Workforce Management in China and the United States - Case Study Example

Name: Course: Institution: Tutor: Comparative Intelligence Report on Workforce Management in China and the United States Introduction Although multinationals are struggling to make massive investments in China and the US, they are also struggling to discover the best ways of doing so. The availability and supply of top talent leadership to manage these initiatives is an important consideration for organizations wishing to establish presence in either China or the United States. As such, organizations expanding into these markets are struggling hard to recruit top skilled people, integrate them quickly, develop their talents and retain them for long. Nevertheless, it is not easy to find armies of experiences and skilled employees in either country. To realize the global competitive advantages, organizations need to invest in booming markets but most importantly, they need the services of top quality talents. Essentially, it is a tremendous challenge for human resource managers to create the next generation of global leadership. Already, many organizations have identified and applied best practices for successful workforce management in both developed and developing countries with success. Nature, Overview and Issues Related to Workforce Management in China For close to three decades, the Chinese economy has achieved an average annual growth rate of 9% and this has helped lift millions of people out of poverty to create a new middle class. By mid 2000s, China was attracting foreign direct investments at a very high rate. Still, this emerging economic power continues to attract large numbers of foreign investors hoping to take advantage of the country’s skilled and relatively inexpensive labor (Leggett, 2000). Moreover, the Chinese economy is expanding its markets for everything from small home equipments to jumbo jets. China has also witnessed a relatively smooth political evolution, one that is characterised with the emergence and successful implementation of socialism with Chinese elements. This unique mix of capitalism and communism has allowed enterprises (both private and public) to prosper under the watchful eye of the state. The system has also allowed the government to maintain social order and internal political stability, a key to attracting foreign investors. These political and economic changes have impacted dramatically on China’s labor market. Today, state-owned enterprises exist alongside multinational corporations that use modern management techniques. Consequently, the long-held idea of holding a job for life has been replaced by new and emerging concepts like career path; bonus program; pay for performance and learning and development opportunities. Accordingly, employers and employees have had to make adjustments to allow for unprecedented levels of labor mobility (Lewis, 2003). As the Chinese economy transits into capitalist and state owned enterprises play a significant role in the economy, employees are realizing that the traditional view for successful career no longer applies. The ideas of seniority and membership to the Communist Party no longer hold and have been replaced by skills and performance. As a result, learning and development are key issues when employers are deciding to recruit new employees (Leggett, 2000). This consideration affects young workers more than old workers whose career life is gradually getting phased out. Chinese employers are equating learning and development with stability and meaningful employee engagement. Basically, Chinese employers have internalized the view that the productivity of their firms will only be viable as long as the employees contribute. This in turn demands keen vigilance in identifying skills especially in areas where technology demands new competencies or eliminates previous ones on a seemingly endless basis. In China, if employers have any expectation on their employees, it is to help them stay valuable, relevant and productive. Interest in employee development in China is being reinforced by new dimensions of social values which place a lot of emphasis on modern human resource management techniques. The Chinese government’s success in promoting a market driven economy is evident on it being among the top investment attractions. In addition to learning and development, other drivers for employee attraction in China include: competitive base pay; opportunities for career advancement; competitive retirement benefits and salary increases linked to individual performance. A research survey by Liu, Liu, Wang & Woo (2001) shows that employees dissatisfaction with their immediate managers and with the overall work environment are the major barriers to employee retention in China. Factors contributing to this include unreasonable workloads, inaccessibility of supervisors, excessive and unnecessary pressures, frustrations with business decisions and unclear expectations. This is exacerbated by shortage of professional managers, as well as the tendency by most Chinese organizations to promote managers based on their technical rather than managerial abilities. Monetary and other material incentives have been used by Chinese economic reformers to stimulate performance and employee commitment and loyalty. As regards reward system, there is substantial evidence to show that money plays an important role as a motivator for employee loyalty in China. As a result, individual bonuses have existed in the country at least since China embarked on modern market reforms. A report by Peng (2000) shows that majority of Chinese workers would rather work in a system where pay is based on individual performance. Nevertheless, there has been a tendency towards low differentiation in a kind of egalitarian reward system, which reflects the need to minimize competition and foster harmony in the workplace. This is in fact a reflection of China’ strongly collectivist culture. For many of China’s indigenous corporations, where pay differentials exist, they are based on the length of service, which is perhaps reflective of respect for age. It is also the case that most state-owned enterprises in China have employee wage structures which are complex and based on a number of different bonuses, allowances and subsidies. As such, many employees may be less reluctant to leave this system in favor of a less socially supportive one, like the ones exhibited in private and multinational enterprises (Lewis, 2003). Essentially, China is one of the most important suppliers of new talents. Each year, about three million Chinese students graduate from college and women are entering the workforce at an increasing rate. Thousands of Americans are employed in business