HRM Systems in the Developed and Developing Countries - Assignment Example

 HRM Questions Ans 1: Conventional globalization theories view the working labor class as being subject to the forces of globalization. According to Kayatekin and Ruccio (1998:80), the forces of globalization are so strong that the working class remains unable to organize themselves on an international basis against the globally organized capital that propels the forces of economic homogeneity in the world. Therefore, this traditional approach to globalization holds the view that globalization undermines national economic systems and since capital is global, therefore any resistance that must be offered against it must also be global. As a result means available for organizational labor at the national levels, such as forming unions or labor movements, become difficult at the global level without the development of abstract concepts such as global citizenship, undermining the power of organized labor to achieve benefits for the working class. Three major factors that have challenged the very existence of labor unions are the (i) globalization of production (ii) the declining importance of individual nation states and (iii) the formation of a transnational capitalist class. The first is based on the fact that globalization represents a flow of capital from the developed nations to the Third world countries where labor costs are low. This is not merely the flow of monetary capital but also of production facilities. With such production facilities being increasingly decentralized with control systems becoming more transnational, existing national systems and domestic unions are challenged. The second is based on the fact that globalization brings about an increase in multinational corporations, foreign direct investment, outsourcing and cross national mergers, all of which undermine the importance of individual nations. Financial globalization puts a constraint on national economic policies while multinational corporations are able to function with a considerable degree of independence. The third is that with the increasing emergence of multinational enterprises, power does not remain concentrated in the State but rather is diffused in” global networks of wealth, power, information and images.”(Castells, 1996: 359), resulting in the emergence of a transnational class that supersedes national Governments and classes. Globalization results in an integration of markets, technologies and classes existing in individual national states. As a result, the traditional strength of domestic organizational labor has been weakened with globalization and trade unions are disappearing. DuBoff and Herman (1997) argue that globalization is strongly based in economic fact because the changes that have been occurring in technology have resulted in an increase in the power of capital to transform the world into one free market for finance, production and wage labor. As a result, the globalization thesis would also imply that there would be a diffusion among the HRM systems of different countries. Individual HRM systems existing in individual nation states may be different from each other – for example, Japan employs a flexible HRM approach where workers are provided support at all levels, through the use of techniques such as comprehensive orientation, information sharing, providing training to employees on a periodic basis, rotation in jobs and some profit sharing – all of which are geared to produce a happy workforce with high levels of incentive. The focus on the well being and welfare of the worker is a characteristic feature of the HRM systems in Japan. As opposed to this, other industrialized nations such as the United States have adopted a more hierarchical framework in their HRM systems, compared to the networking in Japanese firms. In European countries, workers are not provided benefits to as high a level as in Japan, however they receive substantially high wages and paid leave which are not features of the United States HRM system. While national HRM systems may be different however, the globalization thesis that supports the inexorable movement of capital across countries and the homogenization that results, would support some degree of diffusion among HRM systems. For example, when Japanese and American firms work together in strategic alliances, some of the HRM practices that are used in Japan have also been introduced into U.S. Firms, in order to boost the productivity of workers. Similarly, European countries are facing the need to make changes in their HRM systems to reduce benefits to workers in order to become competitive in the global economy. While the existing HRM systems in third world countries allow little benefits for workers, as is the case with HRM systems in developed countries, globalization may bring about improvements in the HRM systems in developing countries, through the introduction of higher wages and added benefits for workers in order to enhance productivity levels. The main characterization of globalization would therefore be the move to produce an international division of labor, which would push up wages in developing countries. Therefore, the globalization thesis leads to a conclusion that there will be some degree of diffusion of one country’s HRM systems into another, to ultimately produce one standard