Human Resources Management Across the Globe - Essay Example

Topic Debate and critique the relative importance of cultural differences andnational business systems on the development of HRM. What are the implications of your conclusions for convergence and divergence? Use examples of HRM across the globe to illustrate your answers. For more than two decades, ideas and theories concerning strategic HRM have formed an extremely potent approach that is directed towards the business management turf. This set of ideas and practices have been implemented on the government level as well as within organizations to encourage “high performance workplaces” and “human capital management”. The main idea here is that labor is an “asset” that businesses need to invest in, not a “cost” that they have to curb. Business and Government organizations all over the world today are investing heavily in the development of this asset and introducing more thorough, and thought-out recruitment policies. They are gearing themselves towards being “learning organizations” with “knowledge based workers”. Because HRM is a dynamic concept, it is difficult to pin on it one standard definition. HRM is therefore, a kind of “discursive formation” which encapsulates a set of inter-mingled propositions. What is more important to the discussion at hand is, in what way and for what cause is the substance matter of HRM so varied and what particular factors have generated this change over the elapsed decades. (Salaman, Storey & Billsberry, 2005). There are numerous factors and theories affecting and relating to the field of HRM. These influences are categorized into social, political, economic and cultural discourses, which encompass finer details like different models, assumptions and theories that are put into practice across the world. People who have extensively studied and continued to research the field of HRM and how it incorporates these factors and relates to the business world in terms of the resulting benefits and the change in direction and thinking of the business world, have come up with various models and theories relating the management of human capital to the aforementioned factors. Geert Hofstede, a prominent Dutch researcher has come up with an exhaustive study of how culture affects the work environment. The Hofstede model initially defined four different dimensions that categorize organizational culture: Power distance, Individualism, Masculinity and Uncertainty Avoidance. A fifth dimension called Long-Term Orientation, based on Confucian dynamism was later added. Based on this model, countries and regions are listed and their rankings in these five dimensions are displayed alongside their names. (Boyd). This part of things deals with how factors affect HRM, however, there is still more to consider. HRM in turn, also has its impacts on the organization’s work environment. Most organizations measure their performance not by looking at the performance of their employees, but by looking at their productivity and the profits they generate. Note however, that even though employee performance is not quantifiable in the sense that management cannot determine in numbers how and how much it contributed to the fiscal profits, but it is still an important factor that helps determine the organization’s productivity and profit levels. Research has shown that a healthy work environment and innovative HRM policies and practices relate directly to the organization’s performance. (Garry A. Gelade and Mark Ivery, 2003). Due to the differences in cultures in different countries, there arise differences in the HRM policies and practices put into effect in the business and governmental organizations of these countries. Some elements are homogenous in similar regions, for example, certain aspects might be consistent over just Asian countries, while others might be unvarying in European countries. However, each of these sets of factors will be different for the other region. This paper lists below with description and analysis for each, different countries in different parts of the world, which will allow us an insight of how HRM policies vary with varying cultures. China is one very important example. To date, very little investment has been done in China on HRM in the form research and development. However, this is an extremely crucial avenue, for China has 20% of the world’s population and a large part of the developed world’s outsourced workforce, therefore, it is essential that this workforce be effectively managed for which, HRM is required. Research showed that even though China has the world’s largest population, only about 10% of its workforce has skills enough to make it eligible for foreign job offers. China introduced market reforms in the 1980s when it was admitted to the WTO. An aspiration to be globally competitive has pushed China towards a more decentralized, free market approach that functions based on performance. In this organizational environment, “HRM practices are influenced by organizational, environmental and institutional conditions”. The traditional model that applies to the West does not apply here, because it will not tackle China’s area specific issues. The general culture in Asia promotes high work involvement, which positively affects the organization’s performance and maintains a need for “close connections” and “mutual support”. In the due course of research and following implementation, some strategic policies have been tested in China’s business sphere. Hr practices that are being used include, giving importance to the worker’s skill and creativity, a more decentralized system, etcetera. Findings in this study demonstrate that in China, the collaborative and commitment oriented HRM practices yielded better results. The study also showed that commitment to the development of an HR system in China boosted competitive advantage. However, the inconsistencies and lack of statistical evidence should also be considered when looking at the results of this study. (Irene H. Chow, Jia-Chi Huang, and Shanshi Liu, 2008). Another factor that is an important determinant of Chinese culture is the presence of Confucianism. According to this, “the highest ideals are social harmony, family and a sense of order”. Hofstede summarized these teachings into four key areas. One, societal stability is based upon the relationships between people. Two, all social organizations use the family system as its prototype. Three, treating others well is reciprocated. Four, good behavior includes practices to better oneself. “Compared to the Western philosophy of honesty above harmony, the Chinese would see constructive criticism as being antisocial”. The Chinese Culture Connection study (1987) discovered that, Confucian teachings were a cultural link to economic growth in China. (Brenda L. Geren). Japan is another important example from the eastern part of the world. It does not have the exact same issues as those China faces even though they lie in the same geographical region although some show a range of similarity. Just like in China, there are deep cultural chasms between Japan and the West. After WW2, as the Japanese economy expanded, its financial institutions were sheltered and controlled by the government of Japan. In the course of this study, two organizations were taken into account. One, The Japanese Financial Group, and two, The Swiss American Financial Group. It was found that, where on one hand SAFG focuses only on the consumer’s end, JPFG focuses on the employee as well. Where the Swiss give diversity more importance, the Japanese think