10-4d Matrix Structure

matrix structure

an organizational structure in which people are grouped simultaneously by function and by division

in North America, where it occupies a leadership position with approximately one-third of the U.S. market under the Folgers brand. The vast majority of P&G’s pet care business is also in North America, where the firm has about 10 percent of the market share. • Fabric Care and Home Care. This P&G segment includes a variety of fabric care products, such as laundry cleaning products and fabric conditioners; home care products, such as dish care, surface cleaners, and air fresheners; and batteries. In fabric care,

P&G is the global market leader with approximately one-third of the global market share, and P&G has the number one or number two market share position in the markets where the company competes. In home care products, P&G’s global market share is about 20 percent across the categories in which the company competes. In batteries, P&G competes primarily behind the Duracell brand and has over 40 percent of the global alkaline battery market share. • Baby Care and Family Care. In baby care, P&G has more than one-third of the global market share and mostly competes in diapers, training pants, and baby wipes.

P&G’s largest brand in baby care is Pampers with annual net sales of approximately $8 billion. P&G is the number one or number two baby care competitor in most of the key markets where the firm competes. In family care, P&G mostly focuses in North

America supported by the Bounty paper towel and Charmin toilet tissue brands, with

U.S. market shares of over 40 percent and over 25 percent, respectively. • Market Development. This segment is responsible for developing go-to-market plans at the local level. Market Development includes dedicated retail customer, trade channel, and country-specific teams. The division is organized along seven geographic regions: North America, Western Europe, Northeast Asia, Central & Eastern Europe/

Middle East/Africa, Latin America, Australia/India, and Greater China. • Global Business Services. This P&G segment provides information technology, processes, and data tools to help the other segments listed above to gain a better understanding of the business and improve customer service. Global Business Services is responsible for providing world-class solutions at minimum cost and capital investment.

After looking at a detailed description of P&G’s organizational units, it should now be clear to the reader that P&G offers a great variety of products, serves diverse markets, and has a world-wide presence. As a result, P&G decided that the most appropriate organizational structure for the company is the hybrid structure.

10-4d Matrix Structure14

For most firms, hybrid structures, which result from combining functional and divisional structures, provide them with enough flexibility to achieve the goals of the organization. However, in special cases, companies need the simultaneous benefits of both the functional and the divisional structures: the technological expertise within functions and the horizontal coordination across functions. For example, a defense contractor may need deep functional skills as well as the ability to coordinate across the functions for each contract or project. Similarly, a global company may need to coordinate across the demands of functions, products, and geographic locations. For these special cases, the answer is the matrix structure, which is an organizational structure in which people are grouped simultaneously by function and by division. A global business with a matrix structure is presented in Exhibit 10.11.

The functional managers and the division managers have equal authority within the organization, and employees report to both managers. For example, a sales person may be assigned to work in a particular product division. Hence the sales person has the Sales function as a primary location, but works full time on the product division. The reporting relationship is dual: The sales person reports to both the sales manager and the product division manager. In Exhibit 10.11, node A represents all manufacturing employees working on Division I, while node D represents all manufacturing employees working on Division II.

EXHIBIT 10.11 A GLOBAL BUSINESS WITH A MATRIX STRUCTURE

Chief Executive Officer

Division I

Division II Manufacturing Sales

A B

D E Finance

C

F

© Cengage Learning 2014

The matrix structure is advantageous because it allows the company to meet multiple demands from the environment. Resources can be flexibly allocated and the firm can adapt to changing external conditions. It also provides employees the opportunity to acquire both functional and division-related skills. One more advantage of the matrix structure is that it facilitates innovation and creativity and provides a work setting in which employees with different functional expertise can cooperate to solve non-programmed decision-making problems.

A basic problem of the matrix structure is determining the responsibility and authority relationships between the functional and divisional managers. By design, there is role ambiguity. Two bosses making conflicting demands on the employee can cause role conflict. Matrix structures also limit opportunities for promotion because most employees move laterally, from division to division, and not vertically to upper management positions.

