Performance Management: Emirates Telecommunication Corporation in United Arab of Emirates - Essay Example

?. COVER PAGE PERFORMANCE MANAGEMENT: THE CASE OF EMIRATES TELECOMMUNICATION CORPORATION (Etisalat) IN UNITED ARAB OF EMIRATES (UAE) of the Student Student number Name of Professor Subject Date of Presentation TITLE PAGE Abstract………………………………………………………………………. 4 Introduction………………………………………………………………….. 5-6 Performance Management defined………………………………………….. 6 Etisalat: Organizational Overview…………………………………………… 6 Significance to Middle East……….…………………………………………. 7-8 Etisalat’s Organizational Policies...………………………………………….. 8-10 Conclusion …………………………………………………………………... 10-11 Recommendations: Improving Performance Management ………………… 11-12 Abstract This study explores the significance of performance management to the corporate life of Etisalat, leading telecommunication and internet industry of United Arab Emirates (UAE). Probing on its business management and its contribution to global development, researcher used empirical data to investigate, draw conclusions and make some recommendations on the state of Etisalat performance management. Introduction Performance management (PM) relates about systems on business management and the administration of its human resource to attain corporate goals and objectives by strategically directing the delivery of services to leverage in a fast evolving market for want of satisfaction. As global market is evolving in diversity and in complex dynamics, it’s imperative for corporation to develop corporate strategy, set goals, conduct regular assessments, seize opportunities for improvement, and enhance motivations to sustain its corporate life (Armstrong, 2009). In such context, this research aims to critically explore Etisalat’s performance management as a leading telecommunication company in United Arab of Emirates (UAE), correlate its significant contribution to global market, determine the imperatives it adopted to be competitive and resilient from risks, and to draw recommendations to improve company’s performance. Researcher used accessed online documents and other related resources in the conduct of this study. Performance Management defined Performance management is about identifying, measuring and adopting strategic mechanism to align company’s plans with its vision, mission, values, specific goals and translate them into corporate operation. It includes conduct of evaluations, either formal or informal, such as appraisal and constructive feedback mechanism to determine company’s strength, weaknesses, opportunities and strength. As a process, PM deals with structures and systems to set criteria and specify roles to motivate human capital in the performance of tasks, reach targets, earn rewards and enjoy salary with self-esteem. The company may conduct continuing knowledge or skill transfer or trainings to enhance their competence. Since corporate management deal systems, communications and reporting are essential for mutual understanding, coordination, interpersonal exchange of opinions and problems as well as sense of uniformity of thoughts about the nature of their jobs. On the other hand, since PM is about human resource management, organizational goals must be understood by staff; changes are facilitated; salary and rewards scheme are commensurate to expected result; and company is protected from legal impediments. Reward system may include contingency pays to intentionally discourage turn-around rates of good employees and to develop corporate culture on excellence. Absence of corporate system and mismanagement de-motivated workers, pull them out of goals, estranged employee-employers relations and such absence of purposefulness will burn them out (Delaney & Huselid, 1996). The company will suffer high turn-around rate, risks and conflicts would be perennial, and business will eventually die. Etisalat: Organizational Overview Emirates Telecommunication Corporation (Etisalat) is second largest company based in Gulf and the 6th largest company of the Middle East in reference to business capital (Etisalat, 2011). It exhibits leadership in communication continental services while optimizing and diversifying its products’ marketing and delivery of services. Etisalat (2010) envisions to bridge social divides through internet, telecommunication and television. Its mission is to advance networks to support people’s knowledge, education and growth. Its corporate values are energy and dynamism, openness and enabling opportunities through communication. It wanted to transform the gaps of social divides through increased online interactivity. In its annual report in 2010, Etisalat bared to have 135 million subscribers with average annual growth rate of 24% (Etisalat, 2010). The revenue reached 31.9 billion although its net income lowered to AED 7.6 billion which corresponds to 14% decrease from 2009 net income (Etisalat, 2010). The company has a liquid cash of 3.9 billion. In 2009, its company’s capital invested reached AED 5.8 billion (Etisalat, 2010). The executive board attributed business growth derived from extensive and expanded international market operations in neighboring countries, e.g. Egypt and in Saudi Arabia. More stringent management control is however exercised within UAE as captive