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Group Members

Mehran Ali
Usman Khan (Group Leader)
Qasim Manzar
Abid Rauf
Shahan Hamza

HRM Practices in IRAN

Overview of Business Industry in


Iran

Primary Industry:
Petrochemicals
Energy

Secondary Industry:
Mining,
Steel Automobiles
Banking Sector:
Islamic Banking is strictly observed

Telecommunications

Government Owned Ownership in the Industry/Economy

80 percent of the overall Economy


Industry dominance by Government
Capitalist Economy
Not favorable towards privatization

Segregation of Business Industry:


Public Sector
Co-operative Sector
Private Sector

Public Sector;

Foreign trade
Mining
Telecom
Banking
Insurance
Energy
Water Distribution Networks
Radio & Television
Airlines
Shipping and Railways

Co-operative Sector
Manufacturing
Distribution

Private Sector

Agriculture
Animal Husbandry
Commerce and Industry
Others

Natural Resources
Abundance in Oil, Gas and Minerals
Owns 10% of the Worlds Oil resources
Owns 16% of the Worlds Natural Gas resources

One of Top 30 Economies of the World


High Political Influence on the Business Industry

Primary Influence: Traditional Shiite Islam Practices


Secondary Influence: Democratic Institutional Approach

Demographics of Iran:

70 Percent of the population is under 30 years.


30 Percent over 30 years
Job Creation requirement: 800,000 jobs a year
Unemployment Ratio: 20% approximately
Highly influenced by cultural institutions of religion and family

Cultural Practices

Individualism
Strong in Group-Collectivism
High Power Distance
High Performance Orientation
High male Orientation
Loyalty and Cohesiveness in Family and Close Friends
Considerable influence of Religious Values.

HISTORICAL BACKGROUNG OF HRM IN IRAN

BEFORE 1979;

Stable Environmental Development


Booming Economy
Fast growing Private Sector
Educated and Technocratic Workforce
Attractive Laws for FDIs
Precedence on Local Culture over personnel practices
Pre-existing relationships prevailing over skill and competence

ISLAMIC REVOLUTION

AFTER 1979;

Monarchy replaced by Islamic Republic


Technocrats Replaced by Ideologists
Competent and Skill force replaced by Loyal workforce
Vivid gender and professional gap
Focused towards Loyalty in the management structure

REALIZATION OF FALTERED PRACTICES;


Consequences of the approach analyzed
Lack of skilled labor and management causing lag in international
competitiveness.
Realization of the necessity for improved HRM practices

EFFORTS FOR HRM POLICIES IMPLEMENTATION


Little or no-pre-existing work in the area of development HRM
systems
Raising Awareness towards the concept of HRM
HRM Society
HRM issues addressed on Public and Private organizations level
HRM Policies encouraged to be implemented

Process of Change
Commitment to HRM Agenda

NATIONAL INDUSTRIAL DEVELOPMENT STRATEGY;

20-Year Perspective Policy


Fourth Five-Year Plan
Need to capitalize on social, economic and HRM basis.
Focused attention on management competencies
Future Manager plan
Identification of 4000 competent managers for public sector

HRM EVOLUTION

Previous Understanding of HRM;


Reactive, Perspective and Administrative

Modern Understanding of HRM;


Proactive, Descriptive and Executive

HRM in different countries;


Evolve at different pace
Local external environment elements;
Political elements
Socio-economic elements

HRM EVOLUTION IN IRAN


Developing countries perceive HRM differently
Developing countries perceive HRM as;

Strategic function
Competitive advantage

Iranian Perception of HRM;


Administration of Basic Tasks

MNCs in IRAN
Difference in HRM understanding of Iranian management
and their MNC partners

DEVLOPMENT of HRM Practices &


Policies

Factors influence development of HRM Policies & Practices;


National Factors
Contingent Variables
Strategies of Particular Organizations/Bodies.

MNCs partially adapt policies according to Host Countries.

