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Executive summary

This research paper explores the decision by the Ministry of Water and Electricity (MoWE) in Saudi Arabia to form the National Water Company (NWC) as a vehicle to facilitate privatisation process and oversee the regional operations under Private Pubic Partnership contracts (PPP). Consequently, 5,000 employees moved from MoWE to NWC. The transition process for human resources will be the main interest to this research study.

The assumption is that that a paradigm shift with regard to the role of the employees concerned is necessary to execute change management successfully. Thus, the intention of this research study is to determine the role played by change management during the employee transition process. In addition, the study shall also endeavour to understand the need of managing change through a mix of communication and training programs for the transfer of employees in order to equip them with the required skills and knowledge to operate effectively in a commercial environment.

The research study has identified a descriptive approach to undertake this project. The study population shall be on those employees from MoWE, who already have been seconded to the NWCs customer services operations in Riyadh, whose number in total is 750 employees. A systematic sampling technique shall assist the researcher choose the studys respondents. A self-administered questionnaire will be the tool of choice for data collection and the collection procedure will be by personal administration of the study questionnaire. Use shall be made of SPSS (Scientific Package for Social Scientists) and Microsoft Excel (Ms Excel) for statistical data analysis. Finally, the presentation of research findings in the form of graphs and tables will assist in data interpretation.

Introduction

Background of the study

The ministry of water and electricity in Saudi Arabia is committed to the provision of clean, yet reasonably affordable and portable water to all the residents, while at the same time also enhancing its organisational performance (Pillai 2). In addition, MoWE aims at ensuring that all households get adequate sanitation facilities, besides the protections of the environment. In a bid to achieve these objectives, MoWE has implemented a Strategic Transformation Plan (STP), to lead the reforms within the water sector, in addition to defining a common path for privatisation.

Thanks to the implementations of STP, four cities in Saudi Arabia, Jeddah, Riyadh, Khobar, Madinah and Dammam, have already initiated PPP projects, to enhance the management of wastewater and water operations. In addition, the formation of NWC was with the intention of facilitating the privatisation process and managing the regional operations by PPP contracts (Pillai 2).

NWC formed MoWE and thus far, two cities, Jeddah and Riyadh, have each signed a five-year PPP contract with Europe based Water Companies. Presently, assets and labour transfer is underway, from the pre-existing entities to the newly formed NWC city business units (Pillai 3). NWC is poised to oversee a transfer of 5000 employees to the NWC, from both the Jeddah and Riyadh cities branches by application of transfer mechanism, processes and criteria designed and approved by NWCs board of directors.

Research problem(s)

In the wake of privatisation of the Saudi Arabia water sector, there is a need to explore the paradigm shift from a public entity to a private one, and the impact of this change on the transition process of the employees from working for a public sector (MoWE), to now a private sector (NWC). It is important to take into account the impact that such a change in terms of management shall have on the communication plans and management techniques of the employees. Such a smooth transition would often call for the implementation of communication strategy and resistant management plan.

The explorations of the right transition mechanism for the employees are vital, based on potential inefficiencies anticipated in the new organisations, following a surplus of the labour. The role that the executive management at both the MoWE and NWC plays is also significant when it comes to the issue of supporting and directing the transition process. The mindset of government employees is different from that of employees from the private sector, as regards compensation, working hours, labour law requirements, and civil service laws. This is bound to impact on the transition process of the employees. It is also important to address the criteria applied in employees assessment before the transition process, so that the process may be fair, objective and transparent.

Research objectives

1. Expected role of leadership during change?
2. Type of messages to be communicated at each organizational level?
3. Type of workshops to be held to support the transition process of employees at NWC customer care department.
4. Is their a need to offer a mix of communication and training for the employees supporting the change process?

Significance of the Study

Today, many feel that bureaucratic structures are largely unable to effectively execute the social functions as required. This is the case yet the fundamental reason for instituting bureaucracy is to better stabilise the environment and deal with emerging challenges by introducing more rules and regulations.

The power of managers has greatly been curtailed but responsibility has remained full. This is due to the use of numerous regulatory procedures by the central agency which are commonly separated from normal service delivery. Greater congruence between operating responsibility and managerial authority is necessary to provide the Kingdom with superior water management services.

In conclusion, this change management process is to ensure that the Kingdom gets more predictable, precise and orderly water management services.

Definition of Terms

PPP: Public private partnership: A term used in reference to either a private business venture or a government service that is operated and funded via a partnership between the government and either one (or more than one), company from the private sector.

NWC: National Water Company: This is a creation of the Saudi government through ministry of water and electricity for flexibility and service delivery within the water sector.

MoWE: Ministry of water and electricity: These acronyms refer to the water and electricity ministry in the kingdom of Saudi Arabia.

