Comparative Human Resource Management In China

COMPARATIVE HUMAN RESOURCE MANAGEMENT By Course Name Professor’s Name University City, State Date of Submission Comparative Human Resource Management Globalization has led to both positive and negative changes within institutional organizations. One of the impacted areas is human resource management (HRM), the department assigned to hiring and firing of workers. It also controls the way they work and reinforces employee behavior with rewards and punishments. Overall, its primary purpose is to maximize the performance of the organization’s employees (Bratton & Gold, 2017). Globalization allows different countries to interact and share their knowledge and experiences on the success and failures of their organizations. It also allows countries to employ people from other nations, who provide a different perspective on how best to manage corporations. According to the theory of comparative advantage, a company aims at providing a product or service at a lower marginal cost or opportunity cost compared to other countries (Dowling, 2008). In this way, they make more profit and benefit more from the trade-off. The benefits of providing the service or good outweigh the costs. The interaction enabled by globalization contributes to the similarity of the nature of the management of companies, also known as convergence. The corporations believe that by mimicking similar human resource management policies of successful companies, they become competitive on a level playing field and can make just as much profit as their competitors. They employ directional convergence, which means that the companies can move at the same pace as their competitors (Kaufman, 2016). A counter-theory suggests that globalization has an opposite effect on companies. They strive to possess different human resource management policies and practices so that they stand out, also known as divergence (Kaufman, 2016). Being different attracts attention from consumers and stakeholders. They are also likely to make more profit and have a better success story as compared to the copycats in the corporate world. From a personal perspective, a company benefits more from both convergence and divergence human resource management policies. The best way to illustrate this perspective is through the study of China’s human resource management structure and how they run their companies in general. However, it is wise to note that not all companies conform to the convergence or divergence rule. Some countries maintain divergence human resource management, where they believe that the human resource manager possesses one of the most important roles in the company. They also believe that the company mainly belongs to the employees and customers rather than the stakeholders. They strive to be different in terms of their interaction with other businesses, innovations, and policies. On the other hand, other companies believe that by mimicking the practices in western countries such as the United States of America, they are able to compete with their consumer market since the focus is not so much on the human resource management but on stakeholders and consumers. China is one of the largest countries in East Asia and has a huge population of about 1.4 billion people. It has the highest number of neighboring countries such as Afghanistan, South Korea, among others, who play a significant role in promoting the country’s international trade. The Chinese economic reform took place in December 1978, executed by the Communist Party of China (Cooke, 2012). China had the most advanced economy even before the 19th century and considered as one of the world’s richest nations. The economic reforms in 1978 aimed at introducing marketing principles. The first stage promoted the de-collectivization of agriculture and acceptance of foreign investment. People also began to engage in entrepreneurship activities. The second stage included the lifting of price controls and regulations and allowing privatization of government-owned business and property. These economic reforms resulted in China possessing the fastest growing economy globally. It also exports and imports the largest amount of goods boosted by its low tariffs and deregulations. China possesses an immense regional power within Asia, also known as having an economic superpower. For companies to perform well globally, it must perform well nationally, and human resource management plays an important role to ensure high productivity. The economic reforms allowed for the evolution of human resource management practices, which took place in three stages: nascent, interim and mature (Cooke, 2012). The nascent stage took place in the 1980s during the economic reforms. Privatization and Entrepreneurship allowed workers to have a better compensation plan. The people management departments of these new companies ensured that their employees had allowance packages in the event that the wage rate remained constant. These packages involved health benefits. They believed that when an employee was more comfortable with the compensation, they would work better and be more productive, especially with the rise in competition among firms. However, the level of human resource management within the firm was very low. The interim stage occurred in the 1990s with the introduction of the China Labor Legislation also known as the Labor Law of the PRC, made effective on January 1, 1995. It is the most basic labor law in China. It comprises of 13 chapters, including wages, labor, safety, promotion of employment and working hours and rests, among others (Cooke, 2012). During this period, the human resource management within the companies was now hybrid. China is among the few countries globally to reach the mature stage, which set in during the early 2000s and accompanied the introduction of the Labor Contract Law. The Ministry of Human Resource and Social Security administered this law on January 1, 2008, to solve and prevent the numerous scandals related to the sacking of staff within firms. The Labor Contract Law had five new requirements. First, a labor dispatch agency required a minimum capital of 2 million Renminbi. It also required businesses to have a permanent premise, comply with administrative regulations and meet the set out conditions. Finally, it was mandatory to apply for and own an approved license (Gallagher, et al., 2014). During this mature stage, the position of the human resource manager had increased in value within the firm. Their opinion and decisions were important for the growth of the company. It was now a job position that people could look forward to applying since the wage rate was now better. The open-door policy in China led to various changes within the companies and human resource departments. It is important for the department to comply with the set regulations. The rйgime has elevated the level of standardizing in the labor market by implementing the laws. The government also emphasizes on the subject of self-innovation, where people can be creative and come up with solutions to everyday problems. Human resource management commits itself to encourage the employees to think outside the box and become innovative and to reinforce them with rewards (Akhtar, et al., 2008). Internationalization of talents is another focus of the government, where employees are encouraged to develop their skills to match that of other countries. In this way, the country is able to trade its labor force to other countries. For instance, a Chinese company can get a contract to work in another company to build roads and buildings for them in exchange for shares and trade permits. It is the responsibility of the HRM to promote the internationalization of attitudes and beliefs as well as behaviors within the companies (Bjцrkman & Xiucheng, 2002). Some of the methods include the gold star approach, which awards employees with outstanding productivity and become a beacon of emulation by others. Other methods include the teaching and preaching approach and direct involvement in participatory activities and creative activities. Employees depend on their wages and salaries to sustain their families and settle their bills. Laying off these workers can directly affect their livelihood because of the subsequent challenges. College graduates face the challenge of job unemployment and this is an issue that lies with the HRM in many companies. Strict requirements set by the human resource department discourages people from getting jobs and thus it is advised to deregulate to employ more college graduate. The approval of entrepreneurship has helped to alleviate that burden in China. HRM in China faces four main issues, which include culture, concept, system, and methodology. Chinese tradition depicts fairness when it comes to compensation. Companies have compensated employees based on equity and not motivation. It is also vital to respect age and authority. Even though a superior is younger than those in a lower rank, it is adamant that they show respect for the elderly by avoiding insults and greeting them in the appropriate respectful manner. Harmony must prevail among the workers and conflicts should be addressed as soon as they arise. Chinese culture emphasizes that a company or person should not lose face (Chow, 2004). That means they should not face public humiliation and shame. HRM in China also faces problems when interpreting some of the concepts of human resource practices. HRM requires adjusting of employees in the workplace and ensuring that each employee fits well in their roles in the organization. The human management system in China has various bumps. Case in point, corporations lack proper and perfect governance and management and there is no competency within government-owned enterprises. Also, family and friends run numerous private companies and corporations, making it difficult to execute human resource policies for fear of hurting family ties and friendships (Akhtar, et al., 2008). It is only recently that many corporations have paid attention to the importance of workforce management. They, however, lack the correct methodology to carry out these policies. Companies are now starting to grasp the concept and applications of tools such as the KPI and the 360-degree feedback. Chinese companies today embrace collective bargaining, which refers to the situation, where an emplo...