The extent of these problems explains why matrix structures are used only by companies that depend upon rapid product development for their survival, or by firms that manufacture products designed to meet specific customer needs. When the matrix structure fails, it is usually because one side of the authority structure (function or division) dominates, or because employees did not learn to work in a collaborative way. Matrix structures are especially common in high-tech and biotechnology companies.

Bayer AG, a chemical and pharmaceutical company founded in Barmen, Germany in 1863, is well-known worldwide for its original brand of aspirin. In 1984, Bayer announced major changes to its organizational structure in response to significant sales gains, especially overseas, in the early 1980s. Until that time, Bayer had been successfully using a functional structure. Due to the changing conditions, Bayer was looking for a new organizational structure that would allow the firm to achieve the following three primary objectives: 1) switch management control from the then-West German parent company to its foreign divisions and subsidiaries; 2) rearrange its business divisions to more clearly define their duties; 3) empower lower-level managers by giving them more responsibility, freeing top executives to concentrate upon strategic matters.

The new organizational structure that Bayer adopted was a matrix structure, which clustered all of its business operations into six groups under an umbrella company called Bayer World. Each of these six groups have included several subgroups comprised of product categories such as dyestuffs, fibers, or chemicals. At the same time, each of its administrative and service functions were placed under Bayer World into one of several functional groups, such as marketing, human resources, plant administration, or finance. In addition, top executives who had headed functional groups in the past, were given authority over different geographical regions, which, like the product groups, were supported by and intertwined with the functional groups. The final result of the new organizational structure divided the original nine functional areas into 19 multidisciplinary, interrelated business groups.

By 1985, Bayer proclaimed that the new matrix structure was a great success because it allowed the company to get closer to its three primary objectives. In addition, Bayer learned that the new matrix structure helped the firm to be more responsive to market changes and new business opportunities while streamlining plant administration and service division activities.15

Clynt Garnham Medical/Alamy

Aspirin, Bayer’s first major product, was invented in 1897.

ETHICAL PERSPECTIVES Ethics at ConocoPhillips

ConocoPhillips Company is an international energy corporation with headquarters located in Houston, Texas. ConocoPhillips is a Fortune 500 Company, and one of the six oil and gas “supermajors.” ConocoPhillips was created through the merger of Conoco Inc. and the Phillips Petroleum Company on August 30, 2002.

Business organizations are often faced with the dilemma of where to place the ethics office in the organizational structure. Frequently, the ethics officer is considered a staff position and could be part of the Human Resources function, a member of the legal department, or located in a separate ethics office. Businesses should aim to incorporate ethics within the staff, rather than in a line position, so that it can operate in an advisory capacity.

ConocoPhillips decided to take a different approach and place the ethics office in the audit and finance department. This way, ethics can operate as a division of the firm that has a reach extending into all other areas of the firm. ConocoPhillips named Steve L. Scheck as the General Auditor and Chief Ethics Officer, reporting to the board of directors rather than to top management. According to Mr. Scheck, it helps that the ethics function is connected to the traditional internal audit function: “It is critically important for ethics to have the same force as internal audit. My charter says that I can go and my staff can go and look at anything in the company. We have free and unfettered access to anything in the company.”

QUESTIONS

1) Do you think that ethics should be part of a staff position, a line position, or both? 2) What are some of the advantages and disadvantages of placing ethics in the audit and finance area?

3) Frequently the ethics officer is considered a staff position and could be a part of: a) the Engineering function; b) the Human Resources function; c) the

Marketing function; d) the Sales function. 4) Businesses should aim to incorporate ethics within the staff so that it can operate: a) in an advisory capacity; b) in a legal capacity; c) in a different capacity; d) in an irrelevant capacity. 5) ConnocoPhillips decided to place the ethics office: a) in the legal department; b) in the human resources department; c) in the audit and finance department; d) in the engineering department.

