Cross-Culture and Human Resource Management - Term Paper Example

Cultural difference between UK and China and human resource management Contents Introduction 3 Theoretical groundwork 3 Globalization and cross cultural human resource management 4 Cultural differences between UK and China using Hofstede’s cultural dimensions 5 Power Distance 5 Individualism 6 Masculinity 7 Uncertainty avoidance 7 Long term orientation 8 Factors that may affect expatriates in China 8 Political factors 8 Economic factors 9 Social factors 9 Safety issues 10 Advantages of working in a bicultural managerial team 10 Disadvantages of working in a bicultural managerial team 11 Benefits of devolving responsibility of key HR functions to host country team 11 Drawbacks of devolving responsibility of key HR functions to host country team 12 Conclusion 13 Self Reflection 13 Reference List 15 Introduction The purpose of this study is to analyse the cultural difference between the UK and China by using Hofstede cultural dimension framework. The researcher endeavours to analyse the impact of this cultural difference on the integration between the British and Chinese employees. In addition to that the researcher will also explore the impact of several macro economical factors (political, economical and social) on human resource management. Besides that the researcher will attempt to explain the advantages and disadvantages of working in a bicultural team. In addition emphasis will also be given on the benefits and drawbacks of devolving HR related responsibilities to host country team. Theoretical groundwork Cross culture human resource management is a widely discussed topic in the modern world precisely because of a rapidly globalized world that has allowed big multinational companies to appoint people from diverse cultural and societal backgrounds (Ranganayakule 2007). Employing people from different cultural backgrounds is a trend set by organizations decades ago. Different academic scholars and organizational leaders have introduced their standpoints behind the employment of a culturally diverse workplace (Schein 2009). As a result of this a number of theories, concepts and principles have been introduced in this field that has proven to be instrumental in some way guiding organizational managers to manage employees from different cultures (Ott 2007). Geert Hoftstede’s cultural dimension is one such framework/concept that has enabled company managers to assess the cultural feasibility of the external environment while considering business expansion (Miner 2012). Employing a diverse culturally workforce allows managers to benefit from enhanced adaptability, wider range of services, variety of standpoints and more effective execution of plans (Martin and Fellenz 2010). On the contrary managers have also faced several difficulties while managing a multicultural workforce which come in the form of cultural conflicts, opposition to change and conflicts of viewpoints, (Krausert 2009). This is why constant debates have ensued between organizational managers, academic scholars and other key market players regarding whether the advantages of employing a people from different cultures outweigh the drawbacks (Kassimali 2011). Academic scholars have commented that managing a culturally diverse workforce requires a highly adaptive and effective leader who is keen on establish a robust communication channel between employees (Hodgson 2009). Such leaders should encourage subordinates to work in a unified manner thereby transcending any boundaries that differentiate them (James 2010). It is with regards to this fact that the researcher, who has been appointed as the human resource manager of Aviva, a British multinational corporation, will be evaluating China’s cultural dimensions. The underlying reason behind this evaluation was to prepare a report that will address the board members regarding the major institutional and cultural differences that separate UK and China as the company is considering the decision of opening a subsidiary in China. Globalization and cross cultural human resource management At the dawn of the 21st century, the advent of globalization intensified the competition between companies all over the world. In order to attain fast mover advantage and or competitive advantage companies started considering options of expanding their businesses to foreign countries that provided ample scope to attain competitive advantage. The underlying rationale behind such mammoth business expansion plans was to increase market share and learn from the experiences of other multinational corporations (Hannan and Carroll 2007). Moreover, exploring foreign country markets also allowed companies to target a larger customer base. However business expansion of such sorts exposes companies to a fiercely competitive business environment (Deal and Kennedy 2008). Thus to survive in such a competitive environment managers have to encourage as well as strengthen the internal aspects of the company. The workforce of a company is one such aspect that needs to be strengthened significantly. Managers sometimes find it difficult to manage a multicultural workforce because employees belonging to one culture form a group of their own comprising people from same cultural background (Bizmanualz 2008). They are reluctant to work with people from different culture (Dong and Liu 2010). This hampers the operational and production efficiency of the company severely. These facts highlight the importance of implementing effective strategies that are aimed towards cross cultural human resource management (Cameron and Quinn 2011). Managers have to create a working environment that supports cultural mix (Bate 2008). It is with regards to this fact that several academic scholars have introduced integrative frameworks