Download Voluntary Labour Turnover in the Omani Public Sector

Research Memorandum
87  April 2010
Voluntary Labour Turnover
in the Omani Public Sector
STEPHEN SWAILES
SALEH AL FAHDI
Centre for Management and Organisational Learning
Business School, University of Hull
Cottingham Road, Hull, HU6 7RX, UK
Email: [email protected]
ISBN: 978-1-906422-18-9
Abstract
We examine voluntary turnover from public to private sector employment in Oman
through semi-structured interviews with 26 current and former public employees. The
rate of turnover is low but this masks the impact of losses to key technical or
management roles. The main reasons for turnover are dissatisfaction with
management style, pay and promotion opportunities along with perceptions of better
opportunities elsewhere. Findings are interpreted in the context of Islamic work
values and implications for public management reform in Oman are given.
Keywords: Oman, employee turnover, talent management, public sector
 2010 S Swailes and S Al Fahdi
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memorandum.
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INTRODUCTION
Voluntary employee turnover is a widely studied management phenomenon; it occurs
in all organizations, its effects are plain to see and it is easily measured. It is defined
as the „voluntary cessation of membership of an organization by an employee of that
organization‟ (Morrell, Loan-Clarke and Wilkinson, 2001, p.220). Where reward is
linked to tenure, as is common in the public sector, low turnover can lead to pay drift
(as employees ascend pay scales) and creative stagnation as old recipes for solving
problems are recycled; fresh thinking is compromised. An organization may be
pleased if the employees it labels as poor or average performers quit yet
disappointed if its high performing, high potential stars move on. High turnover also
leads to losses of accumulated experience and learning which in theory connect to
higher performance as learning and experience through better quality decisions
(Carley, 1992).
While a little turnover is generally seen as unproblematic, high turnover is seen as
dysfunctional and yet the relationship between employee turnover and organizational
performance is complex. A basic model is that dissatisfaction leads to lower
organization commitment, thoughts about quitting, job search, evaluation of
alternatives and, eventually, exit (Hom and Kinicki, 2001). However, not all quitters
have another job to go to (Lee et al, 1996) which is inconsistent with most turnover
models. Decisions to quit often follow some sort of „precipitating shock‟. Shocks can
be unexpected, work-related and affect individuals or groups of employees together
and some are avoidable. Alternatively, they can be expected, specific to individuals,
personal and not necessarily negative (Morrell, Loan-Clarke and Wilkinson, 2004).
While dissatisfaction, commitment and turnover-related thoughts and behaviour are
strong predictors of turnover, lesser but significant determinants include leadership,
stress, job content and perceptions of job alternatives (Griffeth et al, 2000).
Abelson and Baysinger (1984) proposed that there is an optimal turnover rate for an
organization at which the costs of turnover are minimised. In this inverted U-shaped
relationship organizational performance rises with turnover up to an optimum point
and then falls as turnover increases further and the theory has found empirical
support (Meier and Hicklin, 2007; Siebert and Zubanov, 2009). Turnover rates vary
widely between sectors (CIPD, 2009) and the optimal turnover rate is likely to vary
between organizations given their different economic and social structures and
dependencies on organizational learning and knowledge capability (Glebbeek and
Bax, 2004).
Most turnover research has been carried out in the United States and is
predominantly quantitative theory testing using cross-sectional designs. It is
dominated by studies in the psychological tradition that place turnover as a
dependent variable and explore its antecedents in private sector contexts. There is
much less work on turnover as an independent variable and hence its relationship to
organizational performance and there is relatively little research on turnover in the
Gulf region where there are big social, cultural and labour market differences in
relation to the West. The Gulf continues to enjoy a growing economy and there is
strong competition among employers for skills (Al Bawaba, 2009, Gulftalent, 2010).
The Omani economy continues to expand and this paper investigates the movement
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of public employees to the private sector. This is a relatively recent phenomenon
coincident with economic development and the paper responds to reports of localised
public sector skills shortages and a turnover problem. In studying this phenomenon
we present the first study of voluntary employee turnover in Oman with a specific
focus on understanding the public sector.
OMAN
Oman is a Muslim country occupying the eastern edge of the Arabian Peninsula.
Since 1970, the Head of State has been His Majesty Sultan Qaboos bin Said. Arabic
is the official language and English is widely spoken. In the early 1970s, Oman‟s
economic targets focused on creating an infrastructure to aid the launch of major
projects and Oman has developed rapidly. The country has witnessed a
transformation from a harshly ruled, isolationist Sultanate into an economically
liberalized monarchy seeking to integrate the country into the global economy (Aycan
et al, 2007). In 2008, the total population was 2.867 million made up of 1.967 million
Omanis and 900,000 expatriate workers. Expatriates were up by about 10% over
2007 levels. The country enjoys considerable wealth from oil revenues and ran a
trade balance of RO 5.6 billion in 2008 up from RO 3.3 billion in 2007. Gross
Domestic Product per capita was $19,000 in 2008 and is consistently ahead of other
Arab countries. There is a minimum wage of RO 260 per month and no income tax.