more importance should be given to efficiency. Moreover, the Swiss think that good relations with the society are needed, whereas the Japanese believe that trust in the society is more important. In spite of these differences, no similarity was found except for the fact that these organizations belong to the same industry. (Hideyuki Matsumoto and David W. Wilson). In Europe the organization’s cultural landscape is completely different. It has different priorities and different ways to go about the same issues as compared to the eastern countries of China and Japan. In the west, over the last two decades, organizational structure has moved rapidly from centralized to decentralized structures. This has removed HRM hurdles by empowering the employees. This process had also raised many questions about the resulting levels of accountability of organizations. Following this, many western countries have invested in measure to boost the strength of their accountability. For effective functioning therefore, a balance between the two must be found. research has found that there are two dominant models in the west. One, the career-based system, and two, the position-based system. Both are self explanatory and show how the western culture is very ‘me’ oriented as compared to the eastern culture which is very ’us’ oriented. (Demmke, Hammerschmid and Meyer, 2006). Furthermore, the role of the European Union stays vital and prominent in determining the organizational culture and HRM needs of Europe and is supposed to be one of the most important convergence factors. Recently, EU has made a “social model” of people related management. Study shows that laws, culture, subculture and labor relations define the HRM policies needed in all of Europe. The EU regulates HR in Europe by providing employment opportunities, labor laws, a legal and regulatory framework, etcetera. However, the most potent impact by far has to be the results of operating economic and political unions. Finally, it was shown in the study that HRM is not an umbrella/homogenous practice in all of Europe but a collage of practices geared to the same end. (Lisbeth Claus). The underlying associations between the HR in different countries and their respective cultures can essentially be analyzed and summarized by comparing HRM practices in different cultures. Over the past few decades, competitiveness and the need for it in the business world has increased exponentially. Globalization has firmed its feet and new and crucially important markets have emerged like India, China, Brazil and Russia. As the competition grows within and among countries, the need for HRM practices in the business organizations in these places has also increased multifold. To understand this phenomenon and its fundamental reasons, studies have been conducted explaining how history, society and culture shape and impact HRM practices in each area/region. National Business Systems have been a systematic way to study the relation between business firms and social and economic factors. One way to look at the situation is through Hofstede’s four dimensions which will allow us to categorize prevailing significance patterns across different countries. Or, we can take into consideration and analyze the importance of high context and low context cultures in the process of molding HRM policies. In high context cultures, non-verbal cues like gestures and facial expressions are very important but in comparison, low context cultures encourage more precise and clear-cut forms of written communication. However, this approach is more useful when broadly categorizing different races, like the Arabs or the Europeans. Culture permeates the organization, it influences the population’s “basic assumptions” and helps to “socialize new generations” by strengthening cultural norms and practices. The “social cognition” theory states that an individual’s cognition is influenced by the culture he/she is in. which will thereby determine how that individual operates in the work environment and the choices he/she makes. Scholars have found that even though the HRM concepts to be applied across the globe might be similar, the context they are applied in depends on the culture of the area in question. Research has shown that, recruitment in high performance cultures like that in most of the developed world, is based on know how about the job and the technical skills. However, cultures that are low on performance orientation give more importance to things such as social class and societal relations. There is also evidence to show that collectivist cultures prefer hiring labor domestically, whereas in cultures where individualism is prevalent, hiring labor from global labor markets is not a moral and ethical dilemma. Cultures that rate high on uncertainty avoidance use more tests when selecting and recruiting candidates. Furthermore, cultures that are short term oriented are more responsive and concentrate on “transactional employee relationships” however; long term oriented cultures emphasize ‘relational employment needs’. It has also been seen that there is a strong desire among MNCs to transfer their domestic culture and HRM policies and practices to the country of operation. Scholars however are more optimistic about the transfer of HRM policies than HRM practices, because even when applicable policies might be similar, the actual application is always culture specific. (B. Sebastian Reiche, Yih-teen Lee & Javier Quintanilla, 2009). With exponentially increasing levels of globalization coming into play as a major factor when determining HRM practices in this age, convergence of HRM across borders becomes a very relevant concept. Convergence can also be labeled a factor contributing to the growing similarity between HRM practices across the globe. However, there are also some reasons that cause divergences and differences the leading cause of which are strong and influential cultural values and practices. (Chris Rowley and John Benson, 2000). The aforementioned study relates to Asia and its HRM, however to provide a holistic view on the topic, we will consider a study that was based on Europe as well. HRM in Europe is still a hotly debated topic. However, recently a new avenue for debated has opened up under light from the ever dynamic globalization process. Is it HRM in Europe, or is it European HRM? The difference in this statement might be minute and may escape some, however people with even a naïve knowledge of HRM will be able to comprehend the issue here. This statement talks of convergence of HRM practices in Europe. Studies have been undertaken to find out whether Europe experiences convergence or divergence and data has shown that mostly, practices in HRM were organization specific and not country specific, hinting at traces of divergence. With significant traces of convergence also present, this study suggests the maybe the statement/question earlier should eb altered to “HRM for Europe”. (Christian Scholz and Stefanie Müller, 2010). To sum up this discussion and analysis of HRM practices and policies across the globe and the influence culture has on them and the direction this field is headed in, the way to look at is that of cross-vergence or a middle path between convergence and divergence. In accordance with the modern world, this path is flexible and applicable therefore to a variety of situations and deviates from the earlier black and white model of just convergence and divergence which was hard to fit into because of its rigid nature. Bibliography 1. 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