In recent years less developed countries with weak economies have emerged as super powers. Such as Japan, countries of ASEAN, People’s Republic of China etc. , which has aroused great interest in the management world from around the globe. Researchers from around the world are studying the history and management practices of these countries to figure out the success factors. This paper initially examines similar cases of two countries that have emerged as super powers in Asia: People’s Republic of China ; South Korea. The second part of the essay discusses the case of Algeria.
As commerce becomes more global, large numbers of people are conducting business across national and cultural boundaries. The increase in the popularity of international business has lead to the interest in International Human Resource Management. When a company operates business across international boundaries it comes across various Management systems which have evolved over the years. HRM practices are different in different countries around the globe, according to Boxall; International HRM is concerned with the human resource problems of multinational firms in foreign subsidiaries.
The study of Human Resource Management in less developed countries has been receiving increasing attention in the past few decades. The rise of Japan as the second powerful economy of the world, and the emergence of the People’s Republic of China as a powerful economy in Asia has attracted major attention from many researchers around the world. Every country has different business practices, standards, values etc. which reflects when companies are doing business abroad.
These differences are evident when comparing business activities in developed countries to those in developing countries and when examining issues of worker health, safety and environmental issues (Amante, 1993; Cichon and Gillion, 1993). The real challenge is when companies form different countries have to tackle with locals of other nations especially the less developed countries because of different cultural influence. In the west people have a similar culture in many countries like USA, UK, Canada etc.
But in Asia there are lot of different cultures for example the Indian culture is different when compared to the Japanese and so is the Arab from the Chinese. Western HRM methods are by no way applicable across in other countries like India, Saudi Arabia, Algeria, Japan etc. These are clearly evident in areas such as recruitment and selection of employees. In less developed countries like India ; Algeria if there is any vacancy it is immediately filled up through recommendation from family and friends.
The case of China: Chinese management system reflects cultural and traditional Chinese values, which makes it unique and different from that of America and Europe. The Chinese Management system was strongly influenced by the Soviet and Japanese System of Management. After the reforms and opening of China to the outside world in the 80’s there has been enormous changes in the economic and human resource environment. After the death of Mao Zedong, Deng has brought about many changes in country’s infrastructure and as a result the People’s Republic of China has emerged as the promising super power of the 21st century, (Branine 1997).
During Mao’s Communist Party rule the management system was totally different from what it is today. During Mao’s period each enterprise received exact objectives from a Centralised Planning system for production, distribution, manpower etc. (Laak Sonen 1988). This system was called the “iron rice bowl”. After the adoption of the “Open Door Policy”, there was an enormous change in the Chinese style of management, in effect the Deng Xiaoping’s government declared the end of the iron rice bowl system.
Initially in the iron bowl system there was job guarantee for everyone, without any job preference people had to accept the job assigned to him or her and stay with it for life. After the Labour Policy Reforms of the 80’s, for the first time the workers were permitted to seek for the job they preferred, rather than the assigned work which were appointed by a central Bureaux. There was no job guarantees and the system of lifetime employment came to an end and Contract system was adopted. The old tradition of “job for life” has been the cause of the low turnover in the Chinese and Japanese enterprises.
Initially the recruitment was done through universities, schools etc. and the children of existing workers were given priority to come and take over the job of their parent. But as things changed, after the new reforms the concept of job for life came to an end and as mentioned earlier contract system came in. The labour Bureaux that was dealing with work assignments initially became a source of guidance. And now the selection procedures have become very competitive, a vacancy is advertised in agencies and local new papers and there are several examinations and interviews for one job.
People have to compete with each other on the basis of their abilities. Recruitment and selection: Before the reforms of the 80s, recruitment and selection was of almost no significance in the Chinese system of HRM. As mentioned above all people were promised a permanent employment, job security and cradle-to-grave welfare coverage. After the reforms individuals were allowed to search for jobs and sign contracts for 2-3 years. By mid 90’s this Labour Contract System had become the buzzword in State Owned Enterprise and other Chinese Enterprises.
