The Introduction of Management Techniques and National Culture - Research Paper Example

 Companies and organizations are made for people and by the people, and obviously their effectiveness depends on the behavior and performance of the people running these companies. It is therefore quite logical to say that Human Resource Management is a very crucial and an integral part of any organization. The very fact that now people are being considered as resource instead of liability marks the importance of human beings constituting this resource. Core areas of HRM include the individual, the organization and the social context of work and how all of these factors shape relations at work and result in organizational performance. In fact to get out the optimum from a satisfied and participative individual is considered to be the ultimate objective of HRM policies. The Human Resource environment as such is affected mainly by the following five factors; Economic: The economic environment of host country, inflation rates, growth factors and the levels of unemployment affect the HR policies. Demographic: The demographic composition of the workforce like the communities involved, the caste consideration (this becomes a reasonable factor in case of some of the developing economies), the male-female composition, the population density of the country/ region also helps in devising effective HR strategies. Socio-cultural: Religion and culture never tell a person to ‘not to work’, yet people of some socio-cultural background are found to be less workaholic than others. The effect of family systems like ‘Joint family system’ or ‘Nuclear family system’ become crucial factors in forming the habits of individuals and thus formulating of HR policies. Technological: Rapid technological advancements have reduced the dependence on muscle power to a certain extent. Modernization and automation lead to increased accuracy and less redundancy in the output while increasing the comfort level of the workforce. Politico Legal: Prevailing political situation in the country, the party in power, the ideology of government functionaries affect the business environment. Whether it’s a democracy, autocracy, monarchy, one party system, or a multi-party system gives enough room for strategy planners to devise HR policies accordingly. The law of the land has always to be kept in mind while doing the recruitments or managing the human resources. For example in some countries, formation of ‘workers union’ is not allowed while in some others it’s mandatory. HRM itself is the new avatar of ‘Personnel Management’. Personnel management was largely concerned with the technical aspects of hiring, evaluating, training, and compensating employees. HRM on the other hand leaves scope for career building of the employee, development of a professional relationship and the satisfaction aspect. It is no more a mere "staff" function in the organizations. Multi-National Companies in particular take good care of their employees or that is the kind of impression they wish to circulate around. The main reason for attempts to avoid bad publicity is because as per a recent study seventy percent of world trade—“including one-third of all manufacturing exports, three-quarters of all commodity trade, and four-fifths of technical and management services trade”—was accounted for by the 500 largest MNCs. Changes in almost every aspect of human life are taking place very rapidly in a pervasive and profound manner. This change is engulfing technologies, products, processes, materials and above all, People. Globalization leads the changing scenario, bringing in newer technologies, a new phenomenon of knowledge worker and of course the competitive era. In view of the competition and globalization companies start exploring avenues for growth within and outside the borderline of their country of origination. Therefore, it is amply clear from the above diagram that companies are required to take care of a number of factors while planning to go global. Expanding business operations beyond national boundaries, while continuing the commitment to local markets requires more complex business structures. Large, worldwide businesses tend to evolve from international to multinational to global structures. In this process, from HRM point of view, these companies devise strategies mainly of two types; 1. A Multi Domestic Strategy enables individual subsidiaries of a multinational firm to compete independently in different domestic markets. The multinational headquarters coordinates financial controls and major marketing policies, and may centralize some R&D and component production. Otherwise subsidiary behaves like a strategic business unit that is expected to contribute earnings and growth proportionate to the market opportunity. In this strategy, resources are dispersed throughout the various countries where the firm is doing the business, decision-making authority is pushed down to the local level, and each unit is allowed to have its own HR policies, customized products and market offerings depending upon the specific needs. 2. Global strategy is a strategy that seeks competitive advantage with strategic moves that are highly interdependent across countries. This strategy involves a high degree of concentration of resources and capabilities in the central office and centralization of authority in order to exploit potential scale and learning economies. But it is worthwhile here to mention that even in such cases, the MNCs prefer HR functions to have a regional focus. The difference between failure and success depends on how well organizations select, train, and manage their employees. One of the distinguishing characteristics between international and domestic HRM is the complexity of the work force mix. The type of organization structure will directly impact the complexity of the mix of employees. A wholly owned subsidiary operation may employ only expatriate and host country personnel while a strategic alliance with a local partner may have a far more complex work force. In principle, it can very well be argued that a company should have uniform HR policies throughout the globe. That in effect means matching working hours, similar remunerations, similar working conditions, similar