International Human Resources Management Practices in Chinese Companies - Literature review Example

International Human Resources Management Name Institution International Human Resources Management Introduction In the past decades, there have been increments in the number of Multinational Corporations (MNCs) that go global due to increased competitive business environment. Through the years, MNCs have been able to invest in the global markets to acquire and maintain their competitive edge due to forces that encourage globalization like liberalization of the global trade, research and marketing, and integration of production through the major MNCs. People are considered the greatest organizational assets and important in the achievement of MNCs (Tungli & Peiperl, 2009). Therefore, human resources management (HRM) is an important strategy that most MNCs use in ensuring efficiency of their global operations. Over the last couple of years, China has engaged in rapid economic development and internalization of the business system; thus, the Chinese MNCs consider adopting improved management practices as pivotal to the process (Thory, 2007). Drawing on the case study from the Chinese MNCs, the paper aims to explore the literature review on international HRM and application to the Chinese MNCs that operates in the UK. The paper aims to discuss several human resource strategies ad issues implemented by Lenovo Company (Liu & Buck, 2009). The human resource issues discussed within the paper include employee recruitment strategy, training and development, diversity workforce management and ethics within the business which also plays important in determining the success of Lenovo Company within the UK market. Literature Review on Chinese MNCs HRM Practices Until the 1970s, the Chinese businesses operated within the domestic arena characterized by the centralized and planned economy that had little experience of competition within the global markets. However, the Chinese government adopted a policy of outward investment, which opened the market for the businesses while encouraging participation in the international markets. This also offered the opportunity to learn (Zhang, 2003). It is plausible to suggest that most Chinese MNCs are likely to choose the localization strategy for absorption of the highly improved management practices while operating in highly developed countries such as the UK. Hence, adopting the local practice is a rational strategic choice for the MNCs for absorption of mature international management experience. With Chinese business activities becoming more global, the general international management especially the international human resources has become an important area in research (Zhang, Edwards & Ma, 2014). The major challenge experienced by most MNCs is the effective HR practice for adoption and considered appropriate the effective and efficient performance of the subsidiary and be in a position to compete within the local markets. These factors are important for the Chinese MNCs since China is an emerging economy with its businesses entering developed economy. Large Chinese MNCs rely on their foreign subsidiaries for important resources with the Head Quarters (HQ) dependent on the varying levels of its overseas subsidiaries and staffs. Depending on the resource dependence, approach contributes to the needs for control. The MNCs that implement the measure of control over the subsidiaries need to ensure that there is an allocation of adequate resources and direct efforts of attaining the objectives of the MNCs (Zhang, Edwards & Ma, 2014). One of the key challenges experience in managing human resources within the MNCs is the methods of adapting to the headquarter-based or international ways of managing the human resources to various national contexts within the host countries. To compete effectively within the global markets, Chinese MNCs in the UK need talented employees, take up the pressures, and deliver the quality of products and services needed within the developed markets (Zhang, 2003). Even with such realization, there is of talented employees in China, which is projected to be the major barrier limiting organizational growth. To overcome such challenges, most MNCs often focus on IHRM practices and outsourcing talented employees within the UK market. The major cause of the shortage in talented employees in China is due to its high levels of foreign direct investments. With the stiff competition in the UK market, there is a need for talented human resource practices. Research indicate that the transfer of the bust practices between developed and emerging economies is influenced by the hierarchical order that occurs between the economies that creates the dominance effect in which MNCs from countries that have lower hierarchy may perceive the interest in the adoption of practices from the dominant economies (Chen & Smith, 2009). MNCs from China may want to emulate the host country activities rather than implementing the practices of the home country due to cultural differences and HRM practice requirements. Such challenges imply that MNCs from the emerging countries are likely to adopt the western practices due to economic superiority and development within the host countries. Research refer to these practices as reverse diffusion which is a prominent practice among businesses from developing countries such as China. Business Analysis: Lenovo Lenovo is Chinese personal computer manufacturer that started in 1988. The company has experienced fast development in the last decades; Lenovo begins to expand its business into a wider scope. For example, the business has been able to engage in computer related businesses like the production of software, servers, printers, cell phones, and GPS. Lenovo had experienced storms while changing the names when it first entered the global market. With proper management and corporation from Lenovo members, it has expanded into