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Cultural Differences In International Human Resource Management

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Questions:

• What are the key cultural differences between China and Europe and what significance will these have for the HRM approach?

• Should the orientation of the organisation be ethnocentric, polycentric or geocentric?

• What policies and practices would you recommend for the recruitment and selection of local staff?
 
 

Answers:

Introduction to IHRM:

Human Resource Management can be defined as a process which effectively deals with directing the human resources/labour so that plans can be directed accordingly and organizational goals can be achieved (Rowley and Jackson, 2011).

International Human Resource Management (IHRM) is a new and dynamic changing area of practicing the HR policies in the global market. It is defined as a set of activities that is used to manage and control all the resources at international level to achieve the organizational objectives at international level. All the activities like recruitment; appraisal is been done and matched according to the international level. This method is a new and latest technology that is driving all the multinational companies adhering to the international standards. This is the area where globally standardized policies and practices are adopted by the companies and they are implemented (GOLUBIN, 2008).

Organizations have started to increase globally in the market and this has increased the workforce diversity and practice of work culture has also deviated from the initial stage. The main advantages of global HRM are that it generates awareness about cross cultural activities across other geographical boundaries. And this helps companies to identify themselves as global brands.

IHRM caters to international business operations and this help to develop the multinational enterprises. Gamescorp Plc is a UK-based company that provides computer games and has presently their business in Europe, they are planning to open their stores in China to which a proper study on cultural difference is required. Thus in this situation International Human Resource management plays a significant role. This is because IHRM have to build incorporation among the policies and practices of its forms which are subsidiary in order to achieve the overall objective of the organization.

The discussion emphasizes on the main difference between Europe and China that reflects on the organizational behavior of Gamescorp. It elaborates about the main cultural difference according to the Hofstede model of cultural dimension and highlights on the orientation of the organization. The objective is to establish recommendation on the practices and policies in order to select and recruit local staff.

Importance of IHRM:

IHRM is very complex in some cases. It is very essential to make an integrated system along with all the HR practices and policies of the company along with its subsidiary firms in all the territories so that the company can achieve organizational objectives. It is also important for a company to ensure that organizations are flexible in implementing their IHRM strategies and aligning them to their business goals as well. With the advent of strong forces of globalization it was necessary to develop and implement them to ensure a significant level of flexibility (Gannon, Roper and Doherty, 2010). IHRM should also align its objectives with the performance management system as well. To sustain an organizational standard it is also important to develop a capable and efficient workforce system.

 

Role of Human Resource Managers in Internationalization of Business:

IHRM has few important functions that can be effectively implemented to bring change in the dynamic environment.

IHRM aids in providing training and development: It is necessary to maintain a productive environment by ensuring employees having effective knowledge and skills. This is an important function because companies like Gamescorp who are trying to expand their business in other countries needs to know the cultural difference in business operation. After having an idea of the difference the IHRM must implement a strategy for introducing the product to their employees and train them how to sale these products. IHRM should also foster global collaboration along with keeping a view about the day to day business operations as well.

IHRM encourages building teams and effectively working with managers so that all administrative tasks are completed effectively and company profitability is increased (Lee Jungah and Chunsu Lee, 2013). In case of a diverse workforce it is very much important to maintain a unity among their employees. This can be achieved through ice breaking sessions and teamwork.

Key cultural differences between China and Europe

The main objective of Gamescorp Plc is to establish its business in China so that the company can easily penetrate and access to more potential resources (Trestl, 2009). Different cross cultural dimensions are used in terms of societal and cultural profiles (Pandey, 2010).

The key difference between Europe and China can be established with the help of Hofstede six dimensions in culture model. They are as follows:

Power Distance: In this dimension china accepts a society with inequality whereas the people of UK has a belief that inequalities should be minimized.  In British culture the class system has always been an inherent tension and they are trying to reduce the inequalities in order to prevent class differentiation consequences. Whereas in China, they consider the capacity of leadership differs from person to person.

Collectivism and Individualism: China has a culture of Collectivist and in such societies people provide care in return of loyalty. In UK, the people are highly individualistic. Children at a very early age decide for their purpose of life and how they could uniquely contribute to the society. In their team works they highly depend on the leader and their instructions.

