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National Culture And Managerial Discretion

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Question:

Discuss about the National Culture and Managerial Discretion.
 
 

Answer:

Introduction:

International human resource management (IHRM) refers to the management of the issues related to human resources in international firms in foreign subsidiaries. IHRM has gained popularity with the advent of globalization and rapid advancement in the technology. IHRM involved the management of human resources on a global scale. It is associated with the several stages involved in the process of internalization. IHRM involves the processes of recruiting and efficiently utilizing the human resources in an international business. It addresses the issues that are related with cross national boundaries (Brewster et al., 2016).

The purpose of the assignment is to explain the scenario wherein a Singapore based company expands into the market of Indonesia in context of international human resource management. In this report, Charles & Keith has been chosen as the company, which is trying to expand its operation in Indonesia.

Charles & Keith is a Singapore based retail clothing brand, which was established in the year 1996 by Charles Wong and Keith Wong ("Brand Profile", 2017). The brand has attempted to have its presence in several countries. The company specializes in shoe designing according to the preferences of the clients. Later on, the company has diversified its business into bags, accessories and costume jewelry. The company has more than 500 stores all over the world and has a strong online presence. The company has associated with several institutes for helping the society and improving the environment as a part of its corporate social responsibility ("Brand Profile", 2017).     

Background of the country:

Indonesia is a country that has abundant natural resources and has easy accessibility to other nations. The country is surrounded by water bodies, which makes the sea route a major trading opportunity with other countries. It is one of the top five populous countries in the world with more than 300 million people. The GDP of Indonesia has been more than 932.3 billion USD in the year 2016 and is growing at a good pace. The economy of the country is a mixed economy and it aims to become one of the top ten economies across the globe. The Government of Indonesia provides support to the infrastructure delivery by involving in public private partnerships. The country has attracted several foreign investors in the past and has proper rules and regulations that control the foreign subsidiaries. Despite all the favorable situations for the businesses in Indonesia, the country faces several challenges in the form of political pressure and corruption. The clearer regulation and several relaxations in the taxes have encouraged the foreign investors to come to Indonesia. However, lack of appropriate infrastructural facilities have been a major concern in the economic development of the country (Armstrong & Taylor, 2014).   

Job design refers to the specification of the methods and contents of the jobs so that the organizational requirements of the job can be understood in relation with the personal and social requirements (Reiche, Mendenhall & Stahl, 2016). The ultimate objective of job design is to increase the level of job satisfaction among the organizational employees. The company will require additional fashion retailer, who shall work on the floor as sales assistant and the job shall require the following tasks:

  • Showcasing items
  • Serving clients
  • Handling queries or complaints
  • Suggesting clients on their purchasing decision
  • Ordering, administering and taking out stock
  • Aiding with promotional activities
  • Overseeing deliveries
  • Administering and motivating staff
  • Ensuring that the sales targets are achieved

The head office job role shall involve the following duties and tasks:

Selecting new products and reviewing the old

  • Searching the correct suppliers
  • Negotiating prices
  • Making sure that the products are reach the destination on time
  • Aiding in interpreting reports and forecasting future sales
  • Showcasing ideas to top management
  • Stock control
  • Budgeting and financing
  • Promoting products
  • Handling the changes in the demands of the clients
  • Ensuring proper relationships with present suppliers while acquiring new ones
  • Attending trade events
  • Obtaining feedback from clients
 

Hofstede National Cultural Dimension:

Hofstede National Cultural Dimension is a structure or framework for cross- cultural communication, which demonstrates the impacts of the culture on the values of the members of the society (Al Ariss & Sidani, 2016). It also relates the values with the behavior of the individuals with the help of factor analysis. There are several dimensions of national cultures in the Hofstede National Cultural Dimension model. The dimensions are mentioned as below:

  • Power Distance Index (PDI): Power distance index refers to the “the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally”. In this particular dimension, high degree of index implies that the hierarchy is clearly established and implemented without any doubts (Sparrow, Brewster & Chung, 2016). Indonesia has a better established hierarchy than Singapore.
  • Individualism vs Collectivism (IDV): This particular index indicates the “level up to which the members of the society are integrated into groups” (Rees & Smith, 2017). The societies which are individualistic have weak bonding among the members and they emphasize more upon individual interests than on group interests. On the contrary, the societies which are collectivistic emphasize more upon benefits of the groups and the members support each other. Singapore is more individualistic than Indonesia.
  • Uncertainty avoidance index (UAI): The uncertainty avoidance index refers to the “society’s tolerance for ambiguity”. In this index, people tend to avoid any unexpected or unknown event. High degree of uncertainty avoidance index means that the society has strict guidelines, laws and codes of behavior, which cannot be altered (Chelladurai & Kerwin, 2017). On the contrary, societies with low uncertainty avoidance index have greater flexibility in their rules and regulations. Singapore is more likely to avoid unknown situations and has higher uncertainty avoidance index than Indonesia.
  • Masculinity vs Femininity (MAS): In this particular dimension, masculinity is referred to as “a preference in society for achievement, heroism, assertiveness and material rewards for success” whereas femininity is referred to as “a preference for cooperation, modesty, caring for the weak and quality of life”. In higher masculine societies, there is inequality among the men and women whereas in a higher feminine society, the women are viewed equally with men. Indonesia has higher MAS than Singapore, which indicates that there is more inequality between men and women in Indonesia (Welch & Björkman, 2015).
  • Long term orientation vs short term orientation (LTO): This particular dimension relates the past with the present and the future challenges. Short term orientation demonstrates that the traditions are maintained and are easily adapted while long term demonstrates adaptation as an issue (Collings, 2014). Singapore faces more difficulties in adapting while Indonesia is highly flexible.