In 1996, the decision to seek greater economic integration was incorporated into a
long-term strategy named “Oman 2020”. Several developmental dimensions were
put forward with the aim of moving the economy into a new phase by reshaping the
role of the government in the economy and broadening private sector participation,
initiating human resource development strategies and upgrading the skills of the
Omani workforce (Ministry of Information, 1999). His Majesty, Sultan Qaboos bin
Said, emphasized the importance of developing the people. His Majesty commented:
"Development is not a goal in itself. Rather, it exists for shaping humans, who
are its object and creator. Therefore, development must not stop at the
achievement of a diversified economy. It must go beyond that and contribute
to the formation of a society capable of taking part in progress and
comprehensive development." (Vision 2020 Conference, June, 1996)
The vision was to create employment opportunities for Omanis in the public and
private sectors in addition to equipping them with training and qualifications to cope
with labour market requirements (Omanization). Four strategic initiatives were
identified. First, to minimise unemployment, create employment opportunities for
Omanis and provide them with the necessary training and qualifications for the labour
market. Second, develop human resources through better education systems, the
promotion of educational and vocational training, increasing the participation of
women in the labour market and the development of labour market mechanisms
aimed at increasing the level of workforce participation in the economy. Third,
substitute expatriate labour with qualified Omani labour to shift the economy from a
low value added to a high value added economy. Fourth, increase the efficiency of
the Omani labour market by narrowing differentials between the public and private
sectors (Ministry of National Economy, 2007)
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Omanization aims to replace expatriates with Omani nationals; increasing Omani
employment in the public sector and making the private sector more attractive
without disturbing the level of performance (Al Hamadi et al, 2007). Although
Omanization has encountered various cultural obstacles such as negative
perceptions of the jobs normally performed by expatriates and the refusal of some
nationals to work far from home (Oman Human Development Report, 2003), based
on evaluations of its institutions, infrastructure, economic stability, health and
education, Oman was ranked 41 in the Global Competitiveness Report 2009-2010
and for labour market efficiency was ranked 33rd. The same report gave the top
three factors most problematic for doing business in Oman as; restrictive labour
regulations, an inadequately educated workforce and a poor work ethic in the
national labour force. Low skills and high costs in the indigenous labour force have
been noted previously (Mellahi and Al-Hinai, 2000).
The private sector
Since oil exports began in 1968, Oman‟s economy has transformed from
dependence on agriculture to oil. Accordingly, Oman gained a reputation for being
among the most rapidly developing countries in the Middle East (Aycan et al, 2007).
High oil revenues in the 1970s and 1980s played a major role in the country‟s
development but it was confined to local investors who benefited from development
projects. High barriers and legal restrictions hindered the attraction of foreign direct
investment (GOIC, 2001). However, in the 1990s economic strategy changed and
allowed greater openings for FDI. One major reason for this was the continuing
population growth which confronted the Omani government with a proliferation of job
seekers leaving schools and universities. Moreover, the drop in oil prices in the
1990s slowed down economic development and led to pressure from the World Bank
and the International Monetary Fund (IMF) to undertake crucial reforms (Gulf
Business, 2001). The government's attitude towards FDI changed based on the
premise that it would revitalize the economy, rectify the problem of national deficit,
create jobs for Omanis, and secure the transfer of the latest technology and
knowledge to Oman (OBFA, 1998). By 2008, the private sector employed about
942,000 people of which 15.6% were Omani and 11% were women. The main
sectors by employment size are construction, wholesale and retail, domestic service
and manufacturing (Ministry of National Economy, 2010).
However, in preparing itself for further FDI, the government realized that it needed to
reduce Oman‟s dependence on expatriates by developing Omanis (Budhwar et al,
2002). For instance, in 1997 there were just under 500,000 foreign workers in the
private sector compared to 34,000 Omanis. Omanization was driven by His Majesty
who emphasised that Omani society - government and citizens - should prepare to
confront the challenges of globalization through the development of national cadres
on a solid foundation of competitive advantages and the production of international
standards, as well as through the leverage of organizational performance and
recognition of the importance of science, technology, research and development.
The policy of boosting domestic and foreign investment reinforced the national
economy and created an attractive investment climate on one hand while increasing
government spending on the other (Oman 2007/2008). While oil and gas revenues
represent 79% of total revenues, public expenditure for 2008 was expected to be
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around RO 5,400 million up 21% on 2007. However, considering the projected
growth of the population to five million by 2020 (Oman Human Development Report,
2003), the government realised that over-reliance on oil revenues for development
activities is a troubling feature of its economy and initiated a process of diversification
(Al Hamadi et al, 2007). The industrial sector is spearheading the diversification
process and by 2020 is expected to contribute 15% to the country‟s GDP (Oman
2007/2008).
The role of FDI in the economy has been remarkable since the government removed
restrictions and obstacles associated with entry and ownership. Companies with
foreign participation are treated on a par with wholly-owned Omani companies and
may be exempted from corporation tax during the first five years after establishment
(Mellahi, et al, 2003). Foreign direct investment in 2007 was RO 3485.5 million from
59 countries (Ministry of National Economy, 2009). Enterprises with foreign
investment employed 133,889 people at the end of 2006 equating to 21.4% of the
private sector workforce.
The significant contribution of FDI to the economy was evident in that investments
stimulated growth and created employment opportunities for young Omanis (Ministry
of National Economy, 2008). Consequently, the wages and salaries offered have
increased steadily year by year. Increases to basic salaries for professional
employees in the private sector were 5.9% in 2005, 5.6% in 2006, 11% in 2007,
12.1% in 2008 and 8.4% in 2009. Salaries rose to match double-digit inflation which
resulted in particular from rising property and rental prices although inflation dropped
to about 5% in 2009 (Gulftalent, 2010). Mild recession in the Gulf region led to
increased redundancies in 2008 and 2009 although there were still talent shortages
and high performing people were still mobile. Recession coincided with some
pressure from government on the private sector to release expatriates rather than
nationals which led to greater caution and selectivity when hiring nationals
(Gulftalent, 2010).