BOT: build-operate-transfer: A type of financing a project in which the public sector awards a private entity a concession to design, finance, construct, and also operate a given facility that the concession contract has stated.

SPSS: Scientific Package for Social Scientists: This is a computer software package that is used to computer statistical data to yield useful research findings.

STP: Strategic Transformation Plan: MoWEs medium-term strategy for water sector reorganisation

Study results on how change management affects the transition of employees will depend and vary based on the following variables:

• Independent (I), Dependent (D)

Key Categorical Variables

1. Nationality of Employee  Saudi, Other Arab or Non-Arab (I)
2. Gender of Employee  Male or Female (I)
3. Educational Qualifications of Employee  PhD, Master, High Diploma, Bachelor, Diploma, Vocational High School, High School, Intermediate, preparatory, Vocational Training Center or Without Qualification (I)
4. Religion  Muslim or Non-Muslim (I)
5. Marital Status  Married or Un-married (I)
6. Job family (D)
7. Position within Organization (D)
8. Level and Grade within Organization (D)
9. Country and City of Birth (I)
10. Past Performance Appraisals (D)

Key Continuous Variables

1. Age of Employee (I)
2. Other Educational Qualifications and Professional Experience (I)

The level of buy-in will depend on the timeliness and comprehensiveness of the messages and the willingness of the employee to work in a commercial environment after years of working in the public sector under a civil service mandate.

Limitations of the study

This study captures only a snapshot view, during a volatile phase of implementation and transition from a governmental environment to a commercial and profitable practice. It is not possible to predict effectively the actual application accurately, and further processes are to be developed based on employee responses and level of resistance. Time is another limiting factor that needs identification. The shortness of time dedicated to this research study means that the researcher is limited in terms of the extent to which he may explore the research questions of the study. Other study limitations include travelling costs, inadequate budgetary allocation, and the small sample size.

Literature Review

Undoubtedly, Saudi Arabia has had to encounter big challenges for the further development of its water sector (Shandling par. 6). Consequently, the government resolved to privatise the water sector, through the formation of a National Water Company. Amongst the several resources, that the NWC requires is labour. Already, five thousand former employees of MoWE have moved to NWC. Given the differences in terms of contractual agreements, laws and regulations between the private and the public sectors, the expectation is that employees will face the challenge of having to adapt to the transition.

The initial capital set aside for NWC was US$ 5.9 billion. With operations already underway in the cities of Jeddah and Riyadh, the company hopes to extend its operations in about 15 cities in the next three years (Shandling par. 5). The implementation of the privatisation exercise is in two forms: as PPP or BOT (build-operate-transfer) forms of water projects. Both of these two schemes require pursuing in the name of the privatisation process and the expectation is that the water project shall attract varying bidders from the private sector. The deputy prime minister in Saudi Arabia has asserted that when successfully, the PPP initiative shall enable Saudi Arabia to attain the targets for water services (in a better and timely manner) that it has set in the years to come (Pillai 3).

In the face of change, there is a need for organisations to embrace strategy development techniques that are well-established (Shaw 24). Due to the development of the economies, rapid technological advances, coupled with the expectations of both the private and the public sectors, change becomes a necessity. The transition of the water sector in Saudi Arabia from a public entity to a private one is a necessary form of change, not least because it shall enhance service delivery and efficiency, but as the demand for water increases steadily with population growth.

However, it would be futile to imagine that the workforce that has experienced a transition from the MoWE to the NWC shall not have any difficulties in adjusting to the new change. Shaw (24) has noted that usually, organisations and by extension, the human resources have a tendency of clinging, to the practices and systems that they are already accustomed. For this reason, there is a need to develop a strategy that ensures a smooth transition of the workforce. One of the ways through which this can be achieved is by way of identifying the corporate values of the entities involved, in this case, the value attached to the public sector on the one hand, and those that the private sector hold dear, on the other hand.

Organizational change has its arguments falling in either of the two main categories. The first category stresses organizational efficiency while the second stresses social change. For both categories, the focus is on a desired result instead of developing better understanding of the numerous dynamics of organizational change. This hypothesis is based on market forces, which have made the idea of improving efficiency in the organisation a lucrative undertaking.

Kurt Lewin greatly informs the literature that emphasizes the achievement of efficiency in the organisation. To better understand organizational change, he suggested a force field analysis model. The analysis model proposes that an organization is typically in equilibrium. Driving forces and restraining forces are the two main forces which maintain stability at the organization. The driving forces are the aspects of the organization supporting a desired change in the organization. Restraining forces ensure the stability of the organizations equilibrium. In the case where the two forces equate, the organization is very stable and remains so. Disturbances develop when either of the two forces gets stronger than the other (disequilibrium). The occurrence of the change ends with the organization reverting back to a new equilibrium state reflective of the desired change.

