Sample Essay On Human Resource Management Practices In The USA And China
In the modern business environment, it is getting more and more important for the companies to deal with and quickly react to the new trends and challenges brought by the changing market situation and globalization. Nowadays the executives of many companies understand that this may be done only with the help of skilled talent and in order to engage such talent and develop it they should have a strong HR departments and strategy. In this essay I am going to analyze and compare HR practices in two countries that are among the largest market players in the world now: the USA and China.
Chinese and the U.S. HR Practices’ Background
The market of China is extremely growing and competitive. Given the China market’s heterogeneous nature, it is necessary that companies supply their HR managers with the capabilities and tools in order to leverage the talent in the company in the best way as well as prepare for possible changes in the economy and market. Skilled and competent talent is available in the big cities like Beijing, Shanghai, and Guangzhou, but the above-mentioned regions are very expensive and organizations tend to move their operations to smaller rural regions in order to decrease costs. The changes in demographic situation also play a very important role in defining labor policies. One of the most important challenges for HR managers in China is the vicious circle as not being a strategic function of business, and thus never getting the budget or authority to go beyond administrative work. HR managers in this situation are not able to invest in the career development and training of their employees. HR managers in China need to change this fact in case they would like to grow and develop scalable and sustainable HR departments. They should demonstrate to the chief executives that by investing in company’s development and training programs, workers will be able to cope with challenges in the future; also, such programs will also contribute to employee’s retention and engagement. A promote-from-within approach is always less expensive and more effective than buying talent from outside that is turning over constantly. Key employees’ attrition is also very costly for companies, for its profits as well as in terms of productivity loss, decrease in investments, and decreased morale. Whatever strategies used, it is important that leaders spend enough resources for global leaders’ developing. In the United States HR departments usually have budgets and possibilities to invest into their employees. The willingness to do it varies depending on the industry and stakeholders’ opinion.
HR profession in China. The HR profession landscape in China will surely develop over the coming years. There are some aspects that HR managers should focus on in case they want to ensure success. China plays an extremely important role in the world’s economy. Due to this fact, it is not uncommon for every level chief executive to take an interest in the HR policies and processes of the region. Such approach increases productivity, engagement and keeps costs low. The qualified HR professionals’ shortage has caused executives using alternative methods of delivery of HR objectives such as shared services and outsourcing. The interrelation between organizational success and HR productivity is obvious, but companies must develop or build rather than buy talent with the purpose to leverage the growing talent pool available (Kanjirath, n.d.).
General Factors Influencing HR Practices in the USA and China
Unlike Western countries, e.g. the USA, China originally had a guaranteed employment and planned economy (the ‘iron rice bowl’). In spite of its change to a market economy, China significantly lags behind the labor policies, professionalism of the workforce and regulations of the West. Besides, there are also cultural issues preventing China from adopting a Western HR approach. For instance, it is not typical for employees in China to critically discuss or suggest improvements, so a trait of high-performance HR (employee participation) is absent in the workplace. In addition, companies in China are young; most of them are no more than 20 years old. Thus, they still need to learn basic functions of HR before they can successfully use more sophisticated practices of commitment into their approach. A China’s high-performance system of HR definitely differs from the system in the US (A China-based High-Performance HR System: A Model for Success, 2010). In the USA many companies have a history of many decades; also they have professional HR departments that work efficiently and cope with their tasks to attract the best talent to the company.
Any ‘Chinese HRM’ generalizations must involve a certain extent of oversimplification as in a country that is populous, geographically large and experiencing extensive economic development there are substantial differences across type of ownership, size, industry, and geographic location (Shi, 2010)
Comparison of HR Practices in the USA and China
Employment in Chinese companies is now characterized by the significantly deregulated labor market than some years ago. Two-way selection of job replaced most central planning recruitment except for the large SOEs (State Owned Enterprises) very top posts. Sophisticated selection processes and recruitment were introduced to local private companies and SOEs. But, as most organizations established standardized ‘best practices’ with the external consultancies help, processes of selection are often not aligned to individual conditions of companies (Shi, 2010).
Unlike the U.S. practices of HRM, one key aspect of Chinese enterprises employment is its irregularities. Chinese organizations might follow formal policies of employment and processes that are similar to those in western companies on the surface, but the written rules’ implementation are very often not adhered to and substituted with ‘short-cuts’ that is connected with top management’s interests and preferences. One of the major reasons for it is the guanxi and rampant nepotism in employment (Shi, 2010).
U.S. workers are mostly individualistic and try to look as self sufficient as possible. Although Americans have a strong national pride sense, there are a lot of racial conflicts in the U.S. Regarding the education systems, it is possible for a young person to graduate from the U.S. high school without being able to write and read adequately. These peculiarities may have significant impacts for U.S. firms looking for workers among youth.