market matured. From its consolidated data, the company illustrated market rate increase of 30% and 46% increase in revenue (Etisalat, 2010). Currently, the parent and subsidiary companies have business and marketing operations in 13 countries within the Gulf and in Asia with an estimated 11 thousand employees (Etisalat, 2010). Significance to Middle East The expansion of communication and telecommunication industry in Middle East is a positive development that has long been dreamt by its governments to help advance communication efficiency and effectiveness for its industries and institutions. Economists viewed this as global strategic partnership (GSP) which relied on cooperation and networking between companies and countries to achieve goals (Kaynak & Culpan, 1993). In such context, companies agree on common long term strategy, global leadership and competitiveness (Kaynak & Culpan, 1993) by learning and sharing each others strengths and weaknesses. GSP is essentially a horizontal relation with inputs and resources flowing laterally to advance collective expertise (Kaynak & Culpan, 1993). This is somewhat true for Etisalat that is courting monopoly in telecommunication and internet service in Middle East. This region expands in nine countries most of whom are economically considered members states of Oil Petroleum Economic Cooperation (OPEC). To relate Etisalat business plans in this region, a cursory look on its macroeconomy is essential. Fuch (2010) reported that Gulf economy improved in 2011’s first quarter as it rakes more revenues due to increased prices of oil. Such is affirmed by 16 economists’ forecasts and analyses since December of 2010. Saudi Arabia, top oil trader, will also experience competitive advantage for expansion focused on infrastructure and education while it hope to gain good fiscal balance within the Gulf region especially in Kuwait and Qatar (Fuch, 2011). If there were economic risks affecting oil prices, these were results of debt restructuring negotiations and of conflict situations in Iran. UAE was also forecasted to gain relative economic growth albeit economists expects inflation rates as economic set backs due to increasing number of populations and problem on food security (Fuch, 2011). International Monetary Fund (IMF) affirm these findings as it viewed Saudi’s economic growth rate to reach 6.5% this 2011 (Rahman, 2011). IMF too eyed Saudi’s corporation’s profitability and financial boom as its banking sector sustain robust capital and credit growth (Rahman, 2011). This macroeconomic condition in the Middle East (Middle East & Africa Monitor, 2011) is perceived beneficial for Etisalat as it continue to expand and dominate the industry. Early 2011, Etisalat figured of buying Pakistan’s Nayatel, an internet, telephone and cable TV service provider with 7,000 consumers (Georgy, 2011). Nayatel viewed that if pursued, it will strategically provide markets for Etisalat in Afghanistan and in Turkey. The setback however is that Pakistan government seems disinterested on investments flow into its communication industry. Etisalat also proposed to purchase 46% asset/share of Zain, third largest telecom firm in the Gulf, but negotiations are underway for completion yet (Smith, 2011). Sturm, Strasky, Adolf & Peschel (2008) posited that dynamic economic development will be relatively enjoyed as investors, traders and capitalists of these nations will enhance their roles in global economy, taking advantage of profits sourced from increased oil prices and comfortable growth rate. Sturm et. al. (2008) explicated that the macroeconomic development in Middle East illustrated by financial superfluity would motivate rapid business expansion. Analysts however perceive that Gulf-based capitalists will confront inflation rates, unpredictable exchange rate regimes, and issues on finance risk management. Etisalat need to consider these too whilst integrating their finances in world economy. This market condition is also an opportunity for Etisalat’s structural developments, business diversification and introduction of corporate reform toward improving consumers’ access for global information and communication. Such meant information technology advancement and rapid construction of communication facilities. These auger well to improve educational system, socio-economic activities, enhance system of governance and integration of Middle East culture with the global community. This development is socially acceptable subject to the willingness and capacity of Etisalat to invest. Investors should eye this with interests too as the company has registered in two prominent forex trading centers with hope for more investments to pour in. Etisalat Organizational Policies Etisalat is regulated by Communication and Information Technology Commission (CITC) and the Telecommunication regulatory department of UAE where its parent and some of its subsidiary companies are located. It is also subject to corporation and business laws in the Middle East that is basically founded on Shariah laws. The companies were also subject to labor laws and other governmental regulatory policies. Organizationally, it is observed that more power and authorities are vested to the Chairman of the company who is also accorded with powers as managing