Human Resources Management in the Asia Pacific - Essay Example

Human Resource Management in Asia Pacific Human Resource Management has an existence and scope, because of the growing diversities of the world the world is getting more saturated day by day, world’s population is increasing and the technology has played a vital role in reducing the number of jobs, so the human resources are now required to be properly utilized in the work that is suitable for them, human resource management is a two way reaction, firstly people work to achieve their goals by helping organizations grow and secondly the organizations achieve their goals by helping people grow, in short one can say that “the purpose of human resource management is to improve the productive contribution of people to the organization in ways that are strategically, ethically, and socially responsible” (Werther, Keith, 8). “Asia-Pacific has become a region of hothouse growth, outpacing for the past decade both North America and the Euro Zone in the production of goods and services. With the march of some Asia-Pacific countries into the ranks of advanced economies and abundant signs that the others lagging behind are soon expected to follow, consumer spending is on the upswing. The region has in fact emerged as the world’s largest consumer market” (Budhwar 2004). The enormous investment and business opportunities offered by Asia-Pacific to foreign entities have always been there. But the generally enigmatic character of this combined market initially discouraged many. MNCs, for example, used to find the Japanese market inhospitable, even impenetrable. As for China, the previous attitude of Saudi Arabia towards that country tells the whole story. Until the 1980s, observed the Brooking Institution in Washington, Saudi Arabia was unwilling to sell oil to China because of perceptions that it was a godless, revolutionary threat. Now, foreign investors and MNCs tread into the markets of all the Asia-Pacific countries on a welcome mat, such that the region has outflanked even EU as host to the most number of MNCs. But it would seem that MNCs have to sweat it out first to make their standard management and employment practices work in this region of widely divergent cultures. “The subject matter of our project is that international organizations are faced with the problem of providing people from differing cultural contexts with a working framework that enables successful co-operation. On the basis of original research our intention is to extend the knowledge of the internal and external relationships of work groups in various cultural contexts. As co-operation processes play a central role in teams we focus on processes centered on co-operation in and between groups with teams understood as social systems which define themselves in relation to their organizational and social surroundings”(Brewster, Harris, 279: 1999). To understand the challenges inherent in this task, it would be helpful to take up a hypothetical case, say, a consultant assigned by an Australian-based MNC to prepare the ground for the company’s foray into a joint venture with an Asia-Pacific market. The first thing to consider is that there is no existing HRM literature here, such that the concept may be new or non-existent in some regions. If these materials are available at all, companies in a particular country may be using different HRM systems. Thus, it is imperative that the MNC consultant develops a new HRM framework that factors in the employment systems being observed by the local company it intends to partner with. The management practices employed for both managers and non-management labor must be fused into this framework. For the purpose of our hypothesis, we pick China as target destination of the Australian MNC since this market exhibits many of the peculiarities of the Asia-Pacific economies. Like many countries in the region, China has responded to the clarion call for globalization by switching to a market economy. This called for the dismantling of state apparatus that planned and controlled the economy, which gave rise to such anomalies as high employment rates but low wages, high welfare and low productivity. With state control, personnel management in China used to be centralized and the state determined the number of people to be employed in a company and their pay scales. Under the state-mandated system of lifetime employment, wages are low but these are compensated by a range of welfare benefits that included housing, pension, healthcare, children’s schooling, transportation to and from work, etc. As part of the restructuring process on the road to a market economy, the HR policies in China have been overhauled such that the job-for-life system as well the state hiring of managers have been replaced by employment contracts. The basis of the wage system was also shifted to performance, skills and training acquired, while the burden of the welfare system was transferred from the state to the private employers. “It might be assumed that an increase in the qualification levels associated with specific occupations would be of particular value to them. There are a number of reasons for this. First, hi-tech firms generally tend to employ a relatively large proportion of engineers and scientists in comparison with more traditional industries (Anderson and Kleingartner 1987). Second, there is a positive relationship between the competitiveness of ‘hi-tech’ science-based firms and the technical knowledge and expertise of their staff (Bosworth et al. 1992). This means that these employers not only have the opportunity, they also have the incentive to erode one of the key features of professional employment”(McGovern, 44: 1998). The avowed purpose of relaxing job security laws was to give workers stronger motivation, opportunity to update their skills, and protect them against irresponsible employers. The employment contract thus contains the length of contract, job description, health and safety protection and working conditions, remuneration, discipline, and conditions for its termination and liability for violating the provisions of the contract. “MNCs planning to operate in these countries should not lose sight of three elements: national factors (culture, institutions, business environment), contingent variables (age, size, nature, ownership and life cycle of an organization), and organizational strategies and policies related to primary HR functions and integral labor markets”(Budhwar 2004). The most immediate problem encountered by MNCs setting up shop in an Asia-Pacific setting is how to make the local workers see the HRM program their way. It is only in so doing that they could unlock the productive powers of the local