The Public Sector
The public sector is seen as the right hand of government in delivering services to
the public. Development was tied-in with the development of the whole country as the
need for services expanded and led to an increase in the recruitment of Omani
nationals in various government departments. In 2007, Oman achieved the highest
rate of employment of national manpower in public service in the GCC at 85.5% and
the Sultanate is on course to achieve 95% by 2020 as set out in the Oman Vision
2020 (Ministry of National Economy, 2007).
The Ministry of Civil Services was formed in 1988 to oversee modernisation and
development in public management. This need for modernisation was again
emphasised in the Seventh Five Year Plan 2006-2010 as a pre-requisite of
continuing rises to living standards. In 2008, employment in the Civil Service
Ministries (in which education and health services are the major employers) totalled
almost 119,000 of which 87% were Omani. In addition, the Diwan of Royal Court and
the Royal Court of Affairs which serve His Majesty employed almost 26,000 people of
whom 76% were Omani. Other public corporations such as in the supply of utilities
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and state universities employed 8778 people of whom 77% were Omani (Ministry of
National Economy, 2010).
The historic reasons for the preference of Omanis to work in the public sector are
related to high salaries, limited working hours, longer annual leave, high job security
and other privileges. Inflationary pressures in the economy triggered substantial pay
rises in recent years; public sector pay rose by 15% in 2007 (Gulftalent, 2010).
However, although wages are perceived as being relatively higher than the wages
offered by the private sector (Mellahi and Budhwar, 2006) this applies only to
unskilled employees; the wages of skilled and well-educated employees are not
higher. For example, the wage of a new graduate employee is RO 560 per month in
the public sector, compared to RO 820 in the private sector. In the past, the public
sector faced little competition for labour but following the privatization in 1995 when
the doors were opened to other national and international enterprises, the private
sector has become a fierce competitor. However, it is not only salaries and pay that
have become the „touchstone‟ between the two sectors; other factors have become
critical variables for Omanis looking for jobs such as career path, job autonomy, job
quality, morale and motivation and a healthy working environment.
The working environment is characterized as bureaucratic and the conservative style
of management emphasizes routine rather than change. Management attitudes
incline towards holding on to power and hence towards dictating orders rather than
participation in decision making. They do not consider subordinates to be “people just
like me”, in the words of one employee in our survey. Promotion in the public sector
is not based on performance but on seniority; as a general rule, everyone gets
upgraded to the next grade every four or five years. Moreover, post promotions are
not based on merit and level of education, but are based instead on personal
judgment. Promotion and compensation in Arab countries are influenced by nepotism
and connections bound together in wasta - a dominant and prevailing social force in
the region (“Vitamin W” in the words of a former Civil Service Minister that we spoke
to) (Mellahi and Budhwar, 2006).
Detailed statistics available for the Civil Service (Ministry of National Economy, 2010)
show that the Service made 8400 new appointments in 2008 of which just over half
were women and 4180 people left the Service. Of the leavers who were Omani
nationals, 16.8% were women (12.3% in 2007). Total turnover of expatriates and
nationals was therefore around 3.5% of which about 1.5% came from voluntary
resignations. The number of Omani nationals resigning in 2008 was up 54% on the
previous year. After resignations, the other substantial causes of turnover among
nationals were retirement and transfer of employees to posts outside the Civil
Service. The majority of leavers were on or around Grade 6 which is equivalent to
about RO 500 per month. Given that employees can retire after 20 years‟ service,
some retirements are taken in order to switch to private sector work although the
proportion that does this is unknown.
The principal differences between the two sectors are summarized in Appendix 1. In
sum, in a context of rapid economic development we investigate the voluntary
turnover of public employees into the private sector. The main aim is to better
understand the causes and consequences of turnover as a contribution to
understanding public sector development.
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RESEARCH APPROACH
We used qualitative methods to explore and explain the distinctiveness and
complexity of how people perceive their world and their individual decision
processes. A „snowball‟ sampling strategy (Biernacki and Waldorf, 1981) was used to
identify informants who could elaborate on conditions in public service and on their
turnover cognitions. Snowball or referral sampling taps into „the dynamics of natural
and organic social networks‟ (Noy, 2008, p.329). Participants are identified by
information provided by other participants; the snowball metaphor captures the
accumulative nature of the sampling process. It is particularly useful to identify
people who are „hidden‟ in a social setting and who cannot be identified easily, if at
all, by conventional sampling methods and who may share some sensitive
characteristic. In this study we needed to identify people who had moved from public
to private sectors and snowballing was an effective method for locating informants.
Semi-structured interviews were held in 2010 with 15 employees working in the
public sector and 11 private sector employees who had transferred from the public
sector. All participants were Omani nationals; 21 men and five women. All
participants had a Bachelor degree and one had doctorate. Most had left information
technology or engineering departments to join firms in oil and gas, construction or
manufacturing. Interviews were conducted in Arabic and focused on the following
questions. How much of a problem is the turnover of talented staff? What are the
consequences of turnover? What are the main factors behind turnover? How do the
public and private sectors compare in terms of attractiveness? What can the public
sector do to address the retention of talented staff? Interview conversations were
analysed thematically and emergent themes are presented below with illustrative
translations of interview data.
FINDINGS: EXPLAINING TURNOVER
Perceptions of turnover
We began by asking senior public sector managers how they perceived the
public/private turnover phenomenon. Some top managers see it as an evident
problem albeit one which has not been formally recognized. A senior official
remarked,
"In my personal opinion, yes, there is a problem but it is still unrecognized or
ignored and no solution has been put forward to limit or reduce it."