director and as chair of the executive committee. The executive board is composed of all-men committees, probably because in UAE’s culture, custom and beliefs are anchored on Islamic thoughts which rest more authorities to males (Etisalat, 2010). Gender-based sensitivity in business decision-making is maybe crucial but bears no weight in Middle East market’s culture and governance. However, board members should be wary that excessive power to the chair is susceptible to indiscretion. Etisalat (2010) marketing strategy in Africa, Asia and Middle East rest on innovation with value added services. In some regions with less competition, Etisalat offer cheap call rates. Like of other commercial industries, products are promoted vigorously thru advertisements which targeted youth subscribers who are positively incline for interactive activities. Advertisements also promote brands to gain leverage in commerce (Etisalat, 2010). The company furthermore, competes through quality service and network standards by offering advantageous signal strength and sound quality. Such are imperatives for better customer service expected of a telephone company. All contractual relations, marketing plans, planning functions and procurements are centralized, albeit diverse economic operations (Etisalat, 2010). The organization thought of centralization as leverage in negotiations and excellence to control and manage investments. They also utilized extensive research to understand market’s rapid changes to maintain decisiveness (Etisalat, 2010). Etisalat (2010) offers joint ventures with media providers in the same manner as how it ventures with ZTE and Huawei for its succession programs in Afghanistan. It advocated for environmentalism, education, health, emergency assistance and sports as part of corporate social responsibility (CSR) programs. Under environmental concerns, they support recycling of cellphones and have supported tree planting activities. Environmentalism advocacy of this company is bit odd because micro parts of cables, televisions, and mobiles phones actually came from ore and mineral extractive industries-- largely criticized by ecologists as destructive to environments. On its human resources, Etisalat (2010) owned an academy where its workers are educated and trained on Information Communication and Technology (ICT), business, leadership, and human resource management. There workers are extended to Tamdeed projects; development and maintenance of Etisalat Directory Services; construction, maintenance and security of its real estate; and of E-Marine engineering. Other human resources are deployed at Etisalat Facilities Management LLC, Emirate Data Clearing House (EDCH), and Ebtikar Card Systems (Etisalat, 2010). Etisalat’s (2010) claimed to have maintained professionalism, synergy and integration of their human capital. It also boosts of executives quality leadership and tolerates geographic mobility of workers. The company value knowledge transfer and Emiritization. The latter meant prioritization of hiring workers from UAE, although the company highly regards diversity too. Barney (1991) suggests that human resources provide competitive advantage based on its skills and motivation, human resource practices, job performance, and firm performance. HRM here require questioning and understanding of relationships of management, strategies and goals of the organization while dealing with external environment. Such include HRM policies and practices that produce capabilities valuable to the company. Etisalat is transparent of their financial status and have used derivative financial instruments to manage their exposure to foreign exchange rate risks. Hedging was part of its protective measures. Forex risk management intends to “preserve the value of currency inflows, investments and loans, while enabling international business compete abroad” (Bredin and Hyde, 2004). Risks can’t be feasibly eliminated, but as trader, forex bad outcomes can be predicted and effectively managed. The trader must determine his trading strategy, control and flexibility when market either “take a profit or cut your losses” (Bredin and Hyde, 2004).   Conclusion As Etisalat contribute for economic development and resiliency in Middle East through strategic performance management, it must also be sensitive to market’s unpredictable changes. The company needs to sustain competitive advantage in managing and adapting to changes. Trainings should be sustained to improve their capacity. Broadnax and Conway (2001) pointed that performance management upholds accountability from both managers and workers to allow improvement for positive change and development. Managers therefore, should be objective and appreciative of workers differences and expectations. They must be imbued with capacity for conflict management, conflict resolution or conflict transformation to sustain that desired teamwork in workplaces. Recommendations: Improving Performance Management As Etisalat advance, there is however a need for its company to ensure that its human resource will maintain satisfaction as survey conducted by the Emirates National Development Program (ENDP) in 2009 depicted that those working in the private sector have high turn-over rates due to absence of career improvement