global HRM pattern based upon an international division of labor rather than localized HRM systems. Ans 3: According to Hofstede, who explains that a systems approach needs to be utilized in the case of cross cultural studies, national culture may include all relevant elements such as “individuals, groups, organizations, or society as a whole” all of which may be relevant in examining the concept of what constitutes national culture. (Hofstede, 1980:32). Therefore a study of national culture would include all elements that may be pertinent and relevant in distinguishing it from other nations and cultures and an examination of national culture can be made from a variety of disciplines including psychology, sociology, anthropology, political science, comparative law and medicine, geography and economics, all of which may be relevant in understanding component elements of national culture. On this basis, national culture may be said to include all those elements that are characteristic of a particular country including working practices, belief systems, religion, educational systems, Government regulations and financial benchmarks, to mention only a few of the factors. Hofstede has defined culture as the “collective programming of the mind that distinguishes the members of one group or category of people from another. (Hofstete, 2001:9) Hofstede (1980) identifies four specific dimensions of a national culture, which he developed in specific reference to the role played by national culture in the development of work related values and information system design. His study is based on the results obtained from over 100,000 questionnaires administered in 66 countries. The four elements that he has identified are: (a) uncertainty avoidance – this was explained by Hofstede as being the extent to which people are accepting of or defend against uncertainties inherent in future possibilities (b) power distance – this is the degree of distance that exists between workers at a lower level and those persons who are at a higher level in the work hierarchy (c) individualism – the degree of importance that is ascribed to the achievement of individual goals vis a vis the achievement of collective goals (d) masculinity – the extent to which the goals of men tend to dominate those of women in the workplace. The first two factors play an important role in European and American work systems. Uncertainty avoidance and power distance have been considered together by Hofstede because of interaction effects. While comparing Germany and the USA, Hofstede (1980) found that both these countries are characterized by lower power distance. However Germanic cultures have a higher level of uncertainty avoidance as compared to American systems. People in the former culture have a need to keep living up to rules in order to reduce uncertainty and organizations are structured around rules in order to cope with uncertainties that may be inherent in future possibilities. As opposed to this, the American workplace is characterized by low uncertainty avoidance, where organizations are kept together through ad hoc negotiations, where there may be a need for higher degrees of tolerance of uncertainties from everyone in the workplace. Therefore, in the case of German work cultures, work flow bureaucracies are established, which set out the rules for the working process sin much greater detail, while in American organizations, the focus is on negotiations rather than rules, therefore organizations are implicitly structured. According to Hofstede (1980), German cultures therefore perceive the ideal organization as being one that is like a well oiled machine, while American cultures perceive the organization as a village market. Where individualism is concerned, western cultures, such as American and European tend to be centered around the achievement of individual goals and ascribe more importance to it, while eastern cultures may be characterized by a framework where there are greater elements of sacrifice of individual goals required, since collective goals are considered more important and individuals are expected to subordinate themselves to such goals. Hofstede’s identification of the four cultural elements also includes the element of masculinity, which takes into account gender differences existing within nations. He concludes that part of the mental programming of individuals is dependent upon whether they were born as boys or girls. He states that since gender is an involuntary characteristic, its effects upon mental programming are also largely unconscious; however on an average, Hofstede found that among people across all cultures, men are programmed with tougher values while women are programmed with more tender values, although the actual gap existing between genders varies from country to country – it is less in developed countries and higher in developing countries. Therefore, in less developed countries, cultural rules and practices may be laid out by men, with the women functioning as symbols of their culture and beliefs and therefore being told what to do. However, in developed countries, the position of women is changing, so that they are becoming the main players in the new world systems of globalization. Ans 4: The process of internationalization of a firm is a gradual process that takes place in several distinct stages. Two