The Swiss Companys Evaluating System - Report Example

The findings are divided into four main parts: how preference and pay rise is managed; the amount of holidays; training programs; and general benefits. All findings and discussions are based on the interview and information from the literature review. The results are going to be compared and investigated in terms of why these companies chose to apply these decisions in the management of their HR policies. All interview notes are included as Appendix A, B and C. How Performance and pay rise is managed Appraisal System Through the interview, it was established that all three companies used an Appraisal System. However they all have a slightly different approach in applying this system. Moreover, there is a clear difference in how it is executed. All employees from the American company were divided into different groups, and in order to ensure efficient management of the employees, a manager was assigned to each group. The company also had a data base where each individuals sales performance and feedback from customers was encoded and saved. In these instances, in terms of employee performance, employees within the group were also allowed to put in their opinion of their colleagues. Using numerical totals from the database, an evaluation on how each person has been performing could easily be established. Moreover, the interesting part of this database is on how customers’ feedback was also accounted for in the overall evaluation of the employees. The fact that the employees formed groups to monitor one another was very much in keeping with the findings of Bjorkman (2003) on Chinese companies’ putting greater emphasis on team work. The Swiss company also showed traces of an Appraisal system in place. They also went through a performance evaluation process for their employees. They mostly divided their staff into two groups: first, the lower level staff which were general operational staff, and second, the other staff which were usually higher level employees. The lower level staff usually underwent a two-way communication process using the Preference Evaluation (PE) form. Employees would then set objectives at the beginning of the year, with fulfillment of the objectives monitored throughout the year. By the end of the year, their managers usually evaluated the individuals by assessing whether or not they have achieved their objectives. A performance rating also followed the assessment. Among higher level staff, they also underwent a similar evaluation process, however, the review was called performance cycle, and was usually done through an online tool. These individuals also set objectives at the beginning of the year and were then monitored throughout the year. The difference in these two groups of employees is that towards the end of the year, there was a performance calibration session conducted by the managers on the employees. Such a session was not carried out on managers. This session consisted of an open forum where the managers discussed employee performance and then agree on a performance rating for each employee. This allowed a more unbiased evaluation of the employees. It also created a chance for cross department discussions and the sharing of opinions among these departments. In contrast, employees from the Hong Kong Company revealed that their company was using a more traditional appraisal system. Managers evaluated employees’ attitude in the workplace, and took into account the number of times each employee was late for work or if their work was done on time. The Hong Kong company does not have an evaluation system like the other two companies, and the employees’ evaluation is mainly based on their performance and the perception of their managers. The Swiss company’s evaluating system shares some similarities with the American company. They both have a database for the easy evaluation of their employees. They also have groups which help with the evaluation process and which help illuminate the probability of bias. Both companies have traces of HR practices from the East and the West. As mentioned above, the western culture usually includes an interview with the individual. On the other hand, the eastern culture usually carries out self-assessment rather than face-to-face meetings with managers. These personal meetings and assessment is usually avoided in the Chinese company because in the Chinese culture, there is the issue of “face-saving” for each employee. It seems that the Swiss company took the advantage of both eastern and western cultures and adapted both cultures in their employee evaluation. However, the American company still retained a stronger western system. Employees usually met with their managers four times a year, once every quarter in order to ensure that they are on track with their work. The Swiss company reduced the meeting to only once a year, mostly towards the end of the year. Moreover, the employees set their own objectives on every year monitored, and also acted as self-assessment tools. The difference in the assessment revealed in the case of the Swiss company may be attributed to the fact that as opposed to the American company, they have been in Hong Kong longer and have had more experience on how to efficiently operate in Hong Kong. The Swiss Company has already modified their practice to fit the needs of the Hong Kong employees. Moreover, they ongHonhave also modified their system to better fit into the Chinese culture. Since the American company is still new in the Hong Kong business scene, they have yet to come up with a system which can accommodate both the company’s and Hong Kong’s Chinese culture. Wages and Pay Rise An evaluating system is often applied to review future pay rise and wages for each individual employee. Wages in the American company differ for each individual, even if the title of their work may have the same designation. They negotiate wages based on the individual qualities of the employees, using experience and level of education as common parameters in establishing appropriate wages. This means that there is a wide range used in establishing wages for each individual. Everything seems to