workers that they would harness in their operations. That HRM is still an unknown quantity in Asia-Pacific is demonstrated by the cavalier attitude of many countries toward HRD practitioners. The outdated idea still persists that human resource development is concerned only with classifying job positions, screening and hiring employees, ensuring proper employee benefits and seeing to a company’s compliance with employment laws. With this prevailing attitude, not enough attention is given to the training, selection and performance appraisal of employees, three HRM functions responsible for turning out a highly-motivated, perfectly coordinated, quality-conscious manpower complement. In China, there is an employment culture called guanxi that could put a damper on efforts to win acceptance for HRM. Under this system of values, filling up positions and promoting employees in companies are considered a family prerogative such that most business establishments are structured like an extended family. Hence, it is not rare to find Chinese companies with immediate members of the family hierarchy at the helm. The lower managerial positions are distributed among relatives, the closer the consanguinity the higher the positions. Salaries and perks are decided accordingly. The same traditions impinge on the efforts of MNCs to implement the standard HRM methods of their headquarters in other host countries in Asia-Pacific. In South Korea and Japan, the old-fashion family customs that often creep into the arena of business and employment are called chaebol and keiretsu, respectively. There are other examples innumerable. How these ingrained cultural values throw a monkey wrench into the desire of MNCs to operate based on the HRM practices of their headquarters is not hard to see. In Japan, for example, parts of its keiretsu tradition are the phenomenon of lifetime employment and the across-the-board distribution of seniority pay. Such practices run counter to the Western model of management, which takes permanent employment as disadvantageous to the company over the long term. When an employee that started as an asset becomes a liability along the way, how could a company dispense with that employee’s services? As for the seniority pay, the Western concept is that any reward or incentive pay should be given to employees based on skills and performance and nothing else. “MNCs may also have a problem with the nationalistic fervor of some Asians, especially the Japanese. This shows in the staffing pattern of Japanese companies that have been set up as joint ventures in Australia, Indonesia, Malaysia, Singapore and the Philippines. For the most part, the management personnel of the Japanese companies were brought over to the host countries from Japan. It is not that local talent is scarce for these positions or that the Japanese companies do not trust their host countries. This has more to do with the unique Japanese culture and values”(Hang, T. & Low, L., 1994). American managers working for MNCs in China and their Chinese counterparts were asked to set aside cash bonuses to workers to get an idea on how they determine such pay allocation. The Chinese used three yardsticks in handing out the incentive pay: equality, need and equity. Equality was the primary consideration, with “need” a close second. Which means that in the Chinese view, it is but fair to grant the bonuses in equal amounts to all workers if and when they needed the emolument. As for the Americans, they based their decision on only two factors, equity and equality, with emphasis placed on equity. They demonstrated therewith that bonuses represent an additional benefit that should be given only to deserving workers who have earned it by dint of performance. In most countries in Asia, the rapid advance of technology and economic restructuring are rendering the skills of workers obsolete. “After Hong Kong transformed itself from a manufacturing-based to a service-based economy, for instance, factory workers were left on the streets. In response, Hong Kong set up the Employee Retraining Board to make displaced workers fit into the service sector. But the participation rate and after-training placement was found lackluster, giving suspicions that the indicators used by the ERB were misleading” (Wong 1998). Thus, it was suggested that the HRD training required by HRM should cover new labor entrants and those displaced by technology. From the traditional concepts of HRM that emphasized group harmony and age norms through the chaebol, South Korea is working on a new HR policy that places a premium on performance-based systems. Chaebol is giving way to modern HRM concepts in many Korean companies, such as Daewoo, Samsung and Korean Airlines. But as a more accountable management and HR system are being put in place, the question remains: Has this change in perception spread wide enough to include the lowly workers and the small and medium companies, the backbone of any economy? These are the frontline sectors of the economy that MNCs will have to deal with. In Australia itself, MNCs may have to contend with job-related stress among workers that could intrude on the latter’s ability to comply with the HRM imperatives. This condition seems to have been brought about by employment policies set by government not by sociological factors. Flexible employment and other changes in employee management improved organizational efficiency in Australia but this also ushered in a situation where workers are generally stressed out and there is less satisfaction about their ability to balance work and family life. This stress factor is starting to be noticed in the growing number of suicides among Australians of working age, including graduating secondary students who could not cope with the pressure of the Higher School Certificate, an examination that determines both the students’ admission into college and into the workforce in later years. The same rigorous college entrance test is driving many college-age Japanese nuts. The conclusion is that national culture indeed determines the adoption of HRM practices such that globalization of HRM practices in the Asia-Pacific region requires a balancing act and should be undertaken with prudence and sensitivity. Budhwar P (2004) cited a 1995 study that “examined the pattern of HRM systems in 11 Pacific Rim countries. It showed that MNCs find it hard to implement the HRM practices from their headquarters because of the cultural and institutional differences. In effect, the applicability of Western theories on management and organization was challenged. Implementation of HRM practices hinged on global standards were found to have succeeded in some places like China and India, but it was observed that