Masculinity: masculinity refers to the value system and the orientation towards success. The Chinese people consider sacrificing their leisure and family by prioritizing their work. They are ready to provide service irrespective of time. UK in this term has a masculinity driven culture which means that the modesty in British culture and their understatement is at odds having an underlying value system for success.

Avoidance of Uncertainty: UK doesn’t consider the importance of avoiding uncertainty.  Their general attitude is like they don’t want to take necessary steps before any uncertainty. In an ambiguous situation they are comfortable and believe they could overcome it. The Chinese people are also comfortable with ambiguity. Their language has meanings which state the degree of ambiguity. They are entrepreneurial and adaptable.

Orientation for Long term: In this dimension comparison, China stands as a very pragmatic Society. The people there believe that truth depends and varies according to situation. They have an ability to adapt traditions very easily. Whereas in UK it cannot be determined in the culture of British whether there is a dominant preference (Geert-hofstede.com, 2015).

Indulgence factor: Indulgence is the extent to which impulses and desires are controlled by people. In this dimension the British are classified Indulgent. They have a desire to understand their impulses and desires in regard to enjoying life. They also consider the importance of leisure and spend money whimsically. Whereas China is a restrained society, they don’t emphasize on relaxing and free time and have a high degree of control over their desires.

The Chinese philosophy plays an important role in developing the Chinese society and it is very vital factor in defining the social relationships today (Shen and Edwards, 2006).It is also an important fact to consider that every firm has its own enterprise culture and it plays an important role in reflecting values and ethics been highlighted by the Chinese culture of work (Miller, Ochs and Mulvaney, 2008). Guanxi is a connection between people in which one succeed upon another to perform service or favor or be succeeded upon. For this the people involved necessarily ahs to be of same status. The Chinese believes in taking favor from their connection in times of need. This states that in Gamescorp the Chinese market may propose a negotiation for some possible favor (Lin, 2010).

The cultural environment is deeply influenced by the management of joint venture of Chinese and European market as well. Therefore it is necessary to avoid misunderstandings as that can hamper the risks and problems associated with it. This will also affect the management styles associated with the markets as well. Therefore it can be inferred that both the cultures have a strong dominance over each other (Zhang, 2010).

 

Orientation of the organization

In this case study the approach that is to be followed is of the ethnocentric approach which implies that the parent country brings all the natives of other countries all together and develops an interconnection between all the countries. Here the native country is UK and all the other parent countries are Berlin, Paris and Milan. Even the company was planning to set up outlets in China and merge with such a developing country. This provides a deep insight into the fact that the company adopted ethnocentric approach to stabilize globally in the market. This approach had a strong notion that if the system did well in the domestic market then it would perform well in international markets as well. It is also necessary to understand and adopt the marketing mix and understand the need of the overseas market (Folsom, Gordon and Spanogle, 2009).

In the case study it is also mentioned that there should be knowledgeable individuals who can effectively sell the managerial qualities to the host country so that business can be merged with those countries. This also enhances the customer service standards and allows flexibility by giving high status to the employees.

The main objective of geocentrism is to integrate both the headquarters and its subsidiaries along with. The whole focus lies on the fact that to solely maximize the worldwide objectives as well as local objectives that helps to develop unique competency to the host country. To achieve a set of common objectives it is also very important to entail and implement a set of universal standards that can be used as a guideline to achieve managerial goals and objectives. It is necessary to work for global goals rather than defending the values of the home country itself. Geocentric approach helps to determine all sorts of success in the business which leads to attain long term stability and empowerment in business (NEWMAN and SAHAK, 2012). Therefore it is very important to select the right individual by the upper management who can be exposed to such activities.

In Ethnocentric approach the main aim of this approach is to train and develop employees in the host country. These approaches also represent the interest of the headquarters and provide a link with the parent company as well. Sometimes it is also seen that the natives are culturally sensitive of not working properly. One of the disadvantages of this is that the local workers are sometimes deprived to work effectively. There is no language or cultural barriers that will restrict the process of communication in any way (MACHIDA, 2012).

The Polycentric approach uses natives of the host country of a business so that the operations of the parent country as well as of the native country can be managed. This situation is generally preferred by managers of the parent country itself. This approach is adopted by those companies those who have a localized HR department ant the entire human resource are managed by the company itself.

