The Limits on Leadership in China - Dissertation Example

The Limits on Leadership in China Human Resource Management or HRM is defined in different ways by different people because of the complex parameters associated with it. Generally, it can be defined as the process of employing people, developing their capacities, utilizing, maintaining and compensating their services in tune with the job and organizational requirement. The overall effectiveness of an organization depends on how well the HRM department in that organization succeeded in putting the right people at the right place at the right time. It is the responsibility of the HRM department to identify the talents or hiring of people; developing their talents through training and utilizing those talents by placing them in appropriate places. HRM acts as a bridge between the organization and its employees. It is the duty of the HRM department to meet the objectives of the organization without causing any damages to the needs of the employees. “In several countries as part of HRM strategies, employers are adopting schemes to elicit higher degrees of employee commitment” (Bamber, et al, 2010, p.308) Globalization has brought many changes in the business world. International business or cross cultural business is growing every day because of increased cooperation between countries. It is difficult for a country to develop properly using the internal resources alone. Globalization succeeded in revealing the importance of foreign investments and private capital in economic development of countries. Many of the big organizations in the world were facing saturation in their domestic countries and they were struggling to find enough space for expansion. Globalization opened many door of opportunities to these countries in other countries and they accepted it with both hands. The growth of international business brought many challenges to the human resources departments of international companies. Domestic business and international business are entirely different and it is difficult to use the human resource management strategies used in the domestic circuit successfully in international circuits. No two countries are similar either politically, socially, economically, culturally, legally, or environmentally. While formulating strategies for human resource management in an international context, the HRM departments should account for all the above differences between countries. In short, HRM, especially IHRM should vary in accordance with the cultural and institutional environment in which it is conducted. This paper analyses the International Human Resource Management strategies assuming that an American firm is trying to establish business in China. IHRM: Internal Contexts America and China are two countries which have more differences than similarities. The HRM strategies popular in American context may not be useful in China because of the enormous differences. Communication is one of the major aspects of human resource management. It is the bread and butter of an organization. Without proper communication, no organization can develop properly. Communication in domestic circle is not a big problem for organizations; however communication is a big problem for companies in international context. Victor (2009) has identified seven parameters; Language, Environment, Social organizations, Contexting, Authority, Nonverbal behaviours and Time concepts in order to improve the communicational means in IHRM (Victor, 2009) The importance of Language cannot be underestimated especially in cross cultural communication. Historically, Chinese people are very weak in English and the Americans are weak in any languages other than English. It is difficult for an American firm to operate successfully in China if its employees are unaware of Chinese language. It is difficult for the American company to employ only Americans or Chinese alone in their Chinese operations. They would be forced to keep a mixed workforce including Americans and Chinese. If the communication between these mixed workforces does not happen effectively, the organizational functions will be affected negatively. The work environment in the Chinese context and American context are entirely different. The geography, climatic conditions, facilities for recreational activities, freedom of speech etc are different in America and China. Chinese administration has less respect towards human right issues and recreational activities. They are more focused on improving their productivity all the time. In other words, humanity has less value in Chinese environment. On the other hand, Americans always like to spend considerable amount of time for leisure activities. They like to express their views and opinions freely. Trade union functioning can also be different in China and America. In American firms, the employer can determine whether the functioning of trade unions should be allowed or not. For example, MNCs like McDonald’s and IBM have resisted unionisation for decades. On the other hand in China, employers cannot take decisions against trade union functioning. In other words, it is easy to hire and fire an employee in America whereas such things are difficult in China. The leadership styles of Americans and the Chinese are entirely different; Americans are more interested in democratic styles whereas Chinese will opt for autocratic styles in their approaches. In short, the environmental characteristics of China and America are entirely different. The IHRM department of the American firm should give all these information