promotional channels, and similar expectations. It all appears quite fine on paper but may bring in a bundle of problems for MNCs. Let us examine the case of IT enabled services. Now a days the trend is towards ‘outsourcing’ such services to destinations like India. Many companies from the developed world prefer passing on such work to Indian IT professionals. No doubt the quality of work done by these professionals is exceptional, but one big reason for outsourcing is ‘cost cutting’ as well. One US dollar may not be a big amount for a US citizen but it can get you a full breakfast in any Indian city. The per capita income levels are far too low in India as compared to US. Similar is the case with expatriate employees of MNCs. Though their salaries are reduced considerably but they once they are transferred out to any developing nation, but they live a better life with much more savings for future. In one such recent example, a German national, transferred for a project to a location in India was initially very reluctant to join here as he found that his salary is being considerably reduced, but after working for about six months he refused to go back and offered to work under same salary. It is therefore quite a profitable proposition for an MNC to outsource the work. UN studies, focusing primarily on developing countries, have also suggested that specific structural features of state bureaucracies enhance economic growth, facilitate government performance and reduce poverty. Work on international HRM breaks down into three major categories: HRM practices and expatriate employees in multinational corporations (MNCs), HRM practices and host-country nationals as employees of MNCs, and Comparative employment systems. It forms part of a broader strategy for an MNC to decide the extent to which the company transfers its national or global HRM system to a particular subsidiary. While deciding on product specification, pricing and market penetration companies look for local support and go ahead only after extensive marketing research. Similar studies are a prerequisite to study the extent to which host-country culture and employment laws differ from those of the MNC’s home country. The greater the differences, the less likely the transfer of home-country HR practices. A number of factors like risk taking versus risk avoidance, cooperation versus independent action, rule adherence versus innovation are taken into account for the organizational strategic needs and thus an appropriate set of HRM practices is devised. National culture may be thought of as the values, beliefs, perceptual orientations, and norms typical of the members of a particular society. A useful definition of culture is given by Lytle, Brett, Barsness, Tinsley & Janssens (1995): “a complex web of norms, values, assumptions, attitudes and beliefs characteristic to a particular group, and that are reinforced through socialization, training, rewards and sanctions”. Culture as such is viewed as a set of independent variables located outside a person, but having a deep impact on the personality. There are various dimensions of culture that have been identified and can be measured (via survey questionnaires) cross-nationally. Four such dimensions, all of which are related to work behaviors are: a. Individualism/collectivism: The extent to which personal versus group objectives govern a person’s life. This includes the concept of larger families as well as the concept of Union activities. Most industrialized Western countries have individualist cultures, while much of the rest of the world is collectivist, including virtually all developing countries. b. Power distance: The extent to which a low-status person accepts and legitimizes the power and influence of high-status persons. In caste and hierarchy based societies this gap is too wide. In fact in certain societies the power distance among people on account of caste system, wealth, authority, age and sex have been traditionally legitimized through social norms and sanctions. Power distance and individualism/collectivism are correlated, so that individualist cultures are generally low on power distance (less hierarchical) and collectivist cultures are typically high on power distance (more hierarchical). Again, industrialized Western countries are generally lower on power distance and most other countries are higher. c. Masculinity/femininity: The extent to which aggressiveness and material well-being are valued in a society versus good interpersonal relationships and general quality of life. "Masculine" cultures may also tend to be more patriarchal, while "feminine" cultures tend to have greater inequality between the sexes. d. Uncertainty avoidance: Cultures where people are troubled by change and risk. Change is always resisted, but the ferocity and method of resistance varies depending once again depending upon the individualism/ collectivism prevalent. All these factors do not work in isolation and a lot depends upon the basic corporate culture of the MNC. For example an MNC paying salaries higher than the prevalent host country standards is more likely to remain immune to collectivism/ unionism. Of course cultural variables are not the only influence on HRM practices, managing human resources in organization requires understanding of influence the internal and external environments of organizations. Taking employees’ different cultural backgrounds into consideration surely results in higher satisfaction for employees and a more effective management of organizations. People from different cultural backgrounds act differently under similar situations in life. This assumption is based on cross-cultural psychological studies which have argued that individuals' values, norms and general world views are shaped by the behaviors that are rewarded or penalized from early childhood. In some cultures children are free from any adult responsibilities. They are viewed as being part of heaven and God as historically was the case in Japan. In other cultures, children are seen as economic resource for the parents and the family (e.g. in many developing countries). In Western societies, children are rather regarded as separate or independent, they are rather conceived of as partners of their parents, or