several regions including UK (Holstein, 2014). Lenovo has become one of the major personal computers within the global market. The corporation between Lenovo and IBM lead to the development of think pad series computer products. Recruitment and Selection As noted earlier, UK market is highly competitive. Competition among the businesses to select potential candidates has facilitated the focus on the human resource management, decision-making, and innovation. Employees are greatest organizational assets; therefore, human resources need to adopt suitable methods of in sourcing the employees within the organization. Recruitment and selection is an integral facet in HR to ensure that Lenovo has the needed candidate. The business experienced challenges in establishing the competitive advantage since it failed to evaluate and understand the benefits associated with effective recruitment and selection within the market (Deadrick & Stone, 2014). In the UK, there is a pool of employees; however, with cultural and human resources differences, it may not be easy to recognize the employee that best suits the business position. Based on the human relation theory of management, human labor plays a significant role in ensuring organizational success, which makes it important for businesses to take adequate time in, identify the appropriate employees. Management of human resources in different cultural, legal, and economic system may be a threat to effective selection and recruitment process. Research undertaken reveals that the common obstacles to effective recruitment and selection of the employees include racism, economic, cultural, political, and belief factors (Zhang, 2003). Training and Development Chinese and UK markets are different in various aspects. Based on such differences, many organizations operating in the UK often consider outsourcing which costly and required a lot of time as it involves assessing the experience and expertise of each candidate. Lenovo Company struggled to develop the skills of its management to effective operation on a global scale. Employees need to be familiar with the foreign markets, foreign language skills, and experience associated with the management of the global operations (Zhao & Du, 2012). To avoid these challenges, businesses often consider the provision of appropriate training and development to its employees to meet the required skills of managing global businesses. International training and management development has been on the rise. For proper training and development of the employees, most businesses focus on international traveling, the formation of diversified teams, international training, and assignments. The purpose of these events is to improve the existing work skills of the employees and behavior while development increases their ability to accomplish the required tasks. The company failed to realize that required global managers with a set of context-specific capacities including industry specific knowledge and some important features like cultural sensitivity, ability to handle responsibilities, and develop subordinates. Performance Management and Compensation Chinese and UK legal framework that involves management of the employees are different which pose a threat to the survival of business entities operating in China. Performance management and compensation are important tools most businesses use to motivate the employees and aligning some of their efforts to organizational objectives (Zhao & Du, 2012). Most businesses focus on financial methods to manage performance and compensating employees; however, it is important to consider the non-financial methods. In the UK, Lenovo Company used the rise in employee’s annual basic salary to improve performance, which is important in retaining the workers considered to be at the top end of organizational success. Sometimes employees’ poor performance may not be related to pay system which makes it important to explore other performance management methods. HRM face problems in solving performance management and compensation issues in the foreign countries. To such end, it is important that the HRM understand the UK market issues, effective employee management strategies, and ways of improving employee performance within the organization. In developing countries like China, identifying, developing, promoting, and rewarding the highly performing may succeed in retaining the employees and getting returns on the investment of people (Parry, Stavrou-Costea & Morley, 2011). The UK is highly developed, and employees understand the nature of market operations; thus, assumptions may lead to organizational failures. In the UK, the risks associated with getting it wrong are high though the returns for getting it may be higher. Employee Relations The arrival of Chinese businesses in the UK elicited both anxiety and anxiety. In the era of increased level of competition, employees are important organizational assets. China and UK have different cultural, economic, political, and legal framework, which may pose a threat to business success. However, with proper employee-employer relationships, the business could achieve the required status. In developed countries like the UK, already established business often, improve employee relations through employee engagement, which makes them feel part of the management. Besides, the employees understand the market segments better than those in the managerial position since they interact with customers of frequent basis (Anchor, Oh & Jeong, 2016). Moreover, with good relations, the employees can stick with the business during hard times. Businesses that understand the challenges of MNCs and significance of employees in solving these problems use the bottom-up approach in solving various business challenges. The approach allows involvement of the employees and consideration of their ideas while solving important problems. When entering the UK market, Lenovo Company