Source: Vanessa Hill et al., “Implementing Ethics in a Corporate Environment: A Conversation with Steve L. Scheck,” The Journal of Applied Management and Entrepreneurship 11, no. 1, 2006.

REALITY CHECK LO-4

Locate in the business press a recent case of a company changing its organizational structure. Identify the former and later organizational structures.

SUMMARY

Global businesses have been using organizational structures as a basic source of sustainable competitive advantage. For example, as described in the opening vignette of this chapter, when Shell simplifies its organizational structure, its three upstream units will be merged into two geographically focused divisions, which is expected to speed up decisionmaking processes and avoid delays and cost overruns in their most important projects. In this chapter, we described the importance of organizational structures for business firms, and the different organizational structures that global businesses use when evolving from domestic companies to stateless corporations—a futuristic vision of how global businesses will organize people and resources around the world.

The first step in the path toward globalization is the creation of an export department, followed by the export department becoming an international division. Once a company outgrows its international division and becomes a global enterprise, it may adopt one of four common organizational structures: functional structure, divisional structure, hybrid structure, or matrix structure. In turn, the divisional structure has three specific versions: product structure, market structure, and geographical region structure. The advantages and disadvantages of each type of organizational structure were analyzed. The chapter also illustrated the different organizational structures via real-world global businesses.

KEY TERMS

stateless corporation, p. 242 organization, p. 243 organizational structure, p. 243 division, p. 244 functional structure, p. 248 divisional structure, p. 249 product structure, p. 250 market structure, p. 251 geographical region structure, p. 251 hybrid structure, p. 252 matrix structure, p. 254

CHAPTER QUESTIONS

1. Why are global businesses evolving toward stateless corporations? 2. Organizational structures can help a company fail or succeed. Why do you think that is the case?

3. What is the difference between export departments and international divisions? 4. Compare and contrast the following organizational structures: functional structure, product structure, market structure, and geographical region structure. 5. Which type of companies often adopt hybrid structures? 6. A matrix structure may provide the advantages of the functional and divisional structures, but it may also provide the disadvantages of these two structures. Argue in favor of or against this assertion.

MINI CASE: WHAT IS THE BEST ORGANIZATIONAL STRUCTURE FOR THE ROYAL DUTCH/SHELL GROUP?

Royal Dutch Shell p.l.c. commonly known as “Shell” is one of the six “supermajor” oil and gas companies. Shell is the second-largest energy company and the eleventhlargest company in the world according to Forbes magazine list for 2014. Shell’s revenues were $421 billion in 2014 and it employs more than 92,000 workers. Shell began in a unique way compared with other oil and gas supermajors. Royal Dutch Shell PLC was founded in February 1907 when two companies merged: The Royal Dutch Petroleum Company (which had the legal name Koninklijke Nederlandsche Petroleum Maatschappij) and the “Shell” (the quotation marks were part of the legal name) Transport and Trading Company Ltd of Great Britain.

The merger was an effort to globally compete with the then predominant petroleum company Standard Oil, owned by John D. Rockefeller. Under the terms of the merger, the Dutch group owned 60 percent and the British group owned 40 percent of the new company (the ratio is the same today). Shell is the world’s biggest and oldest joint venture. The Royal Dutch Petroleum Company was a Dutch company created in 1890, and the “Shell” Transport and Trading Company was a British company founded in 1897.

Shell is also unique for its organizational structure and its global presence. Shell has been characterized as one of the world’s three most international organizations; the other two, the Roman Catholic Church and the United Nations. At the same time, Shell’s organizational structure is far more complex than the Roman Catholic Church or the United Nations. From an ownership and legal perspective, Shell comprises four types of company: The parent companies, the group holding companies, the service companies, and the operating companies. This formal structure of Shell is presented in Exhibit 10.12.

