International Human Resource management and Emerging Countries
It is known that there is no universal principle for human resource management to all countries. In fact, management is largely influenced by country’s characteristics, such as national culture, political system or mainstream value. Keith(2010) cited Tayeb(2000) argued that human resource management is associated with the unique culture of Anglo-American, which means if managers just copy the Western human resource practices to any other cultures, it is most likely to be incompatible with local situations. Further, it might decrease labor productivity and raise issues of labor relations. In fact, the Western “HRM model” means instrumentalism, they regarded human as valuable resource so that employees have obligations to serve the company’s ultimate goal, such as maximize shareholder’s value or achieved the planned goals. However, in developing/emerging countries, they prefer the humanism view, which stresses the self -achievement of employees and having a value for themselves. ( Jason, —– ) Recently, as the development of globalization, there is a new managing creation, which is referred as hybrid systems & practices for managing people in emerging countries.
To explain the relationship between human resource management and national culture, it is meaningful to compare Japan and the U.S. Since Japan is the most developed country in Asia and one of the most industrial countries in the world, but the human resource management is definitely different from her Western peers. Takei (1999) argued that Japanese Management System (JMS) as one of the best way to support the growth and success of Japanese economy after World War II. In fact, the JMS consists of three factors: Lifetime employment, Seniority based wage and promotion, and Enterprise Unionism, which was very different from the way the management system in western countries. According to Japanese Ministry of Labor (JMOL), the lifetime employment is defined as “the practice of companies to hire their core (regular) employees primarily from among new graduates and other young persons, to plan their continual training and development, to continue their employment within the company group over a long period of time and not to discharge of lay off such employees except in very unusual circumstances (bankruptcy or legal punishment)” (Ornatoeski, 1998). In fact, this kind of policy is consistent with Japanese culture tradition, which focuses on loyalty, order and group orientation. Also, JMOL defined “seniority based wage and promotion” as a system or practice that regarding number of years of services, age and education background as the key factors to determining wage rates and job positions (Ornatoeski,1998). This value releases an important signal, not only boost incentives of employees’ loyalty, but underpin the organizational cultures, which respect senior employee. In terms of Enterprise Unionism, Akimoto and Sonoda(2009) concluded four components of it, which are unions within the boundary of enterprises, covering all full-time employees, “core in power and resource in the whole union apparatus”, usually cooperate with the other two factors of JMS. However, the situations in America are far away from Japanese peers. The individualism roots in the soul of American and the employee is regarded as labor force, which means the labor relations are more tend to be like labor contract or match between buy and sell side in labor market. As a result, the labor mobility in America is much bigger than in Japan and many employers might not consider the long term planning for their employees but stress the marginal product of labor needs to be equal to or bigger than wage rate so that minimize labor cost and maximize shareholder’s value (Orsay, et al. 1993).
It is necessary to make definition of emerging countries clearly prior to review human resource management in those countries. Generally speaking, it could represent for all developing countries and the performance of economic growth is kept in an excellent level persistently. For instance, BRIC is a typical group that represents for emerging countries. Of particular, China, as the current second largest economy and the GDP growth rate is kept at about 10% annually since the market reform (http://www.guardian.co.uk/business/2010/aug/16/chinese-economic-boom). In fact, the Chinese economic miracle is after the Asian miracles, which led by four Asian tigers since from 1960s-1970s. But due to the population base and size of country, China would make much greater effects to the world economy than those Asian tigers. It is interesting to study the human resource management in China, not only the economy/political status of China but she is the typical example of emerging countries in terms of huge modernization efforts, market reform, political uncertainty and immature legal systems. In fact, all points above are associated with labour relations. In addition, it is reasonable to believe that even in China, due to the components of company’s ownership, geographic, demographic, socio-economic status and many other differences, there are many different points in terms of human resource management. At the beginning of open and reform era, many private firms were only allowed to set up in costal areas or special economic