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Role of Cultural and Economic Factors

Question:

The Employment and HR practices used by US-owned and Japanese-owned companies with operations in Singapore are best explained by their country-of-origin. To what extent do you agree with this claim?

Human resource management plays a crucial role in the management of the organization. As a matter of fact, it is the centre of corporate strategy. It is considered as the attribute to the fact in which it facilitates an organization to improve the situation of the company for attaining objectives and forming sustainable competitive advantages. Employment is a relationship between two parties which is based on the contract where work is paid for. Employment law considers the employee of the organization regarding their wages, salaries, dismissal justification, and employer insolvency and working schedules.  There is a number of laws and legislation which may affect the management of human resources in the organization. The topic of the essay indicates to describe the practices of HR and employment utilized by US owned companies and Japanese owned companies with operations in Singapore and it requires an effective explanation by their country of origin.

The employment and HR practices of US owned company is entirely different from other country. Guest, (2011), argues that the concept of dealing employees and way of working in the organization of US is different which influence many organizations of different countries to deal with them. The operations with Singapore organization of US owned company is reflecting the effective combination between the HR practices and employment. Clegg, Kornberger & Rhodes, (2007), stated that the culture of the Singapore regarding HR practices is different so it can be analyzed easily that the difference will be come in the organization of Singapore in comparison of US. Cultural factor is considered as the major factor which may define the entire condition regarding this topic. Wide-ranging cultural differences from country to country demand corresponding differences in HR practices among a company’s foreign subsidiaries. Difference in economies system among countries also the cause of difference of HR practices. Efficiency is required on essential basis in the case of high labor costs. For instance, HR Practices aimed to improve the employee performance. Inter-country differences in labor costs are substantial. It has been analyzed that the hourly compensation cost in U.S. dollars for production workers which recently reached at peak and ranged from a high of $25.56 in Germany to a low of $2.65 in Mexico. It impacts the working style of the US owned companies with operations in Singapore.  In the context of particular interest to operations of other country with Singapore is the suggestion that political forces such as professional associations, unions and governments are important factors of HR practices. It has been evaluated that the government of the Singapore organization is has taken a more active and interventional approach to economic development. Tiwari, (2013), argued that government wage policies have vital role in the highly successful economic development of the country. However, the Singapore National Productivity Board and other institutions announced that raining and development program should be developed in the organization to give proper training to new joining so that the vision and mission of the organization has clear in the view of new joiner. Along with that it provides a range of executive and management development training. Furthermore, professional organization in Singapore such as Singapore Institute of Personnel Management and the Singapore Institute of Management focus on providing the adequate training and development program on up-to-date HRM and other management skills.

Strategies for Transferring HR Practices


I agree with the topic of the essay that the employment and HR practices used by US-owned and Japanese-owned companies with operations in Singapore are best explained by their country-of-origin. It has been agreed by me due to analyze the organization of US owned and Japanese owned company with operations in Singapore.  Toyota Motor Corporation is a multinational automotive Japanese company which headquarters is situated in Japan. Toyota Car Manufacturer Company has been using its principles to manufacture the reliable car as well as sustainable development of society through occupies innovative and super quality products and services. It is the company which has been spreader in all over the world. Toyota Motor Corporation is Japanese owned company which operates its operations with Singapore. It has been analyzed that the operations of Singapore organization is more effective due to have efficient HR practices and the organization of Toyota in Singapore is operating its operation as per the employment and HR Practices of Japan (Piotrowski & Guyette, 2010). It is not necessary that other country follow the entire rule of another country but the organization of Toyota Company is efficient to manage the rules of Singapore government with handling the policies of Toyota Company. Due to follow the proper policy of HR practices and employment, the Toyota Company of Japan introduced its first turbocharged model in Singapore. It is the only company which has introduced a turbocharged model in Singapore. The employment and HR Practices of Singapore organization is effective and it has been suggested that Singapore unions not only show the interest of their membership but take on a cooperative role in facilitating execute government economic policies. Moreover, the more inventions strategy has been adopted by Singapore organization to encourage the incorporation of "non-cultural" HRM practices into firms operating in Singapore. It has been suggested by Tiwari, (2013), that organization adopted HR practices which they see being used by other organizations not by observing the effectiveness of practices for their organization.

The culture norms of the Far East and the vital part of the patriarchal system influence the view of Japanese worker of his relationship to an employer along with it affect the working style of the worker. It has been researched in the journal of Farley, Hoenig and Yang, (2004) that the Japanese workers are most loyal and they expect the long term relationship with organization in return for their loyalty. For instance, incentives plan of the Japan country to its employee tend to focus on the work group, while in the West the major focus of the organization is on the performance of individual worker and incentives plan has made as per their performance. On the other hand, the main focus of the organization of Singapore on the training and development program so that the employee can get better understanding about the vision and mission of the organization (Mendenhall, 2012). It has been analyzed that the hiring and selection process of each country is different but in the context of subsidiary company the process and structure of hiring and selection process is formed as per procedure of home country. The policies and practices of U.S. and Japanese companies differ with respect to the procedures utilized for selecting personnel to fill profiles overseas and the programs of training used to make ready candidates.

