International Human Resources Management in Thailand - Case Study Example

International Human Resources Management (Thailand) Name Professor Institution Course Date International Human Resources Management (Thailand) Executive Summary The increase in globalization in 21st century poses unique human resource management challenges to companies particularly one which operates across global boundaries such as multinational enterprises. Globalization is characterized by competition, advanced technology and cultural diversities. The human resource remains a key factor in the success of a global business. When an organization fails in Human resource management, its operation will definitely fail in the foreign market. The economic growth in Asia has attracted many multinational to invest in the region so as to compete at a global arena, increase their brand awareness and maximize the profits. Companies from the West have had their human resource challenges operating in the East due to low labour supply which cannot meet the demand as well as cultural diversities. Therefore, this report focuses on the feasibility of setting up offshore help desks to support Australian broadband customers. This report will discuss the HRM problems or issues that are likely to be encountered in Thailand, and to make recommendations about appropriate HR policy and practice to the senior management team. A brief overview of the Thailand labour market will be analyzed using various frameworks such as Hofstede and Trompenaars to understand the viability of investing in this market. Table of Contents Executive Summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Overview of Thailand labour market 5 3.0 HRM problems or issues in Thailand 6 4.0 Conclusion and Recommendations 12 5.0 References 14 1.0 Introduction A major change in a business environment which has occurred in the recent years has increased globalization. Particularly, Schuler (2000, p.240) stated that stiff competition in the local markets and growth in some world market has pressured companies to seek new markets and opportunities where they can maximize their returns. Unlike local markets which could be easy to adapt, foreign market are full of challenges and risks. Managing human resource and customer service has become a vital aspect in creating an effective business in the rapidly changing environment (Hashim 2012, p.44). Companies have sent employees over the years to work in foreign markets, but the results has been that many of these people face challenges hence reducing their productivity. In order to operate successfully in foreign markets, Hashim (2012, p.44) argued that multinational companies need workforce who can settle into diverse cultures, social practices, customs, values, political and economic systems, management practices, and can operate with other staff from diverse backgrounds. The situation has led many new challenges for the Human Resource managers. Therefore, this report focuses on feasibility of setting up offshore help desks to support Australian broadband customers. This report will discuss the HRM problems or issues that are likely to be encountered in Thailand, and to make recommendations about appropriate HR policy and practice to the senior management team. A brief overview of the Thailand labour market will be analyzed using various frameworks such as Hofstede and Trompenaars to understand the viability of investing in this market. 2.0 Overview of Thailand labour market Thailand is a nation in the Southeast Asia particularly in Indochina peninsula. The country is rated as the 20th most populous nation worldwide with a population of approximately 66.2 million people (Kokkaew 2012, p.1). Bangkok, the capital city of Thailand is regarded as commercial, political, cultural and industrial hub. Its rising economic influence and large population have enabled it to become the middle power in Southeast Asia and globally. Hewison (2013) contended that the economy of Thailand is ranked as the second largest in South-East, and has portrayed outstanding resilience to political uncertainties of 2010 and economic shocks. Despite the continuing political rifts and investment disputes in recent years, Thailand has continued to operate market-oriented and open economy. In addition, it has also encouraged foreign direct investment so as to promote employment, technology transfer and economic development. The population growth has been able to provide adequate labour to various sectors. In 2010, 39,499,700 people were in the workforce (International Labour Organization 2014). International Labour Organization (2014) went ahead to state that rate of unemployment remains low in Thailand at 0.7 percent on average, compared to 2.0 percent three years ago (see figure 1). However, many people work in manufacturing and low skilled jobs. Over the years, Thailand government have put up various measures in education to ensure its people