Another senior manager supported this opinion adding,
"The turnover of competent employees, particularly technicians and
specialists, in the long term will have a negative effect on in the quality of
work quality in the public sector if this sector wishes to compete with the
private sector in terms of quality."
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A contrasting opinion was that the current level of turnover was a healthy
phenomenon that benefitted the economy in the long run. One senior manager
claimed,
"Anyone leaving the public sector will create an opportunity for a job seeker,
which is perceived as a good outcome."
This opinion held that turnover to the private sector represents a healthy trend and an
opportunity for individuals. Part of the rationale was that some felt the public sector
suffered from surplus labour and as such they were unconcerned with voluntary
turnover. Although there was general support for the idea that switching sectors
benefited individual employees there was disagreement about the consequences for
public sector performance. For example, one senior official wondered,
"How can the public sector provide excellent services for the public when it
loses its competent employees?"
Negative impacts on the provision of services to the public were also reported by a
public information technology manager,
"The general manager of our IT directorate and his two deputies applied for
early retirement because they were 'pulled' by private organizations while
they were managing a project. The organization has suffered for long time in
the IT field and it has been criticized by the public through media. Between
2006 and 2008 our IT directorate lost eight good employees"
Although the rate of turnover is relatively low the turnover is occurring in key or
pivotal roles that are crucial to their organizations. A senior official remarked,
"Eight engineers have resigned in only one month from one of the public
organizations which provide services to the private sector because they had
job opportunities in the private sector. Only one engineer was left, and to
replace them the processes of selection and recruitment take approximately
six to eight months. Therefore, how could we expect the speed and the quality
of the services that should be provided by this organization to the public
sector?"
Level of education was correlated with a decision to leave public service and
interviewees confirmed that most of those who leave are well-educated employees.
One Secretary in a Minister‟s Office postulated,
"The Minister is signing dozens of resignations of competent employees, so if
this phenomenon is going to continue then the Ministry will have to contract a
company in the future to undertake its technical processes"
While less skilled or qualified public employees also think about leaving there is less
demand for them in the private sector. However, private companies are attracted to
public employees who, despite a lack of education, have skills sets built up from
experience especially in technical fields.
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Overall, it was generally perceived that public organizations are suffering from the
negative impact of losing talented employees. One Ministry Secretary confirmed that
the Minister was very conscious of this issue and had asked for an evidence-based
report. Having outlined the scope of the turnover phenomenon, we now turn to
examine the views of current and former public employees to gain a deeper
understanding of the thought processes behind decisions to quit.
Interviews yielded four main themes underlying turnover; reward, working
environment, development and promotion, and perceptions of better opportunities
which are explained below.
Reward
Salaries in the private sector can be much higher than in the public sector, especially
for university graduates.
"One employee who acquired a PhD was in a government Ministry where he
was earning RO 1500. When he found an opportunity in a private university
he applied for retirement. He only gets a RO 500 pension, but he gets a
wage of RO 2500 from the new post in the private sector, which is five times
his pension" (Public employee).
A related problem is that increments to basic salary given for grade promotion are
small in absolute terms. One graduate public employee explained,
"As a university graduate, I was appointed in the public sector at a starting
salary of only 560 Omani Riyals (per month). Now, after six years I have been
promoted to grade five and my salary is now RO 750. After approximately five
years I'll get a promotion to grade four where my salary will only increase by
RO 70. At this stage, I will only get the same as new graduates who just
joined the private sector in terms of salary, although I have had 11 years of
suffering. So, please tell me, at the age of 31, how can I afford to get married,
build a house and buy a car with this salary? Therefore, the private sector is a
lifeline for me."
Higher salaries in the private sector are related to possession of technical skills and
competencies such as in engineering and information systems. Private universities
also seek well qualified academics. However, low skilled workers in the private sector
are not more highly paid than their peers in the public sector with the same level of
education. Nonetheless, there are other rewards to compensate for this. For
example, a low skilled worker in the private sector commented,
"I do not get a high salary in the private sector but I get some bonuses from
the general profit of the company and recognition from the owner of the
company. I prefer this situation to the environment in the public sector, even
with a higher payment.”
In a climate of scarcity of well-educated employees in the labour market and an
abundance of unskilled labor, attractive offers from the private sector can draw
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talented employees out of the public sector either following early retirement or
resignation.
Surprisingly, some interviewees argued that expatriates in the public sector receive
higher salaries than Omani nationals possessing the same qualifications and
appointed to the same financial grade. Many Omanis in the public sector feel
differential treatment and a loss of their rights at work as expatriates in the public
sector receive more privileges and „perks‟ as well as higher salaries than nationals in
the same grade. For example,
"At one of the government's colleges, an expatriate with a Bachelor degree is
offered accommodation and other benefits, such as transportation
allowances, as well as a salary of more than a thousand O.R (per month). On
the other hand, the salary of a national employee (in the same grade and with
the same qualification) does not exceed 700 O.R., and there is no
accommodation provided. Furthermore, if an expatriate works overtime,
he/she will get a financial allowance, which nationals do not get. Therefore,
some staff have resigned and applied to the gas company at Sur"
In the same vein, there is little connection between rewards and performance in the
public sector whereas the private sector is much more wedded to the principles and
practices of performance-related pay. The lack of contingent pay in the public sector
is considered to be an unfair practice particularly among those who see themselves
as talented. This rigidity in the public reward system lies behind decisions to switch.
“The money factor was the main reason behind my resignation from the
public sector, because the inducements provided by the private sector are
incomparable both in terms of salaries and financial incentives” (Private
sector employee).
