Like many developing countries, the Human Resource Management (HRM) function is not yet fully established in Nepalese organisations. An attempt is made in this chapter to highlight the main factors which determine HRM policies and practices in Nepal. Business environment, national culture and national institutions all play a significant role in this regard. Three case studies provide empirical support to the discussion.
Nepal, a Hindu state is located in the Himalayas between India and Tibet (China). Hindus comprise 90 per cent of its population, the remainder mainly consisting of Buddhists and Moslems. The population of 22 million is further divided into eighteen ethnic groups and traditionally in four main castes. Some 90 per cent of the people live in rural areas, of which many are only accessible by foot. When measured by GNP per person, Nepal is the ninth poorest country in the world. It has the highest fertility (5.3 per cent) and mortality rate (91 per thousand) in South Asia. As 42 per cent of the population lives below the poverty line and 73 per cent are illiterate, poverty and population growth of 2.6 per cent per annum are serious obstacles for the development of the country (World Bank, 1998).
Since its unification in the eighteenth century, Nepal has been an independent kingdom. Unlike India and other countries in South Asia, it was never colonised. During the autocratic rule by the Rana family, from 1816 to 1951, foreigners were generally not allowed to enter the country, so Nepal was almost completely isolated from the outside world. In 1951 Nepal became a constitutional monarchy, however, the real power remained with the King. Although the Constitution theoretically guaranteed freedom of speech, the police apparatus was not publicly accountable and political activists were arrested and tortured. In 1990, a prodemocracy movement, which was motivated by economic problems and discontent with corruption, forced the King to end his rule, and a multi-party democracy was established. Since then the King has retained certain powers, but has dissociated himself from direct day-to-day government activities (Europe Publications, 1999).