to their employees before sending them for their overseas assignments in China. The social setups in China and America are entirely different. America is a secular democratic country whereas in China, Religion has not much importance. Moreover, the number of social activities in America is more than that in China because of the immense freedom people enjoying in America. On the other hand, the operations of Social organizations are highly restricted in China because of the concerns of Chinese administration about the wrong intentions of social organizations. Chinese administration suspects that the growth of social organization in China may harmful to the interests of communism. Educational systems in Chin and America are entirely different. The quality of education in America is one among the bests whereas that in China is not so good because of the huge population. China is the number one country the world as far as population is concerned and hence it is difficult for China to ensure quality education to all. In America, upper class and middle class like class systems are there whereas in China only the working class system is prevailing. In America, men and women are equally participating in professional works whereas in China most of the woman confined to the wall of their home. In other words, gender roles are different in China and America. In short, an American working in China should stay away from any intentions to form any social organizations in China. The level of knowledge possessed by different people about a particular topic is different. In international context, this difference is more evident. The difference in knowledge level will hinder the transfer of knowledge. Members of same culture may have almost similar levels of contexting because of their larger awareness between each other. On the other hand, the amount of contexting could be less among members of different cultures. United States is included in the low contexting cultures whereas China is included in the high context cultures. In low context countries like USA, interaction between individuals tends to be explicit, unambiguous and formal whereas in high context countries like China, it is assumed that most information resides in the person, and so greater emphasis is placed on informality and body language. The contexting level should be kept at higher levels while organizations operate internationally and for that purpose, the HR managers should device strategies for raising the contexting levels of employees through training, before sending them for international assignments. Authority and power are the two sides of the same coin. Without power authority cannot be expressed and without authority Power can be exercised. People in different countries may have different levels of power. Americans exhibit more authority in their approaches compared to the Chinese. Proper communication occurs only between two parties with similar power or authority. In other words, the power distance index between Americans and Chinese are extremely high and this huge gap in authority levels may affect the effective communication between the people in these two countries. The American firm which is planning to enter the Chinese market make every effort to educate their employees about the authority level differences between American and Chinese culture. More than 60% of the messages are conveyed through nonverbal means in a communication process. Gestures, facial expression and body languages can communicate more things than the actual things talked verbally. Different cultures may have different types of nonverbal communication methods. Shaking hands is a friendly gesture in America whereas in China, instead of shaking hands, bowing of head is treated as a mean to express the respect towards others. Since majority of the messages are communicated through non verbal means, it is necessary for the American employees going to China, to learn more about the nonverbal communication methods of Chinese people. Some people do many things (Polychronic) at a time whereas some others do only one thing (Monochronic) at a time. Americans do one thing only at a time whereas Chinese people do many things at a time. The above difference is often witnessed in the relationship building process also. Polychronic nations like China are keen in building relationships compared to the Monochronic nations like America. In other words, Chinese people build relationships first before engaging in a deal whereas Americans directly enter into the deals and they don’t bother much about the relationship building. SWOT analysis of China The major strength of China is its economy. China is currently the most rapidly developing economies in the world. Many people believe that China may surpass even United States in the near future itself as far as economic strength is concerned. The recent recession has not affected China much which clearly shows China’s better abilities in handling difficult situations. The major weakness of China is increased amount of corruption and lack of respect towards human right issues. Even though, China is a communist country, the corruption is taking place at every segment of social life. Party leaders are taking bribes for every favor they did for the ordinary people. Moreover, China never allows their people to talk against the will of their administration. Totalitarian or autocratic methods are prevailing in China which may create problems to the foreigners working in China. In an attempt to exploit the opportunities of globalization, China has opened