Design of a Program That Structures Incentive Pay and Links It to a China - Term Paper Example

Design of a program that structures incentive pay and links it to a China The economic success of the any firm depends largely on research and investigation done on the Human Resource front in harmony with the strategic operational management of the firm in this era of Globalization. Many theories have been evolved to determine the success and application of Human Resource Management in the economic success of the operation of the manufacturing unit of the company. The process of the impact which HRM has on the performance of the firm is closely linked with the concepts of time, cause and individuals, and the relationship between the benefits and in incentive pay links with reference to the concerned operation. These considerations drive the more longitudinal research on multi-level phenomena. The human resources comprising the firm, has in recent years become strategic to decision-making in a strong way. Strategic Human Resource Management (HRM) researchers have devoted considerable effort toward demonstrating that the ways that people are managed, particularly through HR practices, have strong empirical relationships with organizational performance.(Huselid, 2005) The theory of close relationship between HRM and economic success has grown significantly in the last fifteen years. This theoretical progress can be seen in two different arenas: meta-theories describing broad rationales for why HRM and economic success should be linked, and middle level process theories describing how this linkage takes place. The firm’s strategy determines the design of the HR system. The HR system impacts the employee skills and motivation, which in turn results in creativity, productivity and discretionary behavior. And, employees’ behavior influences the firms operating performance, which leads to profitability, growth and market value. (Wright & Haggerty ) The development of the meta-theory which emphasizes the new process theory of the relationship between HRM and economic success reveals the current trend to identify some of the key variables which are indicators of this relationship. This includes the consideration of three important concepts: time, cause and individuals in the determination of the relationship of HRM with the economic success in the functioning and the operation of the SME’s in this era pf globalization. The experience of working in advanced and growing economy of Australia, and the developing economy of Vietnam can be good background for initiating a developmental and strategic plan for the focus of the expansion in China which is the fastest growing developing economy in Asia. Meta theories such as the resource based view indirectly consider time, usually suggesting that competitive advantages stemming from HRM evolve over long periods of time. In which time comes into play with regard to “sustainable” competitive advantages as suggested by Barney (1990) suggesting that the concept requires an advantage that is held over time, it is important to specify both the amount of time and the process through which this evolution occurs to really understand the impact of these practices on the economic success. Another very significant consequence is the relationship between which explores the causal relationship between HRM and the economic success as the temporal precedence serves as a precondition to inferring cause. They propose three criteria for the inferring cause: co variation between the resumed cause and effect, the temporal precedence of the cause, and the ability to control or rule out alternative explanations for a possible cause and effect connection. The final area of the future theoretical attention emerges from the role played by the individuals adding complexity to the phenomena within models of the relationship between HRM and economic success. This considers the emphasis on the different levels of analysis tension inherent in research on people in organization. At the organization and the unit level, theories seek to explain how variation in one level variable relates to variation in another unit level variable. The theory as propounded by Becker (1997) argues that HR practices drive employee behavior, operational performance, profitability and ultimately shareholder value. These variables impact he causal chain of the HR practices and performance. (Wright & Haggerty ) The discussion further emphasizes the need for more multi-level theories of the relationship between HRM and economic performance. Multi-level theories seek to simultaneously explain variance at multiple levels of analysis like individual, group and organization. The further emphasis is on the communication theory for examining different aspects of the HRM systems that may impede or facilitate this communication process. It would also be beneficial to develop comprehensive theories that integrate across levels of analysis. Such a theory would link organizational concepts to individual concepts back to their organizational concepts. This would be more well- rounded and all encompassing theory to define the incentive pay links to the management. (Wright & Haggerty ) An active consideration of the working principles of these theories would be very effective in planning a strategy for effective management and HR contribution in the expansion of the company’s venture in China in the area of manufacturing in the Textile and Apparel Manufacturing , while working with the SME”s to give growth stimulus to the expansion of the company. In recent times the role of HRM is very important in defining the guidelines for companies’ strategic economic success. There has been determined close link between the understanding and relationship between HRM and economic performance which determines the future growth of the company. The role of the middle level process theories embedded within the larger meta-theories such as Resource Based View of the firm have provided an essential foundation for further theoretical advances. These advances come from extending the current work to examine the concepts of time, cause and individuals more in-depth. This theoretical examination can serve as an essential starting point for building a more robust empirical base that will significantly increase our knowledge of relationship between HRM and economic performance. Globalization of the developing countries like China, provides a new challenge in the competitiveness based on their export history and bilateral relationships. The support received from the Chinese government to engage in new political and economic reform which would support their SOE”s (State Owned Enterprise) added a boost to this economic success. A surge in production and exports were expected as a result. Overall Chinese textile and apparel imports to the US alone grew by 117% in 2002, and another 75% by August 2003. (Hegreaves). (Smook). In light of this supportive role of government the strategy to get involved in the SME’s in China for further expansion of the business venture in the manufacturing of the textile and apparel industry suits the world economy and guarantees the economic success with focus on the time, cause and individual aspects of the HRM management and control. There are several emerging SME”s (small and medium sized industries) which are ready to take off with good support form outside source. The contribution of the HR is of significant importance in its contribution to the organization as they are managing the profitability based on the human element of intelligence. The Hr professionals need to address this challenge by having a routinely benchmarked comparison of the coast and other efficiency- based performance outcomes associated with the activities of the HR function. This would lead to more efficient and effective human capital management in determining better incentive and pay scales for the respective employees and would enhance the productivity. The Hr performance should be judged from the point of view of the company’s strategy rather than the individual organizations benchmark. HR creates significant value in the organization by reducing costs and becoming more efficient, in harmony with the strategic performance of the company. (Becker and Huselid) The significance of the meta-theory becomes very important when considering the time, cause and individual aspect which could give insight into determining how the accountability of people can be measured under these modules and theories for efficient planning of the strategy and the determination of effective incentives and pay links in the emerging and developing economy of China. These significantly impact the organizational and the financial performance of the company. And this directly impacts the decision making by large number of investments of vast majority of citizens in the developed country. Work Cited Becker, B. & Huselid, M. (2003). Measuring HR? HRMagazine, 48 (12), 56-62. (Becker and Huselid) Holmes, T. A. (2005). How to connect diversity to performance. Performance Improvement, 44(5), 13-17. Retrieved February 23, 2007, from ABI/INFORM Global database. (Document ID: 841286021). (Holmes) King-Kauanui, S., Ngoc, S. D., & Ashley-Cotleur, C. (2006). Impact of Human Resource Management: SME performance in Vietnam. Journal of Developmental Entrepreneurship, 11(1), 79-95. Retrieved February 23, 2007, from ABI/INFORM Global database. (Document ID: 1035650821) (King-Kauanui) Wright & Haggerty, Patrick M. & John. J. . "Missing Variables in the Theories of Strategic Human Resource Management:Time,Cause and Individuals." CAHRS Working Paper Series 2005, retrieved on 17 Sept. 2007 . (Wright & Haggerty ) Barney, J. 1991. Firm resources and sutained competitive advantage. Journal of Mnangement, 17: 99-120. (Barney) Fleetwood& Hesketh, Steve & Anthony. "HRM-performance research: under-theorized and lacking explanatory power." International Journal of Human Resource Management VOl.17 Issue 122006 1977-1993. . (Fleetwood& Hesketh ) Smook, Lizette The Competitiveness of the Chinese Textile Apparel Manufacturing Industry. Seanstone Wynot. 2005. .. (Smook) Read More