Saudi Arabia is the largest country in the Middle East, it is the leading exporter of petroleum in the world which accounts for over 90% of its exports. The economy of Saudi Arabia is mainly based on petroleum products which comprise approximately 45% of the country's gross domestic product which is higher than privates companies, in addition Saudi Arabia is one of the most important members of the Organization of the Petroleum Exporting Countries or OPEC. And because Saudi Arabia is one of the richest nations in the Middle East, a number of individuals from Africa, neighboring countries in the Middle East, America, Europe and South and East Asia seek employment, However, exact figures are not yet determined (Wikipedia, 2006). Due to the massive influx of workers from all over the world seeking employment in the rich oil nation, companies especially the oil companies employed the Human Resource Management. Human Resource Management, according to the Wikipedia it  is a business practice at the same time an academic theory which addresses the methods of managing the workforce in both theoretical and practical approaches.             This paper examines human resource management and discusses the different forms of human resource management. Moreover, this paper also gives discussion on the human resource management practices in the rich oil country which is the Kingdom of Saudi Arabia.               Human Resource Management according to Ledge (2005) is the management of a workforce; it can be both an academic theory and business practice. In addition Price (2004) defined human resource management as a belief of people management on the idea that human resources are significant factors in maintaining the success of a business. He discussed that a company obtains a competitive advantage by practicing an efficient usage of its personnel, using their expertise and creativity to reach the organization's purposes. Moreover, Human Resource Management (HRM) is seeking to employ capable, flexible and committed personnel. In contradiction, Bach (2005) stated that HRM is unitarist, the interests of employees and other stakeholders are marginalized, there is a great importance on the individual firm that is channeled on each employee, there is a logical playing down of external and collective issues. Even though authors differ in their views regarding Human Resource Management, it still remains an important factor in the success and failure of an organization.    According to Mellahi and Wood (2001) there are five factors that shaped and keeps on molding the Human Resource Management policies and practices of Saudi Arabia and these are the structure of the economy, the political structure, the labour market, the national HRD strategy and the national culture. Economy of the Kingdom of Saudi Arabia             Mellahi et al discussed that the primary focus of the economy of Saudi Arabia is in the production and exportation of petroleum products, the earnings of oil products of the country makes up about 90%, which also gives about 75% of the budget of the country. Kemp (1999) characterized the economy of Saudi as "bouyed by oil, bound by its uncertainty." The description of Kemp materialized when during the mid-1980s there is a considerable drop of oil prices in the world, and Saudi as the leading exporter and producer suffered the most, the spiraling down of the country's economy continued when the Gulf War happened, which greatly affected the employment rate of the Kingdom, and during the 1990s, the Saudi economy was able to get back on track in the early 1990s with a rate of 2 percent.             Moreover, Mehalli et al, stated that in Saudi Arabia the unemployment rate is not measured officially by the country, on the other hand private sectors such as the Saudi American Bank (2000) have an estimation of 15-20 percent among males in Saudi Arabia between the age groups of 20-29 years old. In the data males were only measured and if females were included the unemployment rate would be higher than indicated. According to Gavin (2000) in Saudi Arabia about 100,000 males enter the workforce every year; however the non-oil sector does not create enough jobs to absorb all the workers. The unemployment rate in the Kingdom are stressing the country more and more added to the  fact that almost half of the population is under the age of 15 and in the near future the creation of jobs for these individuals will be more difficult.             Even though the Government of Saudi Arabia supports the free market economy and the private sector are slowly participating in the development of the country's economy, majority of the economy is under the control of the government as well as policies and activities in social development. Large corporations that are still controlled and managed by the state still dominate the economy of the country such as Saudi ARAMCO and the Saudi Basic Industries. In order for the economy of Saudi Arabia to become less dependent in oil and petroleum products, the government of Saudi is making huge moves and measures to liberalize the economy and let the private sectors             have the responsibility of having and running their own business in order for the rapid integration of the country in the world economy. To materialize it the government already created measures and laws such as privatization laws in order to increase the competition in the market. In the year 1999, because of the country's reforms it was able to attain the membership in the World Trade Organization and in the same year the government set-up a Supreme Economic Council to Speed up the Reforms. The reforms of the government are to increase the effectiveness of the economy through competition in the domestic and the international market. Even though the government of Saudi, as well as, foreign investors is excited and enthusiastic about the measures and reforms the government is currently undertaking, the society in general are still anxious about the outcomes of the reforms and the opening of the free market economy of the country and how will the firms fair in the competitive market. Political Environment