Conversely, the pay system in the private sector is more adaptable to changes in the
labour market in order to compete with rivals in terms of attracting talented staff. This
system includes bonuses, allowances and other privileges such as health insurance,
flexible working hours, training courses, cars, housing and personal loans,
accommodation, discounts at hotels, airlines and restaurants and free telephone
calls.
Working Environment
Leadership and Management Style
Some public servants clearly felt that management style is an important factor
shaping turnover cognitions. The prevailing style is characterized by resistance to
change, constraints on development, lack of open communication, bias, narrowmindedness, dictating orders and retention of power.
“The leadership and managerial style of my managers is one of the major
reasons for my resignation from the Ministry because they were interfering in
my job and, did not trust me. I was not delegated to when my manager was
absent; on the contrary, he delegated to another manager from a different
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department. This kind of obstructive style does not encourage employees to
stay and work.” (Private sector manager)
In several interviews, public employees related how values such as trust,
empowerment, delegation, innovation, team work and recognition are rarely instilled.
Instead, negative attitudes such as mistrust, punishment, and ignoring good
performance prevail. In contrast, private sector employees did not mention any
negative aspects of management style.
A notable lack of motivation and morale were found in the public sector. Participants
reported that there is no praise or recognition for good effort. In contrast, we heard of
stern, domineering managers who expect employees to obey orders with no room for
discussion or suggestions. Some interviewees saw this as a consequence of a
general lack of people management skills among the managerial cadres.
"Managers are mostly old employees that were promoted to the position
because of the number of years in service or influence with their bosses.
They also lack the competencies, appropriate experience and qualifications of
managers” (Private sector manager)
Internal Climate
Various factors relating to organizational climate were put forward as underlying
voluntary turnover including the ineffectiveness of government regulations in
developing and coping with modern information systems. Government bureaucracy
was criticised as resisting change and constraining innovation and creativity.
Adhering to routine, public organizations are very slow in implementing new
information systems.
“The working environment did not support any creative or innovative efforts.
Instead, rules and regulations which were not carefully thought out limited
development and encouraged routine” (Former public sector employee).
Furthermore, the slow process of government decision-making restrains the
implementation of new systems and delays the process of development. In contrast,
the climate of the private sector was described as a "creative environment" with a
"faster decision-making process" and a "faster adoption of technology".
“The rules in the private sector encourage opportunities for career
development, unlike the civil service law"
The reference here to „law‟ means the rules and regulations prevailing in the civil
service such that the problem of adherence to government rules is that they are not
flexible, for instance in terms of employees doing work at home if this is feasible and
convenient. The rules require attendance at the workplace. The private sector,
however, encourages flexible working and some operate flexi-time.
"The environment in the private sector is much more flexible as it depends on
the completion of the tasks assigned to employees. This is different from the
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working hours that public servants spend in their offices without any
noticeable outcome. This means that private sector employees do not
necessarily have to attend at certain times and can instead spend some
hours working at home or in a café to carry out their assignments." (Ministerial
Secretary).
Regulations governing working in the Civil Service were again highlighted.
"Civil service law should be flexible in order to retain competent employees,
promote them based on their performance, praise them for acquiring new
skills and should treat nationals and expatriates equally" (Public sector
employee).
Job Stress
Weak general management skills have already been noted and in the absence of job
clarity from, for example, clear supervision and job descriptions, public employees
reportedly suffered from job stress. This problem is not just related to job clarity as it
was also found to be related to colleagues who do not give full attention to their jobs.
Furthermore, the daily routine of jobs and lack of challenges are reasons for stress.
Lack of overtime for public servants was also noted.
"Job stress can be avoided if there is a supportive management which
recognizes employees‟ efforts and allocates duties and responsibilities based
on experience. Rewarding employees for overtime is another way to avoid it.
Unfortunately, neither of these factors exists, neither supportive management
nor reward. My manager was exerting pressure on me, with no more pay in
return. That is why I finally left." (Manager in the private sector).
"My manager is good at dictating orders as if I am a machine and not a
human being. I told him several times that I could not handle the work load,
which should really be distributed among several employees, but he kept
repeating it was not his business to recruit more employees. You know, if I
get any chance to leave I will leave without hesitating." (Public sector
employee)
These comments point to localized heavy workloads in workplaces where there is
also overstaffing. Lack of participation was another cited cause of stress. A top-down,
directive culture in the public sector was identified such that employees felt they only
receive orders and follow decisions. Accusing employees of laziness is a common
fallback of the dominant manager without considering that there may be a defect in
the system or a lack of empowerment. For example,
"Our general manager behaves like a spy. He normally sends office boys to
watch us and then inform him of what time we arrive at the office and where
we go or what we do. I presume that he has no work to do except chasing us.
So do you think we can stand this kind of behavior for long?" (Deputy
Director, public sector)
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In sum, job stress was a major reason for turnover and was related to management
style, the nature of the job, work overload without clarification of responsibilities,
absence of targets and a dysfunctional compensation system.
Development and Promotion
Some participants pointed to public sector training and development that was largely
detached from clear determinants such as performance appraisal. Interviewees felt
that there are more training and development opportunities in the private sector that
are much more strongly job-related.
"Our ministry and other government agencies are only concerned with training
courses that are held in a five star hotel offering food and drink, but with no
relation to the organizational needs." (Public servant).
"The private sector has recognized in the last few years the great results from
training and development for Omani nationals. Providing nationals with
required skills has reduced the number of expatriates ... and had a positive
impact on increasing productivity, increasing morale and decreasing work
accidents." (Private sector manager)
In this regard, participants from the public sector pointed to little linkage between
training and organizational strategies, lack of clarity regarding the process of
assigning training, absence of follow-up processes, lack of training evaluation and
lack of continuity. These defects indicate that managers do not appreciate the
benefits of human resource development. While no perceptible change has occurred
in the public sector, the private sector has changed its training and development
systems to update employees‟ knowledge and skills.