During the early 1960s, with the help of McKinsey & Company, Shell created a tri-dimensional matrix structure known as the Shell Matrix, which had functions, regions, and sectors. The Shell Matrix is presented in Exhibit 10.13. This matrix organization continued into the 1990s.

Shell was the only major oil company that did not undergo radical restructuring between 1985 and 1993. The absence of restructuring at Shell appeared to reflect two factors: 1) Shell’s flexibility had meant that Shell had been able to adjust to a changing oil industry environment without the need for discontinuous change; and 2) because of Shell’s management structure, in particular the lack of a CEO with autocratic powers, Shell was much less able to initiate the kind of top-down restructuring driven by powerful CEOs such as Larry Rawl at Exxon, or Jim Kinnear at Texaco. In contrast, managerial control of Shell was vested in the Committee of Managing Directors (CMD).

On March 29, 1995, Cor Herkströter, Shell’s Chairman of the CMD, gave a speech to Shell’s worldwide employees outlining the principal aspects of a radical reorganization of the company, which were to be implemented at the beginning of 1996. Four years later, Shell finalized what would be the most ambitious and farreaching organizational restructuring since the start of

EXHIBIT 10.12 THE FORMAL STRUCTURE OF SHELL

The Shareholders Shareholders

The parent companies Royal Dutch Petroleum Co. Shareholders

Shell Transport & Trading Co. plc

The holding companies

Shell Petroleum NV (Netherlands) Shell Petroleum Co. Ltd (UK)

Shell Petroleum Inc. (USA)

The service companies

The operating companies Service Companies (Netherlands/UK)

Operating Companies in over 130 countries Shell Oil Company (USA)

© Cengage Learning 2014

MINI CASE: WHAT IS THE BEST ORGANIZATIONAL STRUCTURE FOR THE ROYAL DUTCH/SHELL GROUP?

EXHIBIT 10.13 THE SHELL MATRIX

OPERATING COMPANIES

REGIONSEast and Australasia EuropeEast EuropeMiddle East, Francophone Africa and South AsiaWestern Hemisphere and African Region SECTOR

Upstream (Oil and Gas) Natural Gas Downstream Oil FUNCTIONS Finance Information Computing Legal Materials and Environment Health, Safety and Organization Human Resources Planning

Supply Marketing Marine Manufacturing Trading

Chemicals Coal Metals Others Public Affairs Research

© Cengage Learning 2014

the company. The new structure represented a move from a geographically based company to a business sector-based firm. The restructuring also included the elimination of more than 1,000 corporate positions, the sale of a vast majority of its headquarters in London, and the redesign of its coordination and control systems.

At the same time, because Exxon, Shell’s biggest competitor, was merging with Mobil, Shell was no longer the world’s largest energy company. In addition, several other major oil and gas companies were joining the trend of mergers and restructurings. For example, two of Shell’s state-owned European rivals were being re-energized by mergers and privatizations. In 1999, the merger of Total, Fina, and Elf Aquitaine created the world’s fourth oil and gas supermajor, after ExxonMobil, Shell, and BP. Also in the 1990s, the Italian multinational oil and gas company Eni S.p.A. was transformed from a public corporation into a joint stock company when most of Eni’s share capital was put on the market in four successive public issues. Lastly, as described in the opening vignette to this chapter, 2009 brought another wave of organizational restructuring to Shell.

QUESTIONS:

1) What are some advantages and disadvantages of the Shell Matrix?

2) Why do you think Shell has undergone so many organizational restructurings? 3) How would you decide what would be Shell’s best organizational structure?

Source: Robert M. Grant “Organizational Restructuring within the Royal Dutch/Shell Group,” Cases to Accompany Contemporary Strategy Analysis, 5th ed., Hoboken, New Jersey: Blackwell Publishing, 2005.