and due to lack of cultural sensitivity by senior management. Whilst Etisalat claimed to have sustained competitiveness and professionally rewarding working environment, the company must encourage teamwork to enable workers to interact dynamically toward achieving shared values, goals, objectives and mission to better their sense of competitiveness, flexibility, strong coordination and reliability in the delivery of services in new regions (David, 1999). Etisalat must sustain open communications with workers to reach desired outcome and increase team-based performance. Regular assessments and appraisals should be conducted in all sections so as to gather recommendations for operational planning as well as to determine performance strengths and weaknesses. Tasks must be systematized for services, projects, networks, management and administration with specific clarified roles. Company must logically follow the strategic cycle of planning, execution, assessment, and performance review to provide direction for sustainability. Knowledge of workers mission and nature of their job should be inculcated among employees, including key success indicators. Within the atmosphere of mutual trusts, administration and workers (Sweeney, 2001) must maintain open communication, collaboration, team leadership, quality control and smart ability for decision-making. All these are geared to maintain company’s effectiveness in the delivery of services, efficiency in performance and management, and for the satisfaction of all. The company must continue strategizing its business potentials while maintaining sensitivity to regulations and quality control expected of Telecommunication Company. It must also consider sharing powers on decision-making with its subsidiaries so that the latter will not depend so much capital support from its parent company (Lebas, 2000). Hedging and other form of financial risk management must also be sustained as protective measures. References Armstrong, M., 2009, Armstrong's Handbook of Human Resource Management Practice. 11th Edition. United Kingdom. Kogan Page. Or, Armstrong, M. 1994. Performance Management. London: Kogan Page. Broadbent, Jane & Laughlin, R., 2009, Performance Management systems: A conceptual model. Management Accounting Research, Volume 20, Issue 4, December 2009 (283-295). Broadnax, W.D. & Conway, K.J., 2001, The Social Security Administration and performance management. In: D W. Forsythe (Ed), Quicker, Better, Cheaper: Managing Performance in American Government. Albany: Rockefeller Institute. 143:76 Delaney, John T. and Mark A. Huselid, 1996, The Impact of Human Resource Management Practices on Perceptions of Organizational Performance. The Academy of Management Journal. Vol. 39, No. 4 (949-969). Don Bredin, Stuart Hyde, 2004, FOREX Risk: Measurement and Evaluation Using Value-at-Risk. Journal of Business Finance & Accounting Volume 31, Issue 9-10 (1389–1417), November 2004 DOI: 10.1111/j.0306-686X.2004.00578.x Etisalat, 2011, Annual Report of Etisalat, http://www.etisalat.ae Accessed: June 27, 2011. Etisalat, 2011, Our Beliefs. http://www.etisalat.ae. http://www.etisalat.ae/index.jsp?lang=en&type=channel¤tid=bd48e15c0b56a010VgnVCM1000000a0a0a0a____&parentid=ed38800d1f52a010VgnVCM1000000a0a0a0a____ Accessed: June 27, 2011. Fuch, Martina, 2010, Gulf states' 2011 growth outlook improves slightly. http://en.news.maktoob.com/20090000539336/Gulf_states_2011_growth_outlook_improves_slightly/Article.htm Accessed: June 27, 2011. Georgy, Michael, 2011, Etisalat eyes takeover of Pakistan's Nayatel. http://en.news.maktoob.com/20090000551760/Etisalat_eyes_takeover_of_Pakistan_s_Nayatel/Article.htm. Accessed: June 27, 2011. Lebas, M. J., 2000, Performance measurement and performance management. International Proceedings of the 12th International Conference on Production Research Journal of Production Economics Volume 41, Issues 1-3, October 1995 (23-35). Kaynak, Erdener & Culpan, Refik, 1993, Multinational Strategic Alliances. London: Routledge. Middle East and Africa Monitor (2011). Macroeconomic Forecast in Saudi Arabia. http://www.meamonitor.com/file/103035/macroeconomic-forecast-saudi-arabia.html Accessed: June 27, 2011. Otley, David, 1999, Performance management: a framework for management control systems for research. Management Accounting Research Volume 10, Issue 4 (363-382). Peeters, Marga, 2010, The changing pattern in international trade and capital flows of the Gulf cooperation council countries in comparison with other oil-exporting countries, MPRA Paper 23539, University Library of Munich, Germany. Rahman, Saifur, 2011. Saudi economy to grow 6.5% in 2011: IMF. http://gulfnews.com/business/economy/saudi-economy-to-grow-6-5-in-2011-imf-1.815767 Accessed: June 27, 2011. Smith, Matt, 2011, Deal drought may tempt Etisalat to eye Zain assets. http://en.news.maktoob.com/20090000738160/Deal_drought_may_tempt_Etisalat_to_eye_Zain_assets/Article.htm. Accessed: June 27, 2011. Sturm, Michael, Jan Strasky & Petra Adolf & Dominik Peschel, 2008. The Gulf Cooperation Council countries economic structures, recent developments and role in the global economy, Occasional Paper Series 92, European Central Bank. Sweeney, P., 2000, What’s the difference between Leaders and Managers? Vol 33, No 4 (64-65). Read More