Comparison of HRM Strategies of Chinese and Japanese Systems - Essay Example

HRM Strategies: Comparing the Chinese and Japanese Systems Generally, Chinese employees are more individualistic because they favor a contribution-based or performance-based Human Resources Management (HRM) system, whereby personal recognition and promotion depend much on personal leadership. As long as these evaluation systems are adequate and complete, Chinese managers welcome these with open arms. In fact, this is a core area where the organizations and the HR interests overlap. As expected, companies choose to avoid adverse selection or distortions, in order to allocate its prime resources and assets to their most productive uses. On the other hand, Japanese companies are less accustomed to personal evaluations and differentiation because they focus more on achieving a scope of rigid rules and performance criteria as set in their manuals. In fact, there is indirect evidence that shows how Japanese businesses do not put more value on extra opportunity because they are more willing to minimize risks. Expectedly, the problematic Japanese HRM strategies fail to retain their in-pats, as compared to their Chinese counterparts who increasingly prefer US-based employers for superior promotion, flexibility, and self-actualization opportunities. However, the existence of a major gap between their risk-taking profiles (or risk aversions) could not be easily bridged by any HRM strategy, other than a major convergence of cultures. As a rough rule of thumb, the distinctive 'frictions' behind both Chinese and Japanese systems rely on their cultures, as well as flipsides of their morale systems, as expounded by the issue of 'envy' versus the 'distrust', Most probably, an effective training system should appeal to the Chinese working ethics while motivating the morale from the outset. A training program will inevitably reflect the implied culture and HRM system, as the Chinese managerial trainees should be able to appreciate the adequacy in both. This is in realization of how implied culture and HRM system are believed to be systematic, complete, conducive, and incentives-compatible. Of course, there will be a self-selection rule at work, so those willing to comply will stay and likely measure up. In any event, the HRM system and training program should not be perceived as a set of constraints only, instead these should appeal to reason and be open to discussion. In fact, only an effective (fully transparent) culture can motivate critical thinkers to "look in the same direction," and consequently this could be reflected using a functional training program. If Chinese managers are sensitive to a leadership system at large, they become more sensitive to a fair and transparent mechanism of compensation and promotion. In discussing the strategic problems and opportunities in detail, this paper aims to have a clearer understanding of the problems that both systems will generate, when asked with additional, more specific questions and concerns. As we attained a proper vision of Mabuchi's case, this suggests important tradeoffs between opportunities and problems, rather than treating these as stand-alones that is often seen in conventional SWOT analysis. Strategic Problems & Opportunities Like any diversifying company, managers will not settle on just any opportunity which simply adds value or reduces the risks. This candidate 'theme' or line of business should fit just squarely into the core competencies or comparative advantage, while also proving its liquidity as feasible. In other words, the proactive and entrepreneurial management will surely stand as a look-out for new opportunities and geographies. Yet, it is preferable that the investment portfolio could expand in a natural fashion, whereby the original core concept spawns into a host of derivative or complementary solutions. For instance, Mabuchi did a wise move of rejecting Braun's offer of switching to non-steel core motors for its razors. As the counteroffer was for Braun to consider the benefits of Mabuchi's steel-core, obvious solutions are allowed for tremendous cost savings and eventually becoming "state-of-the-art". In a broader setting, Mabuchi had the guts to weather the 1957 crisis in the US toy industry. This simply means when his brother painted the component then deployed for its toy motors had turned out a major scam (Hiroaki 2002). Had it diversified as seen through the demand risks, expanding into a variety of lines outside the motors, it would unlikely have fared as a standard setter on the strength of its focused learning and entrepreneurial search. Instead, the company opted to expand on the issue of the core scope of its motor solutions by entering the non-toy industries. Portfolio of Assets: HR Working in host environments, any company's HR strategy, like the Chinese market, appears to be fully consistent with its focused and educated diversification. In order to secure a successful as well as robust culture throughout its subsidiaries (a common vision being an ultimate motivating vehicle behind teamwork), it cannot possibly afford building on substitutes when it comes to HR management. With this scenario, a possible tradeoff could happen, as well as it could be a major source of conflict. Moreover, conventional optimization strategies suggest that aggressive multinational firms could choose any local advantages to become part of its leverage. This is in the belief that the human capital amounts to more than a sum of individual capabilities. In fact, building a team is a lot like designing the available human capital resembling a portfolio of assets that are complementary with each other. Similar to the Capital Asset Pricing Model (CAPM), human capital could possess optimum 'betas' to minimize the overall portfolio risk (variance or uncertainty). As a result, the company adds further human assets in line with its current portfolio, as well as the grand culture (capturing vision and practices alike). Any major difference from this strategy might usher in