different kinds of models have been proposed to describe internationalization (i) u models and (ii) innovation related models. The u-Models describe the process of internationalization as a “gradual acquisition, integration and use of knowledge about foreign markets and operations” with a successively increasing level of commitment to foreign markets. (Johanson and Valne, 1977:36). This model is organized around the strategic choices and organizational forms selected by the firm and include (i) facilitation of export (ii) assessing information needs and acquiring such information (iii) selection of foreign markets (iv) entry into foreign market, after including effects of cultural distance (v) expansion and (vi) marketing strategies. The innovation centered model also focuses upon a firm’s involvement in foreign markets. However in this model, the availability of innovation as a means to gain competitive advantage in the global market will also play a role. These models consider each subsequent stage that the firm enters as an innovation for the firm. The extent of a firm’s dependence on foreign markets can be operationalized through the export/sales ratio. With the completion of all the stages outlined above, even a small scale or medium scale firm can transform itself from a nation concern into a global enterprise through a gradual phasing of its entry into the foreign markets followed by marketing of its products to sustain itself within that market. Schwarz and George (n.d) have pointed out differences in organizational structure within MNCs, since they may not all be organized in a similar fashion. They have identified three different approaches to Multinational Corporation planning and practices, depending upon the location of the decision making nodes within the firm. (a) The multi-domestic MNC, were there is a higher degree of autonomy in decision making available to the subsidiary companies, so that decision making is highly decentralized and carried out by the subsidiary organizations rather than the parent office. In such organizations, it is likely that HRM systems in subsidiary corporations may retain the characteristics already existent within the host country, although the highly decentralized nature of the system could also lead to an international division of labor caused by the intermingling of HRM personnel between nations. Moreover, there is likely to be a greater degree of pressure exerted by the Governments of the host countries upon the IT and HRM systems – the demands that they must meet and the standards that they must conform to on technology issues such as Spam, as well as the need to provide attractive working conditions for workers. (b) The Transnational MNC, where decision making may be only partly decentralized and part of the decision making process may be more centralized with a greater degree of control from the head office and less autonomy for the subordinates. In such a case, HRM systems are also likely to be individualized to a particular firm and these are likely to represent a combination of HRM systems existing in both countries. It will be the head office that will dictate HRM practices that are to prevail in all of its branch offices and subsidiaries all over the world; however there may be a degree of flexibility existing within the HRM system that also allows for incorporation of local HRM practices existing within the host country. HRM systems may be centered around IT experts and there will be a great demand for qualified IT staff in the host country, who can only be found within specific small areas and who know how to tailor the requirements of an IT system to address the particular concerns of the local environment. While there is likely to be a degree of specialization and variation in the IT system hardware and software to tailor it to local conditions, as well as the HRM requirements, it is likely that such requirements and specifications will be determined extra-nationally; the manner of operation may be partially under the control of the head office. (c) The Global MNC where decision making is completely centralized and handled by the parent company, therefore the HRM systems in existence at the head office are likely to be used by all subsidiaries. The HRM system may be a standardized one that is designed within the parent company and be uniformly used across all countries where the MNC conducts its business. In such cases pressures from the host Government will be lower and the products used are likely to be highly standardized, with large amounts of data sharing and transfer of information within the system network Ans 7: Confucianism is based upon the concept of ren that includes humanity, compassion and rational self. Confucianism derives from “He”, the most cherished ideal in Chinese culture, which literally means harmony. Confucius terms a good person as a junzi and he bases his definition of a junzi on the principle of He, by distinguishing a junzi or a sensible person, as one who seeks harmony but does not seek to attain sameness, because he is able to respect differences in opinion and has the ability to work with different people in a harmonious fashion (Li, 2006). As opposed to this, a petty person seeks sameness and does not harmonize with others. The principle of Confucianism is an all encompassing one in that it thrives on “incorporating others into its expanding self” ( Rosenlee, 2006:159). Harmony is therefore the highest ideal as far as Confucianism is concerned. Harmony occurs at various levels, both within an individual and between an individual and others in his environment, because when an individual is in harmony with his environment, he flourishes.