have been customized based on individuals’ background and history. A pay rise is also customized to fit individuals, including individual store performance. In effect, elements like revenue, cost, customer feedback and individual performance for each store is included as an assessment tool. The company claims to their employee that they will listen to all their employees around the world. As mentioned above, employees from the American company will fill in a self evaluation form, submitted to their managers and meet with their managers four times a year. According to the information given, shortly after the submission of the self evaluation document, they had their first pay rise this year. This led me to believe that the self evaluation document had a direct influence on the pay rise. The percentage of pay rise differed for each individual. Based on each employee’s performance, pay rise was implemented accordingly. In effect, the better they did, the greater their pay rise was. For the Swiss company, when asked about pay rise, it appeared that employees did not have any say in the whole process. Their pay rise was still however determined by their annual performance rating. Such a rating was based on self-assessment as well as management assessment. In other words, the employees still had a significant amount of influence on their pay rise. Pay rise, just like in the American company, was also customized to each individual’s performance. For the Hong Kong company, pay rise is also determined based on the performance and contribution of each employee. They did not customize the pay increase based on individuals, but the company usually set a general pay rise percentage, and all employees were then given a pay rise based on such percentage. The company’s recent increase was 5%. Moreover, pay rise was usually implemented when individuals got promoted. Such pay rise was also based on a standard rate. This practice echoes a similar practice among Chinese companies in relation to team work and how their ultimate goal is related to equal wealth distribution. Training Both Hong Kong and Swiss companies do not have an inter-company training system, while the American company has an inter-company training system and a very sophisticated one at that. They have specific training program regarding an individual’s roles, and such training often focuses on the achievement of individual goals. Before the company officially started operations in Hong Kong, employees had a month long training period where other employees from around the world were selected and flown in to train the new employees in the Hong Kong subsidiary. Every employee, regardless of their post, was trained in the same venue. During such initial training, there were 500 Hong Kong employees who participated. The employees from the American company claimed that the company would “brain wash” them with their company’s culture. This indicated that this American company had intentions to adopt their company/institutional culture in the Hong Kong subsidiary. An appraisal system is usually based on the amount of training and development of individuals. The American company had regular training programs for their employees. Towards the end of the training, a test to evaluate the employee’s learning was carried out. If they passed the test, they were recognized by the company. Such recognition was usually used to further their career within the company, mostly in terms of pay rise and future promotions. Much attention was given to long-term training as it usually improved each employee’s potential. The Hong Kong and Swiss companies did not have any inter-company training programs for their employees, and if they did, there were usually strings attached. Hong Kong companies did not train their employees using their own resources. As was mentioned in the literature review, they did not want to risk losing their employees once they were trained up, which usually happened with employees leaving their employ for other companies after their training. For which reason, the Hong Kong company only allowed training for their employees after they have stayed with the company for at least three years. Three years is a long commitment. Therefore, for most employees this is not an option they have often favoured. Trading freedom for training is not what these employees have been prepared to make. In the case of the Swiss company, the lack of training program is likely due to the influence of their long stay in Hong Kong. Since the American company is still new to the market, they are still unfamiliar with the workings of the human resources trends in Hong Kong. However, the employees from the Swiss company have mentioned that because their company does not provide trainings, there is little to no incentive to improve their knowledge or their skills. This also seems to be the case for the Hong Kong company. They are less willing to use their own money and time to improve themselves and to learn new skills which may lead to future promotion. This lack of initiative may also be attributed to long hours worked and overtime. Employees usually wish to leave time for their own pleasure without being burdened by work concerns. Moreover, long work hours would mean less time for their family. The training would likely take them away from their families, and for Hong Kong employees, this is not an acceptable situation. The American company, on the other hand, ensures that their employees attend necessary training during work time. They also have an allowance provided for these employees during the training. They do not share the fears of the local firms on trained employees leaving their employ. Instead, they are willing to train their employees, but only in relation to the skills that they would need in their line of work. The interesting part is that all three interviewees said that the training and allowance gave them the incentive to stay and upgrade their knowledge and skills. Therefore, companies like the American company, that are willing to train their employees might have more advantages in employee retention because the employees would be motivated to stay and to advance their