Mehalli et al described the government of Saudi Arabia as a traditional Islamic monarchy which based on a tribal system having a large royal family. Due to the traditional system of the government the significant and important figure in the government is the King which is also the head of the House of Saud, the Chief of State and Head of the Government. In the political system of Saudi Arabia the Koran is regarded as the constitution and the principles of the Shari'a law. The King holds the highest position in the country and regarded as the most powerful individual of the society therefore, challenging the King regarding his political power and will is not tolerated and allowed. In addition, because of the structure of the political system of Saudi Arabia, the employees both local and foreign are prohibited to join and create trade unions and various forms of association related to it. Having strikes is also prohibited and workers who will employ this measure could be imprisoned and for the expatriates could be deported. Nevertheless, in Saudi disputes over the management and the workers must be resolved by the Management through peaceful negotiations. The important task of the managers in Saudi Arabia is to sustain a work-environment that is free from conflicts and disputes. Labour Market Context             The labour market of Saudi Arabia is consists of both locals and foreigners with foreign workers amounting to 6 million in the mid-1990s which is about 60 per cent of the workforce and about 93 percent works in the private sector. According to Kemp (1999) approximately the remittances of the foreign workers are about $15,000 to $16,000 million annually, and because of that there is a heated debate of employing more Saudi locals in the private sectors.             Between the years 1995- 2000 about 95 per cent of new jobs are in the private sectors and most of this jobs are manual labours which needs vocational skills, and because private sectors employ mostly expatriates the government passed a legislation forcing the private companies to hire Saudi nationals by 5 percent annually so that the companies would avoid sanctions, however despite the legislation and the media hype regarding this there is still no significant change of employment of the locals in the private sectors. Many private sectors resist the Saudisation of the private firms because of the following factors: Labour Cost- Because of the cheap labor of foreigners and expatriates over the past years have led to the creation of a labor-intensive private sector. Even though the government has introduced compulsory health care, increase in the cost of work visas, which raises the cost of foreign workers, still the Saudi nationals are more expensive compare to foreign workers. According to Cooper (1996) the payment of a foreign worker is lesser compare to a local worker, and Saudi nationals demand salaries that are six times higher than a skilled expatriate. In addition, foreign workers especially the ones from the developing countries accept the low salaries because it is higher compare to their salaries in their home country and most of the workers have no families to support and are single. On the other hand, Saudi nationals could not accept the wages offered by the private sectors because of the high cost of living in Saudi Arabia. In study of Mellahi and Al-Hinai (2000) Saudi Arabians and the Oman managers ranked the higher salaries demanded by the locals as the considerable difference between a local and a foreign worker and the locals believe that if they lower their demand for salaries they would be easily employed in the private firms. According to the Council of Saudi Industrial Chamber of Commerce (1993) determined that 83 percent of the private firms in the Kingdom of Saudi Arabia hire foreign workers because local workers do not apply for the job and 82 percent of the firms stated that they hire foreign workers because of the low cost of salaries.             Social and Cultural Perceptions toward private firms- in Saudi Arabia the work and the sector of employment determines the social status of a local and his family. The workers in Saudi Arabia place a great importance in the type of work and its outcomes on their social status. In the case of private sectors, most of the jobs in these firms are manual jobs in which the locals of Saudi Arabia viewed as low, even before foreign workers started to flock in Saudi for these jobs; the locals think that individuals working at these jobs have low social status.             Discipline and Control- According to researches, managing foreign workers in Saudi Arabia is easier than local workers because they are easier to control and more disciplined than their local counterparts. This is due to the fact that foreign workers cannot be a permanent resident in Saudi Arabia and the employers have fewer obligations towards them. Moreover, the foreign workers have work permits and contracts with a specific employer thus restricting them to move from one employer to another. Therefore, job-hopping among expatriates does not happen in Saudi Arabia.             Inability to integrate in a multi-cultural work environment- As the influx of foreign workers in the Kingdom of Saudi Arabia is increasing over the past years and decades, private sectors are having a more diverse work force and the firms hire employees from different countries and societies with different backgrounds and attitudes. A diverse workforce must work hand in hand regardless of the cultural beliefs and backgrounds in order to achieve the goal of the organization. Studies have revealed that the local workers, most of the times are not able to integrate in a work force that is diverse and multi-cultural. In the study of Attiyah (1994), 60 percent of the Kuwaiti nationals that are surveyed describe the working relationship with a foreign worker as superficial and limited only to the bounds of work and business, and 40 percent of the locals have affirmed that the treatment of foreign workers is lower compare to the local ones. Therefore, working in a diverse and multi-cultural work area is harder especially for the locals and the foreign workers. Saudi Arabia's HRD Strategy: education and vocational training             Even though the Kingdom of Saudi Arabia is rich in capital and petroleum resources, the country has been inefficient in addressing the inadequacy of skilled and qualified local human resources. In order to address this issue the government have committed heavily in the general and vocational education.             