that can help one to understand strategic human resource management (Cheng, Jiang and Riley 2003; Flamholtz and Randle 2011). Different models have also been proposed that outlines the ways in which companies can adapt to globalization changes through managing a culturally diverse workforce (Colella and Miller 2009). These models have proven to be instrumental, while managing expatriates and host country employees (Cullen 2002). Cultural differences between UK and China using Hofstede’s cultural dimensions Aviva is a British multinational company that is considering a business expansion in China. However, before implementing this plan, the managers will have to be extremely mindful of vast cultural differences between the UK and China. A cultural feasibility study is of utmost importance here considering the fact that the managers will be recruiting local employees who will be working in close collaboration with the expatriate managers. Hofstede’s cultural dimensions will pave way for a comparative study between UK and China on the basis of six dimensions. Figure 1: Cultural dimension comparison between the UK and China (Source: The Hofstede Centre, 2015a) Power Distance Expatriate managers of Aviva may encounter several issues of conflict of interests and opinions taking place between the British employees and Chinese employees. This is precisely because people belonging to British society believed that the differences or inequalities on the basis of which individuals are judged should be minimized (Emery and Oertel 2006) and Chinese people have a belief that lower ranked people should not be given an equivalent treatment as provided to the higher class people. They always maintain a difference between people belonging from different cultural backgrounds (The Hofstede Centre 2015b). Due to such contrasting cultural differences managers may often find it difficult to establish a proper chain of command, collaboration and coordination among the employees. However, it is extremely important for Expatriates from Aviva to share their authorities with employees before making decision, and leave certain latitude for disagreement (Chang, 2003). Expatriates and host country officials should maintain and increase disparities in power (Emery and Oertel 2006). Expatriate managers should not rely on their subordinates in decision making as they wouldn’t openly question decisions by their superiors (Swaidan and Hayes 2005). Individualism Expatriates from Aviva may suffer from the lack of highly skilled workers while operating in China. The underlying reason behind this is that people in the Chinese society follow a collectivism oriented culture (The Hofstede Centre 2015b). They prefer to form groups where team members rely on each other heavily. Therefore, the performance of the overall time might be affected as collectivism affects the ways in which employees are hired in organizations (Komarraju, Dollinger and Lovell 2008). Chinese HR managers may be biased towards people from their societal background as a result of which expatriates may lose skilled and knowledgeable employees from a different cultural background. This will severly affect the quality of work done within the organization. Given the fact that Chinese employees are often hostile to people from other backgrounds, expatriates might have safety issues as well in the working environment. Conflict of opinion may also be witnessed as British employees are more individualistic in nature and thus may refrain from working in a group in which case team work will be affected (Browaeys 2011). Therefore managers in China should encourage the employees to work in a team in order to for the employees from both China and UK to learn from each other’s strengths and skills. However, the manager should make sure that the team works with coherence and monitor the fact that Chinese employees do not form their own group comprising people from Chinese backgrounds as this may result in conflict of opinions between Chinese and employees and their British counterparts. Masculinity Given the fact that both China and the UK is a masculine society where people are driven by achievement and success, managers are not expected to face any issue as there is literally no difference between the two counties at least in this aspect (The Hofstede Centre 2015a). However, only one minor issue is that people always choose to leave their families in their hometown in order to look for better opportunities (The Hofstede Centre 2015b). Therefore, there is no scope for them to achieve a balance between their personal and professional life. This may affect their engagement level towards work and managers are also not in a position to provide them with ample time to attain work life balance as employees often stay far away from their family. Therefore, expatriates may try and engage in frequent communication with their subordinates in order to learn their issues and problems and make every effort to address them so that their motivation level is maintained. Apart from that the similarity between the two countries in this dimension places the human resource manager of Aviva in an advantageous situation. Therefore managers in China should inspire employees to be driven by success and achievement. However they need to ensure that the employees engage themselves in other things apart from work. This will enable the managers to maintain the focus and motivation level towards the work. The underlying reason behind encouraging employees to focus on other aspects of life is to prevent them from being fatigued due to overwork. The managers should provide ample scope to both Chinese and UK based employees to focus on their family life other than work in order for them to be able to achieve work-life balance (Swaidan and Hayes 2005). Uncertainty