamic bank, the human resource practices include the recruitment process, selection and retention of employees, development and talent management, training, motivation and enhancement of performance, teamwork and staff participation, and job security. According to Ability Motivation and Opportunity theory, there is a framework of human resources independent working systems that brings out the characters of an employee and contributes to the success of the organizational performance. The theory further explains that the interests of the organization are served best by a framework that pays attention to the employees’ ability, motivation and opportunity (Noor & Assistant, 2015). The Maslwo’s Hierarchy of needs theory is also applicable in the motivation of employees. The theory states that an employee has a number of needs whose fulfillment will lead to improved performance (Rowe, 2016). They include physiological needs, safety needs, sociological needs, self esteem and self actualization. According to Maslow, with all these needs taken care of, the employees are more likely to increase their productivity. The Abu Dhabi Islamic bank has tried though not to the expected levels to fulfill these needs with the aim of boosting employee morale (Rowe, 2016). Generally, the aim of the human resource department at the organization is to build the capacity, to motivate the workers and allow the workers to carry out their performance well. According to the theory X and Y by Macregor, the department needs to categorize its employees into those who belong to category y and x and find a way of fully utilizing their potentials for the good of the organization (Rowe, 2016). The department does not however have such a mechanism in place and as such, all the employees are treated in the same manner. More studies have revealed that a close relationship between the organization’s human resource practices has been found to bring about a lot of effectiveness. Following this concept, the Abu Dhabi human resource department has established high standard work systems that are aimed to positively influence the performance of the organization (Noor & Assistant, 2015). With the knowledge that only a number of these human resource practices will lead to the performance enhancement, the organization’s human resource management department has had to look at other variables. These variables include the welfare of the workers and organizational performance that have been found to have a close relationship with individual human resource practices (Noor & Assistant, 2015). The strategic role of human resource management practices on organizational performance. The financial performance of Abu Dhabi Islamic bank in such a dynamic business environment is the ability to manage a very effective human resources system to be in line with the strategies of the organization. In today’s banking sector, the choice of the human resource practices is playing an important role in influencing the financial position of the organization (Cherian & Farouq, 2013). The banking sector as stated before in this text is categorized as a service industry and no serious risk management can be done without an efficient and knowledgeable human resources. A number of studies have been done that support the organization’s strategy on human resource management practices that have had a strategic role in the performance of the banking institution. Most of the research focused on the recruitment, promotion and rewards, employee participation, training and coaching as the most important variables of human resource practices (Cherian & Farouq, 2013). The extend of the organization’s influence of human resource practices results that include employee satisfaction, motivation, employee retention and loyalty, service quality and their market share has been under consideration, considering that it’s a very competitive industry. Some studies have however established that there exist a number of inconsistencies in establishing a link between the human resource management and the organizational performance. To deal with the inconsistencies and contradictions, the company established a number of factors such as alternate working practices and a very high commitment worker practices (Cherian & Farouq, 2013). The integration of human resource management and organizational strategic management Realigning the strategic human resource management practices of Abu Dhabi with the vital strategic organizational performance and integrating the human resource management capacity with the formulation and business methodologies has been the key objective of the organization’s human resource department. The organization’s head of the human resource management function has called attention to the fact that that capability of the workers, the performance of the organization and cost-proficiency can be advanced by coordinating the human resource capacity into a corporate framework for the organization (Cherian & Farouq, 2013). It has been prescribed that human resource managers in the bank should participate in key basic leadership decisions of the organizations, if they need to see their firm to experience more financial benefits. The requirement for a proper communication channel stem from the vital part of human resource practices in creating and actualizing the powerful plans for fruitful organizational performance. Additionally, it is important for a broad and also top to bottom human resource management technique in the future (Cherian & Farouq, 2013). The management of Abu Dhabi Islamic bank has expressed the capacity of the organization to effectively deal with both the internal and external human resource dynamics. This can be enhanced by using the influence of the human resource department as well as the impact of human resource on the decision making process of the bank. As expressed by a number of studies, all human resource management functions can be synchronized if these targets are supplementary for the goals of the human resource capacity (Sullivan 2003). Further studies on the same have indicated that strategic human resource management can make the hierarchical techniques in backing of human resource practices. It has also been indicated in a number of researches that the human resource capacities ought to have vital consistency to accomplish ideal organizational performance (Noor & Assistant, 2015) . The Abu Dhabi Islamic bank has come to the realization that the human resource functions should have a high degree of consistency if in any case it is to achieve organizational performance. This is in light of the fact that the strategic human resource management of the organization has been observed to have an influence on other related human resource factors that influence performance such as absenteeism from duty, employee loyalty, customer satisfaction and improved service delivery (Noor & Assistant, 2015). These factors according to studies are thought to have a real practical influence on the financial performance at any given period. As a result of this, Abu Dhabi Islamic bank’s human resource department has suggested that there is a necessity to examine the basic indicators such as organizational profit margins and the returns on investment (Noor & Assistant, 2015). The bank’s management has been urged to lay emphasis on the integration of the organization’s human resource practices with the organization’s corporate strategy. This is because it has been established that the human resources practices play a very crucial role in determining the financial performance in any organization. What three specific steps could be taken to enhance the effectiveness of the HR function within my organization? 