HRM Challenges in IRAN

According to Private Sector;

Employee Retention
Discipline and Implementation
Using Corrective Actions
Reward or Incentives to High Performers

According to Public Sector;


Incoherence between HRM fuctions

Three Major Challenging Areas;


Workforce;

Great potential in workforce


Educated and Young Workforce
Low Productivity
Low performance
Employees lack commitment
Demotivated
Frustrated

Workforce (Contd.);
According to MNC managers
Educated
Lack necessary skills
Lack work ethics

CULTURAL:
Private and Family-Owned Businesses
Relationship-Oriented Culture
Biased Recruitment and Selection Processes

Public Sector
Formal Channels
Some level of biasness in recruitment

MNCs;
Strict recruitment policies
Skill and competence based recruitment

Challenges in Compensations and Appraisal Policies Implementation

Business Environment
Laws and Regulations
Vague HR systems
Difficult and Pro-employee Labor Laws

Hurdles in Firing Staff


Strict Selection Processes
Short-term Employment Contracts
Lack of Commitment by Employees

Public Sector grown accustomed to the Labor Laws

HR PRACTICES IN IRAN

RECRUITMENT & SELECTION:


Difference in Perspective of MNCs and Iranian Companies
Approach of MNCs,
Structured
Clearly defined Job Descriptions
Focused towards;

Skills
Qualifications
Competencies
Behaviors

RECRUITMENT & SELECTION (Contd):


Approach of Public Sector;
Formal Recruitment Structure
Psychometric assessments

Approach of Private Sector;


Do not usually followed detailed structures
Not focused towards formalize recruitment
Focus on;
Years of experience
Qualifications
Connections

FACTORS DOMINATING RECRUITMENT & SELECTION


PROCESSES:
Iranian Companies

Biased or Relation-based Hiring


Culturally Dominated
Distrust towards outsiders
Nepotism Hiring focused in Higher Managerial Positions
Swift movement of Approaches towards Competence based Recruitment.

TRAINING & DEVELOPMENT

MNCs Approach;

Structured Approach towards Training & Development of Employees


Globally Designed Training Programmes
Training Needs Assessment Programmes
Need-Based Training Programmes Development and Deliverance
Formal & Informal Trainings;

Workshops
Coaching
On-job training
Courses etc

Training & Development outcomes affect the Performance Appraisals

TRAINING & DEVELOPMENT

PUBLIC SECTOR;

Less Structured
Not linked to Performance Appraisals
Lecture Style Trainings are Focused
Most Popular Forms are leading to Academic Qualifications such as
MBA etc.
Developing ON-Job Trainings and Mentoring Programmes are under
consideration

IRANIAN PRIVATE COMPANIES;


Development of a better fit between needs and delivered
Programmes
Evaluation of Training Programmes and their respective impact.

PERFORMANCE APPRAISALS

MNCs Prospective;

Tool to set Goals and Expectations


Measure Outcomes
Feedback to Staff
To identify;
Development Needs
Career Pathways
Promotional Potential

Sophistically Structured

IRANIAN COMPANIES PROSPECTIVE;

Assessment of Past Performance


Not focused in Developing the Resource
Lack of Performance Setting Indicators
Failure to Effectively Measure Performance Indicators
Failed Appraisal Systems;
Distrust towards Line Managers
Favoritism
Unfairness and Subjectivity

Companies working to make their Appraisal Systems Fairer and


Transparent

COMPENSATION & REWARD


Compensation & Reward Practices;
All organization are abided by the labor laws and
legislations for the development od Compensation and
Reward Practices.

MNCs;

Clear
Structure
Transparent
Combination Intrinsic and Extrinsic Variables
Clear Performance-Based System
Higher Base Salary
Pay for Performance Concept

Iranian Private Sector Companies;

Complex
Not Transparent
Layers of Compensation and Rewards, not clear to staff
Less Benefits to Staff
Basic Coherence with the Labor Law
Slightly high Base Salary
Pay-for-Performance is not easy to adopt
Easy to transform into more Clear and Transparent system

Public Sector;
Lower Base Salary
Abundance of Different Benefits;

Food Allowances
Housing Allowances
Different Club Memberships
Loans etc.

Adaption to Clean and Transparent Compensation and Reward System not


easy for Public Sector Companies

PUBLIC SECTOR
National

Iranian Oil Company(NIOC)

Founded in 1948 67years ago.


Head Quarter is in Tehran, IRAN
Major Products Oil Natural gas, & Petrochemicals
Revenue US$ 110 Billion (2012)
Total Assets US$ 200billion (2012)
Iranian government owns (NIOC)
NIOC has approximately 41,000employees according to (2011)

CONVERGENCE & DIVERGERNCE in


HRM

CONVERGRNCE:

Globalization & Technology Consideration


Universal HRM Practices for All Countries
Same Values Amongst the Countries
Socio-Cultural Variables Not Relevant

DIVERGENCE:

Socio-Cultural Differences are key factors in evaluation


HRM Practices to be derived by consideration of cultural Differences
Same Values and Theories cannot guide HRM theories
Cultural Distance & Institutional Consideration

PRIVATE SECTOR
UNILEVER:

FACTS & FIGURES:


Unilever was formed in 1930 from two companies.
Margarine UNIE (Netherland)
LEVER brothers (UK)

163,000 Employees.
170 Countries.
Think Local, Act Global.
48% Turnover from Developing & Emerging Countries
Estimated 1 Billion New Consumers till 2018.
Focused on personal care and products division.

5 Work Levels;
Level
1

Non Managers

Level
2

Managers

Level
3

Directors

Level
4

Vice Presidents

Level
5

Senior Vice President/President

Global Policy for Level 2 and Higher


Local Policies for Level 1 Workforce

FACTS & FIGURES

Established in Tehran, 2003


First Product; LUX
Regional HQ in Turkey
240 Employees

HRM in UNILEVER IRAN

RECRUITMENT & SELECTION:


Sources Utilized:
www.unilevever.com/careers
Recruitment Websites: Iran Talents, Agah Jobs

50% Recruitments are Management Trainees


Focus on Internal Recruitment
No Biasness in the Processes
English Language is a necessity
Accenture is the Outsource Recruiter.

Selection Process;
Checking and Selecting CVs
Telephone Interviews
Meeting/Interview with Line Managers, HR Directors and sometimes
CEOs Interview with HR or Higher Management for Higher Positions
Management Trainees take Online Intelligent Test
Shorter Selection Process for 1st level Employees.
Accenture recruits on ;
Function Profile or Job Description Provided
Standards of Leadership (SOL)

TRAINING & DEVELOPMENT;


Training Programs conducted frequently
On-Job Professional Development
Online Training Courses
General Skills; (Learning Management System)
Negotiation, Project Management, Excel, Time Management, Personal
Development , Language Courses & Others

Functional Trainings;
Business Law, European Law, Professional Skills for Certain Levels & Functions.

Training Programmes Approved by UNICA, at UNILEVER Turkey HQ

TRAINING & DEVELOPMENT (Contd);

Personnel Development Plan (PDP) for Evaluation of Training


Requirements;

Business & Personnel Targets


Mid-year and Annual Reviews
Assessment of Person
Level 2 and Higher Employees have Individual Development Plan
Lower level have generally designed Training Programs
Yearly review for all Employees
PDPs discussed annually for Training & Development Assessments

PERFORMANCE APPRAISAL;
FOR 2nd LEVEL & ABOVE:
3+1 Analysis Tool
3 Business Targets;
Business Needs
Set by Western European Board
Roll Down to HQs & Subsidries

1 Development Target;
Individual & Team Development

Mid-Year & Annual Meeting;

Clarify Goals for Personnel


Assess Personnels Performance
Each Personnel graded from 1 to 5
Personnel paid based on their Grades

REWARDS & COMPENSATION SYSTEM;


Job Level & Type of Job Remuneration System
Salaries Based on Market Survey, UNILEVER Global Policies & Govt.
Statutory Figures.
Salary Scale of Peers and Competitors Analyzed
Salary Growth Based on Performance
Monetary Rewards for Level 2 & Above Employees Based on 3+1
Employees Receive Fixed Income & Variable Income
Variable Income: 0-40% of the fixed Income
No formal non-monetary Reward Program
Recognition from Higher Management based on Accomplishments

e-HRM;
No Computer based e-HRM in UNILEVER Iran

In contrast, in the U.S., e-recruitment is the most widely used


recruiting approach.

Monster.com pioneered the concept of e-recruitment in 1994. About


804 of the Fortune 1,000 companies in the U.S. use Monster.com as
one of their recruitment portals.
http://www.monster.com/geo/siteselection

DIFICULTIES FACED FOR IMPLEMENTATION OF HRM


STANDARDS;
Unilever has standard HRM model for its offshore subsidiaries.
Windows & Outlook cannot be used as they belong to an American
Company.
Online PDP cannot be used

ANY QUESTIONS

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