Table of Contents

Executive Summary. 2

Introduction. 2

Human Resource Management and Policies. 3

Legal policies. 3

Recruitment and selection policies. 5

Training and development policies. 6

Reward systems. 7

Conclusion. 7

Appendices. 8

References. 9

Executive Summary

The main aim of this report is to explain the differences in employment policies and other human resource management aspects between two countries. Despite differences that occur in human resource management, there are some similarities that also exist due to globalisation. This report is also aimed at identifying these differences, as well as similarities, in human resource management between China and Iran.

The differences in culture and government policies between both countries has made them a point of focus in this report and a reason why human resource management has become one of the most important aspects of management in the world today.

China has become, over the last two decades, one of the fastest growing and most influential economies in the world today, drawing both international and national recruits; this is a good reason why studies on HRM policies need to be reconsidered in such countries. The country’s economy experienced a 9% growth rate in 2008 ranking it to third place in the world in the gross domestic product list. The growth in the country’s economy has led to the establishment of many international companies in manufacturing, banking and finance and technology, making the country very diverse in its economy, culture and employment.

Iran is a Muslim country (Islamic State) characterised by a strong culture that affects its HRM activities. Iran had a growth rate of 6.5% in 2008 with most of its income coming from oil and gas. The country contributes over 5% of the world’s total oil output, making it the second largest oil producer in the world today. The government of Iran controls 80% of the total national minerals with the private sector controlling 17% leaving the corporative with 3%. This point already shows how HRM policies will be greatly influenced by the government. 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.

Introduction

“Human Resource Management is “resource centred” mainly for the management of human resource in a company…. with greater emphasis on planning, monitoring and control instead of mediation” (Mullins, 2002).

The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs exist and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring personnel and management practices conform to various regulations.

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

The first aspect is 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 differ 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 training processes in both countries. Rewards are a very important part of human resource management and differ from country to country and the public and private sectors.

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

Human Resource Management and Policies

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 in 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 role of Islam plays a big role when setting legal policies in Iran. This is a country that is dominated by Muslims who consider dedication and engagement as an obligation – at least, that is what their Islamic leaders tell them. If they disagree, they may be arrested, imprisoned, tortured or executed, as recent events have shown, so it is thus hard to discover the Iranian people’s true opinions. There is actually little respect given to strikes from the government and no labour union system in Iran, but the workers are supposedly represented by the Workers’ House which is a state-sponsored system that is aimed at challenging government policies (Elkan, 1997; iomdublin.org, 2009). On the other hand, in China, workers have the right to participate in trade unions that are organised by the law (Usmra.com, 1995), though these may well be ‘paper tigers’ without real power. Labour law in Iran covers all laws that are related to labour and also the hiring of both local and foreign staff and how employment contracts should be made (Elkan, 1997; Handoussa, 2002).

Iran lacked a lot of skilled labour from 1979 until the late 90s because most of its management was based on relationships and little expertise or knowledge. After this period, things changed as many multinational companies started moving to Iran leading to high competition. Most unemployed were school graduates who had just graduated from university and were looking for jobs. It was very difficult to get hold of a job because of the tight government policies that would not allow employers to get rid of employees easily, unless with strong evidence. This is not the case today because most companies and state own enterprises in Iran are looking for fresh graduates. However, with a huge young population there are many who suffer and Iran has an epidemic of heroin abuse amongst young men, even though alcohol and drugs are ‘haram’ (forbidden by Iranian-style Islam).

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 that affect human resource policies and the style of management in companies; traditional, Islamic and western (Namazie and Monir, 2006). The traditional style is still very important today because it is still used by trade merchants; the Islamic style is characterised by equality, justice and protection (as defined by traditionalist Islam of course); and the western style is adopted as a result of the operations of foreign companies in Iran (Namazie and Monir, 2006). Legal laws are very important for the government to set because of a 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 compensation and performance appraisal (Namazie and Monir, 2006).

The similarity between Iranian labour law and the Chinese law is that multinational companies operating in both countries 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 orientated but fit local culture are allowed to hire managers from these countries and retain them, and are thus likely to succeed (Debrah and Pawan, 2001).