1. Increasing employee skills and their abilities. Studies have indicated that an organization’s human resource management practices can influence the skills of the employees through the utilization of proper recruitment and selection methods to hire the right people for the job with the employment of a comprehensive training technique to develop the skills of the existing employees (Regents, 2016). The areas of concern in the training program should be strategy on the business, more emphasis on product quality and the use of advanced technology. It has also been established that allowing the workers to be part of the decision making organ of the organization and having their opinions count has a positive impact on their self belief as well as their performance (Regents, 2016). It is true to say that competitiveness of any organization in a dynamic business environment is the ability to manage a very effective human resources framework by aligning it to the goals of the organization. The bank’s management should to lay emphasis on training of the staff to keep them updated with the organization’s corporate strategy since it has been established that the human resources skills play a very crucial role in determining the competitiveness of the bank (Regents, 2016). 2. Promotion of positive attitudes and increasing motivation. It has been established in a number of studies that one can only achieve much if the attitude on whatever task they are performing is positive. The organization needs to encourage its human resources to own up their responsibilities and make them feel part of the organization so that they can always feel part of the organization’s success and at the same time take responsibility for anything that goes against the plans of the organization (Regents, 2016). An organization that motivates its employees will certainly be assured of better organizational performance. The Abu Dhabi bank needs to establish reward mechanisms that will lift the spirit in the team for them to enhance their performance. The workers of the bank need to have a reason to work hard. According to the Maslow hierarchy of needs, individuals have a set of needs that they badly need fulfilled. The bank should therefore find a way of engaging the staff through their trade union leaders in order to negotiate for the best mechanism possible to ensure that the spirit of the employees is geared towards making it possible for the organization to achieve its objectives. 3. Providing the employees with expanded responsibilities to enable them make use of their abilities. The department of human resource management needs to delegate most of the critical tasks most of the time to their mid level and low level employees to make the most critical of the decisions. It is important to make the employees feel important and the best way to achieve this is by increasing their scope and responsibilities so that they can make full use of their abilities to innovate and find alternative ways of doing some tasks for the good of the organization (Regents, 2016). There is a tendency for people to get bored for doing one task over and over again. Human beings love challenges as it makes them think. Studies show that an organization that allows their workers to explore options beyond their job descriptions usually achieve higher rates of returns compared to those who simply work like robots. They lack the motivation to work and will always strive to only carry out the specific tasks assigned to them. This reduces innovativeness because creativity cannot be nurtured in an enclosed environment. The Abu Dhabi Islamic bank should therefore allow their workers to go an extra mile to explore their talents that will assist the organization achieve the highest level of competitiveness. Conclusion This paper has been looking at an in-depth analysis of Abu Dhabi Islamic bank, a sharia compliant bank at the United Arab Emirates’ human resource practices. The paper has been looking at the strategic role that these human resource practices play in the organization. In conclusion, it has been established that competitiveness of any organization in a dynamic business environment is the ability to manage a very effective human resources system to be in line with the strategies of the organization. The bank’s management has been urged to lay emphasis on the integration of the organization’s human resource practices with the organization’s corporate strategy since it has been established that the human resources practices play a very crucial role in determining the financial performance in any organization. Three steps have been formulated that can make the human resource department to effectively enhance organizational performance. Reference Cherian, J., & Farouq, S. (2013). Does effective leadership style drive financial performance of banks? Analysis in the context of UAE banking sector. International Journal of Economics and Finance, 5(7), . doi:10.5539/ijef.v5n7p105 Cooke, F. L. (2001). Human resource strategy to improve organizational performance: A route for firms in Britain? International Journal of Management Reviews, 3(4), 321–339. doi:10.1111/1468-2370.00071 Huidobro, B., di Girólamo, S., Zegers, G., & Valdivieso, C. (2007). Abu Dhabi commercial bank: Abu Dhabi, Emiratos Árabes Unidos. ARQ (Santiago).no. 66, pp. 32-36. doi:10.4067/s0717-69962007000200005 Noor, T., & Assistant, K. (2015). Closing the gaps of human resource in Islamic banks: Literature review analysis. International Journal of Business and Social Science, 6(5), . Retrieved from http://ijbssnet.com/journals/Vol_6_No_5_May_2015/19.pdf Regents, U. (2016). Steps to building an effective team. Retrieved August 27, 2016, from http://hr.berkeley.edu/hr-network/central-guide-managing-hr/managing-hr/interaction/team-building/steps Rowe, R. H. (2016). Organizational behavior & human resource theories. Small Business Chron. Retrieved from http://smallbusiness.chron.com/organizational-behavior-human-resource-theories-74260.html Woka, P., & Ihuah (2014). A review of soft and hard approaches of human resource management and the success of real estate development in Nigeria. Journal of Business Management and Economic Development (JBMED), 1(1), 16–23. Retrieved from http://usir.salford.ac.uk/31516/1/PUBLISHED_PAPER_APRIL_2014.pdf Read More