avoidance Expatriates may find it difficult to guide the workflow process in the teams comprising of both British and Chinese employees. The underlying reason behind this is that employees from the cultural backgrounds are happy not knowing what the future may bring to them (The Hofstede Centre 2015a). They try and stay lucid and flexible in their strategies and prefer to change their approaches on the basis of the situations and circumstances they encounter (The Hofstede Centre 2015b). Given that people from UK and China find it easy to deal with ambiguous situations they might take a laidback approach towards a particular objective (Emery and Oertel 2006). In such cases managers may find it difficult to stick to a particular plan as employees might be reluctant to be static. Moreover, flexible approaches adopted by employees may also lead to delays if those approaches are not aligned with the workflow process. Therefore, it is extremely important for managers to guide the overall workflow process and at the same time try and be as flexible as possible in terms of their approach towards their objective. Managers have to ensure that there their flexible approaches and the workflow process is in complete alignment with each other. This is because employees have the tendency to deviate from the actual goal by being lucid and flexible in their plans. Long term orientation Expatriates may encounter problems related to project failure when they expand their business. This is precisely because Chinese employees have a pragmatic approach towards everything that they pursue (The Hofstede Centre 2015b). Therefore it may happen that employees tend to make immature decisions out of their sheer excitement or because of over confidence that is driven by their pragmatic approach. This may lead to unfavourable outcomes as a result of which the overall team performance may get affected. Therefore expatriates will have to properly train their subordinates so that their pragmatism is properly channelized (López-Navarro, Moliner and Rodríguez 2011). Therefore, managers in China should constantly encourage employees to seek new information and knowledge. This will enable the employees acquire knowledge on how to work in a team and the importance of forming an alignment instead of pursuing everything that is out of reach (The Hofstede Centre 2015a). Moreover, proper training and development programs should be designed that are aimed towards enhancing collaboration and coordination among the British and Chinese employees (López-Navarro, Moliner and Rodríguez 2011). Factors that may affect expatriates in China Political factors Although China is not a free market economy the political regime in this part of the world is highly stable. Trade rules and regulations do not change frequently which is favourable for businesses that are set in this part of the world. Therefore, due to such stable political regime expatriate managers will not have to change their business plans frequently (Park and Luo 2001). However, the political regulations are a bit strict as far as international trade is concerned. This might restrict the scope for expatriate managers to conduct bilateral trade by operating from a country like China. In addition expatriate managers might also face issues related to corruption as this is one particular factor that has affected business operations tremendously (Li and Atuahene-Gima 2001). Therefore managers must formulate their import and export plans properly by following the regulations stipulated by the government. They should make proper estimation of the goods that they need to import and export in order to make sure that inventories are not wasted. As far as reducing corruption is concerned, managers will have to establish corporate governance framework where strict penalties will be levied on the employees who resort to corrupt activities. Operation and maintenance supervisors will have to be appointed who would be responsible for monitoring any suspicious or unethical business activity. Economic factors The Chinese economy is developing at an unprecedented rate over the past decade or so. The country’s GDP is at an all time high that places it in the second position in terms of economic development. The country has attracted a lot of FDI over the last ten years that has added to its economic development (Wang and Swain 1995). Manufacturing import and export in China has also increased steadily thereby helping Chinese government to realize trade surplus. The inflation and interest rate is also relatively low compared to other companies which is also favourable for businesses. Therefore, such lucrative economic conditions are sure to help expatriate managers to benefit from the increasing flow of FDI as well as implement effective cost control strategies thereby reducing the operating cost of the organization (Deng 2009). However at the same time managers may also encounter problems if the economic factors start to fluctuate. For example if they have a huge amount of debt obligations, a rise in the interest rate will affect their financial performance owing to the increasing interest expenses. Moreover, fluctuating inflation rate may also have a negative impact on Aviva’s financial performance. For instance a rising inflation rate will increase the cost of goods sold for the company which in turn will affect the company’s profit margin. Therefore, managers should make every effort to reduce their debt obligations in order to bring down their interest expenses. In addition, they also need to keep looking for cheaper sources of raw materials and services so as to reduce the cost of goods or services that is provided to the customer. Social factors Expatriate managers can benefit from the high literacy rate in China. With such a huge base