become competent to work in skilled jobs (Walsh 2013, p.234). However, the number of skilled people is still low. This situation in the workforce makes it hard for foreign companies to hire from Thailand citizens. Figure 1: Thailand Labour market Trends Source: (International Labour Organization 2014) 3.0 HRM problems or issues in Thailand Human resource management is a role within the organization developed to increase the performance of the employees of strategic objectives of an employer (Byars & Rue 2006). Human resource normally concerns the management of workforce in the organizations, and focusing on systems and policies. Gullaprawit (2002) argued that some of the policies which can make an organization work efficiently or inefficiently include recruitment, training, performance rewards, (benefit system and managing pay), workforce diversity, employee classification (generation) and appraisal. In Thailand, where an Australian company is setting up an offshore help desk to support Australian broadband customers, the HRM problems are mainly workforce diversity and employee classification. Willems and Smet (2007) asserted that the workforce diversity and employee classification is largely based on cultural and age differences. While Thai culture is largely influenced by Chinese, Indian, Burmese, Lao and Cambodian, Australian culture is largely impacted by the British culture (Deveney 2005, p.155). The two cultures can be analyzed using Hofstede and Trompenaars frameworks. Basically Thai culture is from the East while Australian culture is from the Western countries. Based on the Hosftede’s six dimensions of culture, countries cultural diversity can be compared using power distance, individualism versus collectivism, indulgence, uncertainty avoidance, femininity versus masculinity and long-term versus short-term orientation (Geert, Hofstede & Minkov 2010). The Human resource management challenge for Australian manager in Thailand will be the differences in power distance. While Thailand has a high power distance of 64, Australia has a score of 36 based on Hosftede framework (see figure 2) (Hosftede 2015). Normally foreign companies are restricted to also provide jobs by employing some. In this process many culturally different people meet to work together. The problem will arise when a Thailand national is hired to head the offshore help desks because Australian national working within the organization will want to be close to power yet Thai culture regard people as unequal hence some must be in power while the rest are from it (Deveney 2005, p.156). Australian nationals often want to be close to managers for accessibility and liaising on various matters. On the other hand, Thai nationals do not bother being close to power. Similarly, the countries differ in terms individualism versus collectivism. While Australia score very high (90) in terms of individualism, Thailand score low of 20; meaning has high collectivism. The result implies that Australian expatriates prefers to work alone and considers team work as a waste of time and also lack of self-discovery (Hosftede 2015). Australian employees dislike collectivism (teamwork) because it takes a lot of time for a decision to be made and a project to be finished. In addition, it makes individuals within the group lazy as they rely on the effort and success of others. On the contrary, Hofstede (2007, p.414) claimed that Thailand nationals favour collectivism since they believe teamwork help in bringing and implementing new ideas. Also, they think that teamwork speed up the pace of a project in the rapidly changing business environment. Putting up these two diverse groups in one place of work can cause problems to human resource manager. Indulgence also differs between Australia and Thailand. Based on this dimension, Australia scores a high indulgence of 71 whilst Thailand scores 45 (Hosftede 2015). Indulgence is defined as the level in which to which individuals attempt to control their impulses and desires in terms of the manner in which they grew up. Comparatively, Hosftede (2015) stated that any form of weak control is referred to as “indulgence” whilst relatively strong form of control is regarded as “restraint”. Therefore, cultures can be classified as indulgent or even restrained. Today, Australia is ranked as indulgent nation with framework score of 71 while Thailand is a restrained country with a score of 45 (Hosftede 2015). Employees from Australia are characterized by their willingness to achieve their desires and impulses in reference to having fun and enjoying life. Liu, Zhang and Leung (2006, p.329) posited the culture is different with Thai employees who are restrained and conservative how they behave and act. Hofstede (2007, p.413) argued that the modern Thailand nationals are largely identifying themselves with strong religious practices which include elements of the ancestor worship, and beliefs in ancient folklore. Thailand