Domestic Or Foreign Firms In China - Essay Example

? Discussion of strategies adopted by firms in China to reduce turnover of their staff and an assessment of the effectiveness of specific measures. BY YOU YOUR SCHOOL INFO HERE DATE HERE Discussion of strategies adopted by firms in China to reduce turnover of their staff and an assessment of the effectiveness of specific measures. Introduction High levels of employee and managerial turnover in China poses significant problems for firms from a human resources perspective. High turnover imposes costs on the organisation in areas of training and recruitment, erodes the establishment of a positive organisational culture and reduces productive outputs that are better achieved with a culture of seasoned and well-trained employees. Therefore, firms operating in China must be concerned with establishing positive human resources strategies that will lower employee intention to leave the organisation and create more employee satisfaction. There are many factors associated with Chinese culture as opposed to Western cultures that must be identified and considered by human resources leadership within firms operating in China. Some of these factors, which will be described in more detail, are long-standing values and attitudes that are not easily changed. However, research has uncovered evidence that there is a growing shift between traditionalism in managerial practice and employee cultural characteristics that are, today, favouring more employee interactivity within the business model. Many of these shifts in values are what is driving a more contemporary and liberal set of human resources policies in Chinese firms by which organisations are finding success in reducing turnover and improving employee commitment and satisfaction. This essay examines the variety of different strategies employed in Chinese firms to reduce staff turnover. Research has uncovered several different strategies that have a positive relationship with turnover reduction including the establishment of remuneration packages, providing salary increases and performance-related bonuses, engaging in participative leadership to better engage mutual decision-making between employees and managers, providing opportunities for career growth and development, and the provision of autonomous working environments. Remuneration packages and salary increases Wang, Chen, Hyde and Hsieh (2010) recruited a sample of 260 different employees working within multi-national corporations in Shanghai in the semiconductor industry to determine the potential relationship between intention to leave and pay systems at the firms. The questionnaire instruments utilised for the study provided results that pay satisfaction was the most significant method for satisfying employees and reducing turnover intentions (Wang et al. 2010). Offering wages that were higher than the competitive environment within other firms substantially increased Chinese employees’ organisational commitment. Cotton and Tuttle (1986) support these findings, indicating that HR strategies involving the development of remuneration and bonus packages greatly improved organisational commitment and, hence, reduced employee intention to leave the organisation. Even though not all companies have the financial resources available to offer high quality remuneration packages, there are opportunities for even smaller Chinese firms to use some sort of monetary incentives in a culture that legitimately values the importance of pay. The study conducted by Cotton and Tuttle (1986) illustrates that pay values are significantly important for Chinese staff members, a phenomenon which has endured into contemporary Chinese businesses. Another study conducted by Ming, Zivlak and Ljubicic (2011) engaged a sampling of Chinese employees in the fashion retail sector. Research findings indicated that 78 percent of respondents cited pay dissatisfaction as the primary motivator for wanting to leave the organisation. Turnover rates at the four different organisations were between 26.69 percent and 36.45 percent (Ming et al. 2011), representing a significant volume of employees that were dissatisfied with HR-established pay systems and remuneration packages. These statistics illustrate the extent of the retention problem in many Chinese firms, making pay a significant consideration for HR leadership in this nation that seems it should supersede most other HR policies and best practices. What is most apparent in the aforementioned research is that employees who work at multi-national semiconductor industry firms were more satisfied when pay was above competitive wages. This is an industry that maintains the ability to provide these higher wages due to considerable revenues associated with the product being produced. In the retail industry where wages are generally lower than industrial organisations, the volume of employees actually leaving the company was substantial. It could be a mitigating factor, therefore, that larger firms with higher revenue streams can establish more effective pay systems than smaller organisations in the retail industry. However, the fact that such a significant volume of employees in multiple industries believe pay is the most primary reason for job dissatisfaction has serious implications for companies operating in China. Human resource managers must be concerned with the pay values of employees and identity opportunities to ensure that remuneration packages are made available even if it would theoretically require a restructuring of financial systems to guarantee such a provision. Pay-for-performance schemes also provide more incentive for employees to remain at the organisation and this is becoming a more commonplace HR practice in China (Melvin 2001). These strategies are effective and produce more committed employees to the organisation. Why, however, is this? China is a collectivist culture, one in which loss of face from an in-group membership perspective is very important to Chinese workers (Cheung et al. 2008). Pay-for-performance systems provide employees with a very valuable resource: the ability to ensure that their reputations among important peers and social reference groups within the organisation are satisfied. It may not, therefore, be only the additional pay that provides motivation to stay with the business, but a strong socio-psychological outcome that occurs as a result of publicity that the employee’s superior performance has brought about satisfaction among the social environment in the business. Participative leadership DeBruin, Parker and Fischhoff (2007) describe participative leadership as a large group of team members consisting of employees and managers who share decision-making and work collaboratively to solve problems and provide innovations. This style invites employees to provide input and employees are given ample information about the business to