International HR Management: China and Pakistan - Essay Example

Human Resource Management (HRM) traditionally refers to the management of a firm’s workforce or human resources and it entails the attraction, selection, training, assessment, and appraisal of employees (Moti 2013, pp.2-3). In today’s age of globalization, organizations have established linkages and operations beyond national boarders that they can no longer be regarded local but global in nature (Management Study Guide, 2013); this has led to a workforce diversity and cultural sensitivities that have created challenges in the Human Resource management (Tiwari 2012, p.675). Key concerns in International Human Resource Management have been the applicability of westernized, especially American Management theory in Multinational Corporations (Suharnomo 2009, p.1). Therefore, International Human Resource Management is the procedure of securing, assigning, and efficiently making use of human resources in a global corporation while evaluating the incorporation and demarcation of HR activities in distant localities (Tiwari 2012, p.671). International Comparative HRM is simply the process of comparing and contrasting the major cultural and institutional features and predominant HR policies and practices across national borders. Multinational corporations are obliged to adopt HRM practices that are in tandem with cultural sensitivities in host countries rather than transferring their parent country HRM practices to the host countries (Kaminsky 2002, p.1). This paper will compare and contrast the major cultural and institutional features and predominant HR policies and practices in China and Pakistan. Officially, China is known as the People’s Republic of China (PRC) and it has a population of about 1,343,239,923 people and its official language is Mandarin; Pakistan is officially known as the Islamic Republic of Pakistan (IRP), with a population of about 190,291,129 and Urdu as its official language. Major Institutional Features The process of international HRM necessitates that multinational corporations will have to comply with specific government laws and legislation in the management of human resource in varying cultural contexts. China has institutionalized Labour law, Contract law, Employment Promotion Law, Child labour law that has pegged the minimum age for working at sixteen. The Human Resource Management practice in China has undergone rapid transformations especially after China shed off its traditional state controlled economy framework in favour of the market controlled economy framework. This has made China the second leading destination for foreign investment in the recent years; however, China is still regarded as the “most foreign” place in the world due to its highly eccentric culture, institutions, and people mind-sets. In this respect, establishing successful business operations in China and adopting the most successful Human Resource Management strategies remains a major challenge to most Multinational Corporations because of its distinctiveness from other nations. Foreign Investment Enterprises predominantly focus on adopting HRM practices that are derived from parent company global policies than the local ones; however, China’s culturally and politically sensitive institutional context makes it almost close to impossible for western HRM practices to succeed. Notably, the Chinese HRM institutional management practice is shifting from the traditional Marxist personnel practices that prevailed in China’s state owned corporations. Institutions are currently adopting an American-style market oriented management system that is successfully instilling pro-market attitudes among Chinese staff without completely producing an “Americanized” Chinese management system. However, HRM practices in China are still at primary stages and it will take a bit of time before the concept is deeply institutionalized in China’s corporate environment. Pakistan has had serious institutional challenges that have influenced activities in the rest of the country, and the HRM practices have been subject to changes due to the institutional woes and frictions. HRM in Pakistan is also guided by institutional regulations and legislation such as labour policy of 1955 (revised in 2010), Equal right law, Anti-discrimination law and Child labour law (unlike China, minimum working age is fourteen). Like in China, HRM in Pakistan is taken seriously nowadays with a majority of institutions establishing HRM departments in their organizational structures though it is still at initial stages of development (Jamil, 2008).Institutions have established basic HRM practices that aim to foster staff productivity for optimum organizational productivity. However, Pakistan’s HRM institutional