knowledge. Furthermore, since the American company offered valuable training which the other companies could not offer, they were also able to attract potential employees. Holidays When asked about holidays, there is a less significant difference between the three companies in terms of the number of paid holidays, ranging from 14 days for the Hong Kong and American company, and depending on job title, about 18 days for the Swiss company (Table 1). Usual traditions and legal mandates for western societies indicate 5 working days in a week for employees. However, Hong Kong does not have a law which states the maximum hours a week employees are allowed to work. Therefore, it is up to the employers to indicate in the contracts the number of days in a week an employee has to work and how many paid holidays they would have. In general, the amount of working days for the Swiss and American company is 5 days, and for the Hong Kong company, it is 5.5 days. The 5.5 days is due to either a short or a long weekend. This means that employees may have arrangements to work 2 full Saturdays per month, or to work for half a day on Saturdays. In the past, most Hong Kong companies will make their employees work for 6 full days. However, after the government imposed work regulations a few years ago, companies started to implement the 5.5 days working week. Hong Kong Company American Company Swiss Company Paid leave 14 days 14 days 12- 21 days Sick paid leave s 28 days in patient 28 days out patient 12 Labour holidays Yes Yes Yes Amount of working days per week 5.5 5 5 Presence of special circumstance holidays (excluding maternity leave) NO Yes, including Bereavement, jury duty, marriage, and paternity leave Yes, including Marriage, compassionate and examination leave Longer working hours has been a distinctive feature for workers in Hong Kong. This is based on a survey by the International Labour Organization (ILO) in 2008, where they ranked Hong Kong in 5th place, based on the amount of hours worked per week. Moreover, about 40.9% of workers spent 48 hours per week at their work. These Hong Kong workers also had long work weeks and less paid holiday (ILO, 2008). Interviewees from all three companies mentioned that they have to work overtime, often up to more than 2 hours. Since the labour law in Hong Kong does not have legal provisions for working hours, companies often let their employees do over time. However, for the American Company, they provide compensation for employees’ overtime hours worked. They also have holidays such as the substitute holiday and substitute rest holidays. Substitute holiday is applied when an employee accumulated enough hours of overtime, and they are allowed a holiday, which means that if an employee has 8 hours of overtime, they are allowed an extra day off. Substitute rest holidays are holidays given back to the employee when they come in for work on a holiday. These two kinds of holidays do not seem to be present in the Hong Kong and Swiss companies. These regulations however increase employee’s incentives to work overtime as they know that their overtime work would have a favourable compensation or substitute in the future. In the western world, overtime is a less common aspect in the working environment since most governments have set laws to protect their workers, including regulations on maximum working hours per week. Moreover, if workers are called in to work overtime, they are usually entitled to 1.5 days of their salary. Therefore, employers usually avoid making or letting employees work overtime because it is a costly practice for them. Special circumstance holidays are holidays that are not counted within the employee’s paid holidays. For the Hong Kong company, there are no such holidays apart from maternity leaves for 10 weeks. These leaves must be granted to employees by law. However, the Swiss and American companies have more than the maternity leave benefit for their employees, as they also have marriage and compassionate leaves. These leaves basically give the employees the feeling that the company cares about their personal life and their feelings. The interviewee from the American company revealed that he worked for the Hong Kong Jockey club before and they are did not have special holidays, furthermore they only had 10 paid holidays for each year. The Swiss company also has an additional 7 weeks of maternity leave for their employees who wanted to avail of such leave. Only 80% compensation is offered during these extended leaves. These additional weeks of leave are a way of giving their employees the sense that they could fully recover from the ordeal of giving birth while also giving sufficient care and attention to their baby’s needs. Allowing employees many holidays could sometimes mean increased product costs. For which reason, many Hong Kong companies are not allowing their workers more holidays. These companies are very much profit-driven and would likely avoid any increase in production costs as much as they can. The interviewee who used to work for the Hong Kong Jockey Club mentioned as much when he expressed that the company sought to maximize their profits as much as they could, that they lacked communication with their employees, and that the managers seemed to have a significant amount of control on how the employees worked, including their work hours. When I talked to him, he also felt upset about his experience with the Hong Kong Jockey Club and had little motivation to stay with the company. General benefit The American and Swiss companies have more general benefits for their employees, including training allowance, monetary benefits for employees to have glasses fitted, and medical allowance. However, in the Hong Kong Company, these benefits were very much limited. At most, only medical allowance was given. The American company encourages their employees to improve their knowledge by studying more and by giving them allowance for them to training. These trainings often included learning new languages and learning other relevant skills related to their job. The workers in the American company are motivated to upgrade themselves and are also more willing to learn new