of literate people not only can expatriate managers recruit people with greater skills and knowledge base in their organization but can also target a highly knowledgeable customer base who would understand the essence and purpose of the products developed by the company (Wang and Swain 1995). In addition, China is a country where people from various cultural backgrounds stay. Therefore, expatriate managers can benefit from culturally diverse customer base by providing them with varied product range which in turn will increase their company’s market share (Deng 2009). On the flip side managers may encounter several issues of conflict of interests and opinions between employees as a result of cultural differences which induces them to have dissimilar viewpoints. Managers may also find it extremely difficult to design a proper product that will suit the tastes and preferences of their customer base in China. This is precisely because tastes and preferences of people tend to vary across cultures. In order to mitigate these problems managers should engage in frequent communications with the employee base in order to motivate them to work with collaboration and coordination. They should be encouraged to work towards a common objective. Additionally, expatriates should conduct extensive market research in order to have an understanding of the factors that influences the buying behaviour of their customer base in China. This will help them to design the product effectively. Safety issues Safety is a big concern for expatriate managers especially when consider expanding their business in China. The absence of adequate safety measures in manufacturing facilities in China has pointed out several red flags that have become a worrying cause for expatriate managers (Li and Atuahene-Gima 2001). The pressure exerted by foreign companies on Chinese manufacturing companies in terms meeting production deadlines in short time frame has compelled owners of host country manufacturers to compromise on safety measures and invest for recruiting more people in order to boost production. However in the process the manufacturing facilities get overcrowded making it difficult for expatriate managers to manage the employee base (Park and Luo 2001). This not only deteriorates the working conditions in the companies but also makes it the environment unsafe and unsecure for the expatriate managers. In order to deal with this problem expatriates need to conduct frequent supervision of the working facilities in China in order to inspect and evaluate the quality and adequacy of the safety measures incorporated in those faculties. They should try and make sure that only required number of personnel is allowed within the working facilities in order to prevent the facilities from being overcrowded. Advantages of working in a bicultural managerial team First of employees from both the UK and China will be able to enhance their adaptability while working in a group that has people from both the cultures (Dalton 2002). The scope of learning new things will increase thereby making it easier for employees from both the countries to learn and respect each other culture (Cheng 2004). On one hand expatriate managers will be able to learn from the innovative ideas provided by their Chinese counterparts (Chen, Tsui and Farh 2002; Lysonski and Durvasula 2013). On the other hand the Chinese employees will be able to learn the methods to improve quality of performance from their British counterparts. Working in a culturally diverse workforce will strengthen teamwork and enable employees belonging from both the cultures to learn to work collaboratively and in coordination (Chen and Francesco 2003). Moreover, by working in a bicultural team employees from both the countries will be able to benefit from each other’s networks. This in turn will allow them to provide services to customers belonging to the opposite culture (Chen and Francesco 2000). Disadvantages of working in a bicultural managerial team The first and foremost disadvantage of working in a bicultural team is that it may lead to conflict of opinions between two employees belonging from the UK and China (Trompenaars 1993). This might deteriorate the overall coordination and collaboration amongst the team members. Conflict of opinions between employees may deteriorate the overall working condition as a result of which the quality of output provided by the employees may get degraded (Walumbwa, Lawler and Avolio 2007). In addition to that employees from UK might find it extremely difficult to communicate with employees who belong from China (Govindarajan and Ramanurti 2011). The difference in the communicating language might be the main cause behind such communication gap. Moreover, Chinese employees may find it tough to understand the accent of expatriate managers and vice versa. This will not only create a communication gap between the employees from both the countries but will also restrict the free flow of information within the organization (Schwartz, 2006). Benefits of devolving responsibility of key HR functions to host country team The main benefits of devolving key HR functions to host country management team is that they Chinese HR managers will have a better understanding of the skill sets and expertise of the Chinese employees who will be recruited for the organization (Schneider and Barsoux 2003). The Chinese HR managers will serve as an intermediary between the employees in China in the expatriate managers thereby diminishing the communication gap that may exist between the employees of US and China (Rarick 2007). The Chinese HR managers will also have a better knowledge of the cultures that exist in this part of the world. This will help a smooth transfer of knowledge from the Chinese employees to the British employees (Molinsky 2007). In addition to that, Chinese management will have better knowledge regarding labour laws and regulations stipulated by the Chinese government. Therefore, they will be able to make sure that Aviva never fails to comply with the legislations enacted by the government when it comes to recruit and manage employees (Oertig and Buergi 2006). Expatriates need to make sure that new employees are recruited on the basis of their merit and not because of their cultural background. This will help them to create a robust wok environment that will comprise of highly skilled employees from different cultural background who will be keen on sharing knowledge with their peers. The employees will have to be provided with proper training and development facilities in order for them to be able to enhance their team working skills thereby learning the importance of collaborative and coordinative working. The employees will be paid on the basis of their job seniority which defines their payment slabs. In addition incentives will also be paid to the employees on the basis of their productivity. Drawbacks of devolving responsibility of key HR functions to host country team Expatriates from Aviva may also end up landing in trouble by devolving key HR functions to the Chinese management team. The first and foremost drawback is that Chinese HR managers may be biased towards recruiting more and more Chinese employees regardless of their skill sets, competencies and expertise (Kirsch, Chelliah and Parry 2012; Jamal 2005). As mentioned before during the cultural dimension analysis that Chinese people are more comfortable working in groups, the Chinese HR managers may form their own group by doing biased recruitment in order to appoint those employees who are like minded. This will affect the working culture of Aviva severely (Lee, Madanoglu and Kom 2013). Not only will this affect the quality of work done in the company but it will also increase the chances of conflict of interest and opinions among the employees. Due to such conflicts Aviva may encounter significant employee turnover rate which in turn will deteriorate its reputation. Chinese HR managers may also have the tendency to recruit as many Chinese employees as possible without paying attention to the actual needs and requirement of the company (Hofstede 1991; Hofstede 1993). This will affect the management capability of the expatriates alongside increasing the operating cost of the company (Hofstede 2000). Conclusion A thorough study of the cultural dimensions of the UK and China revealed that the culture of both the countries is similar in some aspects and dissimilar in others. The similarities will definitely prove to be a favourable factor for Aviva managers when they plan to implement their business expansion strategies in China. The factors in which both the cultures differ from each other are not that significant. In fact the political, economical and social factors in China are much in favour of foreign businesses. This is evident in the magnanimous amount of FDI inflow that the country has realized over the past decades or so. However, the managers may face minor issues related to conflict of opinions between employees. In such cases they have to make sure they communicative with their employees effectively in order to motivate them to work cohesively. Managers need to convey the importance of teamwork to the employees and how they should learn to focus on the success of the team instead of emphasising on individual interests. In order to curb the impact of economic fluctuations, managers need to reduce their external borrowings as well as look out for cheaper sources of raw materials in order to reduce the company’s expenses. Strict supervision should be done in order to curb unethical practices. Therefore, given a proper management and corporate governance framework Aviva will definitely be able to prosper in a growth seeking country like China. Self Reflection This was one of the most extensive studies that I have ever conducted during my course timeframe. Before conducting this analysis I had very limited knowledge regarding the impact of culture on human resource of management. Nonetheless, this coursework helped me to comprehend how globalization has led to blending of culture and the ways in which this cultural blend has shaped strategic human resource management. The cultural dimension analysis between the UK and China helped me to understand a lot about the dimensions in which this two countries are similar and dissimilarly. The application of this knowledge enabled me to adjudge the cultural feasibility of China and its impact on businesses of foreign organizations. Such an extensive allowed me to learn about the essence and importance of teamwork, collaboration and coordination. I was able to comprehend that effective teamwork driven by proper coordination and collaboration is one of the fundamental determinants of organizational success. In addition I was also able to learn the impact that several aspects of a host countries such as political factors, economical factors, social factors and safety issues may have on the business conducted by expatriate managers of foreign countries. I am also able to gain sufficient information about the advantages and disadvantages of working in a bicultural team. The analysis revealed several intriguing details regarding the advantages that can be achieved by employees by working in a bicultural team in terms benefiting from the innovative ideas provided by people from other culture, increased adaptability, and greater network. The study also pointed out that conflict of opinions and interests is one of the major disadvantages when it comes to working with people from different culture. 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