framework is prone to nepotism, favouritism, and lacks of proper coordination (Qayyum, 2011); however, Pakistan too has been faced with the challenge of responding to the new trend of globalization and free market. In this respect, Pakistan is also shifting its institutional structure from centralization to decentralization especially in public corporations as an important government policy concern. Pakistan’s institutions are also embracing the adoption of performance based and result oriented Corporate Management culture in public sector to increase efficiency and effectiveness in public corporations. Unlike in China, Pakistan’s human resource management practice is highly constrained because institutions are not autonomous and flexible in the decision-making process due to government interference (Naveed and Zafar, n.d, p.3). The public enterprises in Pakistan are adopting the Private sector HR management culture instead of the traditional personnel management practices. New trends in Pakistan’s HRM practices include the expansion of employee development, focus on competitiveness, collaboration, communication, and participatory management style and information exchange. Both China and Pakistan have elaborate institutional HRM practice that is still at the formative stages but has potential to expand given the paradigm shifts in free markets and globalization pressures. Major cultural features According to Hofstede, the Human Resource Management practices in the global perspective are influenced by cultural contexts within which organizations operate; in view of this, China’s HRM practices have been shaped by the Chinese cultural context. The essence of Chinese management culture has traditionally been respect for hierarchy; group orientation, image sustenance, avoidance of conflict in decision making process and delegation of all power to the appointed leader have also been the integral aspects of the Chinese management culture. Generally, values of equality, impartiality, non-confrontational decision-making processes, and fruitful relationships are embraced at the work place. However, due to the shift in business dynamics because of globalization and free market pressures, China has undergone a profound transformation from complete collectivism and high power distance to a hybrid of collectivism and lower power distance. The Chinese are also beginning to embrace a more individual-led management culture and employees are being given more rights and responsibilities; even though individualism and competitiveness are emphasized, Chinese management culture still requires conformity to organizational culture. These social cultural values are further strengthened by China’s implicit socialist norms of mutual assistance, honesty, and equality; other socio-cultural norms include solidarity, friendship, and obedience to the law. China’s socialist political system still embraces collectivism and the country’s political history and ideology continues to influence the HRM practice, work behaviour, and employment relationships (Yan, 2011). Like China, Pakistan’s Managerial culture scores highly on power distance perception in that high status hierarchy and power inequalities are generally acceptable in Pakistan’s society and institutions (Aycan Zeynep et.al, 2000, p.197). In relation to China, Pakistan’s culture embraces paternalism as defined by the hierarchical superior-subordinate power relations and role differentiation; superiors provide guidance, protection, and nurturance while subordinates are obliged to be loyal and deferent to their superiors. Pakistan’s culture also values collectivism and loyalty to the community in that individuals feel more compelled to be loyal towards the community by fulfilling their obligations towards in-group members (Aycan Zeynep et.al, 2000, p.198). Apart from that, Pakistan’s management culture scores dismally on uncertainty avoidance and averagely on masculinity because organizations are more futuristic and gender power relationships exist in a delicately average balance. Unlike China, Pakistan’s managerial culture has deeply enrooted tribalism, clannism, and ethno-linguistic orientations; HRM practice is largely influenced by non-meritocratic behavioural traits of sycophancy and flattery towards superiors that have emerged in Pakistan (Mangi, Riaz Ahmed et al, 2012, p.23). In Pakistan’s culture, success is predominantly determined by Sifarsih (connection), sycophancy, intrigue, duplicity, and unquestioning obedience to authority. Organizational culture is largely characterized by bureaucratic management systems, high power distance, and wide communication gap between management and employees. In this regard, western HRM practice as conceptualized through organizational equality, merit-based