Grade promotion (ie, to a higher grade but doing the same job) in the public sector is
not related to performance but is based instead a system of collective promotion
every four or five years. A group of employees, for example, those appointed in a
particular year, are promoted as a batch. Most interviewees saw this as unfair as it
makes no distinction between the talented and less talented or between levels of
contribution. In contrast, promotion in the private sector is closely linked to
performance being based on a “who works better, gets promoted faster” attitude; a
situation accepted by aspiring employees. The contrasting situation in the public
sector favours poorly-performing employees who are aware that they are going to be
promoted to the next grade with the others after a certain time. A manager who had
switched from the Civil Service commented,
"No recognition; people are not recognized for their hard work but are
promoted based on their years in the job and not on their output"
Public servants displayed little sense of expectation as to when they would be
upgraded to higher positions (post promotion). The absence of clear career paths
has given rise to employees having a vague and ambiguous view of their future, and
hence feeling a lack of security and belonging. One public servant remarked,
14
"Promotion is inherited. In other words, you don‟t get promoted till your boss
dies or leaves!"
Interviewees emphasized the lack of differentiation between employees. Promotion
to higher grades is one illustration that the promotion system does not recognize
differential contributions. In addition, the personal preferences given to some
employees at the expense of others in terms of personal relationships have a
negative impact on impressions of equality. These preferences lead to training and
development opportunities going to some employees because of personal favoritism.
Furthermore, performance appraisal based on a fair judgment of performance with
rewards based on merit is absent in the public sector. In contrast, the private sector
is more advanced with regard to achieving equality for employees in terms of linking
rewards with performance. Moreover, training and development are offered to people
who show an interest in acquiring knowledge and developing their skills and
competencies. One interviewee argued that, "work equality is a crucial factor in
increasing job satisfaction, which in turn reduces job turnover".
Perceptions of Better Opportunities
The pursuit of better opportunities was another reason for turnover. This pursuit was
not necessarily a result of job dissatisfaction and can be motivated by a desire to
take advantage of the better opportunities provided elsewhere in terms of financial
benefits, better working environment and jobs that are more compatible with
employees‟ experience and qualifications. For instance,
“The private sector is full of attractive opportunities such as financial
incentives, clear career development, faster promotions and chances for
innovation and creativity. These opportunities attract aspiring public servants."
(Private sector employee)
Some public employees do not have jobs which correspond to their specializations,
skills and qualifications – a situation which makes them think about leaving. Other
employees move to work nearer the family home.
“I left the public sector because I was working in the capital in a public sector
organization for more than 19 years and I only saw my family at the weekend.
I was waiting for an opportunity in my city and I grasped it as soon as it
appeared." (Private sector employee)
In bringing the findings to a close we note an additional factor influencing turnover
decisions. Women were less inclined to leave the public sector since there are
shorter working hours, more annual leave and more maternity leave. In addition,
public pensions provide a reason for women to stay as they often think of devoting
time to their families after some years of working. One woman in public employment
commented,
"In the private sector, there are lots of benefits such as health insurance for
the employee and his/her family and offering transportation in some cases,
but from my personal point of view I prefer the public sector because I am a
woman."
15
This comment reminds us that there are gender-related issues in the understanding
of turnover although the size and balance of the sample were not sufficient to
develop this theme more thoroughly here.
DISCUSSION
This paper explored the scale and effects of turnover among public employees and
the reasons behind it. We found that turnover among qualified employees has
become a problem. While the level of turnover is relatively low, there is evidence of
disruption to services caused by people leaving key or pivotal roles. A talented
employee leaving a small department can have a big influence on service delivery
and the low percentage level is deceptive.
Discourses around the reasons for turnover were critical of management and
organizations. Economic growth fuelled by FDI was linked to the outflow of talented
employees from the public sector as they began to have access to packages that had
never been seen before. Employing talented nationals serves private enterprises as,
over and above good job performance, they save on accommodation, flight tickets
and other expenses normally given to expatriates.
The public sector has not changed its pay policies in response to external changes.
The pay gap appears to have increased despite the loss of talented employees.
Furthermore, management style has not changed as there is little support for training
and development and there is a lack of communication, absence of goals, lack of
trust, lack of empowerment and delegation, lack of recognition, lack of rewards in
terms of morale and the dominance of inequity. In addition, jobs have not been reengineered to be more challenging and career paths are grounded in a relational
model; slow promotion in return for loyalty. The private sector, on the other hand, is
seen as offering better reward packages and management systems. Promotion and
rewards, for instance, are more closely performance-related. Relatively good „perks‟
and privileges are offered and, comparing the two scenarios, it is unsurprising that
ambitious and capable employees create narratives around leaving the public sector.
These findings are consistent with previous research on public management in the
Middle East (Jreisat, 1997; Kalantari, 2005) which portrays public organizations as
characterized by a preoccupation with the preservation of power and hierarchies that
exist to serve ruling elites rather than the public. The paper identifies a divergence
between the Omani government‟s recognition of the importance of modernizing
public management (to keep pace with population growth and rising service
expectations) and management practice. Our evidence points to frustrations among
the professional class at least among those anxious to progress and develop their
careers. It is difficult to escape the conclusion that further efforts to modernize are
needed but in saying that we do not mean to romanticize the private sector by
implying that is somehow better than or more advanced than the public sector.
