Table of Contents

Introduction. 2

Overview Iranian and Chinese economies. 2

Strategic Human Resource Management and need for competition. 4

Legal policies. 5

Recruitment and selection process in Iran and China. 5

Training and development in Iran and China. 6

Reward systems in Iran and China. 7

Conclusion. 8

Appendices. 9

References. 10

 Introduction

Human resource management

This report will be focusing on human resource management of two countries by looking at their differences and similarities in different aspects of the subject.

The report will give and overview of the economy of both countries, Iran and China, by showing the growth rate and how the countries have improved over the years. It is also going to mansion the major activities the countries carry out and their rank in GDP in the world. The report will also be looking at Strategic human resource management and how it is used as a competitive advantage. Under strategic human resource management, the report will explain those aspects that make up this tool.

The first aspect in the legal policies for human resource management which will look at the different policies set by the government to both multinational and home based companies and how they different between China and Iran. Then it will look at the recruitment and selection process in both China and Iran and how it differs not just between the countries but also between the public and private sectors and multinational companies. A closer look will also be given on how the training processes in both country differ and similar and what the aim of the training is. Rewards are a very important part of human resource management and differ from country to country and public and private sector. This report will look at how this differs between these countries.

The question here is why are the management styles different from one country to another? Is it because of the culture, religion, politics or norms?

Overview Iranian and Chinese economies

The Chinese economy is one of the most influential economies in the world today with a rapidly developing economy. Since 1999, the economy of China has been growing constantly until the year 2008 (Uschina.org, 2008). In 2008 the country had an economic growth rate of 9%, though less than the 13% in 2007, however, Gross domestic Product increased from RMB25,730.6 Billion to RMB30,067.0 Billion (Uschina.org, 2008). This increase in GDP has put China in third place in the world in the list of GDP (Worldbank.org, 2009). China has been the fastest growing economy in the last 20 years and has an average GDP of about 8% growth rate. China today influences a lot of activities in other economies especially in less developed countries in Africa. The country’s per capita income has increased in the last three decades to 8% causing a decrease in poverty rate and therefore narrowing the income inequality gap (Adb.org, 2007). The country is engaged in many activities from manufacturing, banking and finance, foreign investment, science and technology to tourism

Iran on the other has been ranked by the World Bank as 26^th largest economy in terms of GDP with a total GDP of $385,143 Million with a GDP growth rate of 6.5% (Worldbank.org, 2009; CIA.gov, 2009).

Source; Worldbank.org

Iran is part of OPEC and contributes over 5% of the world’s total oil output, making it the second largest oil producer in the world today (Namazie and Monir, 2006). Iran has gone through a series of excesses with 9% of oil reserves and 16% in gas reserves of the world’s production (Namazie and Monir, 2006). Iran has the largest public sector. Most of the minerals in the country are owned by the government and they control about 80% of the total national minerals with the private sector controlling 17% leaving the corporative with 3% (Namazie and Monir, 2006). The government is still trying to give opportunities to the private sectors by allowing banks and insurance companies to get involved more in the economy. The Country has a work force of 23.35 Million people with unemployment of 12.5% in 2008 up by 0.5% compared to 2007 and about 18% of the population below the poverty line (CIA.gov, 2009).

Strategic Human Resource Management and need for competition

Strategic human resource management is implemented in different countries according to their laws and norms. Human resource policies are very important today for companies because of globalisation which has allowed many companies to operate in different countries. Being strategic does not just mean financial performance of focus but also creating a long term performance portfolio and a strong competitive advantage (Namazie and Monir, 2006). It is important for companies to distinguish human resource needs between organisational level and international level (Smale, 2007). Human resource management is seen as Iran as more of a basic function rather than a strategic function to create competitive advantage as seen in developed countries (Debrah and Pawan, 2001).

