Implementation of Human Resource Management in Germany, China and India - Literature review Example

Report on Implementation of Human Resource Management in Germany, China and India. Executive summary The purpose of this report was to analyze management of human resource for our company that is aiming to set subsidiaries in German, China and India. Theoretical perspective has been considered to glimpse other studies on International Human resource management. The studies that were conducted in the past on management of human resources for companies with subsidiaries abroad are used so as to enable me issue recommendations on how to manage employees, which will enhance a competitive advantage. The recommendations are based on the findings of the literature review. Table of Content 1.0 INTRODUCTION 1.1. Historical background 1.2. Convergence and divergence 1.3. Comparative background of German, China and India 2.0 LITERATURE REVIEW 2.1. International HRM 2.2. Models of culture Adapted by German, China, and India 3.0. DISCUSSIONS 4.0. CONCLUSIONS 5.0. RECOMMENDATIONS 6.0 References 1. INTRODUCTION 1.1. Historical background Production performance in any organizations is greatly influenced by Human resource (Stone 2008). My promotion to head the HR department of this organization is a career fulfillment, but HR is not an easy task and it requires a holistic individual to lead and manage human resources with due diligence. Our subsidiaries are located in countries that are in a competitive business environment, and to sustain our competitive advantage I have to play a significant role in influencing our employees’ behavior in those subsidiaries (Cowham 2008). The three subsidiaries in German, India and China will no doubt pose challenge in my management quest of managing human resources. These countries have different legal, culture, political systems, and educational systems, which means that standardization of workers affair won’t be an easy task bearing in mind that our organization is committed to a free, fair and equitable management. It will be my obligation to integrate worldwide standardized approach and the local adapted approaches that our subsidiaries in those countries have adapted in respect to international human resource policies. 1.2. Convergence and divergence Issues of divergence and convergence will confront our company since it characterizes a multi-national corporation (Rowley and Benson 2002; Von Glinow et al. 2002). It can be very difficult for these three countries to adapt to change in regard to our human resource management style due to their tradition that can be deep-seated (Adler 2001). This report will explore the challenges of convergence & divergence as we try to transfer our practices and policies to our subsidiaries in China, India and German. The subsidiaries in this three nations have different culture systems, national cultures should be enforced in order for a projected behavior and high performance is experienced (Early 1994). Most studies suggest that culture is a very fundamental strategy when it comes to managing employees across the globe (Adler 2001; Briscoe 1995; Schuler et al. 2002). 1.3. Comparative background of German, China and India German is among the leading nations in the world as far as exports are concerned (Financial Times Deutschland 2003), and therefore our company has consider that German is a strong economic hub in global economics. For this reason human resource in German should be centered towards a development country. China is one of the fastest growing economy, and the most likely determining factor of HRM in china is culture. China’s culture is characterized by collectivism and Confucian values, which include values such as responsibility, social value, and authority respect that is likely to influence how employees in this are likely to be managed (Ma and Trigo 2008). India is a country that can be described as a conservative nation, which has held traditions for a long time. Issues such as inequality and hierarchy have entrenched Indian traditions and has managed to stratify people in caste and social groups. Social, political, cultural and economic factors have a great influence on HRM policies and practices in Indian corporations (Budhwar and Khatri 2001). 2. LITERATURE REVIEW Market in Germany, China and India are new, which will require us to seek financial and labor competitive advantage to succeed. These are totally different worlds from where our Parent Company’s world, and this will pose challenges on how business and managing of human resources will be conducted. The labor forces that will be employed in this nations will require implementation of new Human resources management practices and policies. These policies include recruitment, selection and hiring of the employees in the three states. There are particular expectations from employees regarding human resource functions such as motivation, recruitment, training, development and termination, hence management of human resource have a crucial effect on HR functions (Anitila and Kakkonen 2008). 2.1. International HRM International human resource management can be described as system with unique activities, processes and functions so as to develop, attract and management of human resource in a company with subsidiaries overseas (Shen 2005). The decisions that senior management will provide will influence and determine an organization’s accomplishment in an international environment, therefore human resource department in an organization plays an important role of aligning HRM policies and practices to a corporation’s business stratagem and integration of culture in an international atmosphere (Du Plessis, Venter & Prabhudev, 2007). Policies and practices that determine IHRM are inclined by an organization’s different strategies and structure, and their cultural and institutional conditions (Muratbekova-Touron, 2008). It will be thus very important to apply efficient IHRM to manage the diversity that is an international environment, it will be my obligation to organize and manage the employees in China, German, and India based on their environmental and cultural issues. This will make sure that misconceptions and conflicts won’t arise in these international environments due to mix-up of culture. Differences in intercultural are an important tool in swaying the international Human Resource Management (IHRM) process. One of this difference is the disparity of power, which means that the distance of the distributing power from this Holding company to the subsidiaries in those countries. Power distance in different cultures in a particular work place will be different (Broadway 2006). IHRM will be very successful if their intercultural effectiveness will be achieved, intercultural effectiveness is competence of people in an intercultural environment. Competence that is involved with effectiveness include communication skills and ability to generate international relationship as well as cope with stress (Fisher and Härtel 2003). German has a culture of individualism, where employees prefer recognition of individuals as opposed to groups, whereas in china, which is characterized by collectivism culture employees prefer rewarding and recognition of groups (Du Plessis et al. 2007). 