Recruitment and selection policies

Recruitment and selection in Iran in usually carried out in an informal way or a word of mouth way, which could be called ‘croneyism’ or ‘nepotism’ if family is favoured; this may be due to the suspicious nature of Iranians for those they do not know or are unsure about and therefore many consider this method ideal to help reduce risk (Namazie and Monir, 2006). Iranians offer jobs to those who are loyal rather 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 advertisements and by using recruitment agencies just like multinational companies and private sector companies in Iran today (Namazie and Monir, 2006). The law in Iran even allow managers to hire verbally without any written agreement (Budhwar, 2001). In China the law stats as follows

“Article 17 Conclusion and alteration of labour contracts shall follow the principle of equality, voluntariness, and agreement through consultation. They shall not run counter to stipulations in laws or administrative decrees” (www.usmra.com, 1995)

Selection in Iranian public companies is based on the prestige of previous company employer, 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). The Chinese Government has a selection process that is used for its public owned enterprises that are similar to those used by the private sector because of the high competition they face from both multinational companies and private companies based in China based on experience, ability and competency only (Cooke, 2005; Namazie and Monir, 2006).

The Chinese system is similar to the Iranian system where relationships are very important in the function of industries: contacts are everything, and family is important too. 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 to and have family ties 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; then, 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 an informal face to face interview is carried out to find out more information about the individual (Debrah and Pawan, 2001). A survey in China shows that about 80% of unskilled jobs are found through family and friends (Cooke, 2005). This makes in similar to the way jobs are being advertised in Iran, where families plays an important role and contacts are everything. It is very important for the company to know where candidates come from and how they can work with others in the company based on the relationship they have (Debrah and Pawan, 2001). This is perhaps similar to pre-Industrial Britain where one followed in one’s father’s footsteps and family reputation affected future generations. So perhaps this will eventually change as China and Iran become more economically mature, or perhaps even democratic or simply less oppressive and dictatorial in future.

 Training and development policies

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, a great many foreign management schools have opened, offering training programs that suit the Iranian population and the recruitment style in the country with programs such as 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, non state owned enterprises consider training to be very important to their firms, arguably more than the state owned enterprises (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). SOEs in China concentrate on skills development and working relationships as well (Warner, 2004). The difference between public and private sector in China concerning training and its aim is not as great 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 the 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 courses at these business schools to improve on their personal skills.

Reward systems

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 a view to personnel personal development, meaning they are not linked with merits and are not connected to pay and development (Namazie and Monir, 2006). Iranians believe that relationships are more rewarded than performance of an individual in a public company, but rewards are more related to performance in multinational companies there (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 employees is a lifelong job prospects 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 who 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 this 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 carried out in the countries.

The emphasis of human resources activities was placed on training and development, recruitment and selection, and the reward process. These activities have been used to show the similarities and differences between both countries and how they adopt techniques from multinational companies.

In conclusion, multinational companies influence both the private and public sector in their human resource policies as more people start moving to work in multinational companies. Globalisation has broken down some cultural factors in most companies as they fight for international recognition, reputation and profits. Companies which operate 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

• 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 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
• org (2009) http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf Accessed date 04/09/2009
• Elkan, Walter (1997) Employment, Education, Training and Skilled Labor in Iran; Middle East Journal. Vol 13 : http://www.jstor.org/stable/4325620
• Handoussa, Ahmed et al (2002). Employment creation and social protection in the Middle East and North Africa. American University of Cairo

• Iomdublin.com, (2005)Employment in Iran http://www.iomdublin.org/DORAS%20Iran%20Employment.html Date accessed 10/09/2009
• Usmra.com, (1995) Labour Law of the Republic of China http://www.usmra.com/china/Labour%20Law.htm date Accessed 11/09/09
• Budhwar, Pawn and Debrah Yaw (2001) Human resource management in developing countries;. Routledge,
• Cooke, Fang (2005). HRM, work and employment in China. Routledge,