Organizational structure:

Organizational structure determines the manner in which the organizational activities are directed towards the achievement of the goals and objectives of the organizations. A majority of the companies in Singapore are family- run businesses and the eldest member of the family tends to be the CEO of the organization (Rabl, 2014). Usually, the major decisions are taken by the top level management in these organizations and the sub- ordinates are to follow the orders of the top management. Mechanistic organization refers to the organizations that have highly centralized and formalized procedures. On the contrary organic organization refers to the organizations that have flexible policies and procedures.

On the other hand, in Indonesia, the organizational structure is systematically organized with the employees letting the managers to make all the decisions and assign tasks to them. The promotion of an employee seems to be more dependent upon the relationship of the employees with the employers rather than their performance. Indonesia is highly affected by nepotism. The hierarchical nature of a majority of the organizations in Indonesia has resulted in the development of bureaucracy (Festing, Knappert & Kornau, 2015).

Recruiting and staffing process:

The most widely used international human resource management approaches involve ethnocentric, polycentric, geocentric and regiocentric. The selection of the IHRM approach depends upon the type and degree of internationalization, cultural preferences and the type of industry and markets served (Slavi?, Berber & Lekovi?, 2014).  The staffing procedure used herein shall be ethnocentric as the major positions in the foreign countries shall be held by the nationals of the parent country.

The following shall be the training and development process for managing international teams:

  • Form: The managers shall ensure that there is proper communication with and among the team members as the team members meet for the first time.
  • Norm: This stage involves making the team members comfortable with their job roles and developing good relationships with the team members.
  • Perform: This stage involves the team performing its tasks in accordance with the expectations of the organization.
  • Adjourn: This stage involves the dissolution of the team when it begins to underperform or the motive of forming a team is achieved.

Remuneration package:

Posts

Annual package

Additional benefits

Floor manager

Rp 220000000

Basic pay + travelling allowances + house rent allowances + telephone allowances

Sales representatives

Rp 150000000

Basic pay + 30% incentives of the target achieved + travelling allowances + house rent allowances

Store manager

Rp 190000000

Basic pay + travelling allowances + house rent allowances

Cash counter executive

Rp 100000000

Basic pay + travelling allowances + house rent allowances

Head of supply chain

Rp 350000000

Basic pay + travelling allowances + house rent allowances + telephone alowances

Table: Remuneration package

(Source: Created by author)

Conclusion:

IHRM deals with the relationship between the foreign environments and the human resource management activities of the organization. It also involves comparative studies between the employee skills and knowledge required in the home country and the foreign countries. Indonesia has proper labor laws that preserve the rights of the employees working in local as well as international organizations. The country has proper laws related to the terms of recruitment, termination, working hours, wages and leave entitlements and employing the foreigners due to which it would be best suitable for the  organization to establish a subsidiary in Indonesia.

 

Units

SGD per employee($)

Total

 

$

Liabilities

     

Assets

 

Accounts payable

5

12100

60500

Cash

60000

Outstanding expenses

   

500

Accounts receivable

1000

     

61000

 

61000

 

References:

Al Ariss, A., & Sidani, Y. (2016). Comparative international human resource management: Future research directions. Human Resource Management Review, 26(4), 352-358.

Armstrong, M., & Taylor, S. (2014). Armstrong's handbook of human resource management practice. Kogan Page Publishers.

Baum, T. (Ed.). (2016). Human resource issues in international tourism. Elsevier.

Brand Profile. (2017). Charleskeith.com. Retrieved 17 November 2017, from https://www.charleskeith.com/sg/brand-profile/

Brewster, C., Houldsworth, E., Sparrow, P., & Vernon, G. (2016). International human resource management. Kogan Page Publishers.

Chelladurai, P., & Kerwin, S. (2017). Human resource management in sport and recreation. Human Kinetics.

Collings, D. G. (2014). Integrating global mobility and global talent management: Exploring the challenges and strategic opportunities. Journal of World Business, 49(2), 253-261.

Festing, M., Knappert, L., & Kornau, A. (2015). Gender?Specific Preferences in Global Performance Management: An Empirical Study of Male and Female Managers in a Multinational Context. Human Resource Management, 54(1), 55-79.

Rabl, T., Jayasinghe, M., Gerhart, B., & Kühlmann, T. M. (2014). A meta-analysis of country differences in the high-performance work system–business performance relationship: The roles of national culture and managerial discretion. Journal of Applied Psychology, 99(6), 1011.

Rees, G., & Smith, P. (Eds.). (2017). Strategic human resource management: An international perspective. Sage.

Reiche, B. S., Mendenhall, M. E., & Stahl, G. K. (Eds.). (2016). Readings and cases in international human resource management. Taylor & Francis.

Slavi?, A., Berber, N., & Lekovi?, B. (2014). Performance management in international human resource management: Evidence from the CEE region. Serbian journal of management, 9(1), 45-58.

Sparrow, P., Brewster, C., & Chung, C. (2016). Globalizing human resource management. Routledge.

Welch, D., & Björkman, I. (2015). The place of international human resource management in international business. Management International Review, 55(3), 303-322.

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