International employee relation

I Introduction: Human resource management refers to the activities an organization carries out to use its human re-sources effectively. These activities include determining the firm’s human resource strategy, staffing, performance evaluation, management development, compensation, and labor relations. None of these activities is performed in a vacuum; all are related to the strategy of the firm because, as we will see, HRM has an important strategic component.

Through its influence on the character, development, quality, and pro¬ductivity of the firm’s human resources, the HRM function can help the firm achieve its primary strategic goals of reducing the costs of value creation and adding value by better serving customer needs. The strategic role of HRM is complex enough in a purely domestic firm, but it is more complex in an international business, where staffing, management development, performance evaluation, and compensation activities are complicated by profound dif¬ferences between countries in labor markets, culture, legal systems, economic systems, and the like. For example:

? Compensation practices may vary from country to country depending on prevailing management customs. ? Labor laws may prohibit union organization in one country and mandate it in another. ? Equal employment legislation may be strongly pursued in one country and not in

another. If it is to build a cadre of managers capable of managing a multinational enterprise, the HRM function must deal with a host of issues. It must decide how to staff key man¬agement posts in the company, how to develop managers so that they are familiar with the nuances of doing business in different countries, and how to compensate people in different nations.

HRM must also deal with a host of issues related to expatriate man¬agers. (An expatriate manager is a citizen of one country who is working abroad inane of the firm’s subsidiaries. ) It must decide whom to send on expatriate postings, be clear about why they are doing it, compensate expatriates appropriately, and make sure 2 that they are adequately debriefed and reoriented once they return home. A large and expanding body of academic research suggests a strong fit between human resources practices and strategy is required for high profitability.

Superior human re¬sources can be a sustained source of high productivity and competitive advantage in the global economy. At the same time, research suggests that many international busi¬nesses have room for improving the effectiveness of their human resource function. In one study of competitiveness among 326 large multinationals, the authors found that human resources was one of the weakest capabilities in most firms, suggesting that im¬proving the effectiveness of international human resource practices might have sub¬stantial performance benefits.

In the past few years, Japan’s large firms have begun to change human resource management practices due to due to global competition, rapid by technological change and by the high labor cost. Employee rewards is not just base on seniority and capability development but to the individual’s contribution to the organization. In the recent years, it is also a common practice to promote employees to managerial and supervisory positions based on performance and qualification rather than seniority.

The externalization of employment has been proceeding in Japan in a manner similar to that found in other industrialized nations. In particular, Japanese firms increased use of part-timers and temporaries and hiring limited-contract employees and sorting employees into categories having different levels of employment security. The goal has been to introduce mobility and to obtain a better matching of employees and jobs. This is done by reducing the likelihood of long-term employment and by giving both employees and employers more autonomy in choosing the “right” partners. 3

Japanese managers are considered to be more employee-oriented than in Western countries. A Japanese sees his supervisor as employee-oriented when he: 1. works beyond official work hours; 2. never reprimand a subordinate in front of others. Discusses problems with subordinates one on one; 3. updates the subordinates frequently about progress in relation to a work schedule; 4. spends time with his subordinates socially; 5. spends time with their subordinates discussing about their career plans; 6. evaluates work performance as a whole. Emphasizes group and team effort; 7.

consults and involves all the members of the group whenever there are significant changes in work procedure. Respects each member of the group and work as a team; 8. meets the group on a regular basis. In order for a multinational company to operate effectively in Japan, the MNC should use the polycentric staffing policy which requires host-country nationals to be recruited to man¬age subsidiaries, while parent-country nationals occupy key positions at corporate headquarters. One advantage of adopting a polycentric approach is that the firm is less likely to suffer from cultural myopia.

Host-country managers are unlikely to make the mistakes arising from cultural misunderstandings and language barriers to which expa¬triate managers are vulnerable. As a Multi – National Company trying to thrive in Japan, it is best to hire and train a Japanese national who will lead the organization not only because of cultural difference but more so of language barrier which is very important in communication. As we can see, Japanese employees’ would work best with a 4 leader who communicates, discusses, reach out and meets them frequently.

A second advantage is that a polycentric approach may be less expensive to implement, reducing the costs of value creation. Expatriate man¬agers can be very expensive to maintain. Japan’s human resource management concepts are more common with those being discussed and applied in Western industrial countries while China is more similar with Eastern Europe. China, in order to survive and to compete globally is shifting from a central planning system to a more market-oriented economy. Reforming state-owned enterprises (SOEs) has thus been at the top of the Chinese government’s agenda since the mid-1990s.

This has led to the emergence of new patterns of enterprise ownership and consequently new employment relations which are distinctively different from those in the traditional SOEs. The key elements of employment relations may have changed as a result of ownership change; why the trade unions have failed to perform adequately, and what the impact has been on workers of the new form of employment relations. Presently, China’s market reform is setting the stage for significant changes in management practices.

The responsibility for labor allocation is being shifted from a centralized planning authority to forecasting and planning departments within enterprises. Production and reward systems are changing, with less emphasis on egalitarianism and a stronger emphasis on efficiency and performance (Shenkar & Chow, 1989). Meindl, Hunt and Lee (1987, cited in Cyr & Frost, 1991) note that managers in China are already showing an increasing interest in using human resource techniques and motivational systems which emphasize productivity at the individual, group, and enterprise level.

Current best practices in HRM can make significant contributions to the process of change undertaken by Chinese enterprises. China’s market reform has resulted in the dramatic growth of privately owned enterprises, township enterprises and international joint ventures. It has been reported that by the end of 1992, there were nearly 140,000 private enterprises employing more than 2 million people while township 5 enterprises produced 1,650 billion yuan (US$ 289 billion(1)) in goods and absorbed 100 million rural laborers (China Daily, 27 May 1993).

Similarly, international joint ventures as well as wholly foreign-owned ventures are growing significantly. With the number of private and township enterprises as well as international joint ventures increasing rapidly, HRM is even more important as these organizations are generally outside of the state planning system and thus have more autonomy than state-owned enterprises to use HRM to assist productivity growth.

Furthermore, these enterprises have fostered a new generation of entrepreneurs. They are beginning to appreciate the direct impact of HRM on productivity and organizational effectiveness. Meanwhile, as foreign investors continue to call for a greater role for HRM in their ventures in China, a new role for Chinese HRM is most likely to evolve in these enterprises and ventures.