their economy more than any other countries. Private capital is welcomed more than ever in China as China realized the importance of private capital in their economic development. Thus there are many opportunities for the foreign companies in China. Censoring of information is a major threat in China. Even internet use in China is restricted and controlled because of the huge censoring taking place in China. Information against the will of the Chinese administration cannot be accessed from China’s soil which is a major threat for the foreigners working in China. IHRM: External Contexts Politics Politics play a major role in the functioning of organizations in a country. In China socialism is prevailing whereas in America capitalism is dominant. Organizations from capitalist countries will face immense difficulties in China because of the huge differences in political ideologies. It is difficult for an organization to functions against the will of the political administration in their country of operation. Communism is prevailing in China and it is difficult for an organization in democratic country to function in a communist country if it fails to adapt to the political culture of the target country. Bachman (1992) mentioned that the Chinese political system is institutionalised and it is governed by certain norms (Bachman, 1992,p.1046). As mentioned earlier, China is one of the toughest nations in the world as far as strength of political administration is concerned. China has less respect towards human rights and more respect towards media censoring. No media can function in China against the will of the administration and the human right issues like freedom of speech or expression has not much value in China. The communist administration in China never allows the leakage of unhealthy things happening in their country. Several government bodies are engaged in reviewing the content of media products flowing in and out of China. Any information which is suspicious with respect to the religion, politics, or contents against the communist led government will be censored or banned. Amnesty has also reported that many people has been arrested detention for disseminating information about the spread of Severe Acute Respiratory Syndrome (SARS) over the Internet (Censorship in China, overview, 2008). In America like countries organizations have immense power in politics. In fact many of the Congressmen are the nominees or lobbyists of prominent organizations. Such lobbying or canvassing is impossible in China and the organizations should develop their own strategies to develop properly in China. In short, the HRM practices used in America may not be compatible in China. Economical Jintao (2005) has mentioned that by 2020, China's GDP might be approximately $4 trillion with a per capita level of around $3,000 (Jintao, 2005). China is currently believed to be the most rapidly developing nations in the world. Even America is watching the economic growth of China with major concerns. Many economists are of the view that China may outclass America in near future itself from the super power spot. The death of Mao Zedong, the father of China’s Cultural Revolution, helped them to shift their attention from the ideological warfare and class struggles to economical development. The emergence of Deng Xiaoping as the leader of China after Mao, gave momentum to the economic development activities. China’s GDP was dollar 4.5 trillion in 2000, second only to US whereas the GDP per capita was $ 3600 in 2000. The trading power of China was in the 32nd place in 1978, 15 th in 1989, and 6 th in 2001. China was the world’s fifth largest exporter and 6 th largest importer in 2002. FDI in 2002 was around $ 50 billion. The number of poor has declined from 250 million in 1978 to 30 million in 2000. Population growth has been controlled by controlling the birth rate. The average life expectancy of Chinese people increased from 35 years in 1949 to 71.8 years in 2001 (Gao). Investment climate in China is far more superior to many other countries in the world even though communism is prevailing in China. “Not only the Chinese Government's effective policies on taxation, but its long-term investment in infrastructure construction also contributed to a more pleasant investment climate” (Xinhua, 21.3.2004). “China received $60.6 billion of foreign direct investment in 2004”(Overholt, 2005, p.5). Social Social activities and social setups in China are mentioned earlier. Technological “China has already achieved breakthroughs in the development of Biological Warfare, Space Technology, and Military Information Technology, Laser Weapons, Automation Technology, Nuclear Weapons and Exotic Materials” (Pei & Lee, n. d, p.6). Technologically, China can compete with any country in the world at present. In fact Chinese technology is far more effective than the technologies of other countries. Because of that, China is able to reduce the prices of the goods produced by them. In international market, Chinese products are cheaper than any other similar products from other countries. China has got one of the most modern internet filtering systems which enable them to control the information on internet. Chinese technology is capable of blocking any unwanted content entering in or going out of their territories. Culture and IHRM “Culture is the fundamental determinant of International human resources management”(Harzing, & Van Ruysseveldt, 2003, p.114). Culture and communication plays an important role in international business and it is the duty of the IHRM to prepare the