Hiring and Selection Process

The hiring process in US-owned Company is typical due to U.S. labors and employment laws. It has been suggested by Boselie, Dietz and Boon, (2005), that the subsidiary of the U.S. owned company should be more practical because it has to follow the rules and procedures of Singapore as well as the norms of the company made by organization as per government of home country. It has been analyzed that the local environment to persuade affiliates toward the variation of local norms and practices. Apple is a technological multinational company which is situated in America and the main aim of company is to develop and offer online services, consumer electronic and computer software (Riches, et. al., 2015). It has more than 100 subsidiaries in all over the world and one of them is in Singapore.

Strategic human resource management is keeping huge importance in the MNCs, it involves typical human resource components such as hiring, payroll, discipline and training in a collaborative manner to motivate retention and improve the quality of working. There are various factors such as institutional, political and cultural which may influence the specific national features will affect the transfer of HRM practices and the intrinsic fashion in which would happen (Farndale and Paauwe, 2007). Multinational Corporation can be recognized as the important agents of the phenomenon of globalization and the business international. When the practices of HRM are congruent with MNCs strategies, it enhances the attention to develop the business plan. It has been analyzed in the article of Mellahi & Wood, (2004), that strategic HRM practices are able to enhance the productivity of the employee in relation to a MNCs aims. It leaves the portion of growth and failure to the ability of the HR manager to develop the practices which should be able to correspondence with entire strategy plan of the MNCs including economical, legal, social, political and cultural constraints of the subsidiary as well as host country. Adaption of HR practices is the process of adjusting these practices to respect the values of cultural, legislations, educations and traditions. Adaptation is usually related to host country effects which refer to the extent to which HRM practices in subsidiaries are impacted by the host country context (Dowling et. al., 2008).  


Susaeta & Pin, (2008), argued that Japanese companies can easily export their strategies to the U.S. and Europe and it has been analyzed that the US is unable to export their practices to developing countries because the foreign attitudes towards work are little bit difficult that is why the subsidiaries of US owned companies in Singapore has to face some challenges in the context of HRM practices. Barmeyer & Davoine, (2006), claims that Japanese companies are more successful in transferring some of their HR practices to its subsidiaries companies and it has been evaluated that Japanese companies are failed to execute the other practices in the west especially just in time and quality circles. Government policies and labor market is different for every country which might dictate some practices to be adopted by MNCs. On the other hand it has been noted by Gabler, Barmeyer & Davoine, and (2008) that MNCs must take into consideration national development plans made by host countries and adapt HR practices and employment policies consequently. MNCs usually respect local employment practices of the country. Political processes are considered as a barrier or facilitator in MNCs for the dispersion of universal practices. On the other hand, MNCs can utilize control system to reward subsidiaries that reflects conformance with the headquarter practices.

Impact of Strategic HRM Practices

There are so many issues in compensation in international HRM and it is vital for the organization that right type of compensation is most important for employee motivation in international HRM because the risks and challenges in performing are higher. Brewster and Suutari, (2005), stated that the policies of staffing in international HRM explain the procedure through which the MNC allocate the foreign job to the most eligible candidate. It has been analyzed that there are three approaches to staffing in MNC. These three approaches are polycentric, ethnocentric and geocentric. Polycentric approach refers to International Management which is the policy included in hiring and promoting good employees within an organization who are citizens of the host country (Tungli, and Peiperl, 2009). It is an approach that includes low cost of recruiting and training with no adjustment and communication and it describes a condition that it would be done since all employees are from the same region. Ethnocentric approach is utilized in MNC’s having international strategic orientation on the other hand polycentric approach is able to maintain the employee of the certain area and it is the approach which involves sending employees from the parent countries to home country. Geocentric staffing approach is used when companies execute a transnational orientation. It is the approach in which people are recruited based on their skills and experiences irrespective of their nationality (Ferner, Almond and Colling, 2005).

Figure 1: Comparison of staffing approaches

Source: (Charles, 2013).

Expatriate is the employee who moving from home country to foreign country with or without family for completion a job. Selection the right person is vital for the organization else it raises the issues in international business. There are five categories of attributes of success such as job factors, motivational state, family situation, language skills and relational dimensions. These five attributes are considered as the main factor which will be effective in determining the suitability of an expatriate for foreign assignments (Kusluvan, et. al., 2010). Training of expatriate and employee is an essential elements included in international business is a decisive factor determining the quality and performance of HR in international business. It is important for the international business to include cross cultural training, language training and technical training regarding job profile (Dowling, 2008). The subsidiaries companies of Japanese owned company and US owned company have to suffer so many issues and conflicts due to lack of efficient training regarding above mentioned three aspects. It is essential for cross cultural training to include understanding and appreciation of host’s country culture. It has discussed that the language of Japan and US is different and that is why it is necessary for the country to provide language training to employees so that the subsidiaries company’s employee would not have to face issues regarding language. The training must provide the knowledge of the language by using the rules of verbal, written, non verbal communication widespread in host country (Susaeta & Pin, 2008). Every job role has responsibility that is why it is required for the employee to be trained about the job specifications to deal with the specific requirements of the job.  