as little adults being responsible for what they are doing and having to decide themselves; they are conceived of as having certain rights for which they get institutionalized support. Early in life they acquire the need to be strong-willed and self-determined, as is the case in many "post-modern" Western cultures. Changing social roles throughout the course of one's life also affects the individuals’ capacity to grasp the things. People may have different and effective solution to the same problems depending upon the cultural backgrounds. It therefore follows that cultural variables indeed leave enough room for different HRM practices. Deepak Chopra an internationally renowned Indian philosopher says, “The first spiritual law of success is the Law of Pure Potentiality. This law is based on the fact that we are, in our essential state, pure consciousness. Pure consciousness is pure potentiality; it is the field of all possibilities and infinite creativity. Pure consciousness is our spiritual essence. Being infinite and unbounded, it is also pure joy. Other attributes of consciousness are pure knowledge, infinite silence, perfect balance, invincibility, simplicity, and bliss. This is our essential nature. Our essential nature is one of pure potentiality.”1 An effective HRM therefore tries to carve out this potentiality of the individual towards achieving the larger goals of the organization. Organizations have persons of different backgrounds and temperaments. The likes, dislikes, preferences, and different needs of individuals come to interplay in the work situation. Hence not only is the formal interpersonal relationship important for the organization, but informal person-to-person relationship is also equally important. It is imperative for an HR Manager to develop a sound interpersonal relationship among his people and also enhance their positive aspects. Good interpersonal relationship makes the environment more congenial to work. There are essentially four stages of developing interpersonal relationship; i. Forming First Impression: When an individual joins an organization, he forms an impression about the organization. Similarly the organization and fellow colleagues form an impression about the individual. ‘First impression is a lasting impression’, they say, as it influences the way people see each other, but a professional HR manager has to discount this as well. This may not guarantee long-term relationship but it is important to make favorable impression for starting an enduring relationship. ii. Developing Mutual Expectations: Organization has recruited the individual with some expectations. Similarly the individual has also joined the organization with some expectations as well. A set of mutually synchronized and realistic expectations are then worked out by the HRM. This involves a series of exchanges and adjustments to each other’s expectations. Individual expects rewards/ good compensation for his work while organization wants optimum out of the individual. Organization’s HR Department has to play a very crucial role in this adjustment process. Frederick Herzberg’s Two-Factor Theory suggests that rewards affect work behavior in substantially different ways depending upon whether they are intrinsic rewards (motivators/ satisfiers) or extrinsic rewards (hygiene factors etc.). Intrinsic rewards are those that are built into or inherent in the job such as recognition, responsibility, accomplishment and autonomy. Employees gain or experience these rewards as they perform their job. Extrinsic rewards are external to the job and include such aspects like pay, benefits, working conditions, job security, etc. The extrinsic rewards, largely form part of the compensation package and some of these in fact become intrinsic, as entitlements once give are seldom withdrawn. iii. Honoring Psychological Contracts: A set of mutual expectations, which is worked out and understood by the concerned parties is called a psychological contract. For an effective interpersonal relationship, the participants must honor their psychological contracts. Each party must be faithful in the relationship and should not take any arbitrary action. iv. Developing Trust and Faith: Honoring of psychological contracts results in an increased level of trust and influence, which in turn increases each party’s ability to affect the behavior and thinking of the other. Employee selection criteria based on technical competence alone will not lead to success in the global organization. Personality characteristics such as adaptability and flexibility as well as interpersonal skills are better prediction criteria for competence. In any organization good HRM consists of three major elements:– The recruitment of suitable employees Their training for maximum productivity, and Grooming them for retention The single ‘subject’ who is the focus in all these exercises is the individual employee – a suitable human being. The actual suitability of a person depends on a lot of factors like the work climate in the company, the nature and behavior of bosses, colleagues and subordinates, job satisfaction, status and remuneration package, knowledge, skills attitude and capability. But the key to success often boils down to one single thing: it is the attitude of the employee that truly determines success or failure. The problem is that nobody, for sure, can say how attitudes and capabilities are developed and applied by a person. Moreover the same developmental tools applied on different people yield different degrees of impact from negative to zero to positive, because different people respond differently to similar situations. The big question, therefore, is to figure out what determines the way a person behaves. Can a rectangular rod roll? No, to roll it has to be a round ball. Can a round ball hold another round ball? No, it has to be a rectangular rod. Solids settle down, liquids flow, gases fly. Exothermic reactions generate heat, endothermic ones consume it. The purpose of these observations is to suggest that everything behaves the way it was designed to. To modify their behavior, we need to modify their formation – at least at the outset. This formation is based on certain physical an chemical properties ascertained by ‘NATURE’. And this