2.2. Models of culture classification Hofstede (2001) suggested that there are four aspects of culture, which include power distance, individualism, masculinity and uncertainty Avoidance. Using this dimensions he proved that is variance in culture among nations, and hence there is a high potential that can affect HRM perceptions and practices. Individualism and collectivism dimensions measures the intensity of ties between a society’s members and their fellow members. Masculinity or femininity describes a culture where men and women have distinctive duties, jobs and emotions. If the culture is feminine the emotions and roles would be unclear or shared between women and men (Hofstede 2001). Power distance is the extent to which people expect and accept existence of the differences between the greatest and smallest powerful members of society in regard to wealth and privileges (Wright University 2002). An individualistic culture, people are likely to be self-reliant, independent and caring to only members of an immediate family. A collectivist cultures members serve and oblige to a group that they belong as in the case of china. Trompenaars (1993) had a more pragmatic view on culture, which he classified in three culture differences dimensions that include are universalism vs. particularism, affective vs. diffuse and achievement vs. ascription. Universalism vs. particularism, universalism characterizes people who believe they can develop regulations and standards, which can be applied to everyone in each situation. This is applicable to Germans who are universalism since they believe in rules and regulations applied to everyone. Affective culture is described by people who are don’t shy away from expressing their feelings openly, on the other hand neutral culture don’t express their feelings or emotions openly. In German personal emotions are incorporated in business life, while in china personal emotions are considered in the life of business. Specific vs. diffuse was used to describe the various life roles and how they are separated, this can be compared to Hofstede’s dimension of collectivism and individualism. 2.3. Models of culture Adapted by German, China, and India Indian employees are more likely to work more closely with their managers in relation to setting personal goals (Aycan et al. 1999). Indians are also likely to display forward thinking as they plan actions and goals. There is a significant correlation in differences between cultural feature and perceptions, which include uncertainty avoidance power distance and paternalism (Aycan et al. 1999). The belief that one can’t control the outcomes of his actions is called fatalism, Indian managers scores high as far as Fatalism is concerned, which means they are less likely to engage in activities such as employee empowerment job enrichment and performance based reward systems (Aycan et al. 2000). German scores very high in uncertainty avoidance but power distance is low (Hofstede 1983). Transfer of practices and policies knowledge is a key ingredient to ensure that our business will succeed in this international environment (Bartlett & Ghoshal 1998; Evans, Pucik & Barsoux 2002; Poedenphant 2002). Implementation and transfer of practices and policies will enhance a quick access in matters such as global head count (Roberts 2000). International human resource is a very integral part in actualization of business strategy (Bartlett & Ghoshal 1989; Evans, Pucik & Barsoux 2002; Nankervis, Compton & Baird 2002; Rugman & Hodgetts 2000). The transfer of organizations practices can take various form such as transferring the practices from the parent company to the international subsidiaries. 3.0. DISCUSSIONS According to the literature reviewed it is evident that companies in the level of internationalization of companies with subsidiaries overseas should make decisions based on where the subsidiary is located (Adler2001; Briscoe 1995; Rugman and Hodgetts 2000; Schuler et al. 2002). the literature deduce that decisions on policies and practices of HRM that are made in the head quarter should be translated to the subsidiaries but should adopt and take into considerations cultural difference. The literature also imply that the IHRM will adopt an approach that is important in terms of strategy, which means that some of the HR policies and practices will be pushed than others. The findings of the literature confirms that it would be prudent for Companies’ HR strategy to manage the tension that exists between internal consistency or integration and differentiation (Dowling et al. 1999). The literature also suggest that there is an importance for integration of expertise into headquarter. The literature has clearly indicated that an excellent policy in the subsidiary is not implemented or adopted in headquarter or a parent company (Adler 2001; Briscoe 1995; Kostova 1999). There are some fundamental issue such as cultural, societal and legal that have to be considered in management of international human resource. This three issue exists in different countries, this factors are capable of influencing the HQ as well as the subsidiary respondents. This has led the local HR staff to manage and implement policies and practices. The findings from the literature indicate that the directors in the Subsidiaries don’t possess the international expertise that is required to manage cultural, societal and legal differences. Almost all the literatures concur that there exist cultural differences, and any international business should take into account these differences (Adler 2001; Bartlett & Ghoshal 1998; Briscoe 1995; Hofstede 1997). During the transfer of HR practices and policies to the subsidiaries, there are two impacts of that can be experienced between the two countries. The first impact is well illustrated in the literature (Briscoe 1995; Dowling et al. 1999; Nankervis et al. 2002). That deals with the difference of culture, attitudes, behavior, and values of the employees that are supposed to consummate the practices and policies of HRM. The second impact is experienced from the cultural differences that occur to managers while they are