A Matrix Organization May or May Not Be the Best Way to Restructure a Business

POINT COUNTERPOINT

For many firms, the obvious choice for an organizational structure is the matrix structure. These firms need to operate multiple business units in various countries and distribute their products to different customer segments via multiple channels. These organizational dimensions such as business units, countries, customer segments, and distribution channels, have champions that speak with equally strong voices to those coming from traditional business functions such as accounting and manufacturing. For example, if a company is spending significant amounts of money on R&D, the head of the global business unit will need to be strong to achieve the global economies of scale that would make investment on R&D profitable. At the same time, if the company is conducting business in Mexico, India, and China, it will need a country manager that can develop strong government relations. In principle, when both strong business and strong countries are needed, a matrix structure is necessary. However, does a matrix structure really work?

POINT Yes, as exemplified by successful companies such as Nokia, Cisco, and Schlumberger. These companies are no longer caught in sterile debates regarding dotted lines, and have productive planning processes to amicably settle. Global optimization, as opposed to local optimization, is their common goal. Plans are crafted by teams working in collaboration. People with team spirit are rewarded and promoted, while traditional command-and-control managers opt out. For example, at Cisco, 20 percent of the management group resigned. These departures were considered to be a step in the right direction, and a victory of collaborators over the command and controllers. In the matrix structure, the organization defines roles and responsibilities and then holds people accountable. To prevent myopic approaches and functional silos, the matrix structure promotes the rotation of managers between units. Moreover, businesses with a successful matrix structure, have top executives that instill a one-company culture and settle internal disputes via strong leadership teams. For firms with global business, the matrix structure is the way to go COUNTERPOINT The surest way to slow down a firm is to adopt a matrix structure. The key factor in the success of a company is leadership, and to make sure that leadership is effective, the company needs organizational clarity: very few committees, short decision paths, and unambiguous allocation of resources and responsibilities. Unfortunately, matrix structures possess the exact opposite of organizational clarity, resulting in endless committees and unproductive agreement processes, long and unclear decision paths, and especially, nontransparent responsibilities leading to confusion regarding “who owns successes and failures.”

Past examples, such as those of the ABB Group and Unilever demonstrate that matrix structures can sometimes do more harm than good. ABB, the world’s largest builder of electricity grids, was nearly ruined by the matrix structure, and in 2010, ABB was reorganized as a product structure with five divisions (power products, power systems, discrete automation and motion, low voltage products, and process automation). Unilever is an Anglo-Dutch multinational corporation that owns many of the world’s consumer product brands in foods, beverages, cleaning agents, and personal care products. Unilever has been oscillating between various organizational structures since 1996.

Although the matrix seems to be a logical organizational structure, as indicated by Goold and Campbell, “most managers have not found it to be an easy structure. Managers have struggled with ambiguous responsibilities and reporting relationships, been slowed down by the search for consensus decisions, and found it hard to get all the different units to work constructively together. Many companies are now deeply suspicious of matrix structures, and even leading proponents of it, such as Shell and ABB, have concluded that such structures are no longer working for them.”

What Do You Think?

Which viewpoint do you support and why? Could it be the case that the matrix structure is the best for some global businesses but not for others?

Sources: Jay R. Galbraith and Guido Quelle, “Matrix is the Ladder to Success,” BusinessWeek, www.businessweek.com /debateroom/archives/2009/08/; Michael Goold and Andrew Campbell, “Making Matrix Structures Work: Creating Clarity on Unit Roles and Responsibility,” www.ashridge.org.uk, June 2003.

INTERPRETING GLOBAL BUSINESS NEWS

Business newspapers and magazines such as the Financial Times, The Wall Street Journal, The Economist, and BusinessWeek, are filled with news on organizational structures. After reading this chapter, you should be able to interpret the relevance of the notes being published. The following lines will ask you to do so for a sample of news: 1) Westpac Banking Corporation is a multinational services company and one of the Australian “big four” banks. Gail Kelly, the chief executive of Westpac plans to redesign the organizational structure of the corporation. Under the new organizational structure the chief-facing consumer and business financial services will merge into a new division, to be called Westpac Retail and Business Banking. Peter Hanlon will lead the new division and will be responsible for all consumers, small-to-medium enterprises, and commercial customers. A second new division will be led by Peter Clare and will be named Product &

Operations, which will help to redesign Westpac’s products and processes with emphasis on streamlining and simplifying the company’s business. A third new division with a tentative name of “Westpac Technology” is in the works. (Source: “Westpac Banking to Overhaul Structure” The Wall Street Journal, July 18, 2008, page B7.)