The education system of Saudi Arabia prior to the five year development plan is limited only to Islamic religion, laws, values and the basic skills such as reading and writing, and because of the huge excess of funds from the revenues in oil the government have invested in the general and vocational education.             The first Five Year Development Plan has introduced the current vocational education in Saudi Arabia. However, even if the number of students has enrolled in vocational and training schools have risen over the past years, the system is comparatively small. In addition, only the students who could not remain in the primary and intermediate education go to vocational schools. In the study of Mellahi, it revealed that over half of the students that graduated from vocational schools in Saudi Arabia seeks for office jobs or start their own businesses than work as a skilled worker. The study shows that the salary system and the attitudes of the locals towards vocational education and jobs are the reasons why the vocational education is not expanding and is still ineffective. National Culture and HRM             According to Yavas and Yasin (1999) the culture in Saudi Arabia has a deep influence in the Human Resource Management practices of companies may it be state owned or private owned, the cultural and social values of management and work in Saudi Arabia is different from the HRM practices around the world. The main culture and social features of Saudi Arabia that have a huge impact in the HRM practices can be regarded in two main factors which are the influence of religion and influence of tribal and family traditions. The Influence of Religion             The Islamic laws and values have a huge impact in the HRM practices in Saudi Arabia. The principles written in the Quran and the words of the prophets are used by the managers as a guide in their business transactions. The impact of the Islam religion can be seen in three areas: employment of women, management style and HRM practices.             Employment of Women- Even though the education and training of women have raised the presence of women in schools and universities, the participation of females in the economic sector is still minimal. In the case of data regarding the employment and unemployment rate, females are not included in the statistics. The labour force of women in Saudi Arabia is considered one of the lowest in the world. According to Doumato (1999) the main reason why the participation of women in the labour force is very low is because the majority of the locals believe that marriage and having a child is the main function of women in the society. In addition, in the workplaces in Saudi Arabia there is an extreme segregation which restricts the chances of women to obtain a work. The options of women even today are limited in home economics, education and nursing.             Management Style- The attitudes and style of management in Saudi Arabian firms is still influenced heavily by the Islamic religion. The teaching so Islam puts a great emphasis in obedience to the leaders. The power of the manager is viewed as appropriate and the employees under the manager must show respect and obedience towards the leaders.             HRM Practices- The Islamic religion and practices also has a heavy impact on the interaction between the managers and the employees. In the case of prayer, at least twice a day the managers and the subordinates pray side by side regardless of the status and position in the organization. Thus because of this interactions it will decrease the physical and psychological distance of employees from their leaders. The Influence of tribal and family traditions             The culture of Arab is traditional and is dominated by males, it also encourages relying on relatives and friends. Another tradition of the Arab culture is the Asabiyah or the intense loyalty of an individual to his or her own tribe which stimulates authoritarianism to other tribes and foreign workers. According to Atiyyah (1999) the firms in Saudi Arabia are run in the traditional format such as clans which depend heavily on the leadership skills of the managers to do their job. In addition, according to Ali (1993) the tribal values of the Arab strengthen the idea of absolute right and wrong, and approaches that is not acceptable in the norm of the Arabian society is regarded as a threat in the authority of the managers and the organization. Due to the high power distance and uncertainty avoidance of the tribal culture of the Islams it resulted in the lower tolerance for emerging ideas, low initiative for changes within the organization, fatalism, acceptance of orthodox ideas without question and obedience to the authority. The Arabs are collectivist within the in-group such as tribes and families and individualist with the out group such as foreign workers and other tribes. In the managers, if the subordinates are in the out-group they stressed a great deal in performance and accomplishments, and the relationship between the subordinates that are in the out-group is calculative. On the other hand, the relationship of the managers within the in-group is moral and directive as well as paternalistic.   HRM policies and Strategies in Saudi Arabia The Human Resource Management practices in Saudi Arabia depends upon the type of ownership whether the corporation is state-owned or private-owned, the type of employees whether is local or foreign. In the state-owned corporations such as Saudi ARAMCO, the HRM model is mainly concerned in the management of local employees and managers which is described as having a lifetime employment, seniority wages and social cohesiveness. In the context of culture the ties of the tribes, relatives and friends are regarded as more important than the vitality of the company, the managers are hiring their tribe members and friends. Moreover, the competition in the public sector which is now restricted stimulates nepotism in giving jobs via connections with the tribes or family members.             