this did not come on a silver platter. The MNCs involved had to adjust and make their HRM programs jibe with local conditions”. This could be significant because China and India, two previously backward economies whose only assets were their cheap labor occasioned by overflowing population, have claimed their positions as the new world economic powers. Which means that these countries took pains to abandon their age-old traditions to welcome fresh winds of change in people management. The mission of HRM is to achieve and sustain cost competitiveness, which can only be done by using manpower efficiently and downsizing it to eliminate part of the staff that performs superfluous functions. The HRD challenge then is to harness the stimuli of FDI, MNCs, globalization and business environment, including the expected future economic performance to sustain competitive advantage. The recommended topics for theoretical and research development include ageing, career and life transitions, adult learning, communication, cross-cultural experiences and labor migration and expatriation. As a rule, both MNCs and host countries in Asia-Pacific have recognized HRD as a strategic tool for enhancing competitiveness in the global market, but dizzying changes in the business environment have turned this position askew. Uncertainties, rapid technological change and rising pressures on revenues and costs are the order of the day, which call for new skills, more complex, flatter, leaner and more flexible organizations to keep in step with changes in demographics, the workforce profile and government regulations. Speaking of government regulations, MNCs must be prepared to deal with bureaucratic red tape and graft and corruption in Asia-Pacific. Previous surveys found that this region is host to the world’s most corrupt governments. Other important things to consider in Asia are the managerial attitudes, values, behaviors and efficacy that differ across national cultures. The population size, geography, development phase, labor markets, socio-cultural, legal and political setup and HRM systems also vary to make convergence-divergence an issue. MNCs have to consider the distinctive political, socio-economic, cultural and institutional systems of each country in their management approach. Also, the degree of industrialization and economic development. The advanced economies include Japan, Australia, New Zealand and the newcomers China and India. The newly industrialized economies are South Korea, Taiwan, Singapore and Hong Kong. The less developed are Malaysia, Thailand, the Philippines and Brunei. In the interplay of these economies, many of the developed ones are losing their advantage on cheap labor and property cost to the newly emerging economies that the only recourse left to them is to shift the bulk of their economic activities from mass production to development hubs. This brings serious implications for HRM. Any HRM analysis of the Asia-Pacific setting should try to interpret many economic trends as they relate to management and employment. For example, agricultural production in many countries have given way to industrial and manufacturing activities, such that agriculture no longer counts as a contributor to GDP. This assumes large implications on employment and labor. Migrant labor is another important factor for MNCs in the Asian setting. As economic globalization gives rise to labor mobility, some countries like Australia and Taiwan have opened their doors to expatriate workers. Malaysia is in need of workers as it switched from a commodity-based economy to one powered by manufacturing. The foreign workers are welcomed in the low-wage plantation and construction sectors as the locals take on better-paying jobs in manufacturing. Even South Korea is partially open as it brings capital to neighboring Indonesia, Thailand and the Philippines to push up wages in the host countries. Hong Kong and Singapore keep their markets tightened since human resource is their only asset, while Japan stays in character by regulating the entry of migrant workers although it is experiencing a labor deficit. For this reason, these three countries have intensified their HR development programs to produce their own top-grade workers that their industries require. Moreover, there are the demographic changes that occur as frequently as the tropical storms that batter the region. Thus, while some countries with an ageing and low growth population like Singapore and Malaysia encourage procreation, others like China and the Philippines are checking their runaway population growth. These countries with high fertility rates have to wrestle with the problem of how to accommodate a rapidly growing workforce. “International joint ventures between culturally diverse partners offer unique opportunities for learning at the organizational level. The partners may potentially gain information and skills related to each other's management practices or culture. In the realm of HRM, new policies and practices can be created in a way that matches the needs and requirements of JV groups. Alternately, culturally diverse joint ventures can pose overwhelming challenges to managers who fail to embrace a philosophy of synergy rising from diversity. For many employees, cultural diversity compounded by language difficulties is threatening. There is less certainty about how work is to be accomplished”(Cyr, 149: 1995). References & Bibliography Budhwar P, “Managing Human Resource in Asia Pacific”, London, Routledge: 2004. Boyd C, “Human Resource Management and Occupational Health and Safety”, New York: Routledge, 2003 Brewster C, H Harris, “International HRM: Contemporary Issues in Europe”, New York: Routledge, 1999. Brewster C, Hilary H, Paul S, “Globalizing Human Resource Management”, New York: Routledge, 2004. Briscoe D, R Schuler, “International HRM: Policies and practices”, New York: Routledge, 2004. Cyr D, “The Human Resource Challenge of International Joint Ventures”, Westport, CT: Quorum Books, 1995. Gupta, M.L, “Business led HR strategies”, New Delhi: (n.p), 1998. Hang T, Low L, “Human Resource in Asia Pacific: Issues, Challenges and Responses, Research and Practice in HRM”, New York, Routledge: 1994. Kraut A.I, Korman A.K, London M, “Evolving Practices in HRM”, San Francisco, Jossey Bass: 1999. McGovern P, “HRM, Technical Workers & Multinationals”, London: Routledge, 1998. Werther W.B, Keith D, “Human Resources and Personnel Management”, (n.p.): McGraw-Hill, 2000. Wong M, “An Evaluation of the Employees’ Retraining Programs in UK, Employee Relations”, London, Routledge: 1998. Zhu C.J “Human Resource Management in China: Past, Current, and Future HR Practices in the Industrial Sector”, New York, Routledge: 2005. Read More