By: Jeanette Teh
Navigating the current times of uncertainty with low oil prices, a slowdown in economic growth, and geopolitical crises can provide challenges for management.
At Institute of Management Technology (IMT) Dubai last Tuesday, a panel of experts discussed management strategies for today’s economy.
Global slowdown and its impact on corporate strategy
The average growth rate in 2016 for the world is less than 3 percent, with all countries growing at a slower pace than the previous year, including China whose slowdown will have effects reverberating across the globe.
Patrick Bol, Director of Global Operations at DP World described the current state of affairs as one wrought with volatile markets changing very quickly, ambiguity and uncertainty where markets act in a way that cannot be easily understood with data, and complexity characterised by a new way of thinking that presents both challenges and opportunities.
Within this global economic framework, Dr. Rakesh Singh, Director of IMT Dubai, advised corporations to address strategic issues on three different levels:
- Managing macro-economic fundamentals into corporate strategy. It was also advocated during the panel discussion that companies run businesses in a manner agile enough to respond quickly to these economic changes.
- Using the downturn as an opportunity to properly manage operational and financial strategies. Include some financial engineering and correct issues within the supply chain, which can bring balance into the overall corporate strategy.
- Be ready to capture opportunities in this market. It is crucial for companies to be innovative and mobilise on opportunities such as making acquisitions when borrowing rates are low or expanding into different markets due to lower costs of transportation.
Snapshot of the UAE Economy
Dr. Kai L. Chan, economist and Distinguished Fellow at INSEAD who also advises the UAE government on national competitiveness, has a more positive outlook for the UAE.
He believes that we have reached a nadir on oil prices, and given a recent report indicating that there is less over-supply than previously thought, oil price recovery will likely be on the stronger side of forecasts.
Further, as the UAE economy has been diversifying away from oil, it accounted for less than a third of national gross domestic product (GDP) in 2014, a figure that is likely now, with even lower oil prices, closer to twenty percent. Coupled with investment in human capital, it is this diversification that has led us to a service-based economy, driven in large part by the talent we have attracted to this country.
Dr. Chan described how the UAE government has also been strategic in investing in infrastructure projects to fill in the gaps when the private sector is not as robust, acting like an automatic stabiliser for the economy, creating jobs and positive economic impact for the country.
In addition, he explained that the government, armed with many different key performance indicators and benchmarks, is moving towards developing a knowledge-based economy, including knowledge-based manufacturing which skills can be easily transferred to other sectors of the economy.
HR as a strategic business partner
In these changing times, the role of Human Resources (HR) and the management of people too has to change.
Suhail Bin Tarraf, CEO of Tanfeeth, emphasised the importance of people in the organisation. For him, it is “people who drive organisations and not organisations that drive business. Every industry is a people business first and foremost” which is why he believes that there needs to be a strategic partnership between HR and the business units to plan strategically for its human resource needs.
“HR is about engagement, motivation, and putting right talent in at the right time. If I have the right number and set of people with the right skills, I don’t need to replace them in an economic downturn”, he continued.
Upgrading skills during the downturn
The importance of developing human capital has been described as a priority by UAE’s leaders, including UAE Minister of Culture and Knowledge Development Sheikh Nahyan Bin Mubarak Al Nahyan who emphasised that human capital drives economic growth, particularly in a post-oil economy.
It is precisely during times of slow economic growth that more investment needs to be made in human capital. As Michael Todd, Head of Career Services & Corporate Relations at IMT Dubai, expressed, “when business is slow, it is an excellent time to conduct professional development for staff because during times of growth you want to focus on generating revenue.”
“It is also important for businesses to maintain a pipeline of fresh talent through internships which will allow for quick and easy absorption when things pick up; not to mention leveraging the ingenuity of youth which will bring in fresh perspectives and new ideas”, he added.
This article was originally published on February 5th 2015 at http://www.gulfbusiness.com.
Jeanette Teh is a legal and corporate trainer, adjunct (assistant) professor, non-practicing lawyer, writer, coach, and founder of Kaleidoscopic Sky. You can find more about her at http://linkedin.com/in/jeanette-teh-601115.