national have a way of greeting to show respect especially for those in power hence have a great respect for social hierarchy, and expect everyone else to embrace the same. Seniority is vital among the Thai (Gullaprawit 2002). Trompenaars’ framework of national culture also proves that Australian managers working at Thailand offshore help desks to support Australian broadband customers can face various human resource management problems. According to Trompenaars & Hampden-Turner (1997) This model consists of seven dimensions including universalism versus particularism, individualism versus communitarianism, neutral versus emotional, specific versus diffuse, achievement versus ascription, sequential versus synchronic, internal versus external control. Universalism versus particularism is anchored on either rule or circumstance. In cultures with high universalism such as Australia, individuals put high significance on applying rules, law, obligation and value on their daily activities (Trompenaars & Hampden-Turner 1997). On the other hand, Maleki (2013) opined that cultures which are based on particularism like Thailand, individuals hold that every situation determines the rules which are applied to resolve it. This means the reaction to a circumstance might change depending on the happening. Gelfand, Erez and Aycan (2007, p.481) stated that with such differences on how rules and laws are applied managers can find it hard to implement ideas because Australia employees will follow instruction, rules and procedure while Thai may not. Just like Hosftede, a research carried by Trompenaar also found out that society differs in terms of culture. For instance, in one hand, one society is high in individualism whilst another is high in communitarianism. Obviously the Australian offshore help desks in Thailand will have employees from both countries. The HR manager is likely to face challenges because Australian are highly individualistic compared to Thais who are much more communitarian (Loi, Lai & Lam 2012, p.469). Australian therefore believe to work alone and enjoy that comes with it. They also believe in being given chance to make personal decisions than collective ones. In contrast, Thai employees who posses communitarianism believe in group work and group decision because the company get a wide range of view which is more informed than individual decision. Trompenaars and Hampden-Turner (1997) contended that in specific versus diffuse dimension, some people like to keep or being open about the personal lives at work place. Thai people a specific culture bars them from disclosing personal issues at the place of work. The situation means if they are interviewed by the Australian managers about their personal lives like marriage and home life (Trompenaars & Hampden-Turner 1997) and they decline to answer, the manager can think that they are rude. Similarly, Australia employees believe that a good relationship is created when people take openly about business and personal lives at the workplace. They also see nothing wrong with socializing at workplace because it helps employees create a good rapport with their managers (Maleki 2013). Thais which keep their personal live away from workplace are rather seen as antisocial people making workplace to be dull. Another human resource problem which could arise when Australian company is hiring people is based on performance. The situation is demonstrated by achievement versus ascription dimension. Caligiuri, Lepak and Bonache (2010) argued that employees who are oriented in achievement culture often individuals hold that their best status is rewarded by performance. Therefore, people work hard for promotion and rewards. They also believe that to acquire a job, one must have worked performed well to achieve it. The situation is so different in with you ascription culture where status is judged by what someone is such being old or have a particular title (Trompenaars & Hampden-Turner 1997). Normally, Australians have achievement culture and believes in performance in achieving status. Since it is an Australian company which as set up an offshore helps desks in Thailand, the manager is likely to clash employees with Thai origin because they do not believe in performing to achieve but rather status based on what someone is in the society (Tuntimas 2007). Beside the two frameworks, employees diversity based on age will also be a problem in effective human resource management (Calo 2008, p.407). In 2003, the number of baby-boomers increased considerably. The number is even projected to increase by 2030 when more than 23% of the population will reached 65 which are past the recommended retirement age (Gullaprawit 2002). Similarly, there will a high number of young population who are less than 15 years of age. Gullaprawit (2002) maintained that Thailand Labour Act of 1998 people 15 years is not allowed into workforce. The trend could force the