skills. Such allowance for employees has served to encourage the employees to improve themselves. Such trainings are also beneficial for companies. First, the company would gain more skilful employees, and therefore gain more comparative advantage over other companies, especially those which do not provide trainings for their employees. Employees are also given allowance to look good and to stay healthy. For which reason, they are often allowed reimbursements for buying good clothes, for buying glasses or contacts, and for gym memberships. The Swiss company has medical benefits for their employees. Most Nestle subsidiaries implement Employee Health & Wellness Programmes, which is a one-day training programme which seeks to increase their employee’s self health awareness. This programme also sends regular emails to remind employees of the need for heath awareness. The company also offers medical cards for employees to use during their doctor visits. These medical cards ensure free medical consults and treatment from government hospitals. If the employee wishes to go to a private hospital for treatment, the employees will only have to pay 25% of the treatment. Such sophisticated scheme shows that the company cares very much about their employees’ health and therefore seeks to protect them from illness. Employees therefore feel assured that their company will care for them when they are ill and not fire them for failing to report to work. The American and Hong Kong companies also have medical benefits in place for their employees, however these are not as sophisticated or the Swiss company. The most special benefit the Swiss company provides to their employees is the fact that they have an infant feeding program where the company provides free milk powder for the newborn babies of their employees. The company is one of the most successful milk powder companies in the world, therefore they can afford to provide such benefits to their employees. One of the classic features of Hong Kong-based companies is the limited benefits these companies have for their employees. In this Hong Kong company, its difference with the two companies in terms of HR management is very much apparent. Although they provide medical benefits for their employees, very much like the two other companies, they do not offer any other care for their employees. They are doing everything according to the Hong Kong laws however, they are not taking any initiative in doing more than what is prescribed to them. Instead, they are doing everything they can to increase their profits, and little else to improve their employees’ lives and work conditions. Under these conditions, I think that Hong Kong companies are missing out on talented employees who now refuse to join their employ due to limited benefits and remuneration. Conclusion All the covered HR strategies imply that the Hong Kong company has very limited communication linkages from top (management) to bottom (employees). Moreover, the employees seem to do whatever the managers tell them to. This is a similar practice to a Chinese company in China. Authority is very important within the company and managers need to keep their “FACE” and must therefore minimize the voice of the employees. To increase profit, they will often choose not to provide training and benefits to their employees. This indicates that they care less about their employees as compared to the two other MNCs in the study. Their choice of HR policies also gives the impression that they care less about their employees’ well being, and do not make them think they are important to the company. However it is interesting to see MNCs adopting eastern and western HR policies. The Swiss company with a long history of operating in Hong Kong seems to have struck a balance between HR policies from the West and the East. Though they don’t provide training for their employees, they have a various benefits which have kept their employees happy and which have increased their employee retention. The interviewee from the American company mentions that he has more incentive to carry on working for the company because they offer a wide range of benefits which can help improve his skills. He feels that there is a greater incentive for him to stay with the company and he seems happier about his current situation as opposed to his situation working for the Hong Kong Jockey club. As an employee with the Hong Kong Jockey Club, he said he was driven to work hard and for long hours. He also did not feel like he was valued by the company as the company seemed to value their profit more than their people. Now, under the American company, he feels valued as an employee. This led me to believe that the American company has significant benefits in place, including monetary and associated training benefits for their employees. Their HR strategy is to make their employees feel included in the whole running of the company. This is very much opposed to the HR policy in the Hong Kong company which excluded the employees entirely in the running of the company. To conclude, it is apparent to note that the Hong Kong company has very distinct HR strategies, strategies often seen in Chinese companies in Asia. This is mostly attributed to the influence of the labour laws and the culture of Hong Kong. Influence from their British past does not seem to have had much impact on their HR strategies and company culture. The Swiss company has a mixture of influences from its Swedish background and from the Hong Kong culture. Although they still value their people and use different HR strategies to protect their employees, they also understand the environment in Hong Kong and the need for them to gain comparative advantage. The American company is new to the Hong Kong market, therefore has yet to be influenced by the Hong Kong culture. This company is also a very large company, and as such would unlikely be influenced or manipulated by the local culture. It may take many years for this American company to operate in Hong Kong before any possible changes would be seen. Till then, these American companies HR strategies would likely keep their employees happy and work-fulfilled. Read More