Describe what type of organizational structure Westpac is adopting. 2) Eli Lilly and Company is a global pharmaceutical company that had sales of $20 billion in 2014. Lilly is making changes to its organizational structure to reduce the number of layers of management in order to minimize bureaucracy. Under the new organizational structure, Eli Lilly will combine global regulatory, medical, and patient safety business units into a new division called Lilly Research Labs. Eli Lilly has also consolidated and streamlined its European infrastructure and global marketing business units. (Source: “Lilly Alters Structure” The Wall Street Journal, May 22, 2008, Jenny Park.)

What type of organizational structure will Eli Lilly use in the future? 3) Starbucks is the largest coffeehouse company in the world, with more than 21,000 stores in more than 50 countries, and 182,000 employees. The CEO of Starbucks announced the expansion of the company’s matrix structure in order to improve customer satisfaction.

The company will now operate in the United States under four divisions: Western/Pacific,

Northwest/Mountain, Southeast/Plains, and Northeast/Atlantic. Starbucks believes that with the new organization structure, it will be able to develop products faster and with more appeal to customers. A second phase of the Starbucks organizational restructuring is the creation of centralized support functions that will help the United States and international divisions.

(Source: “The Organizational Structure of Starbucks, Unilever, and Wal-Mart” www .associatedcontent.com/article/782963/the organizational structure of starbucks.html,

May 28, 2008.)

Do you agree that with the expansion of its matrix structure Starbucks will get the listed advantages? 4) Merck & Co., Inc. is one of the largest pharmaceutical companies in the world.

Merck was restructured into five divisions after it completed the buyout of rival Schering-

Plough in 2009 for $41.1 billion. The five divisions are Global Human Health, Animal

Health, Consumer Health Care, Merck Research Laboratories, and Merck Manufacturing.

“The Organizational structure for the new Merck was designed to capture the opportunities in the broader and deeper in-line pharmaceutical franchises that would be created through the integration of Merck and Schering-Plough products,” Merck said in a statement. (Source: “Merck to Form 5 Divisions after Schering Buyout,” BusinessWeek, August 31, 2009.)

Draw the organizational structure of the new Merck. What type of organizational structure is it?

PORTFOLIO PROJECTS

Exploring Your Own Case in Point: Global Organizational Structure After reading this chapter, you should be prepared to answer some basic questions about your favorite global company. 1) Is the company a stateless corporation? If not, is the company on its way to becoming a stateless corporation? 2) What type of organizational structure is the company currently using? 3) Are competitors using the same organizational structure or a different one? Why do you think competitors are using the same or different organizational structures? 4) Do you think the company may benefit from a hybrid or matrix structure?

Developing an International Business Strategy for Your Own Small Business: Choosing an Organizational Structure From an organizational structure perspective, the first major decision that you have to make is to determine the best organizational structure for your firm. The following questions will help you to make this decision: 1) Would an export department or an international division be appropriate for your company? 2) If you adopted a functional structure for your company, what would it look like? 3) If you adopted a division structure for your company, what would it look like? 4) If you adopted a hybrid structure for your company, what would it look like? 5) If you adopted a matrix structure for your company, what would it look like? 6) What would be the most appropriate organizational structure for your company? Why?