assist in this shared decision-making process (Probst 2005). Participative leadership is a marked change from the traditional management model in Chinese firms due to the collectivist values that have driven Chinese culture for centuries. In China, there is considerable power distance (as a cultural element) between managers and employees in most firms. Power distance is the disparity of authority that exists between leaders and subordinates and the extent to which this is considered appropriate and normal (Hofstede, Hofstede and Minkov 2010; Hofstede 2001). In most Chinese firms, it is relatively common for managers to maintain a centralised hierarchy of controls in which consultation and socialisation with subordinate employees is not invited or deemed appropriate. However, there is a shift in contemporary values of Chinese employees that are demanding more participation in business decision-making. HR systems are providing training to managers to become more actively involved and engaged with lower-level employees in an effort to boost their satisfaction levels and reduce turnover rates. There is a theory known as Leader-Member Exchange (LMX) that suggests positive relationships occur between manager and employee when there is effort on behalf of leadership to establish cooperative team methodologies and when regular communications exchanges occur between employee and manager (Harris, Kacmar and Witt 2005). Trust is developed through leader-member exchanges as well as mutual esteem and consideration for the needs of others. Chinese employees, today, desire to build their own sense of identity and belonging within an organisational context, something that is recognised as being an important factor impeding or enhancing turnover intentions (Wei, Liu, Wang and Hai 2010). Though this is a marked change from traditional cultural systems that ensure high levels of power distance, it could be a product of hybrid management systems that have introduced Westernised models of management and human resources into the Chinese business environment. Provis (2008) identified that Chinese workers demand more interpersonal support and commitment from supervisors in order to remain loyal to the organisation. In most Chinese businesses, there is much less organisational commitment and more dedication to following managers when mutual exchanges occur. This is because Chinese culture, holistically, maintains more loyalty toward the person and not the institution (Chen, Tsui and Farh 2002). HR managers, therefore, must develop appropriate training for management that accustoms these leaders to conducting better engagement and socialisation with subordinates in order to gain their commitment to meeting organisational goals. Chang and Chang (2008) identified in a research study that managerial support and participation in Chinese firms was highly correlated with less intention to leave the organisation. This indicates that there may be fundamental shift in long-standing cultural values where employees want better engagement with managers that once maintained high levels of power distance. This is critical for the role of human resources management as the supervisor’s prowess for building effective social relationships is directly related to the extent to which employees are committed and loyal to the organisation. Wasti (2003) supports the notion that organisational commitment is directly related to the employees’ perceptions of managerial support, trust and cooperation. Therefore, HR managers within Chinese firms must create strategies that allow employees to share information and share solutions in order for the organisation to become insulated from high turnover ratios. Chinese managers are becoming more attracted to Western businesses with an investment in China and, through adoption of the many people-centric policies in Anglo-American companies, they are becoming more and more concerned with softer aspects of HR leadership and strategy development (Ma 1998). This is leading to reduction of turnover and better relationship development between managers and employees, thereby providing the institution with the important allegiance that provides firms with competitive advantage, human capital advantages and better productivity; something critical in highly competitive external markets. It cannot be under-emphasised, therefore, that the working and social relationships with employees and managers must become a critical dimension of human resources strategy. McConville (2006) found in a research study that line managers who do not have control over reward systems and communications systems has a negative impact on the ability to retain employees. As such, human resources managers must develop systems that provide more control over how employees are engaged and rewarded for performance if the organisation desires to reduce high turnover in the Chinese business environment. Career development and autonomous working systems Chang and Chang (2008) found that there was a significant, positive correlation between the implementation of a talent training plan and intention to remain with the organisation. Companies with HR leaders in Chinese firms are growing more concerned with career planning and career development, thereby illustrating to employees that they are deemed valuable resources and that the organisation will take appropriate steps to provide opportunities for promotion or job role advancement. Why this reduces turnover could be related to the growing employee sentiment that they should be shared decision-makers (a Westernised philosophy) r perhaps the long-standing cultural dimensions of Chinese society where loss of face and achievement of business success is so paramount to their personal utility and satisfaction. “employees’organisation-focused fit perceptions originate in characteristics that are different from supervisor-related ones” (Van Vianen, Shen and Chuang 2011, p.909). As previously identified, Chinese employees want to be recognised for their accomplishments and be given guarantees that they will advance within the company as a result of their individual performance and productivity. Career planning through HR in Chinese firms, therefore, is an exceptionally productive strategy as it gives employees rewards separate from supervisory belonging as a representative of the organisational culture, thereby providing satisfaction, social belonging and much less intention to leave the organisation. According to Starnes, Truhon and McCarthy (2010) authenticity of relationships is only developed over time and if trust is to be developed in the organisation or supervision, relationships must be a reciprocal process. This is why HR strategies that provide effective career training and guarantees of career advancement represent a positive psychological motivator for employees. Trust becomes established in the organisation, HR leadership and line