American workers do not feel very much linked to their company, on the other hand, most of them are loyal to their families and themselves and often use an organization only to receive new experience to move to a more attractive paying job at another company (Martin et al., 1992). Chinese workers usually take their employment more seriously and are often ready to work overtime, and etc. U.S. workers are less likely to work long hours and in uncomfortable working conditions than their Chinese colleagues, who sometimes may decline vacation time and work when they are sick in order not to reduce productivity. Thus, U.S. workers have less tolerance for discomfort and less self discipline. Also, American workers are willing to obtain a variety of perquisites and spend more time with their families (Martin et al., 1992).
Importance of regulations. The U.S. HR practices are ruled more by laws, than by people. The main aspects of the US employment laws are: wage and hour, protected leaves, discrimination and termination requirements, employee privacy, and etc. The distinct ‘rule-by-people’ in Chinese society and not ‘rule by law’ characteristic, as well as vague criteria, make assessment of employees’ performance very subjective (Shi, 2010). The U.S. employees like personal recognition and thus public rewards are used to motivate very often. In some other countries, increased attention to the performance of individual may have the opposite effect (Raim, 2012).
Systems of compensation. Systems of compensation in China have changed radically from an egalitarian flat structure to performance and job and skills levels linked one in most organizations. One of the Chinese peculiarities of the system of compensation is that except for formal salaries, a large income portion is received in forms of provisions, subsidies, and also institutionalized gift-giving. Such ‘fat jobs’ are concentrated in giant, monopolistic SOEs and governmental offices and are sought after by graduates avidly (Shi, 2010). U.S. systems of incentive are mostly monetary systems based on promotions, salary increases and bonuses (Martin et al., 1992).
Performance management. A Western concept of performance management was introduced to companies in China mainly in order to link it to compensation and thus to give reasons for employees to increase productivity of their work. For this reason, its role in development and training, organizational competencies and recruitment is less emphasized (Shi, 2010).
The Chinese organizations’ assessment methods also differ slightly from the typical Western ones. The assessment process in China includes more elements of self-evaluation and unique ‘democratic’ opinions’ gathering about the assessed individual from his/her contacts at work. The process of goal setting is characterized by the Chinese top-down, authoritative feature, where managers usually take a leading role in the setting of goals and the subordinates are less engaged into the discussion than their Western peers (Shi, 2010).
Systems of suggestion. Although systems of suggestion are available in the U.S., employee’s suggestions are considered more as a threat to the executives. U.S. workers who often recommend changes may be labeled as problem makers (Martin et al., 1992). In China suggestions are not typical and supervisors usually do not take into account the opinions of the subordinates.
Specialization in the USA. The scientific approach to management used in the U.S. is based on a specialization system, where each employee fulfills a few repetitive tasks. Due to this approach, the workers are getting de-skilled and almost all are expendable. Neither workers nor the management trust each other. U.S. managers usually use a kind of short run leverage in the human resources area. When engaging skilled workers from the other companies, the employer uses other companies’ human resources investments to achieve results (Martin et al., 1992). Most decisions related to work in the U.S. are made by supervisors. When committee or group decisions are made, the democratic process of voting prevails with the obvious winners and losers (Martin et al., 1992).
HRIS. Surveys showed that around 5 years before HRIS (Human Resource Information System) development in China was by a 5-10 year gap behind the Western countries like the USA. However, general willingness of the companies to implement HRIS in a short horizon of time suggests that Chinese companies are adopting HRIS rather quickly (Shi, 2010).
Cultural differences. The cross cultural differences between the USA and China are very significant. Americans believe that ‘time is money’ and highly value punctuality. U.S. culture is considered to encourage brief straight to the topic dialogue and risk taking. Business decisions are taken quickly and the people are mostly very future oriented and ambitions. Persistence is also a very important characteristic of the majority of the U.S. citizens. In China, due to its extensive philosophical background, the most important is moralist conduct. Also, there is high collectivism and low individualism and a trend of group orientation. Discussions are conducted in a harmonious warm atmosphere where there is few or little arguments based on fair criticism and the word “no” is uncommon. There lacks a punctuality level among the Chinese people, who do not appreciate time as much as the American culture does.
Having compared the HR practices in the USA and China, I have noticed a large number of differences. The reasons of such differences are as follows: cultural background, political system, traditions and social peculiarities. The USA has a Western style of HR management that has been developing for many decades already and foresees strong HR strategies in the companies. For China it is a comparatively new trend that has been developing for about 20 years. During this time it acquired many features of Western practices, but at the same time it has its own ‘Chinese’ shape. There are differences in attitude to work, compensation practices, considering the opinions of employees, their attitude to companies and companies’ attitude to them.
It is evident to state that employees’ desires and perceptions of HRM practices differ substantially across cultural borders and such differences influence HRM’s general areas and individual practices.
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