Legal policies

The labour law in Iran was rewritten in 1985 to give employees more confidence and stability in their jobs causing employers to take into consideration a lot of issues before handing out a contract to their employees (Namazie and Monir, 2006). There are three main components in Iran the affect human resource policies and the style of management in Iranian companies; traditional, Islamic and western (Namazie and Monir, 2006). The traditional styles is still very important today because it is still used by trade merchants; the Islamic style is characterised by equality, justice and protection and the western style is adopted as a result of the operations of foreign companies in Iran (Namazie and Monir, 2006). A modification of the employment and administrative law in 1966 allowed the law to work closely with its growth rate (Namazie and Monir, 2006). Legal laws are very important for the government to set because of lack of skilled and multi-task labour in Iran which has caused problems in productivity, performance and efficiency. Iranian policies and practices do not encourage loyalty nor enhance productivity, performance and efficiency, but makes room for numerous training, high compensations and performance appraisal (Namazie and Monir, 2006).

Unlike Iran, multinational companies operating in China have to follow the same cultural policies that have been implemented by the government and are being followed by home industries to achieve a cultural fit (Debrah and Pawan, 2001). Only companies that adopt the HRM policies that are not just result oriented but fit local culture are allowed to hire managers from China and retain them and likely to succeed (Debrah and Pawan, 2001)

Recruitment and selection process in Iran and China

Iranian workers in the private sector are selected using a better process than in the public sector (Namazie and Monir, 2006). Recruitment and selection in Iran in usually carried out in an informal way or a word of mouth way also known as Nepotism due to the suspicious nature of Iranians for those they do not know or are unsure about and therefore consider this method to help reduce risk (Namazie and Monir, 2006). Iranians offer jobs to those who are loyal than those who are skilled especially when it comes to appointing or selecting a manager (Namazie and Monir, 2006). Recruitment at lower level staffing is done through advertisement and using recruitment agencies just like multinational companies and private sector companies in Iran today (Namazie and Monir, 2006). Selection in Iranian public companies is based of prestige of previous company, experience, seniority, level and location of education with interviews conducted in a very informal ways or formal way, as far as applying for clinical psychometric test for the candidate, based on experience and culture (Namazie and Monir, 2006). Selection methods in Iranian private companies are simpler but there is still the power of seniority and relations which outweigh experience and competency (Namazie and Monir, 2006). Multinational companies recruit based on experience, ability and competency only (Namazie and Monir, 2006).

The Chinese system is similar to the Iranian system where relationships are very important in the function of industries. Quanzi which means relationship in the Chinese context is very important together with li (rite), mianzi (face) and renqing (obligation) are very important for the smooth running of a company and are therefore considered in the selection process(Debrah and Pawan, 2001). Companies tend to use the traditional way of employing those they are related and have family tides to and can trust (Debrah and Pawan, 2001). Multinational companies tend to adopt this culture but change after operating in the country for some time. After some time, multinational companies in china tend to employ on bases of education and experience (Debrah and Pawan, 2001). The recruitment process in China is similar to that in Iran where and informal face to face interview is being carried out to find out more information about the individual (Debrah and Pawan, 2001). This is very important for the company to know where the candidates come from and how they can work with others in the company based on the relationship they have (Debrah and Pawan, 2001).

 Training and development in Iran and China 

In Iran, there were two forms of the development of personnel in the country; the first was that major public-sector industries had direct or indirect influence on the development of the employees and the second is happening today where there has been a shift and training is being carried out in management schools (Namazie and Monir, 2006). In recent years there has been the many foreign management schools offering training programs that suit Iranian population and the recruitment style in the country with programs like Masters in Business Administration (MBA) (Namazie and Monir, 2006). These management programs are very popular in Iran because the country has more engineers than business managers (Namazie and Monir, 2006). Multinational companies in Iran bring in experts to provide specialised standard training to their employees during their training programs they organise, but there is still lack of systematic training and skills-training which is needed by Iranians (Namazie and Monir, 2006).