management when there are reciprocal steps being undertaken to assist the individual develop a more rewarding career advancement and training plan. Turnover intentions in a firm that provides this type of training incentive and ability to increase salary through promotion make the switching costs for seeking other employment quite high to the worker. Using a cost-benefit analysis of the employee’s opportunities for career illustrates that the high-commitment organisation stands the best chances for improving the social and professional goals of Chinese workers. The notion of using career development and career training within the organisation is linked with the concept of employee-organisation fit. In Western companies, employees want to believe they are valued and respected members of the organisational culture and are moved to higher levels of motivation and personal satisfaction through this effort on behalf of HR leadership. In China, it would appear that this demand is growing as employees become more accustomed working in dynamic organisations that must be flexible and responsive to changing market conditions. Therefore, HR managers that establish systems that provide better career planning and development, supplemented with guarantees of promotion, are satisfying not only the long-term financial objectives of Chinese employees, but also their social needs as well in a culture that genuinely values maintaining a positive social reputation associated with top quality business performance. Furthermore, the establishment of autonomous working systems has a positive correlation with reduced turnover ratios in the Chinese organisation. Autonomy allows employees to have a level of control over the nature of their job roles and work outputs, providing an opportunity for employees to gain ownership over their work environments. Autonomous management systems attempt to improve overall employee productivity by providing them with the motivation to ensure work task completion as well as self-monitor their own performance to identify their strengths and weaknesses, providing the foundation for employee job role improvement (Langfred and Moye 2004). Autonomous management systems and employee involvement can either be perceived as burdensome or personally empowering associated with employee time and their current workloads. Employees in autonomous positions where control systems do not dictate work functioning are forced, sometimes, to work under pressure and can lead to stress. Autonomous systems can also give Chinese employees a type of dissonance in which their cognitive resources move from task to monitoring and evaluation, thereby impairing their cognitive functioning and leading to stress. The growing trend to adopt Westernised models of human resources to provide employees with autonomy may not always, therefore, have the ability to give employees less intention to leave. When workloads increase and there is more emphasis on ensuring that employees have a self-regulating and self-monitoring perspective of their own work environments, it can theoretically lead to perceptions of organisational injustice or lack of equity. Even though human resources leaders develop policies intended to make the employee feel more valued within the organisation through trust in providing autonomous work outputs, the tension and anxiety over being self-managed can lead to job burnout. Hirst et al. (2008) conducted a research study on autonomy in Chinese firms and firms in the United Kingdom and discovered that stress is a more common outcome of autonomous working environments in China. In the same study, organisational productivity was reduced in China in the face of autonomous working conditions as compared to the United Kingdom. Hence, it may be cultural characteristics and values that produce higher instances of stress and lower work productivity in China as compared to nations maintaining Western models of HR management and leadership. It was discussed previously that Chinese employees are greatly concerned with loss of face (reputation) among the in-group social environment and, when productivity declines and employees are chastised for failing to meet performance expectations, stress and anxiety is built which, in turn, leads to a higher intention to leave the organisation. Hence, when Chinese HR managers are developing systems that provide for greater levels of autonomy, they should be concerned with not over-burdening workers with significant work output demands and recognise discretion in performance evaluation to avoid peer networks criticism of employee competency and capability. However, even though the literature indicates that autonomy is becoming more commonplace in the Chinese organisation, the level to which employees are cognitive and psychologically equipped to operate within such autonomy could be substantially different than in Western companies. Though this is only a supposition based on the literature on autonomy and stress in Chinese organisations, it is clear that HR practices must be aligned with socio-psychological models of Chinese workers if the organisation intends to improve employee dedication to the organisation and the achievement of its strategic goals. Conclusion As illustrated by the literature, the majority of contemporary HR strategies being utilised in Chinese firms are largely successful. Establishment of participative leadership practices gives employees a greater sense of ownership and value within the organisation, causing them to remain committed and dedicated to the organisation. Coupled with the establishment of autonomous (yet controlled) working environments provides the same motivation and dedication which has the opportunity to reduce turnover ratios. The most fundamental finding of the research is the shifting dynamics of manager-employee relationships that confounds the traditional model of management in which there is ample power distance. Giving employees more communications, information and opportunities to share their opinion and innovative solutions better satisfies Chinese employees, whether a product of adopting Western models of business management or whether as a product of an evolving and liberalising culture. The engagement quality between managers and employees cannot be under-emphasised and more HR leaders should be training managers and developing communications systems that provide for a more decentralised environment. The only potential hindrance to active HR policy in China, as illustrated by the research, is the extent to which autonomous working systems have been established and implemented. Stress and anxiety as two potential outcomes of working independently of management control should be major concerns for HR managers in China attempting to reduce turnover through policies allowing for self-sufficiency and self-evaluation. 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