huge uncertainty, as well as a major loss of complementarity (as an ultimate source of value added growth). Derivative Issues: HR/KM/Culture Contingency Another contingency that is worth viewing is how a successful organizational structure (as a dual knowledge management system accountable for knowledge flows within the organization) may or may not prove transferable across legacies. While structural layers might be too complementary to be imitated as partial solution, this contingency might be an edge in its own right. But even if it is right, this does not need to imply the transferability of human capital or managerial practices, which crucially important given that these are complementary with respect to knowledge-managerial or organizational designs. Thus, the company is faced with the dilemma of either (a) importing both the culture and the expats, or (b) adopting a local legacy while designing its training program in order to adjust the local human capital to be familiar with it. Unfortunately, a learning lag could occur using this contingency and would amount into short-run synergy losses. But, one good thing about it is that the company could enjoy an extraordinary scale boost with the use of this market. Although apparently fragmented, the Chinese market is huge enough (CIA report, 2006), so Mabuchi can afford designing an ad-hoc local culture (or accept one), regardless of whether one carries over elsewhere. But this extreme case of non-transferability is nearly irrelevant in real world because a major 'spillover' of managerial knowledge and institutional forms has already started. It is important to note that leading Japanese companies have adopted an 'American-style' (or common-law based) legacy in corporate governance as a response to the systemic crisis and recession in the late 1990s. In comparison, Western academic and business profession is even more receptive of some kamban-type standards in Japanese managerial culture, when it comes to operations management. In any event, the robust and transferable core of operations management has evolved, characterized to be complementary in relation to human capital management (as it increasingly proves), optimization and perhaps the standardization of the latter is a matter of time. This will only be possible if drawn together with general and multi-aspect solutions that will put forward things as integral parts of the same. For instance, human capital becomes increasingly transferable across the sectors of a 'new economy,' given that the role of information technologies has exploded. Eventually, this will exhibit growth overlap between professions. In view of this, it is safe to assume that one should not expect the host environment in mainland China to be choosing between the Japanese legacies versus the Western style as allegedly competing directions, for convergence. Moreover, despite the fellow Asian legacies appear to be more consistent, the Hong Kong corporate culture might be American-dominated and for that matter largely foreign to that in the mainland. Of course, it will imply more delegation and seizing the initiative levels of human capital to interact as a portfolio structure rather than a power hierarchy. However, the effective scope of Mabuchi's case is more focused on discipline and strong culture that could become a benefit in this risk/opportunity tradeoff. Tradeoffs and Tossups Hiring knowledgeable locals (insiders to the host culture) could be a good alternative in the short run. But, the company can hardly afford this extent of decentralization. Moreover, the company may claim a moral basis to import its better institutions, managerial styles and culture because it believes that augmenting local human capital is the single most valuable and socially responsible contribution a business can afford. One solution between the two extremes (decentralization/leadership on every level versus a low-risk/hierarchic leadership) could be a tossup or, an optimum 'mixed strategy' between the two (e.g. planning for a gradual and safe as well as ongoing authority transfer drawing upon personnel that qualified for a longer-term team from day one). However, an overly conservative CEO might be prone to the agency failure or the moral hazard of focusing on the minimum important scope of measurable performance. In this scenario, latent core of strategy that genuinely contributes in the long term may be overlooked. In this light, the feasibility of strategic planning in terms of liquidity management and lesser dependence on the financial markets may be good in terms of capturing underlying strategies. Of course, this could be against the idea that the financial market discipline is the ultimate incentive for performance (as agents may shirk unless monitored). In reality, this may be a necessary prerequisite to fill the gaps in corporate culture. Another convention that may be applicable is the adoption of the strong version of the Modigliani-Miller theorem, whereby the structure of capital (financing) is irrelevant so long as the leverage secures enough earning capacity for interest coverage. As it happens, the structure of assets may be related to that of financing. Therefore, although the outside portfolio investors think that the 'right-hand side' is less important in backward-looking or ex-post valuation, in a real world scenario that is characterized by huge transaction costs and rollover constraints, this point of view remains significant for forward-looking managerial decision making. References Hiroaki, Niihara. (2002, September). The skills of the best managers at superior companies, RIETI website. Repr. from Bungei Shunju. Retrieved 31 March 2006 from, Mourdoukoutas, Panos and Stratos Papadimitriou. (1998). Do Japanese companies still have a competitive strategy European Business Review 98(4): 227-234. Retrieved 31 March 2006 from, Taura, Rika. (2005). Japanese companies' HRM strategies in China, NRI Papers 86, February 1. Retrieved 1 April 2006 from, Mabuchi Motors annual report. (2005). Retrieved 31 March 2006 from, Read More