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Background
According to Butt, the performance of the oil and gas industry of the United Arab Emirates in the local and international markets is influenced by the work of the industry players and the productivity of the workforce (231).
Productivity is influenced by the availability of skilled personnel who are well trained to use modern technologies to perform the upstream, midstream and downstream oil exploration and production activities.
According to Butt, skilled personnel contribute significantly to the competitive positioning of a firm in the market (232).
To ensure efficiency and effectiveness, companies operating in the global and local oil and gas industries use the 360 degree performance appraisal system to evaluate the level of employees (Vessenes, 11).
This appraisal system enables the management of the companies to set goals and objectives for employees and the firm as an entity to work at the improvement of managerial effectiveness.
The approach enables the management to assess the effectiveness and efficiency of employees who can positively affect the competitive market position of the companies operating in the industry (Vessenes, 11).
Dessler argues that the upsurge in the demand for oil and gas in the local and international markets has necessitated the industry to employ skilled personnel to perform the tasks of oil and gas exploration and production (1).
To achieve excellent performance targets which have a positive effect on the competitive positioning of the firms in the local and global markets, the oil and gas companies have adapted the 360 degree performance appraisal system to manage employees and the expatriates who work in the industry.
Here, most of the expatriate employed in the oil and gas industry in the United Arab Emirates joined the companies from other countries as soon as the government discovered oil and gas in the country.
Expatriates came in because of the shortage of skilled personnel to address the challenges and problems the companies operating in the oil and gas industry were experiencing.
According to Langley and Guest, the need to respond to the increasing demand for oil and gas necessitated the country to embark on an ambitious program of sourcing for highly skilled personnel from other countries between 1990 and 2000 (2).
The newly recruited employees working in the industry consisted of 91% expatriates of the country’s 2.4 million people by 2006. It is important to note that the public sector was the greatest employer because of the attractive benefits employees enjoed from the government.
According to Randeree and Chaudhry, the urgent need for trained and skilled personnel to work in the fields based on the exploration and production of oil in the United Arab Emirates was the reason for the ministry of labor and social services and the UAE council of ministers to identify training and development needs of the people (8).
Here, the Government partnered with training institutions to teach skills required for the exploration and production of oil to the local people.
However, the companies which operate in the sphere of exploration and production of oil and gas undergo significant challenges in employing the local people who demand higher salaries, better job security, shorter working hours, and greater employment benefits (Rees, Mamman & Braik 2).
The employees in the oil and gas industry in the UAE positively influence the performance of the oil and gas sector in the international market, which is partially driven by the underlying population growth in the consumer market, and the rise in the demand for oil and gas in emerging markets such as China, South East Asia, and Africa. 50% percent of the market position and performance of the oil and gas industry in the United Arab Emirates (UAE) is influenced by the performance contributions of each individual employee against established objectives and standards (Rees, Mamman & Braik 2).
The financial performance of the companies in the industry makes significant contributions to the sharp rise in oil and gas prices in the international markets which contribute to the strength of the market position of the firms.
The phenomenon was observed before the 2008 sharp fall in the international prices of oil and gas which created a decline in the market position and financial performance of the companies in the international and local markets.
A summary background investigation shows that the exploration and production of oil in the United Arab Emirates is run by the Abu Dhabi National Oil Company (ADNOC), which was established in 1971, and operates a consortium of subsidiary companies.
Zakum development company (ZADCO) is one of the subsidiary companies that make ADNOC with a workforce which is involved in the exploration, mining, and production of gas and oil in the UAE.
Employees with specialized skills in the production of oil and gas have contributed significantly to the increased production capabilities of the companies under the directions of the top level management which uses the 360 degrees performance appraisal technique (Business Monitor International United Arab Emirates Oil & Gas Report, 1).
To achieve the objectives of the desired market position, the management of the companies has integrated a performance appraisal system for all employees who work in the industry to evaluate their contributions to the performance of the oil and gas industries.
The management is responsible for the management of customers, the analysis of the market positions, the ultimate pricing of oil in context of the global oil prices, the quantity and quality of oil production, the market size, the customer value, maximization of market share and profit in the oil industry.
Scope of the oil and gas industry in UAE
This study focuses on the effect the oil and gas companies, which use the 360 degree performance appraisal system for performance evaluations, have on the local and international markets.
An examination of effect of the 360 degree performance appraisal system on the performance of the human resource and the market position of the oil and gas industry in the United Arab Emirates is critical in answering the research questions.
The Oil and Gas Industry in the UAE
A study by Rees, Mamman and Braik shows that the workforce in the oil and gas industry contributes 90% to the performance of the sector which is the key driver of the economy of the United Arab Emirates, which possesses 10% of the world’s oil reserves (12).