In China, none state owned enterprises consider training to be very important to their firms than the state owned enter prises (Warner, 2004). State owned enterprises (SOE) provide little training to employees, but the difference here with Iranian public companies is that the Chinese SOEs provide training for skill development (Warner, 2004). SOE in China concentrate on skills development and working relationships as well (Warner, 2004). The difference in public and private sector in China concerning training and its aim is not as much as that in Iran. Most companies in China today provide training for their workers through the company’s training program. This has been adopted from many multinational companies that operate in the country. A lot of multinational companies operating in china allow their employees to go for training for both self development and for the benefit of the company. This system has also been adopted by private sectors in China and is now trying to fit in to the competitive environment in the country. China has a very competitive market with many companies coming from abroad to operate in the country. This has led to adoption of management style by local private companies from foreign companies. China also has a vast range of Business Schools that train managers and employees today. Some companies send their employees to take training course at these business schools to improve on their personal skills.

Reward systems in Iran and China

Performance appraisal in Iranian companies is used to set goals and expectations and for employees’ evaluation (Namazie and Monir, 2006). This is carried out in many public and private sectors in the country but not with the view of personnel personal development meaning they are not linked with merits and are not connected to pay and development (Namazie and Monir, 2006). Iranian believe than relationships are more rewarded than performance of an individual in a public company but rewards are more related to performance in multinational companies (Namazie and Monir, 2006). The labour law in Iran states the provision of security, housing, food, education and clothing for employees as compensation, the public sector has its own law and does not follow this strict law put on private and multinational companies (Namazie and Monir, 2006). The most certain benefit gained from the public sector by employee is a lifelong job prospect while in the private sector and multinationals, employees are rewarded with self development and financial rewards (Namazie and Monir, 2006).

Managers in China are rewarded by their companies by providing training programs to them. Managers also reward their employees by increasing their salaries to encourage them to work harder and improve performance (Warner, 2004). The compensation in the public sector is not efficient enough because it is too small and given out in bulk to many rather than based individual performance (Warner, 2004). Promotions are also used as a form of reward managers with good performances (Warner, 2004).

Conclusion

This report has looked at the definition of human resource management and how important is to companies. In the report, an overview of two economies was looked into by comparing their GDP and growth rate. The report focused on China and Iran by looking at the differences and similarities in employee policies and also how various human resource activities are being carried out in the countries.

Emphasis of Human resources activities were placed on training and development, recruitment and selection and reward process. These activities have been used to show the similarities and difference between both countries and how the countries and how the countries adopting techniques from multinational companies.

In conclusion, Multinational companies are influencing both the private and public sector in their human resource policies as more people start moving to work in multinational companies. Globalisation and broken down some cultural factors in most companies as they fight for international recognition, reputation and profits. Most companies operation in China and Iran are fighting for a share of the market and the home based companies are also trying to looking for ways to gain more market share by doing what their competitors do. The differences in human resource management, to answer our question, are due to differences in culture and how different countries look at the position of a manager.

Appendices

References

• CIA.gov (2009) Iran; Economy Overview https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html accessed date 02/09/2009

• Gross Domestic Product for the Year 2008 http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf accessed date 03/09/2009

• Namazie, Pari and Tayeb Monir (2006) Managing Human Resources in the Middle East; Human Resource Management in Iran. 1^st Edition. Routledge

• Reducing Inequalities in China Requires Inclusive Growth http://www.adb.org/media/Articles/2007/12084-chinese-economics-growths/ accessed date 04/09/2009

• Smale, Adam (2007). Global HRM integration: a knowledge transfer perspective. Vaasa, University of Vaasa
• Budhwar, Pawan  and Debrah, Yaw (2001) Human resource management in developing countries. Routledge
• Warner, Malcolm (2004) Human resource management in China revisited: introduction
• Worldbank.org (2009) http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf Accessed date 04/09/2009