Page 218 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

200 Dubai & Co.

nationals to the payroll while expecting little or no productivity
from them. This approach is, of course, corrosive to overall morale
and to any sense of fairness in the company. Another approach is to
engage expatriates through what McKinsey calls “ghost companies”—
firms that exist only to import workers and pass them on to other
companies. McKinsey estimates that 25 to 30 percent of the GCC
expatriate workforce may be “ghost-company” staff. 21
For leading multinationals with stringent global standards,
none of the “creative” solutions cited above—except the direct nego-
tiation of exemptions—will be appropriate. Compromising integrity
is not an option, and the risks of evasive behavior are too large for a
global franchise. Some sectors require large workforces at variable
skill levels, and in those cases complying with the quotas is less
difficult. Many companies will choose to register in free zones,
where the quotas either don’t apply or apply at a reduced level. The
new Dubai International Financial Centre, for example, is com-
pletely exempt from local labor laws and nationalization quotas. 22
Observers have cited recent reforms in Bahrain—one of which
requires a fee to be charged for foreign work visas that is then used to
fund investment in local human capital—as a breakthrough innova-
tion of much significance. Market-based approaches like Bahrain’s
are more likely to fit the needs of multinational firms. Leading global
firms are willing to bear additional financial costs if needed but will
not compromise their global hiring or compliance standards. Doing
so can put the company’s worldwide reputation at risk.

HIRING BALANCING ACT: MANAGING
THE MIX OF EXPATRIATE AND LOCAL
STAFF

For multinational firms operating in the Gulf, finding the balance in
the hiring of expatriates and local workers is a delicate matter.
Expatriate talent brings expertise and other benefits, but also
imposes limitations. Local talent is crucial for long-term success,
but recruitment and retention are real challenges. Figure 7.5
captures some of the key elements of the balancing act that global
firms must manage.
Expatriate talent brings global expertise into the region,
including training received and skill sets developed from working