16
It would be tempting to put forward normative, managerialist recommendations aimed
at retaining talented employees in key roles such as increasing basic salaries,
introducing contingent pay, linking promotion to performance and improving
management capability. This, however, is too easy as objective and neutral
exhortations of this kind ignore the way in which dominant discourses in
organizations filter information (Orr, 2005). They are unlikely to have any impact
unless accompanied by a deeper understanding of the power and interests at play in
the Ministries and elsewhere. Badly implemented human resource management
practices can do more harm than not having the practices at all and pushing
unaltered western practices and New Public Management runs a danger of creating
more dysfunctionality.
Changing public management in developing countries has proved slow and
challenging and is inextricably linked to national cultures and institutional systems
(Samaratunge and Wijewardena, 2009). Despite a general improvement in living
conditions in Arab countries „the availability of public finance appears not to have
translated into improvements in human capital‟ (Jreisat, 2009, p.43). Our findings fit
with previous calls for management and leadership development to build institutional
capacity focusing on commitment to effectiveness, transparency, performance
management and ethics (Jreisat, 2009).
There should be no illusions, however, about the scale and complexity of the
challenge involved in bringing about such changes. Unlike western democracies
where new governments can impose new philosophies (eg,Thatcher, Blair), political
change is slow and the concentration of power around the Sultan insulates public
management from change (Common, 2008). Inefficiencies rooted in nepotism and
patronages which are so deeply entrenched in the region are near immutable forces
in anything but the long term (Jabbra and Jabbra, 2005).
Islamic values are interwoven into Gulf society to the extent that separating religion
from work is problematic if not impossible. An additional perspective on this research
is therefore provided by a consideration of Islamic values as they can be applied to
work organizations (Kalantari, 1998, 2005). Equality of man is the most sacred value.
Justice and kindness go together and this explains phenomena such as group
promotion. If people have performed to the best of their abilities, even if they have
not performed relatively well, they will not be excluded. Reward and punishment are
as central in Islam as in other societies but there is a strong emphasis on mercy and
this influences judgments of performance. While employees should do their best,
Islam discourages unfettered pursuit of individual goals and disregard for others as
this is deemed not to be best for the individual or for society. Morality is highly prized
and must not be compromised for material reasons. This explains the shape of
approaches to performance management. Not for them the grossly individualistic
bonus systems that contributed to the recent financial crisis in the West.
Regarding leadership in the Islamic workplace, there is a strong emphasis on
consultation with delegated officials and the idea that a manager is responsible for
errors made by his/her delegates. Decision making needs to be open, although not
totally, because decisions are made in the service of God and need to be to His
satisfaction. Indeed, God will be relied upon to help make decisions. Control
mechanisms are shaped by two values; the importance of self-control since God is
17
omnipresent and the importance of structures to ensure proper supervision and
conduct. The higher a person is in a bureaucracy, the greater the responsibility upon
them for demonstrating competence as judged by others and by God. This shapes
attitudes to decision making and levels of risk.
Islamic teaching recognizes that the appointment of people to posts should be based
on merit otherwise injustice and unfairness prevail. This value, however, appears to
be neglected in management practice in favour of dominant personal connections.
Fealty to social networks seems to outweigh merit. This is aggravated by the
absence of clear and accepted criteria such as comprehensive job descriptions.
Without criteria that force attention to merit, wasta fills the vacuum left behind.
The main findings can, therefore, be explained thorough an Islamic values lens and
further research is needed to examine how outside influences (through FDI) impact
upon adherence to religious values. Finally, it is necessary to comment on the
linkage between human resource practices and public service. Strategic public
management can be modeled using Moore‟s public value framework (Moore, 1994).
A public organization needs to be focused on creating something valuable (public
value). Two things influence the level of value delivered. First, an authorizing
environment which gives legitimacy, support and resources and, second, operational
capabilities that are needed to deliver the value. An organization‟s capabilities are the
outcome of interactions between its culture, human capital, partnerships and legal
powers (see Samaratunge and Wijewardena, 2009). Here, then, we see how human
resource practices impact on the levels of public value delivered. In Arab cultures the
relative stability of societal values and expectations gives legitimacy to actual levels
of service and so legitimizes the prevailing cultures and state of the human capital.
Coupled with the strong influence of Islamic values the rate of change in human
resource management in the Omani public sector looks set to be slow.
In closing, we note some limitations of the study. Snowball sampling has the
disadvantage of potential bias particularly if no other research method is used
alongside it. Bias can include possible oversampling of people with good networks
and under sampling of those who are more isolated. Nevertheless, Welch (1975)
compared snowballing and conventional sampling methods on the same topic and
found very similar results. As such it is suitable for exploratory, descriptive studies
where the aim is to generate understanding of a phenomenon rather than
generalisable knowledge. The informants who had switched sectors were relatively
young and career-minded. Their views may not be shared by others in public service.
We have assumed that the people who moved sectors were high performing
employees but there can be no objective verification of this.
Throughout the paper we have used the term „talent‟ to describe high performing
employees (by their own or others‟ definitions) and this terms is becoming
increasingly used in Western human resource management contexts. Further
research, however, is needed to explore how the concept of talent is seen through
the lens of Islamic values. Indeed, the cross-national nature of talent could be studied
in a much wider perspective to explore how religious and cultural differences impact
on the definition and management of talented employees. Further research is also
needed to explore the labour turnover problem from the perspectives of men and
women in order to develop a finer-grained analysis.
18
Appendix 1: Comparison of Employment Conditions
Public Sector
Private Sector
Working
hours
A five-day week, hours 7.30 to 2.30 Up to a six-day week. Hours are
without a break. Weekend Thursday more variable, generally longer.
and Friday.