transferring policies, procedure and knowledge, and this was well dealt with in the literature of organizational behavior and knowledge management (Adler 2001; Kostova 1999; Poedenphant 2002). The literature suggested that most societies, employees, managers are parochial and that the best way to deal with cultural difference is by shaping the communication style but the difference that occur due to values have to be deducted or observed (Adler 2001). According to my own experience there is a contradiction from the literature (Dowling et al. 1999; Nankervis et al. 2002) which indicate that the cultural differences are at the head of international Human resource management. From my previous work HR managers don’t have an in-depth knowledge of cultural differences across different nations. What is concentrated by this managers in the subsidiaries is the implementation of HR policies and practices without considering culture of the holding company. If the HR policies are to be transferred from this head quartet to the subsidiaries it will be through the local HR managers who are supposed to implement the practices and policies. The findings that are also found in the literature also confirm that there should be an expatriate Chief Executive Officer and a local HR director in when a certain stage of internationalization is reached (Chew and Horwitz 2004; Dowling et al 1999). The reason as to why there should be an expatriate CEO is because of his rich experience in the business and the local HR is because of the familiarity of the subsidiary’s environment like language, legal and culture (Dowling 1999). The role of the Local HR director is very important in terms of adapting the policies and practices of the Head Quarter. It will be also very easy for the local HR to influence the business positively according to our strategic plan and help us in terms of regional Knowledge by giving us the useful information here at the Head quarter. It will also be very important for us to be culturally versatile so as we can be successful internationally (Adler 2001; Bartlett et al. 1998; Briscoe 1995). There should be more culture sensitivity at the head Quarter, and this can be achieved by having more experienced staff at the head quarter. When the HQ sends its staff to the subsidiaries there the current staff as all the parties (the HQ and the subsidiaries) will prioritize the business despite language and cost. Job rotation has been conferred by the literature as the main and the best way to transfer knowledge and skills though it is costly. 4.0. CONCLUSIONS Companies which have subsidiaries overseas should emphasize an International Human Resource Management approach that determines our company’s strategy for managing the tension between internal consistency and external consistency. A company with subsidiary should make sure that it adopts a strategy to combat each issue. There is also a challenge incurred when transferring human resource practices and policies to the other subsidiaries due to the existence of cultural difference. Legal differences are not an issue in IHRM since the local HR is responsible for translating the laws and regulations. The findings indicate that there is minima knowledge of cross-culture issue among the different managers in the subsidiaries. Inter-cultural sensitivity is very important for the success of a business that has subsidiaries in various countries. If the impact of culture differences are not considered the business will lag behind, and won’t have a competitive advantage. There is also an importance in making sure that HQ’s staff are made aware of cultures that exists in the subsidiaries. It is crucial for the managers to be internationally experienced in terms of cultural diversity. The findings of this report indicate that there is lack of cultural sensitivity at the Head Quarter, which if not considered breeds misconceptions between the managers of the HQ and those in the Subsidiaries. The findings also suggest that it is important to distribute power evenly to the subsidiaries there is also need to enhance intercultural effectiveness since in will boost the competence of the employees in that environment. Such competence involve communication skills, which is capable of increasing international relationship as well as cope with stress. German which has been described as a country that has an individualism culture from the literature should be considered in managing of employees. China is characterized as a nation that has a collectivism culture, it is therefore necessary to manage the human resources in a collective way as opposed to individualistic way. It is also found that there is need to engage Indian employees in policy making since they are likely to work closely with the managers unlike the Germans. 5.0. RECOMMENDATIONS From the findings of this report I would strongly recommend the following to be considered as the company considers to open the three subsidiaries in China, German and India. 1. The approach that should be adapted in regard to IHRM should not be a strategic one, but one that will consider the situation according to the issue at hand 2. Cultural distance should be considered in the transfer of HR policies and practices 3. The local HR director should be trained in relation to the policies and practices HQ since he is in the best position to transfer them to the employees. 4. A comprehensive understanding of culture in China, German and India will ensure that our company can tailor and transfer policies and practices that suits the employees’ need, which will enhance employees’ efficiency that will paramount to giving our company a competitive advantage. 5. There is always a difference in the regions where the company will be located, and for this reason it should be ensured that the practices that are more preferred by the employees are considered. 6. German is an individualistic nation, which suggest that employee rewarding and motivation should be geared towards an individual. Motivation and rewarding of employees in china should be geared towards a group and not an individual. India which indicated that the employees are likely to cooperate with managers from the Head Quarter. 7. To achieve uniformity in relation to management of human resources, there should be job rotations of HR managers. This implies that HR managers can be transferred from one country to another since this will equip them with cultural diversity. 8. The aspect of motivation cannot be ruled out in any country, which I would suggest that the company should adapt a motivation strategy that suits employees of a particular nation where the subsidiary is located. 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