employees capable of adapting to the culture in other countries. Domestic business and international businesses have more differences than similarities. It is easy to start a business in the home country whereas it is difficult to establish a business in a foreign country because of the difficulties in communicating with different stakeholders in the foreign country. Dutch psychologist and business researcher, Dr Geert Hofstede identified five different parameters in order to mark the cultural differences between different countries. According to Hofstede, Power distance, Uncertainty avoidance, Individualism v collectivism, Masculinity v femininity and Long-term v short-term are the five dimensions of culture which are varying from countries to countries (Hofstede's Cultural Dimensions, 2011) In countries with high Power Distance, strong hierarchies and larger power of leadership can be observed whereas in low Power Distance (PD) countries, teamwork, democratic styles of leadership, equality among workers and supervisors can be observed. China is a country with higher PD. Individualism (IDV) refers to the strength of the ties between the people in a country. China has a low IDV score or in Chinese society, cooperation between the people is weaker. Masculinity (MAS) refers to the extent of male domination over females. In societies with high MAS, the male domination will be high. China has a medium score as far as MAS is concerned. In other words, male domination is visible in Chinese society. Uncertainty Avoidance Index UAI) is the degree of anxiety society members feel when in uncertain situations. China has a medium score in the UAI also. Chinese people are more focussed on long term goals (Long term Orientation LTO) rather than the short term goals. On the other hand, Americans are more focussed on short term goals. The recent financial crisis is one of the best examples which can be used to study this difference in levels of people as far as LTO is concerned. China escaped from recent recession easily whereas Americans are stills struggling to come out from the crisis. “Education, social standing, religion, personality, belief structure, past experience, affection shown in the home, and a myriad of other factors will affect human behaviour and culture” (Encina, 2007). Educational levels in different countries can be different. China is the number one country in the world with respect to population size. Naturally the educational level or the quality of education in China could be lesser than that in other countries like America. Most of the Americans are highly educated people whereas same thing cannot be said about the Chinese people. So, while formulating IHRM strategies, the HRM managers should consider the educational levels in China also. The US people enjoy much freedom because of democracy in their country whereas Chinese people are not enjoying freedom very much. So the work force from America who enjoyed substantial freedom in their domestic country, may find difficulties in countries like China as far as freedom is concerned. Americans give more emphasize to leisure activities whereas Chinese are ready to work like machines. These differences in attitude towards life and profession will definitely reflect in their attitude towards work. In USA, each firm has their own HRM strategies. In other words, it is not necessary that Microsoft and Apple follow same HRM strategies in America even though most of their activities are in similar lines of business. However, in China, instead of firms, national institutions, national legislation, cultural issues and trade union etc are the major factors which affect the HRM paradigm. The concept of HRM is much broader in China than America. In other words, the concept of HRM is not limited within the boundaries of the organization alone in China; it extends towards the government, sectors, institutions etc. Conclusions Human resource management in an international context is an extremely difficult exercise for organizations. No tow countries are identical, politically, culturally, economically socially, environmentally, or legally. All these factors can influence the human behaviours one way or other and the HRM managers formulating strategies for International Human Resource Management should account for that. Language, environment, social organizations, contexting, authority level, nonverbal communication, temporal concepts etc are different in different countries. Moreover power distance, individualism, masculinity, uncertainty avoidance, long term and short term goal orientations etc of different cultures are different. IHRM should consider all such diversities of people in different countries, while they prepare a workforce for international assignment. References 1. Bamber, G, Lansbury, R and Wailes, N (2010) International and Comparative Employment Relations,Publisher: Sage Publications Ltd; Fifth Edition (December 29, 2010) 2. Bachman, D (1992). The Limits on Leadership in China. Retrieved from http://www.jstor.org/pss/2645270> 3. Censorship in China, overview (2008) Retrieved from http://www.amnestyusa.org/business-and-human-rights/internet-censorship/page.do?id=1101572 4. Encina, G. B (2007). Cultural Differences? Or, are we really that different? . 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Retrieved from http://www.enotes.com/biz-encyclopedia/cross-cultural-international-communication 12. Xinhua.(21.3.2004). Globalization Boosts China's Economic Growth. Retrieved from http://www.chinadaily.com.cn/english/doc/2004-03/21/content_316671.htm Read More