As prices of natural resources drop, GCC countries must invest in human resources

Amid a 50% reduction in the price of oil, GCC countries might be tempted to cut non-critical investment. Depending on your viewpoint, some people might see investing in people and skills as non-critical. Yet Oxford Strategic Consulting (OSC) research shows that investing in national talent, a more sustainable resource than oil & gas, can achieve huge returns for relatively low costs and can create a stable economic future for the GCC.

Now, Oxford Strategic Consulting (OSC) has launched three high-impact steps that countries and companies can take to quickly and efficiently build their human resource capacities.

First, build better HR departments. Research by OSC suggests that world-class HR departments would yield an extra $14 billion in GCC-listed company profits per year. According to OSC’s ‘HRM in the GCC’ report, a world-class HR team adds 12% to a company’s profit or effectiveness. More effective HR departments will also help GCC professionals contribute to the achievement of national and organizational strategic goals.

Second, encourage entrepreneurs who actually contribute to job growth. Many GCC countries promote entrepreneurism and SME development as part of their diversification strategies, but more can be done to identify which entrepreneurs are most likely to succeed. OSC research found, for example, that only 6% of entrepreneurs actually contribute to employment growth. This means that targeted support to high-potential entrepreneurs, known as ‘gazelles’, would be more cost-effective than across the board funding of entrepreneurial projects.

Third, embrace organisational models that work. Family firms, which account for 75% of the GCC’s private sector economy, are critical for growth and represent a proven advantage for GCC countries. Nearly 50% of these family firms operate in more than 5 sectors, which means that they spread risk, are more resilient to downturns in one sector, and can rapidly move into growth markets. Moreover, family firms tend to outperform non-family firms by 15%.

The most proactive GCC countries and organisations have already made great strides in developing national talent and improving human resource capabilities, yet more can be done. With natural resources like oil proving less and less valuable, the value of quality human resources is soaring.