As for economic factors, the economic factor may influence the organization of the host country which included exogenous factor influencing HRM to MNC. The factors of exogenous could be cleared in better way with the definition of MNE. An MNE is any business that takes out transactions in or between two businesses, decision making process is operating under a system that allows affect over capabilities and resources, where the transactions are considered as the major subject to attract by factors exogenous to the home country environment of the business. Economic factors also involved the economy of the particular state (Edwards, Colling and Ferner, 2007). It has been found that the employments in the Singapore is not that much effective and when the economy is in adverse situation and the rate of employment is low and the demand of the skilled people is high, force the people to do job even under low pay. In that case the adaption of HRM practices of parent company enhance the productivity of the employee as well as the growth of the economy of the particular country amplifies. Economic factors that could influence the strategies of IHRM involve the type of economy, the state of the economy, labor market, unemployment rate, relationship of employment and inflation rate.  

Figure 2: Influence of the political economic system on HRM

Source: (Boxall and Purcell, 2011). 

The legal factors also influence the strategies of the IHRM strategies of the host country, Tayeb, (2005); states that international organizational activities of HRM and industrial relations are main cause of the legal factors which may influence the Singapore organizations regulated by parent company. Along with that as for social cultural factors, number of people shares a distinct way of life with common values, beliefs and attitudes that are broadcasted over the period

Figure 3: phases of the transfer process

Source: (Susaeta & Pin, 2008).

The transfer initiates with the configuration of the policies of the headquarters which will have been affected by the country of origin of the MNC. The second components include the decision by parent company to adapt the HRM practices to host country. In the third step, negotiation will take place between the parent and the host country as of to decide the role of subsidiary. Possessions of critical resources are important to decide the negotiation power of the host country. The following phase is based on the adaption of HRM practices as internationalizes by the employees of the host country.


In the limelight of above discussion, it has been concluded that managing human resource management in international organization can be a complex issues. The major aim of this study was to research the transfer of HR practices and employment from Japanese owned companies and US owned companies to their subsidiaries in Singapore. The ability of MNCs is to be competitive in today’s international market is reliant to their ability to evolve and adapt the major resources for the purpose of widening the global paying field. Therefore, strategies have been developed to maintain the market competitiveness with human resource management practices. Political, legal ad socio-cultural factors has been discussed in this essay to provide better understanding about the impact of transferring HR Practices from parent company to host country.

References

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Boselie, P., Dietz, G. and Boon, C., 2005, Commonalities and contradictions in HRM and performance research, Human resource management journal, 15(3), pp.67-94.

Boxall, P. and Purcell, J., 2011, Strategy and human resource management. Palgrave Macmillan.

Brewster, C. and Suutari, V., 2005, Global HRM: aspects of a research agenda. Personnel Review, 34(1), pp.5-21.

Charles, W.L.H., 2013,International Business, Tata McGraw Hill.

Clegg, S., Kornberger, M., & Rhodes, C., 2007, Business Ethics as Practice, British Journal of Management , 18 (2), 107 - 122.

Dowling, P., 2008, International human resource management: Managing people in a multinational context, Cengage Learning.

Edwards, T., Colling, T. and Ferner, A., 2007. Conceptual approaches to the transfer of employment practices in multinational companies: an integrated approach. Human Resource Management Journal, 17(3), pp.201-217.

Farley, J.U., Hoenig, S. and Yang, J.Z., 2004, Key factors influencing HRM practices of overseas subsidiaries in China's transition economy, The international journal of human resource management, 15(4-5), pp.688-704.

Farndale, E. and Paauwe, J., 2007, Uncovering competitive and institutional drivers of HRM practices in multinational corporations, Human Resource Management Journal, 17(4), pp.355-375.

Ferner, A., Almond, P. and Colling, T., 2005, Institutional theory and the cross-national transfer of employment policy: The case of ‘workforce diversity’in US multinationals. Journal of International Business Studies, 36(3), pp.304-321.

Gabler, W., Barmeyer, C., & Davoine, E. 2008, The intercultural challenges of the transfer of codes of conducts from the USA to Europe - Exploring the competencies facilitating the transfer process from US-American Headquarters to French and German subsidiaries. EGOS Conference, University of Amesterdam.

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Whiteoak, J., Crawford, N., & Mapstone, R., 2006,  Impact of gender and generational differences in work values and attitudes in an Arab culture. Thunderbird International Business Review , 48 (1).

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