processing outsourcing where workers deal with different issues ranging from processing insurance claims to tax statements for foreign companies. This workforce is expected to increase in the next few years thanks to China’s status as the foreign investment destination of choice. Although workforce in China is large, it is not loyal as compared to the United States. As such, turnover poses significant security risks for companies especially foreign companies which are often perceived with skepticism. The enormous amount of hiring that occurs in China also makes it expensive and difficult to verify a job applicant’s education and work experience. In order to reduce such risks, most Chinese organizations are developing national databases where willing companies can deposit employee data. Currently, the government is considering implementing a law requiring companies to provide data on employee training, skills, background check and results. This will remove much of the strain on the system because all the necessary data will be available in one place. If, for instance, integrity issues arise with a worker, they may get blacklisted and it will be difficult for them to just change jobs (Peng, Lu, Shenkar & Wang, 2001). Generally, the workforce management structure in China needs to be adjusted to include employee training and development. Because outsourcing is viewed as a cost cutting strategy, most organizations especially multinationals overlook development needs and then blame cultural differences for the problems that arise. Although foreign investors often insist on hiring graduates from China’s elite schools, this is largely a limited pool and may often be overqualified. Trends in the recent past have shown that women are increasingly becoming an important facet in the Chinese workforce. Recruiting women to work in big organizations can significantly and dramatically increase the labor pool and hence make the country a favorable destination for foreign investments (Luo, 2000). Nature, Overview and Issues Related to Workforce Management in the United States The past three decades have witnessed immense developments in the practice of managing workforces in the United States. These developments have been particularly unfolding in the areas of Strategic Human Resource Management and International Human Resource Management. Across these two areas of activity, workforce management in the United States has evolved to encompass a wider appreciation of issues related to the systematic nature of human resource management and the role that context plays in shaping human resource policies. Other areas of importance include the need to demonstrate the effectiveness of human resource policies and practices, the value of addressing the interests and concerns of multiple stakeholders and the need for partnerships in managing workforces. The ever increasing complexities in managing human resources in multinational enterprises and the difficulties of developing frameworks and theories are the main challenges facing successful workforce management in the United States (Kirkman, 2007). According to Mills (2005), the practice of workforce management in the United States has long been shaped by legal regulations and limitations which provide a variety of rights and protections against unfair employment practices. As such, monitoring the regulatory and legal environment to ensure that a firm’s employment practices comply with this important aspect of the organizations’ environment has long been the main responsibility of workforce managers. In addition, because organization’s pay practices must take into account the pay practices of other companies that are competing for the same pool of labor, the workforce management role in the US has traditionally included monitoring the practices of competitors. Similarly, because an organization’s decisions about future recruitment, staffing and development are influenced by the level of supply and demand in the labor market, the workforce management role has generally included tracking labor market conditions. However, the evolution of strategic human resource management in the recent years means that the workforce management responsibility of monitoring the external environment has considerably grown. Hargittay and Kleiner (2005) have provided empirical evidence which shows that a variety of environmental conditions can influence the choice of strategies and approaches that American organizations use to manage their workforces. According to these researcher, these conditions include particular aspects of the organizations itself (size, life cycle stage, structure, culture and workforce composition) as well as conditions of the external environment such as industry dynamics, country cultures and economic and political conditions. Thus, it is apparent that issues of workforce management in the United States need to be sensitive to continuous environmental scanning. In addition, issues of workforce management in the United States need to include developing a comprehensive understanding of how aspects of external market environment influence the functioning of the organizations. These aspects include change in demographic patterns and consumer preferences and the impact of technological changes on business processes. Generally, human resource professionals who demonstrate a keen understanding of business issues and their implications on workforce management can increase their ability to develop modern and efficient practices for managing dynamic workforces. Without a deep understanding of the broader spectrum of organizational context, it is highly unlikely that the next task of human resource managers (that of developing coherent workforce management systems) will be successful (Greer & Stephens, 2006). It is important to note here that gaining competitive advantages through workforce management in the United States can be accomplished in two main approaches. One approach is to pursue the generic workforce management policies that have been shown to be successful across industries and organizations. An example of these generic policies is linking individual and collective pay to performance. Majority of American organizations effectively link their payment to performance and have been able to outperform their competitors. Essentially, adopting workforce management strategies that have been identified to be among the best can be useful for moving organizations to competitive positions. However, because such practices and strategies are widely known and practiced by other organizations, they cannot be relied upon as a source of long term and sustainable competitive advantages (Robbins & Coulter, 2007). The other approach is for the firms