Weekend is Friday (Holy Day)
and maybe Saturday to overlap
more with institutions in other
countries.
Appraisal
Performance appraisal grades are
commonly withheld from
employees.
Appraisal is open and often
based on Western-style systems.
Reward
Basic salaries lower than found in
the private sector. Bonuses
distributed on a group basis
independent of individual
performance. Increments given for
grade promotion are small.
Allowances are given for utilities
and transportation to all employees.
Higher grades can get a
housemaid‟s and telephone
allowance.
Bonuses distributed on an
individual basis. In a fast-growing
economy, salaries are heavily
based on market and spot rates
rather than systematic job
evaluation.
Allowances are grade dependent
and for professional expatriates
may cover schooling, housing
and flights.
Pension
Employees contribute 6% of salary
and the government 15% to a Civil
Service Fund. Retirement at 60 but
employees can retire after 20 years‟
service even if below 60. Retire on
about 80% of basic salary (the
percentage varies with sector).
Employees are registered with a
Public Authority for Social
Insurance. Generally, employees
contribute 6.5% and employers
10.5%. Normal retirement at 60
of after 20 years‟ service on
about 40% of basic salary.
Employees Predominantly Omani nationals.
The official language for
communications is Arabic.
Predominantly expatriate from
the Indian sub-continent. The
working language in
organizations is often English.
Job
security
Relatively high.
Not low but lower than the public
sector. Security is related to the
acquisition of qualifications. (All
Omani and expatriate employees
are protected by the same labour
laws).
Promotion
Grade promotion on a group basis
every few years. Post promotion is
based on seniority. Strong influence
of networks and connections.
Much more based on individual
merit.
19
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G Midgley (1995) Mixing Methods: Developing Systems Intervention
J Thompson (1995) User Involvement in Mental Health Services: The Limits
of Consumerism, the Risks of Marginalisation and the Need for a Critical
Systems Approach
P Dudley, S Pustylnik (1995) Reading the Tektology: Provisional Findings,
Postulates and Research Directions
W Gregory, N R Romm (1994) Developing Multi-Agency Dialogue: The
Role(s) of Facilitation
N R Romm (1994) Continuing Tensions between Soft Systems Methodology
and Critical Systems Heuristics
P Dudley (1994) Neon God: Systems Thinking and Signification
M C Jackson (1993) Beyond the Fads: Systems Thinking for Managers
S M Green (1993) Systems Thinking and the Management of a Public Service
Organisation
M C Jackson and R L Flood (1993) Opening of the Centre for Systems
Studies
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CENTRE FOR ECONOMIC POLICY RESEARCH PAPERS
(PRIOR TO MERGING WITH THE BUSINESS SCHOOL IN AUGUST 2002)
283 Naveed Naqvi, Tapan Biswas and Christer Ljungwall (2002). Evolution of
Wages and Technological Progress in China‟s Industrial Sector
282 Tapan Biswas, Jolian P McHardy (2002). Productivity Changes with Monopoly
Trade Unions in a Duopoly Market
281 Christopher Tsoukis (2001). Productivity Externalities Tobin‟s Q and
Endogenous Growth
280 Christopher J Hammond, Geraint Johnes and Terry Robinson (2000). Technical
Efficiency under Alternative Regulatory Regimes: Evidence from the Inter-War
British Gas Industry
279 Christopher J Hammond (2000). Efficiency in the Provision of Public Services:
A Data Envelopment Analysis of UK Public Library Systems
278 Keshab Bhattarai (2000). Efficiency and Factor Reallocation Effects and
Marginal Excess Burden of Taxes in the UK Economy
277 Keshab Bhattarai, Tomasz Wisniewski (2000). Determinants of Wages and
Labour Supply in the UK
276 Taradas Bandyopadhay, Tapan Biswas (2000). The Relation between
Commodity Prices and Factor Rewards
275 Emmanuel V Pikoulakis (2000). A “Market Clearing” Model of the International
Business Cycle that Explains the 1980‟s
274 Jolian P McHardy (2000). Miscalculations of Monopoly and Oligopoly Welfare
Losses with Linear Demand
273 Jolian P McHardy (2000). The Importance of Demand Complementarities in the
Calculation of Dead-Weight Welfare Losses
272 Jolian P McHardy (2000). Complementary Monopoly and Welfare Loss
271 Christopher Tsoukis, Ahmed Alyousha (2000). A Re-Examination of Saving –
Investment Relationships: Cointegration, Causality and International Capital
Mobility
270 Christopher Tsoukis, Nigel Miller (2000). A Dynamic Analysis of Endogenous
Growth with Public Services
269 Keshab Bhattarai (1999). A Forward-Looking Dynamic Multisectoral GeneralEquilibrium Tax Model of the UK Economy
268 Peter Dawson, Stephen Dobson and Bill Gerrad (1999). Managerial Efficiency
in English Soccer: A Comparison of Stochastic Frontier Methods
267 Iona E Tarrant (1999). An Analysis of J S Mill‟s Notion of Utility as a
Hierarchical Utility Framework and the Implications for the Paretian Liberal
Paradox
266 Simon Vicary (1999). Public Good Provision with an Individual Cost of
Donations
265 Nigel Miller, Chris Tsoukis (1999). On the Optimality of Public Capital for LongRun Economic Growth: Evidence from Panel Data
264 Michael J Ryan (1999). Data Envelopment Analysis, Cost Efficiency and
Performance Targeting
263 Michael J Ryan (1999). Missing Factors, Managerial Effort and the Allocation of
Common Costs
26