(Li, 2006). Therefore, applying these principles in a work related environment, the goals underlying Confucian societies would be collective goals at the expense of the individual where necessary, since the achievement of harmony is the ultimate objective. Since the achievement of harmony between individuals is also a desired objective, Confucianism favors the development of unions and facilitating worker happiness on the job. It also suggests that government regulations and measures would be such that they would seek to attain harmony with other nations through the regulation of foreign direct investment. Singapore achieved its independence in 1959 and since then, it has adopted a policy of import substitution industrialization strategy that has been financed through foreign direct investment in order to aid its economic development.(Kuruvilla, 1996). This produced a change in the existing HRM systems which were centered on the achievement of minimum standards wages, provision for collective bargaining and arbitration. All of these may be seen to be in line with the Confucianism goal of achieving harmony. However, with the introduction of external investments, the need to maintain harmony with the foreign countries doing business with Singapore produced a stable and flexible industrial relations systems, where the Government provided funds for the education of union leaders and strikes in certain industries were banned altogether (Kuruvilla, 1996), in order that no disturbances occurred in the existing relations with foreign investors. As Kuruvilal points out, the years 1974-76 were characterized by labor shortages in manufacturing with increased competition for foreign direct investment from other south-east Asian countries such as Korea and Taiwan. This represents a disturbance in the existing harmony of the system, which needed a restoration of balance. As a result, the Government restructured the HRM policy in Singapore by spearheading further industrialization through improvements in technology, in order to continue to attract foreign investors. This produced a shift in the HRM policy where highly skilled labor was called for. As a result, the Government took steps to enhance worker skills through policy changes in education, which may seen as the move by Government to harmonize with a changing environment. HRM systems in Korea are authoritarian, because of the paternalistic system of social organization. As a result the employer has complete discretion in so far as decisions about employees are concerned and individual freedom is completely subordinated to the will and wishes of the employer.(Lee, 2001). The origin of such a paternalistic system also has its roots in Confucianism, which seeks to incorporate all elements into its expanding self. In applying this to the South Korean workplace, this principle therefore results in the individuality of workers being swallowed up in the whole, so that their individual goals are subordinated to the greater good of the entire enterprise or organization, thereby producing a structure where the stronger elements are the controlling elements – in this case the employers. As pointed out by Lee (2001) South Korea also went through a change during the labor disputes in 1987-89, where labor began to struggle to assert its rights, thereby representing a disturbance in the harmony between the organizational elements. The authoritarian system existing in South Korea that mandated the superiority of the employer was replaced with a paternalistic system, where major decisions in terms of HRM practices and policy towards workers were designated into the hands of males. Here again, the incorporation of weaker elements into the expanding self has resulted in women occupying a subordinated position in the workplace as compared to men. Ans 8: The internal environment existing within China prior to recent reforms has been characterized as “Iron Rice Bowl” due to the tight grip on human resources and industry that was exerted by the Communist Governments reigning in China. Existing HR practices within the country, as well as coordination with foreign investors interested in investing in China were coordinated through the All China Federation of Trade Unions (ACFTU) and worker participation in unions was mandated in order to secure employment within the Country (Warner, 1975). This has proved to be the biggest challenge to introducing HR reforms within China, since the existing system was a tightly controlled system where the trade unions exercised undisputed sovereignty over the Chinese workers and their terms and conditions of employment. The introduction of economic reforms and the opening up of Chinese borders in order to allow foreign direct investment has also spelt the beginning of labor reforms, however the biggest challenge faced by investors is the degree of resistance that is still faced from existing labor Unions and the reluctance of the Government to de-structure these Unions or dissolve them. China offers almost unlimited business potential to an investor because of its size and the potential market existing within the Country , apart from the cheap labor and quality of its products. Government regulations are still an inescapable part of the Chinese economy and any business investor seeking to do business in China needs to be prepared to deal with those regulations, which mandate certain employment conditions for workers. Moreover, dealing with the various Government regulations in regard to HR practices and management of a business within China are the biggest stumbling block to introducing global HR practices within China. The obtaining of Government regulatory permission may be fraught with delays and such regulations are apt to change frequently due to sudden policy swings. Under the Communist system of Government, the Chinese have become very efficient and organized in the management of their resources. The Chinese worker operates under a strict and circumscribed set of rules that specify the parameters of his/her job and the exact requirements that are expected of them at their jobs.(Tung, 1981). Since China is a planned Socialist economy, the Government still plays a significant role in mediating Hr practices within the country. As pointed out by Tung (1981), the Government still sets the production targets, determines the allocation of raw materials and also purchases and market a portion of the output produced by selected enterprises. While western firms seeking joint alliances and mergers with Chinese firms will be allowed to operate according to their own labor and management practices, the level of Government regulations that is exerted over local firms and enterprises does play a role in restricting the free and unfettered incorporation of human resource practices and management techniques. Since the Government is determined that China will expand in the Chinese way and not in accordance with Western management principles, therefore the introduction of HR principles in accordance wit HR systems is limited and poses a challenge for Western firms seeking to do business in China. Moreover, Chinese Government policy tends to extend in the direction of ensuring that only those principles that have been found to work in practice are actually allowed to thrive and flourish. (Ling, 1981). This also proves to be a barrier to Western companies since there is a restriction on the extent to which innovation and flexibility can be implemented to change with changing political, social and economic conditions. Therefore existing Socialist principles are in practice opposed to capitalistic goals and therefore render the implementation of Western HR practices difficult in China, due to Government resistance. As Ling(1981) also points out, the reluctance to let go of old communist systems also means that there are high levels of bureaucracy which pose a further challenge to improving existing HR practices in China. While the Government does seek to improve worker motivation by allowing for some materialistic gains, the gap between wages of the high paid and low paid can never be allowed to become too wide as existing in a capitalist enterprise through the free market, due to the Socialist basis on which the country is founded. Therefore wages are fairly uniform across the nation while they are not exactly equal such that worker incentive is removed. But this also means that substantial worker incentives through higher wages and bonuses are restricted, which poses a further challenge to successful operation in Chine with maximum productivity, as is the case in capitalist countries. References: * Castells M, 1996. “The Information Age. Economy, Society and Culture. Vol. 1 :The Rise of Network Society.” Blackwell. * DuBoff, Richard B and Herman, Edward S, 1997. “A critique of Tabb on globalization” Monthly Review, 49(6): 27-36 * Hofstede, G.H, 1980. “Culture Consequences: International Differences in Work-related Values” London: Sage. * Johanson, J., and Vahlne, J.E., 1977. "The Internationalization Process of the Firm: A Model of Knowledge Development and increasing foreign market commitment” Journal of International Business Studies, 8:35-40 * Kayatekin, S.A. and Ruccio, D.F, 1998. “Global Fragments: subjectivity and class politics in discourses of globalization” Economy and Society, 27(1) * Lee, Hyo-Soo, 2001. “Paternalistic Human resource Practices: Their emergence and characteristics.” Journal of Economic Issues, 35(4): 841-870 * Li, Chenyang, 2006. “The Confucian ideal of harmony” Philosophy east and West * Rosenlee, Li-Hsiang Lisa, 2006. “Confucianism and women: A philosophical interpretation” New York: State University of New York Press * Kuruvilla, Sarosh, 1996. “Linkages between industrialization strategies and industrial relations/ Human resource policies: Singapore, Malaysia, the Phillipines and India.” Industrial and Labor Relations Review, 49 (4): 635- 658 * Schwarz, Andrew and George, Beena, No Date: “The Development and deployment of IT in the global organization.” ISRC, University of Houston * Tung, Rosalie L, 1981. “Patterns of motivation in Chinese industrial enterprises.” Academy of Management: The Academy of Management review, 6(3): 481 * Warner, Malcolm, 1995. “The Management of Human resources in Chinese Industry” New York: St Martin’s Press. 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