Polycentric and Ethnocentric approach are not applicable in this approach because ethnocentrism focuses on the home country and polycentrism focuses on the host country. This is a global expansion, both the host and the home countries have their own business culture and business policies that needs to be kept in mind. If the Company makes an Ethnocentric approach then the home country will have advantage because the product is UK-based and so as their operation, but the country for expansion in China and the hiring employees from China would help to make the product acceptable in the market. A British selling a UK product will be less effective to the customers than a Chinese selling a UK product. In case of Polycentric approach, if products are sold emphasizing more on the host country then the advantage will be the attention of the Chinese customer but the product is UK-based so to some extent the policies of UK also needs to be involved.

 

Policies and practices recommended for recruitment

There should be deliberate efforts given in selecting the right candidates and this gives focus to increase the diversity and engage new audience in the organization. There are certain critical factors that should be kept in mind while recruiting locally. There should be programs developed to supports the needs of local recruiting. There should be consultation of facilities and recruitment processes within the local unit. Various methods must be developed to conduct and coordinate the position searches as well. Emphasis is to be given to hiring supervisors as well (Adano, 2008).

There are few points that are to be kept in mind in order to implement broader recruitment efforts.

Building relationships with cultural groups and organizations those work with diverse communities: this involves interacting and contacting the local immigrant service agencies which can provide employment advice and services to learn about their programs and policies. They can assist the organizations in implementing various programs such as temporary foreign worker programs , post graduation work permits for international students as well (Diederich, Günay and Hogan, 2010).

Get the word out: It is necessary to go through regular channels and contacting such suspects would be safer and easier for the busy managers but that won’t bring new or diverse talent into organizations (De Vos, De Hauw and Willemse, 2015). The positions must be advertised in a number of places including service agencies, settlement boards, and local community groups, local as well as community newspapers, and other local language schools as well.

Organization should be promoted as a viable place to work: This can be done by challenging the misperceptions about employment in the nonprofit sector and also by attending various job fairs and networking events.

By connecting with the volunteer base: this is basically done to gain experience build and find networks so that individuals are interested to apply.

Sourcing candidates: this means the employment specialist utilizes the professional contacts and all the detailed knowledge of the vacant position is identified by the company applicants as well (Danowitz, Hanappi-egger and Mensi-klarbach, 2012). Sometimes this process also involves outsourcing the selected number of candidates via social networking sites, trade shows, seminars and other means of convention. Job announcements are also made through word of mouth.

Screening and Reviewing the applications posted: this is basically done by a software called Application Tracking Systems (ATS). In today’s worlds online submissions are replacing the submission of hard copy applications. This process starts with identification of keywords that match with the organizational standards as well. This also allows recruiters to narrow the list of candidates to a few numbers that could be managed easily and interviewed (Kramar, 2013).

Pre Employment process: After all the processes have been done another round of interview is conducted along with a panel of high level colleagues. This can be the final round for the candidate being interviewed. After this all the negotiations are been undertaken. This in turmn brings about preparing employment offer letter in which all the work details and its terms and conditions are mentioned. After this the documentation part is been carried forward which is the sole responsibility of the human resources department (Yang and Doh, 2014).

 

Recommendations given to Gamescorp in China:

Few recommendations are suggested in favor of adopting the company rules and policies. It is recommended to the company to understand the basic principles underlying all the cultural aspects of the market established in China. The company wanted to set up and align its business with developing countries like China. Therefore to penetrate the Chinese market it was necessary to have enough knowledge about the Chinese culture, their work environment and how a business can develop in such a market in a short span of time. Therefore it was necessary to develop a corporate strategy consisting of business plans and formulating the plan when needed.

Conclusion:

It can be concluded from the case let and research work been done that China was a fruitful market that the company was planning to penetrate in such a market. Not only China the company had future plans to develop in other countries as well. But in order to fulfill that it was important for the company to understand the basic differences in culture between China and European market. It can be inferred that the Chinese market focuses much more into organizational orientations such as values and ethics that are developed and depicted by that country itself. It is also important to adapt to the changes of Chinese environment keeping a view about the parent country itself that is UK. The Chinese philosophy plays an important role in developing the Chinese society and it is very vital factor in defining the social relationships today. In contrast the European cultures are more individualistic and they believe on implementing their own guidelines and policies discriminately so that there is no delegation of authority that is being followed.

 

References:

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