On the other hand in the private sectors, the context of Human Resource Management is constantly evolving. The Saudi government is finding innovative ways to hire and manage locals in the private firms in the most efficient manner. The private sectors in Saudi Arabia have two sets of HRM practices, one for the Saudi locals and one for the foreign workers. The human resource management practices of foreign workers are based on the accounting approach. The control in the case of foreign workers is concerned in the performance, systems, performance management and tight control over the activities of the individuals. The main purpose of control is to decrease the cost in labour at the same time enhancing the efficiency of the workers. The HRM department becomes no more than an administrative function when dealing with foreign workers. The salaries are set individually and they are treated as individual rather than an important entity in the organization.             The model of HRM with the foreign workers is also embedded in the HRM practices of the locals in the private sector. However the managers have a hard time adjusting the practices in order for the locals to fit in the practice. The local workers wanted to be treated as an important factor in the development of the organization. The HRM practice is a neglected practice in the private sector. The hiring of foreign workers decreased the HRM practice in administrative task such as hiring and firing employees. The Human Resource managers must attract and motivate highly skilled local workers. Elitism in the Human Resource Management in Saudi Arabia             The social environment in Saudi Arabia is generally traditional, as mentioned earlier; the belief that certain tribe or race is superior to the other is very evident in the work environment. According to Baxter (1998) most of Saudi workers does not desire to work opposite a Korean or a Filipino, most workers in Saudi Arabia wants to be the person who handles, controls and directs other people, especially the foreign workers.   Experiential Learning             According to Kolb (1984) Experiential Learning happens when people employ in an activity, think about the activity in the critical manner, obtain beneficial awareness from the examination, and integrate the outcome via a transformation in comprehension and demeanour.  One of the most popular models of Experiential Learning is the 4MAT model by Bernice McCarthy, according to SWC (2007) the model is developed along two continua, which are the perceiving and processing.             Human Perception- under human perception are the experience, which is the notion through personal contact with the situation, the other one is conceptualisation, which is the transformation of the experience into ideas and languages.             Human Processing- under human processing are reflection, in which the knowledge and ideas are translated through intellectualizing, structuring and ordering, the other one is action in which the ideas are tested in the outside world.             In the experiential learning of the human resource management in Saudi Arabia, the experience of various researchers regarding the HRM in that particular country is the first step in experiential learning, in the book of Deal and Prince (2003) the people in Saudi Arabia are reflective, which means that they choose to understand the general assumptions behind the problem or to create an instinctive feel prior to developing a solution. Reflective people, like the Saudi locals, have high regard on intellectual brilliance and deductive reasoning; however they don't investigate in order to attain a solution. Another trait of the people in Saudi Arabia, according to Deal and Prince is that they are plentiful, which means that they view time as limitless, timelines are considered expressions of goal; moreover these people favour a life that revolves at the present time and permits multiple and continuous participation with the people and opportunities surrounding them, these people do not consider the value of attaining deadlines and doing tasks on time.             There are a various types of Human Resource Management Models that different companies utilised in order to enhance the performance of the workers. In the case of Saudi Arabia wherein the majority of the corporations are owned by the state or the government, the best practice of human resource management is the Harvard Model. The Harvard Model outlines four policies in the Human Resources and these are: ·        The Human resource flows such as the recruitment, selection, placement and promotion. ·        Rewards system such as the payment system and incentives. ·        Influence of the employees which includes the level of authority and responsibility, and ·        Work Systems. The Harvard Model of Human Resource Management is the best practice model can be applied in Saudi Arabia, because the model views employees as resources. And when a company thinks its employees as a useful and essential support in increasing the production and profit of the company, the organization will scrutinize the recruits for placements and will give good compensation packages for good performing employees. The model can be used to almost all firms whether private or public owned in Saudi Arabia because the basis of the model is that employees are as important as shareholders and customers and that the companies must address their needs. And as stated earlier one of the challenges of a company in Saudi Arabia is loyalty of employees, by letting the employees know they are equally important as customers by in the for of good compensation packages the work force will retain and will not look for another company. In applying the Harvard model the important stakeholders must be taken