Australian Broadband to rely on foreign labour which is difficult and expensive to manage. Figure 2: Hofstede’s cultural Dimensions Source: (Hosftede, G 2015) 4.0 Conclusion and Recommendations In the recent years, labour market of Thailand has demonstrated major structural changes (Kokkaew 2012, p.5). The population has been able supply sufficient workforce to industry players. According to World Bank Group (2015) countriy’s laws have also become friendly to foreign businesses (see figure 3). However, foreign companies like the Australian Broadband company still face several human resource challenges challenges based on cultural and age differences. Based on Hofstede and Trompenaars framework, the report has found out that culture affect relationship, teamwork and staffing policy hence reducing the effectiveness of work in foreign countries. Therefore, this report recommends some of the ways the company can use to reduce these challenges. Adoption of more technology. Hiring many Thais can prove to be ineffective to the company bearing cultural differences. Therefore, as a company which operates in technology industry, it needs to rely on computerized most of its work to avoid inconveniences. Training The company needs to invest in more training of employees both from Thailand and Australia. Training has the capacity to instill cultural intelligence on employees and to make the global citizens. In so doing, the employees will drop cultural difference and focus on corporate culture. Polycentric Staffing Another best option is to hire nationals from host-nation (Thai) for lower positions to the high top level managers with only a few slots for Australians. Since the company operates in Thailand, the company will have reduced the effects of cultural difference. Figure 3: The ease of conducting business in Thailand Source: World Bank Group 2015 5.0 References Byars, LL & Rue, 2006, Human Resource Management, edition 8th, McGraw Hill, New York Caligiuri, P, Lepak, D & Bonache, J 2010, Managing the global workforce, Wiley- Blackwell, Chichester Calo, T. J 2008, ‘Talent management in the era of the aging workforce: The critical role of knowledge transfer’, Public Personnel Management, Hofstede, Vol.37, No.4, pp.403–416 Deveney, B 2005, ‘An Investigation into Aspects of Thai Culture and Its Impact on Thai Students in an International School in Thailand’, Journal of Research in International Education, Vol.4, No.2, pp.153-71 Gelfand, M. J, Erez, M & Aycan, Z. 2007, ‘Cross-cultural organizational behavior’, Annual Review of Psychology, Vol.58, pp.479-514 Geert, H & Hofstede, G.J & Minkov, M 2010, Cultures and Organizations: Software of the Mind, 3rd ed, McGraw-Hill, New York Gullaprawit, C 2002, “Thailand,” in M Zabko (ed.), The handbook of HRM Policies and Practices in Asia-Pacific Economics Volume 1, Cheltenham: Edward Elgar. Hashim, M 2012, ‘Human Resource Management in 21st Century: Issues & Challenges & Possible Solutions to Attain Competitiveness’, International Journal of Academic Research in Business and Social Sciences, Vol. 2, No. 9, pp.44-52  Hewison, K 2013, Thailand’s street politics turns violent yet again, The Conversation Australia. Hosftede, G 2015, The Hosftede Centre, Viewed 14th May 2015 Hofstede, G 2007,’Asian management in the 21st century’, Asia Pacific J Manage, Vol.24, pp.411–420 International Labour Organization (ILO) 2014, Thailand Labour Market Update, Viewed 14th May 2015 Liu, A., Zhang, S & Leung, M 2006, ‘A Framework for Assessing Organizational Culture of Chinese Construction Enterprises’, Engineering Construction & Architectural Management, Vol. 13, No.4, pp. 327–342 Kokkaew, N 2012, ‘Current Practices of Human Resource Management (HRM) in Thai Construction Industry: A Risk and Opportunity Perspective’, Rev. Integr. Bus. Econ. Res. Vol 1. No.1, pp. 1-14 Loi, R, Lai, J.Y.M & Lam, L.W 2012, ‘Working under a committed boss: A test of the relationship between supervisors’ and subordinates’ affective commitment’, Leadership Quarterly, Vol.23, pp.466-475. Maleki, A 2013, A Proposal for Clustering the Dimensions of National Culture, Cross-Cultural Research  Schuler, R.S 2000, ‘The internationalization of human resource management’, Journal of International Management Vol.6, pp.239-260 Trompenaars, F & Hampden-Turner, C 1997, Riding the Waves of Culture: Understanding Cultural Diversity in Business, Nicholas Brealey, London Tuntimas, A 2007, Factors impacting on the efficiency of HRM practices in Thai construction industry SMEs, University of South Australia. Walsh, J 2013, ‘Management of Foreign Teachers in International Educational Institutes in Thailand’, Journal of Education and Vocational Research, Vol. 4, No. 8, pp. 230-237 Willems H & Smet, M 2007, ‘Mentoring driving diversity’, Organization Development Journal, Vol. 25, No.2, pp.107–111 World Bank Group 2015, Going Beyond Efficiency: Economic Profile 2015 Thailand, London, London, Viewed 14th May 2015, Read More