HR Practice in Chinese SMEs
In recent years Human Relations (HR) practice in business corporations has morphed from being an establishment oriented and cost center based corporate support activity to a proactive and important function instrumental in execution of corporate strategy. With the actual execution of strategy being widely accepted in modern business theory to be far more critical than its planning, the use of HR methods for improving strategy execution is being seen to be increasingly vital to the achievement of business objectives and the improvement of competitive advantage.
While the mechanics of HR practice have remained the same, the potential of HR tools like training methodology, remuneration and rewards policies, and worker incentivization schemes to improve performance and boost productivity has led to a change in its perception from that of a cost centre and a necessary corporate support activity to a strong force multiplier capable of improving production, sales and profitability.
This report deals with our company’s recent initiative into the PRC and aims to elaborate how effective HR practices (in the area of performance incentives) can be applied towards improving strategy execution by manufacturing SMEs in China and for the achieving of business objectives. 2. Experiences from Australia and Vietnam
Company experience in Australia
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Hofstede, in 1980, developed a model of culture that distinguishes members of one human group from another and stated that culture manifests itself at four levels, symbols, heroes, rituals and values, all of which work towards creating behavioral differences along national cultural lines. His theory was progressively and in 1984 he expounded on four dimensions of culture, which vary from one group to another, namely Individualism V Collectivism, Large V Small Power Distance, Strong V Weak Power Avoidance and Masculinity V Femininity.
These, he argued are the distinctive societal preferences that distinguish different societies. (Anbari, Khulnokova, Romanova, and Umpleby, 47) Societies that prefer individualism consist of people existing in small units and preferring to look after their very own, whereas collectivism represents a social structure where relationships are interlinked and people expect their larger extended clan of relatives to look after them in exchange of loyalty.
Power distance represents the extent to which its members accept the inequality in distribution of power. Large power distance societies are thus essentially unquestioningly hierarchical in nature. Uncertainty avoidance represents the degree to which members of society are ready to accept uncertainty and vagueness. The lesser the acceptance of uncertainty the stronger is the rigidity of thought and belief in a particular society and its resistance to change.
Masculinity, in a society, stands for its dominant preference for achievement, heroism and similar symbols while femininity is associated with qualities like compassion, care for the weak and quality of life. (Anbari, Khulnokova, Romanova, and Umpleby, 50) Nothing illustrates this more cogently than the differences between Australian and Vietnamese cultures. Berrell et al. (1999), in a study of the management behaviour of Australian and Vietnamese managers within the same organization, found significant differences as to how these individuals handled management issues.
Compared to their Australian counterparts, Vietnamese managers were more accepting of hierarchical and formal management structures; more collectively-oriented, putting less emphasis on individual actions and achievements; less willing to accept change; more focused on harmonious relationships at work; more likely to voice differences subtly rather than openly and to view disagreements as too confrontational; less focused on actions, (King-Kayanui, Ngoc, and Ashley-Cotleur, 80)