account first because the stakeholders have the power on the programs of the Human Resource Management. Fleming (n.d.) identified the key stakeholders that have influence in the HRM policy. Government. According to Fleming, government has the authority on the public sectors, just like in Saudi Arabia where most of the companies are state-owned, the government has the power to change and reform the policies, and utilising the Harvard Model as a Human Resource Management practice. Management. The second key stakeholder Fleming identified is the management according to Storey (1992), the ability of Harvard model to draw the managers to carry out consistency, direction and structure to the policies on employees that are already old fashioned and cannot be utilized to address the requirements. The top managements of both state-owned and private owned companies in Saudi Arabia have the capacity to improve the outdated policies of the Human Resources. Unions. The union is the third key stakeholder Fleming determined. According to Guest (1995) Human Resource Management is defined by a number of people including Bach as unitarist in form, and it only focuses more on the outlook of the management which serves as a threat to labor unions. However in the context of the Harvard model which the groups of employees such as the labor unions are an important component.  There has been a relationship among key stakeholders; the relationship gives labor unions an opportunity to participate in the reform policies within the organization. In this way, the employees can be assured regarding their employment stability as well as the company will be assured on the loyalty of the employees.          According to Fleming, an important matter in the HRM models including Harvard model is integration. Guest, (as cited by Fleming) identified three levels of integration. ·        Integration with business strategy ·        Integration with HRM policies. ·        Integration with the line management function. Integration with Strategy. Guest (1987) defined the Strategic integration in the Harvard model as the capacity of a company to incorporate issues on HRM into its strategic plans, assure that the diverse phases of HRM adhere and provide the managers to integrate a viewpoint of the HRM in to decision-making. In state-owned companies in Saudi Arabia associating the HRM with the strategy in business will pose a difficulty because of different purposes, stakeholders and procedures. An example, if a state-owned company incites a strategic goal of delivering more efficient service to the public, the Human Resource management will develop and train the employees, however due to the mismatch of workers there the goal of giving better service will be impaired. On the other hand, as more private firms emerge in Saudi Arabia, it provided new ideas regarding HRM in which it has open up opportunities for top the management of public sectors to learn and eventually will incorporate the policies in their own firms. Integration with HRM policies. Fleming discusses that in developing an integrated HRM policy, it is important to evaluate the responsibilities of the Human resources at a central level. He wrote that by assessing first at a central level, policies can be identified whether it retain on the central level or not. According to Taylor (n.d.) in the Harvard model policies are influenced by different stakeholders in which were stated earlier. By having representatives on the different sectors of the organization an integrated HRM policy will be developed balancing the various interests of the stakeholders. Integration with the line management function. In order to have a successful transfer of HRM from the central level to line managers, the Saudi Arabian managers must be trained to take the responsibility on the management issues on his or her department.             The Harvard model of Human Resource Management can be applied in almost all the private organizations in Saudi Arabia. However, application of the Harvard Model in the state-owned organizations will be quite a challenge since Saudi Arabia's government is still traditional. Although Harvard Model is the most influential and popular model among the Human Resource Management, the state-owned organizations will not find it difficult to apply it in their own firms. As the trend of globalization occurs nowadays, the private and public organizations will adhere to Human Resource Managements in order to enhance the production and capability of its employees, in which will lead to better revenues and sales for the company as well as good compensation packages for its employees. The Harvard Model of HRM will still face a number of challenges when implementing it in Saudi Arabia. Different measures must be made to ensure that the employees are well taken care of by the organization, to avoid losing the workers to other firms offering better salary and compensation. The Harvard model is the best practice and high performance HRM that can be applied in a nation that has a strong economy such as Saudi Arabia, according to Taylor, it can represent the multiple constituencies' strand of industrial sociology, the multiple needs of psychological contract and the relational contracting element of the perspective of economics.     Conclusion             The human resource management practice in Saudi Arabia is different from other parts of the world because it is deeply rooted in the culture of Islam. As mentioned earlier, the HRM practice becomes an administrative function rather than a business practice in which it nurtures the employees. The HRM in Saudi Arabia faces a number of challenges such as the influx of cheap foreign labor in the market. But with the gradual diversification of a number of firms in Saudi Arabia, human resource development initiatives must be made such as integrating the locals into what they see themselves in the future at the same time removing the stereotypes regarding the division of labour based on ethnicities. However, facing and addressing these challenges will be difficult without the reconstitutions of the institutions in the political world.