“For a nation to be competitive it is not sufficient merely to have ample supply of resources such as minerals, oil, rain forests and human resources; rather, it is the way in which these resources are managed and utilized
which makes all the difference.”

The basic premise of this paper is that the effective management of Iran’s human resources can play a crucial
role in the economic success of the country in the international market as a leading developing nation. There is ample evidence for such a crucial role in the successful countries of our own continent, Asia.

Following the spectacular success of Japan in the mid-20th century, the newly industrialized countries of Central and South-East Asia (the so-called Asian Tigers) have become a competitive and formidable force to be reckoned with.

They have made inroads in the markets which have hitherto been regarded as the domain of Japanese and Western companies.

In the race to catch up with, and in some cases even to surpass the advanced industrialized nations, they have left their other fellow Asian countries far behind, even though at some stage in the race they were all on the
same line.

A major production factor which the Asian Tigers have been able to turn successfully into their competitive advantage is their human resources. They have done so through the management of this valuable resource at both company level through management styles, and at a national level, through government policies, especially in education and economic areas. Indeed, these nations have hardly any natural resources other than their people.

Iran too can follow a similar route to success. Iran is a developing country which started its process of modernization and industrialization nearly a century ago. Its business organizations are one of its obvious engines of progress to become a West Asian Tiger in the 21st century.

There are many opportunities at the disposal of these organizations: abundant natural resources from fossil fuel to minerals, a growing domestic customer base and a young and largely educated population eager to learn new skills and participate in the economy.

In Iran we have relied too much on our natural resources and on wealth generated through oil and minerals and have always believed that this is what makes us competitive and provides our country with strategic significance. But today we realize that it is not enough.

In order to become a country of importance and a competitive nation, we must realize the value of our human resources as a national asset, far more valuable than our natural resources.

This paper is an attempt to set that realization into motion, with the hope that it will stimulate discussion and discourse to set our country on the way to becoming a competitive force in the global scene. It further aims
to examine the development process of Human Resource Management (HRM) in Iran with special emphasis on the national factors, socio-economic environment and other factors which influence the quality and structure of human resources for the future.

National factors affecting the development of HRM in Iran In an on-going study of HRM in a sample of international joint ventures in Iran, Namazie (2000) has found that in Iran the perception and role of HRM is
very different from those seen in developed countries.

Whereas western and many other developed countries view HRM as a strategic function, that seeks to achieve competitive advantage by making full use of human resources, in Iran the role of HRM is more basic and has
been dependent on internal and external politics. The redundancy of female staff in top managerial and industrial sectors following the Islamic revolution and the recruitment of large numbers of war veterans following the Iran-Iraq eight-year war are telling examples here. In our country HRM is really the ‘old’ personnel
management with a heavy local color especially in recruitment and training areas.

The pace of HRM in Iran will be influenced by the following external and internal challenges. The external factors include a number of social and economic concerns which face Iran:
1) Iran has a very young population of which more than 70% are under the age of 30
2) There is growing unemployment and more importantly underemployment
3) There are over 800,000 entrants into the job market per year, which has and will continue to put a significant burden on the government to provide jobopportunities for this emerging workforce
4) There is an increasing number of multinationals entering Iran who, by using their own HR standards,
policies and practices, are beginning to make a visible difference in Iranian companies’ workforces compared to that of a multinationals’ local workforce.
5) Iran is gradually trying to obtain membership to the WTO and to bring about the internationalization of companies and industries, which is putting pressure on organizations to achieve international standards.

This can be clearly seen in the number of different ISO standards Iranian companies have already achieved.
Among the internal factors are:
1) The role of education on the development of a strong human resource base,
2) The brain drain where the government will be challenged to retain the educated workforce in Iran by creating a healthy and prosperous working and living environment, especially so that the educated youth are not tempted to go to other countries for better job opportunities
3) With JV partnerships and other strategic alliances, Iran is reaching an international standard and gradually this is causing Iran to realize the importance of a professional HR base, as one compares products and services in other countries and industries
4) Creating the management bond between superiors and subordinates and increasing the trust factor which will enable subordinates to have a more active and participative role and authority in decision making
5) National spirit: A softer touch to the emergence of HRM may be the fact that many Iranians are travelling more and more to countries in the region and further away. Thus they see other cities, especially in the Persian Gulf states, which seem more advanced than Iran, in terms of infrastructure, opportunities, living standards
and conditions.

This plays upon the national spirit of Iranians who are a proud and ancient race and have a long civilization and feel disappointed that their country is lagging behind. This has the effect of putting pressure on organizations to improve working conditions and provide more job opportunities.

If not, the capable and competent people now active in Iranian organizations will join the brain drain of over
200,000 Iranians who leaveIran every year. With these challenges it can be seen that the development of HRM in Iran will need to take on a strategic function if these challenges are to be met.

As mentioned earlier, HRM, like many other aspects of organizations, is embedded in the socio-cultural and politicoeconomic context within which they operate. In theory, unless all the elements of this context are also simultaneously transferred, HRM policies and practices cannot successfully travel between various nations. In practice, however, this is not the case.

Human beings over centuries of existence have developed certain practices that are common to almost all civilized communities even though in some cases these practices have different local ‘colors’. In addition, given the right circumstances, we are all capable of learning all sorts of things from other human beings even if they live hundreds of miles away from us in a totally different country.

We can certainly adapt and modify some of these practices to suit our own specific ‘context’ so as to make them workable and acceptable by our compatriots. HRM policies and practices are no exception. The authors here suggest some practical steps to consider in rethinking the development of HR in Iran. These can include steps such as:
At a macro level, Iran will need to decide where she is heading with her HR base and what the objectives are in developing the human resource base, what industries and business sectors will become strengthened in the
coming decade and how the HR base may be reinforced. At a macro level a master plan for HR strategy for Iran may need to be developed. However this will require the backing and support of both public and private sectors, particularly if development of HR in Iran willrequire the cooperation of all national institutions.

Industries will need to work more closely to identify competence, skills and educational bases for the managers of the future; the educational establishments may need to adapt courses both at schools and universities to meet the economic needs of the country; a number of research projects may need to be developed and HR studies performed on various groups to ascertain the sustainability of such practices, and the challenges that face its implementation; the government and indeed the country’s legal establishment may need to enforce effective measures to ensure HR priorities are met; and so forth.

At a micro level, organizations may want to learn best practices of successful worldclass companies, not with the intention of copying from them, but adapting culture-specific practices and policies to meet Iran’s cultural and external environmental settings.

Rather than using the standard training practices, training may be modified to help employees learn new ways of performing their jobs, such as multi-skilling, job flexibility and analytical thinking.

Finally the concept of HR needs to be accepted and appreciated for its benefits. This in itself is a complex training and will require the changing of minds to some extent. Taking senior managers who are used to traditional ways of management and educating them on HR practices will be a challenge in itself which will
need to be carefully addressed. The authors hope that this paper has covered all the different aspects of developing an HR base and framework for Iran.

This is easier said than done, of course. It is now the challenge for the country to develop its HRM.

Dr Monir Tayeb is a reader at Heriot- Watt University. She has been conducting research in cross-cultural studies of organizations since 1976. Her current interest is in the human resource management policies and practices of the UK – and foreign-owned companies located in Scotland.

Pari Namazie received a BA (Hons) in Business Studies from Middlesex University in the UK in 1992 and is currently continuing her studies, completing her research PhD on HRM in Iran.