clearly defined its management strategy: top-down approach in which the management makes crucial decisions for the employees to follow. The poor organizational structure may limit employee contributions to the businesses. Employee relations involve empowering them to push organizational objectives and feel responsible for organizational failures; as a result, the practice is likely to improve their input organizational output that meets the needs of the customers. Conclusion and Recommendations In the recent years, internationalization process of the Chinese MNCs has been able to attract the attention of researchers in international businesses and management. The focus of research has been on an exploration of motivation, entrance theories and models, and the features of internationalization process practiced by Chinese MNCs (Warner, 2010). Diffusing the best management practices across the boundaries is becoming important for the MNCs to achieve their required competitive advantage within the global market. However, businesses from emerging economies such as China often experience greater challenges to suit the complex UK market. Drawing on the study of the Chinese MNCs operating in the UK market, Lenovo Company, the paper highlighted some of the human resource challenges. MNCs are faced with the challenges and pressures to remain globally consistent with the HRM practices through practicing effective employee commitment, integration of the employees with the business, quality, adaptability, and flexibility. With differences in the political, cultural, and legal framework that both countries have, it is recommended that the Chinese MNCs operating in the UK adjust their HRM practices to meet the needs of the UK market. Transferring HRM practices and policies from headquarters to the subsidiaries is complicated; therefore, businesses need to have a counterbalance global standardized HR practices while responding the demands of the locals (Minbaeva, 2012). There are hybrid management practices that might assist human resources to develop effective practices to improve employee performance. Recruitment and selection are important HRM practices; however, if the business ends with poor employees, then it would be a great challenge to acquire the required business competitive advantage. Although China and UK have different legal and cultural practices that affect HRM practices, through training and development of the employees, MNCs are able to develop their employees to the level that meet organizational needs. In a bid to address the differences between China and UK to enable the MNCs to undertake their operations efficiently, the Chinese MNCs need to decide on whether they require localization, ways of balancing globalization and globalization, and the methods of choosing the time for globalization (Shen, 2005). Research on MNCs indicates that businesses that decide to go global should not only adopt the HRM practices that suites organizational strategy, but also accommodate the differences in the local business environment. Moreover, in the modern global business environment, businesses need to consider strategic HRM considering that the main strategic goal of the MNCs is to strengthen the level of interdependent connection that occurs between the long-term internal business methodologies and flexibility in the local operations (Edwards & Zhang, 2003). Through the practice, the MNCs are likely to employ hybrid strategies and choose the strategy considered suitable for the local condition of the subsidiary. As a result, businesses with subsidiaries such as Lenovo Company may consider the ethnocentric strategy. With a focus on the HRM, studies predict that only the HRM practices of the parent company that fits within the features and expectations of the target global market need to be transferred since the MNCs depend partly on the actors outside the business. In countries that have remarkable cultural differences, the localized HRM management approach is applicable. The method may also be practical to the businesses that have internal isomorphic pulls that are weaker compared to the ways of thinking and behaviors of individuals. The key to ensuring that the business creates a consistent corporate culture across the global subsidiaries is through maintaining the important balance between strong corporate organizational culture and local cultural differences (Rugraff, 2009). Chinese MNCs that have subsidiaries in the UK should avoid transferring the whole HRM practices since such activities may pose a big threat to the organization due various barriers including cultural, political, and legal. Most research indicates that most HRM practices of the MNCs are subject to greater levels of pressure to adapt to the local methods of practicing HRM. The MNCs may adopt the HRM practices from a country considered dominant which they perceive as advanced practices (Hu, 2012). Generally, the HRM practices of the subsidiary are shaped through different institutional influences and the extent of influence of various forces of the subsidiary practice. Developing an effective workforce is a great challenge in most host countries. However, achieving cheap labor is easy though a proper employee relation is hard. The challenge associated with such practices is a selection of the local people with the potential of ensuring organizational success, provision of the training and development required within the business, retaining the best performing employees, and effective management of the daily employee relationship. References Anchor, J. R., Oh, K. S., & Jeong, G. Y. (2016). Reverse knowledge transfer from subsidiaries to MNCs in Korea: size matters. International Journal of Multinational Corporation Strategy, 1(3/4), 179-188. Chen, I. C., & Smith, M. E. (2009). Can Western HRM learn from Eastern MNCs? The case of Taiwanese/Chinese MNCs in the UK. 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