Richard Beckhard and David Gleicher the Formula for Change, and is sometimes called Gleichers Formula (Beckhard and Harris 64). The formula offers a way to evaluate the relative strengths influencing the possible success or otherwise of change programs in the organisation.

D x V x F > R

Three critical factors have to be there for any sensible change in the organization to happen.

These factors are:

• D = Dissatisfaction with how things are now;
• V = Vision of what is possible;
• F = First, concrete steps that can be taken towards the vision.

In a case where the product of the three determinants is larger than R = Resistance, change is viable. Due to multiplication of D, V and F, the absence or low, presence of any of the variables means that the final product is low and hence not able to overcome resistance.

Other literatures describe the resistance to change as the ultimate cost of change. The cost is then split into two, the economic cost of change (e) which is the monetary cost as well as the psychological cost of change (p). This tries to showcase is that even in cases where economic cost of change remains dismal, the change will indeed not happen if the psychological resistance of employees is at its high levels and vice versa. In such a case, the formula for change becomes:

D x V x F > C (e+p)

What this allows managers to do is to isolate the actual problem areas of change and develop unique strategies specifically designed to resolve the correct form of resistance.

Organizational change management includes processes and tools for managing the social change at an organizational level. These instruments incorporate a very well developed approach very useful in ensuring effective transition groups or organizations through change. If combined with a proper understanding of individual change management, the instruments offer a structure for managing the individuals side of change. Organizational change management processes include techniques for creating a change management strategy (readiness assessments). This is as an addition to the engagement of higher managers as change starters (sponsorship), developing knowledge on the need to undergo changes (communications), the development of skills and knowledge in aid of the change (education and training), as well as assisting workers move through the change process including ways of sustaining the change (measurement systems, rewards and reinforcement).

Research Methodology

A research methodology addresses the actual research activity, ways of proceeding, progress assessment methods, as well as the measures of success. This research study is concerned with the privatization of the water sector within Saudi Arabia. In this case, the study wishes to explore the role played by change management, because of the ensuing paradigm shift of employees moving from the public sector, in this case the ministry of water and electricity (MoWE) to the national water company (NWC).

Research design

According to Creswell (134), a research design is a framework for collecting and utilizing sets of data that aims to produce logical and appropriate findings with great accuracy, and that aim to adequately and reasonably rest a research hypothesis. Höger (18) views a research design as the glue that is necessary in order to ensure that a research project stays together. This is because the structure of a research borrows heavily from its design, in effect illustrating the manner in which the various main sections of a research projects (for example, the research instruments, samples, and assignment methods) are able to functions in unison, for proposes of addressing those issues that are central to the research (Laurel 36).

This research study hopes to apply a descriptive research approach, with a view to accurately describing the different variable that are being explored, in addition to aiding in the assessment of the level to which these variables could bear a correlation (Zikmund 45). Creswell (134) has noted that an exploratory research is best suited at a time when the researcher is exploring insights into the broad nature of research problems, as well as the most appropriate variables that require to evaluating. In this case, this study wishes to assess the manner in which change management impacts on employees transition. Consequently, both dependent as well as independent variable shall be at play.

The independent variable to consider includes the nationality of the respondents, their gender, and level of education, religion, and marital status, among others. On the other hand, the dependent variable to consider include the job family, position of the employees within the organisation, grade and level within the organisation, as well as past performance appraisals.

Study population

The study population for this research study shall be on those employees from MoWE, seconded to NWCs customer service centers in Riyadh. The customer service centers houses 750 employees. This study chose to target the customer care department at NWC to take part in the survey, by filling in the study questionnaire that had been sent to them. However, the actual number of participants to this study was 742, indicating an attrition rate of 1 percent.

Sampling procedure

According to Creswell (137), sampling is one element of the statistical practice that concern itself with the selection of unique observations that are anticipated to surrender some knowledge about a population in question, specifically for the purposes of forming some statistical inference. Before conducting any primary research, a researcher must be clear about the category of respondents it wants to interview. In most instances, it is virtually impossible for a researcher to interview the whole population to get their views and opinions about a research question as this would be unfeasible and costly. In this respect, choosing a representative sample of the population identified will enable their participation in the actual research study.

Having already established that the sample size for the population under study is 750 employees, this research study deems it appropriate to employ a systematic sampling technique, to facilitate in the data collection exercise. This sampling ensures that each individual in the population has an equal and known possibility of been selected to participate in the research (Creswell 137).

However, any researcher using systematic random sampling must first ensure that chosen sampling interval in a population does not conceal any pattern, as this would threaten the randomness of a sample. In this case, every 10^th employees seconded to the NWC at Riyadh service centres shall be chosen. Employees database at the company and the systematic sampling will be based on an alphabetic order of the employees surnames.