recruitment and selection, promotion, appraisal and training is yet to gain entrance in Pakistan’s organizational culture. Therefore, HRM practice is heavily constrained in Pakistan due to the country’s cultural stranglehold on organizational culture and practice thus limiting successful HRM development and practice at the workplace. Impact on HR Practices Divided into 31 regional federations and 10 national industrial unions, the All-China Federation of Trade Unions is the only nationalized trade union federation of the Peoples Republic of China; it is the major trade union in the world with 134 million members in 1,713,000 key trade union organizations. The ACFTUs primary role is to assist the state in ensuring the continuing operation of the labour market in the People’s Republic of China while establishing and strengthening global linkages in international perspectives. On the other hand, Pakistan Workers Federation (PWF) is the single largest national trade union centre in Pakistan and it is divided into three National levels namely: All Pakistan Federation of Trade Union, (APFTU), All Pakistan Federation of Labour (APFOL), and the Pakistan National Federation of Trade union (PNFTU). Unlike China’s ACFTU, which strives to assist the state to sustain the operation of the labour market, Pakistan’s PWF voices the rights and needs of workers through HR rights campaigns. Currently, mainland China requires that multinational corporations adopt specific HRM policies for employee recruitment that are in tandem with the country’s economic reform agenda in response to globalization and free market demands. However, multinational organizations operating in the People’s Republic of China are faced with enormous challenges in complying with this recruitment requirement given the lack of sufficient talented local managers (Rovai n.d., p.4). Guanxi ties can potentially influence recruitment in China’s organizations especially about jobs that require only soft skills to perform; however, this is limited where organizations have adopted standard screen and recruitment methods. Unlike in China, Sifarsih (connections) heavily determine recruitment in Pakistan and because the country’s’ organizational framework is yet to make direct commitments towards the adoption of clear HRM practices concerning recruitment. In this regard, the adoption of effective HRM practices especially in matters of human resource recruitment in Pakistan is largely constrained by Sifarsih; almost half of Pakistan’s unemployment is attributed to the lack of Sifarsih. Cronyism, sycophancy, tribalism, and ethno-linguistics play a leading role in the recruitment process because ultimately individuals are hired basing on recommendations from organizational ties; in this respect, lack of Sifarsih results to unemployment because one cannot be recommended to a position. China’s pay system varies according to provinces and districts and naturally, one would expect that given China’s specific cultural characteristics, Group Based Performance Reward Systems would be appreciated the most. Conversely, research has recently proven that contrary to the expectation, Individual Based Performance Related Reward Systems are appreciated more than the traditional Group Based Performance Related Reward Systems at the workplace. This shift can be attributed to China’s broad economic reform agenda that aims to transform China’s traditional government controlled Marxist economy to a more market driven economy, in response to globalization and free market restrictions. On the other hand, Pakistan’s minimum pay stood at an average of about PKRs 8000 per month while the reward systems have largely been group oriented in that most Multinational Corporations in Pakistan have adopted Group Based Performance Reward Systems. China’s broad economic reform agenda stipulates that Multinational Corporations adopt HRM policies that provide for human resource training and development to improve the quality of China’s workforce (Xinhua, 2010). The State and the Communist Party of China have prioritized human resource development and training as a key and urgent task that aims to upgrade China’s competitiveness and improving its national strength (Xinhua, 2003). Unlike China, Pakistan larks behind in the aspect of Human resource development and training despite its being endowed with natural resource and having a reasonable population (Brohi, 2003). The incessant deterioration and decay of government institutions has also wretched havoc on the quality of training opportunities and Pakistan is in dire need of comprehensive human resource development and training framework. Conclusion Ultimately, human resource management on a global perspective in response to globalization continues to create a