zones, and many of these were governed by foreigners or those came from Taiwan or Hong Kong. While, the majority of firms were state backed at that time, it is easy to recognize the huge differences between two kinds of firms in terms of human resource management. In the past, the state owned enterprise implemented “iron rice bowl” policy (http://news.xinhuanet.com/english2010/indepth/2010-08/23/c_13457932_2.htm), which is similar with Japanese life time employment but the owner of corporations is Chinese government. It is easy to understand that the management of state owned firms have many similar points with government so that the overall management system is influenced by bureaucratic style largely. In huge debt, inefficiency or resources wasted are most often used words to describe the state owned enterprises at that time. After recognized that serious problem, Chinese government started reform for state owned enterprises in 1990s. Dowling et al. (2000) argued that the human resource activities were not conducted the same with Western manner, even for those have already received investment from Western companies. In detail, some Western HR activities were partially implemented by Chinese managers, some only existed nominally or some combined with Chinese characteristics, and some were totally neglected by managers. In terms of human resource management in private sector, it also depends on company’s characteristics, owners’ preferences or even the human resource managers’ education background. Moreover, it is necessary to know that 99% of enterprises in China are small-medium size, and the total number is more than ten millions (http://news.xinhuanet.com/fortune/2010-05/14/c_12102294.htm). While, it is meaningful to know which kind of employees recruited by those firms, according to National Bureau Statistics of China, the total number of migrant workers from rural areas was nearly 230 millions. From two figures above, it is reasonable to deduce that many employees in small-medium size firms are from rural areas, most of them are lack of college or even basic formal education, employers usually did not care or consider planning their workers’ future, some of them even refuse to hand out enough payment on time. It is more likely to view that as the primitive capitalism era, owners capture profits at the expense of labours’ basic human rights. If the basic human rights cannot be hold or sustained, the human resource management is more similar with labour supervise or the way to exploit from labours.
After recognized those basic situations, it is easy to know that the human resource management in China is still in very early stage, it is confidential to conclude that the majority of firms in China not implement proper human resource management. For those large companies, such as state owned, foreign owned, joint venture firms, the criteria to entry is generally strictly and many of them are associated with relationship or power effects, but there is at least one conclusion for them, which is that human resource management is more likely to be a hybrid system.
At last, it is critical to understand that human resource management cannot be effective or efficient without considering the national or organizational culture. Further, for emerging countries, the human resource management is immature for majority of firms, especially for those switched from central planning economic system to market oriented system recently, such as Russia, China or even India. Similarly, India and China share many similarities in terms of huge population base and low level of human right. To those countries, the performance of economic development are praised by many sides, but many external sides not to consider some issues seriously, such as employees’ welfare and planning program, the more and better incentives designed and the exploration of human resources. Even though, there are abundant of reasons to believe that the human resource management in those emerging countries would be improved as the economy and legislation progress.
Akimoto, T., Sonoda, Y (2009), ‘Labor Welfare in Japan: Social Change and Enterprise Unionism.’ Journal of Workplace Behavioral Health, 24:243-264.
Dowling, P.J., Zhu, C.J. (2000). Managing Human Resources in State-Owned Enterprises in Transitional Economies: A Case Study in the People’s Republic of China. Research and Practice in Human Resource Management, 8(1), 63-92.
Takei, H. (1999). Changing Structure of Japanese Management And Corporate Governance, New Hampshire College, 1999.
Ornatowski, Gregory K.(1998). The end of Japanese-style human resource management? Sloan Management Review, 39(3), 73-84.
Orsay,K., Refik,C. (1993) A comparison of U.S. and Japanese management styles and unit effectiveness. Management International Review, January, 1993.
The Guardian(2010) “Chinese economic boom has been 30 years in the making”, retrieved from http://www.guardian.co.uk/business/2010/aug/16/chinese-economic-boom.
Xinhua News (2010) “ 32 years after economic reform, China moves to break “iron bowl” reserved for civil servants. Retrieved from http://news.xinhuanet.com/english2010/indepth/2010-08/23/c_13457932_2.htm
Xinhua News (2010), “ The number of small-medium size companies is more than ten millions.” Retrieved from http://news.xinhuanet.com/fortune/2010-05/14/c_12102294.htm