Instrumentation

Creswell opines that best method of ensuring that the research measurements errors are minimised is through the measure use a good [research] instrument (p. 394). Consequently, this research study wishes to utilise a questionnaire containing (mainly) closed-ended and open-ended questions administered to the respondents as the instrument for data collection. By using open-ended questions, the study participants shall be in a position to express their views with minimal limitations, as Cohen and colleagues (26) have noted.

Further and colleagues have asserted, Closed and open ended questions can catch the authenticity, richness, depth of response, honesty and candour which is the hallmarks of quantitative data (p. 255). The anticipation is that a mixture of measurable closed-ended and a limited amount of open-ended questions is the best approach to explore the views and opinions of the respondents to the study about how their transition from the public sector to the private sector may influence them.

Data collection procedures

The procedure for data collection shall involve a personal administering of the study questionnaire to the respondents. Creswell (394) has noted that one benefit of personal administration of a questionnaire is that respondents are best suited to comprehend the concepts and questions contained therein. Further, Personal administration accords the study respondents a chance to make clarifications from the researcher. Besides, personal administration enables the attainment of longer, detailed as well as complicated interviews (Laurel 69) and consequently, it gives more insight to the research study in hand.

Data analysis

Creswell (395), talks of data analysis as a technique of gathering, transforming, and modelling data with the purpose of suggesting conclusions, highlighting useful information, and supporting decision making. There are various approaches that facets that are used to analyses statistical data and these shall vary from one discipline to the other. For example, the analysis of data in the business domain may be quite different from that in the social sciences. Once the collected data has been cleaned and edited, analysis shall be done using a number of statistical packages such as SPSS (Scientific Package for Social Scientists), and Microsoft Excel (Ms Excel). This is with a view to generating research findings for the study, presented in the form of tables, and pie charts.

Data analysis and results

Demographic information

Nationality of Employee

Almost two-thirds (65 percent) of the 750 respondents that took part in this study were Saudis. A further 31 percent were non-Saudi Arabs, while the remainder (4 percent) were non-Arabs.

Gender

More than two thirds of the respondents on transition from the ministry of water and electricity in Saudi Arabia (71 percent) to the newly formed national water company were more likely to be males, as opposed to females (29 percent).

Educational Qualifications of Employee

Table 1: Educational Qualifications of Employee

In terms of educational qualifications, only 2 employees had PhDs, 11 had masters degrees, a further 57 had higher diplomas, 138 were bachelors degrees holders, 257 were graduates with diplomas, 104 had completed vocational high school, and 61 were high school leavers. In addition, 41 respondents had an intermediate school level of education, 23 either had completed preparatory education, while the remaining 7 were without any formal educational qualifications, or had attended vocational training centres.

Religion

• Muslim (88 percent)
• Non-Muslim (12 percent)

In terms or religion, a majority of the respondents were Muslims by faith (88 percent), compared with 12 percent non-Muslims.

Marital Status

In terms of marital status, 56 percent of the respondents were married, 41 percent were unmarried, while the remaining 3 percent, had separated.

Employee transition information

Are you anticipating the move of employees from a public sector to the private sector to be resisted?

Most of the employees expect a certain kind of resistance during transition (81%). Interpretation: 1. Peoples awareness and expectations are high during the transition process. 2. People are willing to utilize resistance in such a case that the new environment will not be the like as they expect it to be.

What are the forms of challenges that you foresee during the transition of the organisation from a public entity to a private entity?

When questioned on the forms of challenges that they foresaw during the transition process of the organisation from a public entity to a private one, the employees interviewed by this study offered diverse types of potential challenges. Challenges employees mentioned are:

Table 2: Employees challenges to transition

• Interpretation: These challenges have to be considered by the management when defining their messages to employees

Are there problems that you anticipate because of this transition?

Table 3: Anticipated employees transition problems based on marital status

An increasingly number of married employees anticipated problems due to the transition process.

• Interpretation: it is possible that the transition process may affect the work-family life balance of the employees, and this may explain why more married respondents foresee it as a problem.

What are some of the transition problems you anticipated?

Out of the 742 participants that took part in this survey, their anticipated problems towards the impending transition process differed.

Problems employees mentioned are:

Table 4: Anticipated employees transition problems based on gender

• Interpretation: These challenges have to be considered by the management when organizing workshops for employees.

Do you feel that there should be a right way of ensuring a smooth transition of the employees, as a way of minimising potential resistance?

Majority of the people requesting a right way for transition (87%).

• Interpretation: Employees deliver change to the management (they have the recipe and know what to do). Employees are more function as the audience rather than to be actors influencing the change process according to their wishes.

What are some of those right ways of ensuring a smooth human resource transition?

Right ways for smooth transition are: