Introduction
In essence, the Middle East refers to an expansive region. The region covers a large area from North Africa to Iran. Many countries are located within this region, with Islam being the major religion practised in all countries. Approximately 95 per cent of the region’s population practice Islam (Budhwar and Mellahi (a), p. 3). Oil is the major resource in these countries. While oil is a very precious resource found in all countries within the region, there are high levels of underdevelopment.
The region has affluent states such as Qatar and the United Arab Emirates and poor states like Yemen. Though endowed with the same resources – oil and natural gas– each of these countries has varied political and economic constraints. These challenges impact heavily on the countries variedly. Most of these countries are also trying to shift from focusing on one resource, which is oil. Mostly, the rich states are introducing other economic activities.
All these activities affect the approaches of HRM which are used in these countries. Most countries in the region – oil-dependent and non-oil dependent– are working on modalities of enhancing human resource development just as it is with the western countries, which have developed human resources (Budhwar and Mellahi (b), p. 296). This paper looks into the HRM in the Middle East. It uses a comparative analysis of two countries – the United Arab Emirates and Iran.
HRM in the United Arab Emirates and Iran
The United Arab Emirates is one of the wealthiest countries in the Middle East region. It has a stable government. It is one of the countries that have diversified its economy greatly with the focus being paid to trading activities. However, this does not mean that the country is not dependent on oil and natural gas. The UAE has large reserves of natural gas and oil. With the presence of the open port, the country has been able to adjust its policies as one way of attaining high growth levels in the economy.
The country has come up with policies aimed as shifting the country from dependency on oil and natural gas for economic growth to trade and agriculture. Trade and agriculture are used in supplementing the revenues that come from the oil and gas industry. With increased trading activities in the country, the revenues from trade and agriculture have been increasing at an accelerated rate. The volume of trade is in the country has been quite outstanding.
The country has attracted many foreigners who come in both traders and employees. This has necessitated a proper human resource policy which best fits the diversified economy of the country and which can best manage the diversified workforce in the country (Alserhan and Forstenlechner, p. 44).
Iran is a country found in the Middle East region. It has large reserves of oil and other minerals like uranium. It has had a long history of civilisation. The country has had a long history which has necessitated many changes to its political, social and economic orientation. Islam is the major practised religion in the country. It has a big influence on the political and economic institutions in the country. Iran is still, to a large extent, dependent on natural resources of oil and natural gas. The country produces 5% of the general global oil output every year. The country has few foreigners as compared to the United Arab Emirates.
Over recent years, the Iranian government has been reinterpreting Islam and its influence to develop better structures to adapt to the new demands of the economy. These changes have been aimed at changing the country’s image in relation to the influence of Islam in the economy and governance. These changes include the adjustment in the economy and politics and the general human resource practices to incorporate the country in the larger global economy. Human resource management activities have, for a long time, been localised with a lot of standardisations (Budhwar and Mellahi, p. 20).
Similarities in challenges facing the HRM approach in UAE and Iran
Both the UAE and Iran are Islamic states endowed with similar oil and gas resources and practising a common religion, Islam. Though the UAE has been witnessing a high influx of expatriates, it initially had a localisation policy. This policy was put in place to guide the economy and human resource management in the country. Islam was the major influencer of the localisation policy. Iran is also having a localisation policy, which has been guiding its economy. Both countries have been struggling to move away from this policy to fit into the global economy fully. This is due to the increased globalised economies (Ghotbi, para. 15-17).
The other major challenge facing Human resource management in the two countries is the stereotyping of the workforce. Research has revealed that cases of stereotypes are common in multinational companies. Most MNCs operating in the UAE have a negative attitude towards the local population. This influences the approaches taken by these firms in selecting and managing their workforce. In Iran, there are a few international business firms. However, for a few firms operating in the country, cases of segregation are very common. Cultural differences emanating from religious and social practices have been figured out as major fuelling agents of the stereotypes (Al-Waqfi and Forstenlechner, p. 367).
Iran has been working on standardising human resource management to obey the international standards on HRM. This is a requirement for the country to be fully incorporated into the international economy. In doing this, many structures have to be adjusted and readjusted. This is a complex process which hinders the efficiency of human resource management within the state. The rate of HRM standardisation in the UAE is a bit advanced because of the open business environment resulting from the free ports. As is with Iran, the UAE is still facing impediments to the full standardisation of HRM to international HRM standards (Ghotbi, para. 18-20).
Differences in HRM challenges within the UAE and Iran
The UAE is one of the most diverse countries in the world as it is with its population. Business in the country has led to an influx of populations from different regions of the world. The country draws populations from all regions of the world. This high degree of heterogeneity is proving to be a constraint in implementing HR within the country. Heterogeneity in population has its lapses in management because each population group has its unique culture which impedes the application of standardised human resource policies.
Whereas the UAE is faced with the challenge of heterogeneity, Iran has a homogenous workforce and is being faced with the challenge of absorbing the external workforce. This has come with the realisation that it will be beneficial for the country to join the global economy and shun segregation. As the country is allowing foreign firms into their economy, many HRM setbacks are being witnessed (Brewster, p. 515).
Iran has a centralised economy that resulted from the repatriation policy during the Islamic revolution. Therefore, most of the Iranian economy has been dominated by the public sector – approximately 80 per cent. The public sector is struggling to gain grounds in the economy. Therefore, most employees are found in the public sector. Most of the employees are middle level and are devoid of leadership and motivation due to the public sector’s problems. Most initiatives in changing or restructuring human resource are derived from the public sector. Since the private sector is constricted, laxity in enforcing new HRM policies is prevalent.
The United Arab Emirates has witnessed a sprout in the number of private organisations due to globalisation and the country’s opening of the business field. Many global business firms are operating in the country. While this is a positive sign for the country’s workforce, there are several negative setbacks on human resource development that comes with this. The high number of business firms operating in the country leads to fragmentation of HRM.
Many organisations hinder the implementation of human resource management. They are guided by different internal policies that often conflict with the policies that guide the country’s new HRM policies. However, the open economy seems to favour the UAE’s economy in as far as the adoption of new and improved HRM is concerned. Challenges are there, and nobody can refute this aspect. Nonetheless, the benefits coming to prove to be worth in human resource development and improvement (Jones, pp. 53-59).
The UAE has been working on nationalising its human resource management due to the impacts of the new open economy and foreign business firms’ activities. Foreign firms have been stereotyping the Emiratis, which is the original population of the country. Emiratization aims to nationalise human resource policies so that they can favour the country’s original populates. Iran has been working on improving the internal environment to attract more people and organisations to invest in the country.
The aim of this is to effect changes that will favour globalisation. In other words, Iran is striving to fit into and meet international human resource management standards. On the other hand, the UAE, which has already fit into the globalised economy due to a good political system, is striving to avert the effects of a globalised economy. Thus, it is readjusting its human resource management in what has been referred to as Emiratization (Rees, Mamman and Braik, p. 33).
Lessons derived from the experience of each country
Most countries are working to develop human resource activities and upgrade them to international standards. This is because of globalisation, which is pulling different economies together. Globalisation has resulted in a sprout of different firms in different parts of the world to enhance business. When the two countries are compared, it becomes evident that both countries are working towards improving HRM. Also, both countries are in one way or another constrained.
Of the two countries, the United Arab Emirates has gained much progress in adopting better HRM practices. Iran has to borrow from the UAE on the part of economic liberalisation. The UAE has upgraded its policies and shifted from dependence on a single sector in the economy. With the diversification of the economy, more firms have come in, making the country adopt better human resource management practices by harmonising the policies.
On the other side, Iran has been having a rigid policy and a closed economy with most of its institutions being manned by the public sector. If Iran chooses to go the UAE way, the country’s HRM practices will be greatly enhanced because there will be competition from many firms, the firms leading to improved HRM approaches. Private firms aim to make profits thence they often come up with favourable HRM policies, which guides them in meeting the objectives (Branine, p. 453).
Iran is among the nations that have been witnessing strict regulation from the government. With the increased need for economies to allow for privatisation, the country’s policies are not favourable to the development of better HRM policies.
The regulation by the government of Iran in business is the major impediment to private firms in the country. The human resource management officers are limited in making individual policies that are liable in reaching enhanced HRM. There are other factors that hinder managers from developing better human resource management. Most people in the country are Muslims. Cultural factors associated with Islam combine with Islamism policies by the government to stiffen the environment of adopting and improving HRM (Punnett, p. 63).
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