An effective workforce has contributed positively to the industry by transforming the economy from a desert region to one of the best performing economies in the Middle East by increasing the revenue required for the provision of social services and for the rapid economic growth and expansion.
Expatriates working in the oil and gas sector consist of 85% of the 4.337 million workers according to the 2012 statistical data. The licensing of the companies involved in the exploitation of oil and gas in the United Arab Emirates is done according to the constitution of the UAE.
Under the constitution, the licensing for the development of the oil and gas resources is an exclusive task of each Emirate. Typically, around 95% of the oil produced in the UAE is from Abu Dhabi.
The main companies involved in the production of oil and gas in the UAE include ADNOC, Dubai Petroleum Company (DPC) for upstream operations, Abu Dhabi Marine Operating Company (ADMA-OPCO), and Dubai Natural Gas Company (DUGAS), which is owned by the state and responsible for the production and transportation of gas from the offshore fields.
A critical review of the licensing of the production of oil and gas in the UAE shows that ADNOC holds the majority shares and is considering limiting the number of foreign companies involved in the exploration and production of oil in the UAE.
The United Arab Emirates has an ambitious investment plan on the upstream production activities to enhance the recovery of oil and gas. The strategy is to raise the production capacity to 3.5 million barrels a day by investing a US $60 billion in the next five years to achieve the target.
To enhance competitive exploration and production of oil and gas, the government of the UAE has awarded contracts to Hyundai worth US $1.88bn for the exploration and production of oil from the Satah al-Razboot (SARB) regions, the National Petroleum Construction Company (NPCC), and Petrofac Emirate and Daewoo Shipbuilding & Marine Engineering (DSME) respectively for the production of oil and gas in other fields.
Market Position
Abu Dhabi National Oil Company (ADNOC)
The market is the key driver that has significant effects on the financial performance of the company and its competitive position.
To improve the performance and effectiveness of the company, it was important to restructure the main company into five autonomous business units under a directorate. Each directorate offers services in the exploration, production, and marketing of oil and gas.
To improve accountability, the restructuring, which was implemented, affected different companies under the coordination of ADNOC’s project directorate, which coordinates the management, human resource, and administration units.
In this case, the critical components that contribute to the competitive strategy formulated by the company are the five new autonomous units of the main company (Rutledge, 9).
ADNOC operates as a joint venture with other companies and has invited western countries, which contribute skilled personnel, enabling the company to improve its market strategy and competiveness.
Employees in the industry do not like the 360 degrees performance appraisal system as a tool to determine the marketing strategy of the oil and gas industry in the country.
The critical components of the performance appraisal system that affect the performance and marketing position of the oil and gas industry include the assessment centers, human resource accounting, and behaviorally anchored methods.
Managerial effectiveness provides the organization with an evaluation of complete assessment of the effectiveness of the oil companies’ performance and the development needs of the company.
Market position
A report by the Business Monitor International United Arab Emirates Oil & Gas Report shows that 61.4 % of employees consider the 70% market share held by the company to be a direct result of the 360 degree performance appraisal system (1).
A positive impact is created on the market position held by the company because of the impact caused by the 360 degree.
Over 60% of the employees regard current market position and the competitive strategy to be as a result of the problem solving capabilities of the management, the promotion of teamwork, management competence in creating the right company mission and vision statements, ability to create strategic awareness, management drive to achieve organizational goals and objectives, and the ability of the management to enhance teamwork and motivate employees toward improved performance.
Employee contributions to the company’s upstream interests in the production of oil and gas with its commercial production concentrated in the Dubai Natural Gas Company (DUGAS), which started the commercial production of oil and gas in 1980 (1).
That is in addition to other national companies that ADNOC has invested its shares in. Besides, the company is undertaking different expansion projects to increase its production capacity (Vessenes, 11).
The strategic aims of the company is to boost oil and gas production and market share in the oil and gas market, both locally and internationally and enhance the performance of the downstream operations of the company at different refineries.
To enhance the performance of the downstream and upstream, the management has strategized to use technology to design and develop the latest engineering components to perform downstream activities with efficiency and effectiveness (Business Monitor International United Arab Emirates Oil & Gas Report, 1).
Zakum development company (ZADCO)
ZADCO was constituted in 1977 under the promulgation of Sheikh Zayed Bin Sultan Al Nahyan of law No. 9 to incorporate the company into the development and production of oil in its present area of work.