to develop workforce management strategies that are appropriate to their specific contexts. This approach can, in fact, enable firms operating in the United States to have competitive advantages over their competitors. For instance, US businesses competing on the basis of cost reduction may be compelled to adopt the policy of performance based pay and then develop an individual piece-rate pay system to support the strategy. This strategy fits well within the context of the American cultures of capitalism and individualism. Challenges and Other Issuers Facing Workforce Management in China and the United States As the global economy pulls itself out of the recession, a new economy is emerging, one that is not only truly international but also requiring continuous innovation for survival. As organizations come to terms with the new economic changes, they must put appropriate measures in place to cope with rapid changes in technologies, the increasing complexities of international markets and the demands of human resources. It is apparent that there are ongoing shifts in workforce demographics, which are revolutionizing the way organizations do business. For instance, demographic shifts are a major challenge facing the future of workforce management in both China and the US. China has a large and relatively young workforce. Young employees will be expected to fill some of the vacancies left by departing aged workers. As such, there is need to develop appropriate succession planning policies (Schlevogt, 2000). In the United States, immigrants from Latin America, Africa and Asia are a major composition of the modern American workforce. Therefore, diversity management is a central issue in the American workforce management. One of the most important strategies that organizations can do to avoid the risk of adverse demographic changes is to assess their cultures and develop human resource management policies which are aligned to long term business objectives. The result of this arrangement will be strategic alignment of workforce and culture, which will go a long way towards attracting and retaining the best talent. Deteriorating psychological wellbeing is another important challenge facing workforce management in both China and the United States. According to Makino and Beamish (2008), about one-fourth of employees in the United States view their work as the main source of stress in their lives. Having a workforce that is at risk due to stress is a very big business challenge. This challenge not only increases workloads, short term business thinking and bad management but can also lead to anxiety and depression which in turn reduces productivity. This risk can be mitigated by implementing comprehensive employee assistance programs which provide employees with access to counseling and information resources. Workplace harassment and bullying are also a common issue in workplace management and can have serious consequences to individuals and companies alike. According to Schlevogt (2000), nearly half of all workers in multinational companies have been affected by workplace harassment; either being targets themselves or witnessing harassment against co-workers. Harassment in the workplace can adversely impact on businesses resulting in poor engagement, decreased productivity and compromised customer care. This issue is a common experience in both China and the US but can be mitigated by developing workplace management policies which define appropriate behaviours and consequences for failing to comply. Although many of the issues related to workforce management in China and the United States are very similar, there is no one-size-fits-all solution. In general, Chinese managers put a lot of emphasis and priority on maintaining relationships while American work values are more entrepreneurial and performance driven. Essentially, these differences are directly related to each country’s culture but have far reaching implications for foreign organizations looking for local investment. In the United States, most business managers are Americans but the same can’t be expected in China where less than fifty percent of companies CEOs are local Chinese with the rest being from foreign countries (Schein, 2006). Generally, American managers are more sophisticated when it comes to workforce management. In fact, only a handful of Chinese companies can talk about strategic approaches to workforce management. Disparities also exist in aspects of management development, the use of 360 degrees and other multilayer tools, adoption of workforce development programs and succession planning. While majority of American companies have programs for frontline leaders, strong programs for leadership development are not a norm in China unless those in multinational companies. Additionally, few managers in China demonstrate strengths in core skills that are critical to the long term growth and success of organizations. Most of the Chinese managers show particular strengths in relationship skills, which is not surprising given the traditional demands of Chinese business. Without trust for instance, most Chinese managers would find it difficult to marshal their resources and respond effectively to emerging workforce management challenges. However, more and more business leaders and human resource professionals in China are adequately getting prepared for new challenges facing workforce management in this emerging economy (Shenkar & Zeira, 2007). Conclusion The concept of workforce management has changed dramatically over the last few decades in response to changes in business practices. In China, the rapid economic growth rate is becoming an attraction for foreign investors. These investors have to develop workforce management strategies that take into account the interests and wishes of employees. Although the United States has the most developed economy, it has a small labor force compared to China. Nevertheless, the United States has a well developed labor force. Therefore, organizations operating in both countries must take into account the changing nature of human resource expectations when developing workforce management policies. References Greer, C. & Stephens, G 1996, “Employee Relations Issues in U.S. Companies in Mexico.” California Management Review, 38(3), p. 121-137. Hargittay, P., & Kleiner, B 2005, Effectively Managing Korean-American Businesses, Management Research News, 28(6), p. 55-65. Kirkman, S 2007, “The Impact of Cultural Values on Employee Resistance to Teams: Towards a Model of Globalized Self-managed Work Teams Effectiveness.” Journal of International Business Studies, 22(3), p. 730-757. Leggett, K 2000, September 22–24). 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