is the way the entire ‘NATURAL UNIVERSE’ works. Being a part of the whole universal structure, human beings are no way different: they, too, are ‘formed’ in a particular way. Now a days managers have started studying the scientific techniques of ‘Physiognomy’, a natural science that believes that a person behaves as per his (or her) formation. The sign of his or her formation is reflected in the face of every individual. Most managers find that technology plays a critical role in industrial competition as well as ability to provide quality service. But there are many others who are averse to technological concepts as they fear that their jobs are being redefined or eliminated as technology assumes more functions. Socio-economic and cultural contexts gives rise to specific socialization conditions which influence the developmental outcomes of the child. It is through behavior that employees give expression to their commitment to work, level of motivation and their attitude. Behavior included all our actions – overt or covert and verbal or nonverbal – and thus directly affects the performance of the individual in the organizations. The culture of people in general also has an effect on performance appraisal system as well. In some societies the loyalties of employees is more to the people than to the task or to the organizations; people become power centered in the sense that those in authority would like to influence their subordinates and subordinates in their own interest are willing to accept a dependency syndrome. Where these observations hold good, there is every possibility that performance appraisal turns out to be more personal than system or organization oriented. Today’s manager talks about Performance Management using the input gathered from performance appraisal reports. Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. A performance management system includes the following actions. Develop clear job descriptions. Select appropriate people with an appropriate selection process. Negotiate requirements and accomplishment-based performance standards, outcomes, and measures. Provide effective orientation, education, and training. Provide on-going coaching and feedback. Conduct quarterly performance development discussions. Design effective compensation and recognition systems that reward people for their contributions. Provide promotional/career development opportunities for staff. Assist with exit interviews to understand WHY valued employees leave the organization. Conclusion: We know that everyone is not suitable for every job. In similar situations one can be a great individual worker, one can be a good team worker, one can be the best planner, while another can be best salesman. But rarely can anyone be a best all-rounder. The introduction of management techniques inconsistent with national culture can lead to the failure of the method, not to mention conflict between an MNC and its employees and, perhaps, the broader society. Well for that matter, it is equally difficult to study the behavior of people by peeing inside the system, especially when the researcher is not being the part of this system. Each researcher also brings a particular degree of his or her cultural knowledge and expertise to the task. This culturally rooted knowledge gives researcher easier access to understanding his or her society, but it may not be as helpful in understanding other societies. This can also result in researcher bias in selection variables under investigation and interpretation of data. Resources: 1. Gisela Trommsdorff, et al. (2002), “An Eco-Cultural And Interpersonal Relations Approach To Development Over The Life Span”. 2. ILO, “International Labor Standards”, http://www.ilo.org/public/english/standards/norm/index.htm 3. John J. Lawler, Shyh-jer Chen & Johngseok Bae, “Scale of Operations, Human Resource Systems and Firm Performance in East and Southeast Asia”, http://rphrm.curtin.edu.au/2000/issue1/scale.html 4. John J. Lawler, Feb. 1999, “Human Resource Management in International Settings”, http://www.ips.uiuc.edu/gap/pdf/Human.pdf 5. Jon Erland Lervik, Rolv Petter Amdam, Randi Lunnan and Laura Mercer Traavik, June 2000 “Organizational recipes and Management Practice in Multinational Corporations”, http://web.bi.no/forskning/papers.nsf/dc1faa5090e7f026c1256e5c0044a137/66ca186015bf6800c12569ac004f4ad4/$FILE/dp2000-06.PDF 6. Livia Markoczy, 2000, “National culture and strategic change in belief formation”, http://www.goldmark.org/livia/papers/stratint/stratint.pdf 7. Lytle, A. L., J. M. Brett, et al. (1995). “A Paradigm for Confirmatory Cross-cultural Research in Organizational Behavior.” Research in Organizational Behavior 17: 167-214. 8. Magdalena Andralojc, “Cross-cultural research in the field of Human Resource Management – in search of the methodology”, http://www.business.aau.dk/ivo/research/seminars/recent%20seminars/MA-Cross-cultural%20research%20in%20the%20field%20of%20Human%20Resource%20Man..pdf 9. M Warner WP/2000, University of Cambridge, “The Future Of China’s Human Resource Management In Its Asia Pacific Context: A Critical Perspective”, http://www.jbs.cam.ac.uk/research/working_papers/2000/wp0029.pdf 10. Patrick McGovern, London and New York, “HRM, Technical Workers And The Multinational Corporation, http://www.questia.com/PM.qst?a=o&d=103002222 11. Randall S. Schuler, Nikolai Rogovsky, “Understanding compensation practice variations across firms: The impact of national culture”, http://copenhagen.jibs.net/Archive/1998/29_1_98_159.pdf 12. Taylor, S., Beechler, S., and Napier, N. (1996). Toward an integrative model of strategic international human resource management. Academy of Management Review 21: 959- 985. 13. United Nations Publication “Human resource management and government performance” http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN021621.pdf 14. World Business Council for Sustainable Development, a report “From Challenge to Opportunity: The role of business in tomorrow’s society”, http://www.wbcsd.org/DocRoot/C77uYrHIIJcti1FWAn1s/tomorrows-leaders.pdf 15. Wayne Cascio, University of Colorado at Denver Elaine Bailey, University of Hawaii at Manoa, “International HRM: The State Of Research And Practice”, http://www.cba.hawaii.edu/elaine/ihrmoded.htm Read More