number of challenges especially to Multinational corporations around the world. Multinational corporations are faced with the enormous challenge of creating a local appeal in host countries while retaining a global identity in response to globalization because no Multinational Corporation would wish to be termed as local today. This is what led to the establishment of the concept of International Human Resource Management, which encompasses a set of performances intended at supervising the human resources at an international level to achieve optimum organizational success. Therefore, the concept of International Human Resource Management entails creating consciousness of cross-cultural sensitivities along with global managers in Multinational Corporations. IHRM also entails the appointing of staff across geographic boundaries and educating upon cultures and compassion of the host country instead of transferring HRM practices of the parent company to host countries. This helps global mangers in Multinational Corporations to create a local appeal in their host countries without losing their global identity, and to achieve optimum success accordingly. In this regard, organizational HRM practice for Multinational Corporations is subject to cultural, institutional, and specific HR policies and practices in the diversified global environments. References Suharnomo, D. 2009. The Impact of Culture on Human Resource Management Practices: An Empirical Research Finding in Indonesia. Oxford Business & Economics Conference Program. Print. Brohi, N.A. 2003. Human resource development in Pakistan. Dawn.com. [Online] Available at: http://archives.dawn.com/weekly/dmag/archive/030622/dmag4.htm [Accessed on 27 March 2013] Xinhua. 2003. China strives to bolster Human Resources Development. Chinadaily.com. [Online]. Available at: http://www.chinadaily.com.cn/en/doc/2003-12/21/content_292190.htm [Accessed on 27 March 2013] Xinhua. 2010. China strengthens training of Human Resources. Chinadaily.com. [Online]. Available at: http://www.chinadaily.com.cn/china/2010-09/10/content_11286988.htm [Accessed on 27 March 2013] Qayyum, A. 2011. HRM: Does it matter? Pakistantoday.com.pk. [Online]. Available at: http://www.pakistantoday.com.pk/2011/01/18/comment/editors-mail/hrm-does-it-matter/ [Accessed on 27th March 2013] Jamil, S. 2008. HR in Pakistan. Hrmtoday.com. [Online]. Available at: http://www.hrmtoday.com/human-capital/hr-trends/hr-in-pakistan/#more-533 [Accessed on 27th March 2013] Yan, T. (2011). Three Institutional Factors Leading to China’s Success in Coping with the International Financial Crisis. Qiushi Journal. [Online]. Available at: http://english.qstheory.cn/selections/201109/t20110924_112604.htm [Accessed on 27th March 2013] Moti, U.G. 2013. Human Resource Management (HRM) in the global perspective: Theory and Practice.Academia.edu. [Online]. Available at: http://www.academia.edu/283847/Human_Resource_Management_HRM_in_the_Global_Perspective_Theory_and_Practice [Accessed on 27 March 2013] Mangi, R.A., et. al. (2012). Human Resource Management Practices in Private Sector Organisations in Pakistan: Study of Cultural Influences. Globaljournals.org. [Online]. Available at: https://globaljournals.org/GJMBR_Volume12/4-Human-Resource-Management-Practices.pdf [Accessed on 27 March 2013] Management Study Guide. (2013). Global Human Resource Management: Meaning and Objectives. [Online]. Available at: http://www.managementstudyguide.com/global-hrm.htm [Accessed on 27 March 2013] Zhang, M. and Edwards, C. 2003. HRM Practice and the Influence of “the Country of Origin” in Chinese MNCs operating in the UK. Ilo.org. Available at: http://www.ilo.org/public/english/iira/documents/congresses/world_13/track_3_zhang.pdf [Accessed on 27 March 2013] Rovai, S. (n.d). HRM Practices in foreign MNCs (Multinationals) operating in the PRC: An Institutional Perspective. Iese.edu. [Online]. Available at: http://www.iese.edu/en/files_html/p23.pdf [Accessed on 27 March 2013] Naveed, S. and Zafar, M.I.J. (n.d). HRM in Public Enterprises in Pakistan. Umt.edu. [Online]. Available at: http://www.umt.edu.pk/icobm2012/pdf/2C-65P.pdf [Accessed on 27 March 2013] Aycan, Z., et.al. (2000). Impact of Culture on Human Resource Management Practices: A 10-Country Comparison. Applied Psychology: An International Review.49 (1), 192±221 Tiwari, P. 2012. Human Resource Management practices: A comprehensive review. Iobm.edu.pk. [Online]. Available at: http://www.iobm.edu.pk/PBR/PBR_1201/120103_HRM%20Practices%20Tiwari%2037.pdf [Accessed on 27 March 2013] Kaminsky, L. 2002. The Influence of Culture on Human Resource Management.Workforcediversitynetwork.com. [Online]. Available at: http://www.workforcediversitynetwork.com/docs/InfluenceofCulture.pdf [Accessed on 27 March 2013] Read More