ZADCO is a high performance subsidiary of the fully integrated oil and gas company ADNOC in the United Arab Emirates (UAE) with the wider perspective of carrying out petroleum industry business related activities, which include mining and exploration for oil and gas.
ZADCO is a subsidiary that deals with the production of oil in the Umm Al Dalkh, Satah, and the upper Zakum fields using the latest oil mining technologies, which have given the company a competitive edge, enabling it to become the leading oil mining company in the UAE (Stauffer, 9).
Methodology
A literature review of secondary sources including books, articles, journals, and online sources will provide the required data for the study to determine the competitive market position of the oil and gas industry in the United Arab Emirates.
The research method will consist of a combination of both qualitative and quantitative approaches to answer the research question on the competitive market study in the oil and gas industry at the national and company levels.
The choice of the method of study is based on the online availability of information on the market position and performance of the oil and gas industry of the United Arab Emirates.
Different articles will be studied and the results will be deductive from the sources of information used as sources of data.
Findings
According to the results in the appendix, 15% of organizational employees agree that the management needs to improve on problem solving skills, managerial skills, and decision making skills to improve the performance of the organization in the oil market.
90% of the employees agree that the management has driven the employees to improve the productivity of the firm, 85% regard management as excellent in strategic planning, 90% regard management as having cellar mission and vision statements.
The factors that contribute to organizational performance including teamwork, effective communication, and problem solving skills are rated above 50%.
Analysis
ZADCO holds a 60% market share of the oil and gas industry in the UAE and a 10% share in the global market which has been improving significantly. The reason for continuous growth is in the performance of the employees in the companies.
Conclusion
The effect of the 360 degree performance appraisal system on the performance of the employees who work in the oil and gas industry in the United Arab Emirates shows a direct positive effect on the market position of the firms.
The results have shown that the competitive market position of the United Arab Emirates oil and gas companies show a positive relationship with the performance of organizational employees.
The appraisal system enables management to understand and determine the rationale for continuous learning and the ability to make changes at management level by restructuring the company.
That is in addition to increased levels of trust the employees develop, and the ability to collect information from different sources for effective decision making and improved performance, which contributes to enhanced organizational performance and market position.
Works Cited
Business Monitor International: United Arab Emirates Oil & Gas Report 2013. Web.
Butt, Gerald. ’’Oil and Gas in the UAE.” United Arab Emirates: a New Perceptive. Ed. Ibrahim Abed and Peter Hellyer, London: Trident Press Ltd, 2001. 2331-249. Print.
Dessler, Gary. Human Resource Management, 13th ed. Upper Saddle River: Prentice Hall, 2012. Print.
Langley, Ian, M, and Mark Guest, 2012, The Global Oil & Gas Workforce Survey, 2012. Web.
Randeree, Kasim, and Abdul Ghaffar Chaudhry. “Leadership in Project Managed Environments: Employee Perceptions of Leadership Styles within Infrastructure Development in Dubai.” International Review of Business Research Papers 3. 4 (2007): 220-232. Print.
Rees, Christopher J., Aminu Mamman, and Aysha Braik. “Emiratization a Strategic HRM Change Initiative: Case Study Evidence from a UAE Petroleum Company.” The International Journal of Human Resource Management 18.1 (2007): 33-53. Print.
Rutledge, Emilie. Monetary Union in the Gulf: Prospects for a Single Currency in the Arabian Peninsula. London: Routledge, 2009.
Stauffer, David. The Power of Competitive Intelligence, Cambridge: Harvard Business School Publishing, 2003. Print.
Vessenes, Peter. “Cash Is King, but Marketing Is Everything.” Journal of Financial Planning 16.12 (2003): 1-19.Print.
Appendix
This questionnaire is used to collect data on the effect of the 360 degree performance appraisal system on the performance of the employees at the Zakum Development Company (ZADCO), and the direct effect it has on the performance of ZADCO development company in the local and international oil markets.
Any information provided by the respondent is confidential and cannot be used for any other purpose except to conduct this study. You are kindly requested to fill and submit the questionnaire.
Questions about the management
Experienced and understands the management skills
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Solves problems, seizes opportunities plans for action
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Is proactive in making tactical decisions
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Technical and professional skills
Is expertise in area of specialization
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Positively solves technical problems and anticipates problems
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Solves problems innovatively
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Is strategically aware of the financial position of the company
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Communicates clearly
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Positively influences teamwork
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Creates business strategy
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Mission and vision statement of the company exists
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Has a structured planning mechanism
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Manages to gain an edge over competitors
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Makes the company products available than the competitors
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Strives to make higher profits
- Strongly agree
- Agree
- Disagree
- Strongly disagree
Results
Analysis of the results
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