CHAPTER NOTES

1 Benoit Faucon et al., “Shell Plans Further Reductions in Jobs,” The Wall Street Journal, September 5, 2009; Guy Chazan, “BP Readies for a Shake-up,” The Wall Street Journal, October 11, 2007. 2 “In Praise of the Stateless Multinational,” The Economist, September 18, 2008. 3 “A Bigger World,” The Economist, September 18, 2008. 4 Ibid. (i). 5 S. Hamm, “Borders Are So 20th Century,” BusinessWeek, September 22, 2003. 6 N. Nohria, “Note on Organization Structure,” Harvard Business School, June 30, 1995. 7 G. R. Jones, Organizational Theory, Design, and Change, 6th ed. (New Jersey:New Jersey: Prentice Hall, 2010). 8 J. A. Sonnenfeld, “How Rick Wagoner Lost GM,” BusinessWeek, June 1, 2009. 9 K. Swisher, “A Question of Management: Carol Bartz on How Yahoo’s Organizational Structure Got in the Way of Innovation,” The Wall Street Journal, June 2, 2009. 10 Ibid. (v). 11 Ibid. (v). 12 PepsiCo, Inc., 2008 Annual Report. 13 The Procter & Gamble Company, 2008 Annual Report. 14 Ibid. (v). 15 “Matrix Management and Structure,” Encyclopedia of Business, 2nd ed. www.referenceforbusiness.com/encyclopedia.

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iv

Managing Global Business

Aleksandar Todorovic/ Shutterstock.com

Ricardo De Mattos/iStockphoto.com ArtisticPhoto/Shutterstock.com Noel Hendrickson/Blend Images/Jupiter Images Jorg Hackemann/Shutterstock.com

Chapter 11

Global Human Resource Management

Chapter 12

Global Marketing

Chapter 13

Global Operations and Supply-Chain Management

Chapter 14

Global Financial Management

Chapter 15

Accounting and Taxation in Global Business

CH 11

Global Human Resource Management

Nathan Benn/Alamy © C Miller Design/Getty Images

After studying this chapter, you should be able to:

LO-1 Explain the basic cultural/regulatory issues involved in global human resource management including outsourcing/ offshoring.

LO-2 Describe the challenges involved in staffing foreign operations, assessing needs for training and development, and designing appropriate strategies to meet those needs.

LO-3 Discuss performance appraisals and employee compensation issues around the world, including cultural differences, cost of living, and how expatriate issues are handled.

LO-4 Explain the interplay between international labor standards and free trade, the free trade and labor concerns presented by NAFTA, and the functions of labor unions.

Cultural Perspective

Breaking the “Glass Ceiling” in Saudi Arabia

The overreliance on foreign labor and the growing number of women graduating from universities in Saudi Arabia has led to a higher expectation of employment for both genders. While Saudi workplaces have traditionally been male-only, employers are having to examine ways to allow females into the workforce. In a country in which women are not even allowed to drive, this has obviously proven to be a challenging task.

Because of Saudi customs and traditions, offices must be updated to include separate entrances, restrooms, prayer rooms, and work spaces for women, as they are to be kept apart from men. Similarly, offices must be updated so that no woman can be seen through a window. It is custom for women to work shorter hours than men, as well as to have shorter overall careers due to the expectation of marriage and childbirth fairly shortly after graduation, so employers must account for this. It is also necessary that a woman obtain approval to work from her male “guardian.”

Furthermore, workplace policies must be updated to include protection for women from instances such as sexual harassment. Saudi Arabia already has strict labor laws that must be followed, prohibiting women from working in hazardous conditions and working nights. These laws also provide extensive accommodation for women during pregnancy and after childbirth. While the number of women in the workplace in Saudi Arabia remains small compared to the rest of the world, the efforts being made by employers to increase these numbers certainly seem a step in the right direction.

Source: Jeff Leeth, “Integrating Saudi Women into the Workforce.” December 9, 2014, Society for Human Resource Management, http://www.shrm.org/hrdisciplines/global/articles/pages/saudi-women -workforce-challenges.aspx.