“In the early 1980s, foreign-investment firms (FIEs) started to use short-period contracts. In 1986, Chinese state enterprises began giving such fixed-term labour contracts to new employees, normally of four years maximum duration. As part of the ‘three systems reforms’ (San Gaige), this procedure was extended in 1992 to all eligible employees in state enterprises in North East China; by 1995, that was implanted in a wide range of SOEs. ” (Keith Goodall ; Malcom Warner 1997: 574) According to Goodall and Warner later on these laws were further relaxed.
The present law states that all employees must have a signed contract between the management and the workers either through the trade unions or through the workers representatives. Initially Chinese enterprises were overstaffed, and the production level was considerably low. There were two or three or more employees where only one was needed. The overstaffing was a problem for many enterprises, but because of legal regulations enterprises couldn’t sack these employees and had to keep them even if they were of no use.
But after the new reforms the Managers were allowed to dismiss the employees working for them. Under the new reforms companies are allowed to “decide the time, conditions, methods and numbers when hiring new employees” (Min Chen). Companies can now “freely determine the scale of wages and bonuses according to each employees work skills, work intensity, work responsibility, working condition and actual contribution” (Min Chen). Initially the government took all the decisions and the enterprises had to strictly follow them.
The liberalisation of the rewards system: Under the new reforms companies are allowed to “freely determine the scale of wages and bonuses according to each employees work skills, work intensity, work responsibility, working condition and actual contribution” (Min Chen). After the reforms were introduced the pay was also increased; it also introduced the bonus system. “Before the present reforms were introduced, the ideology behind the Chinese pay policy was to keep the rates of pay as low as possible and to use normative or symbolic rewards as performance incentives. ” (Branine)
The case of South Korea (hereafter referred to as Korea): In the last few decades Korea has transformed it self from an agricultural country to a highly industrialised nation. It is one of the members of the four little dragons of Southeast Asia. Korea lacks natural resources and in the absence of natural resources, Korea’s strong labour force has served as the foundation of its modern economic development. Korean population is highly educated with almost 98% of the population knows to read and write. Koreans place great importance on education of their workforce, and most of the Korean graduates prefer to go into higher education.
“Korea’s HRM system was seen by many as playing an integral role in this waxing and waning of the economy as in turn has influenced by the cultural milieu” (Rowley ; Bae 2002: 530). The Korean management system is very similar to that of the Japanese management system, but they tend to show some notable differences to. According to Rowley and Bae the key factors that have influenced the Korean management system have been the Japanese and the Americans, the Confucianism and collectivism beliefs, Inhwa, YonGo, authoritarian leadership and sharp distinction between the management and the employees.
The Korean Chaebols have led to massive reforms in the Korean Economy after the war. And as a result Korea has emerged as a technologically advanced nation in Asia. The Korean Chaebols are similar to the Japanese Keiretsu, and are large companies, which are mainly, owned and managed by families or the holding companies. The Korean Chaebols have close links with the government and have received heavy funding from the governments. There are more than 30 Chaebols in the Korea; some of the famous ones are Samsung, Hyundai ; Daewoo, which have made way into the international markets around the globe.
“The priorities of Korean companies’ human resource management include recruiting the best candidates, operating on the job training programs, and instituting reward and appraisal system” (Min Chen). Recruiting ; Training in Korean Firms: According to Chen, Korean firms tend to categorise their employees into 3 categories: the top management, the basic permanent employees and temporary employees. The strategy used by Korean firms is to hire the best employees for the firm ; selection is generally based on different methods depending upon the size of the firm.
Many large Korean companies prefer to recruit their white-collar employees directly from universities and colleges through an exam, recruiting also involves strong references, English proficiency, knowledge in the field, interviews etc. The recruitment is very competitive in Korean firms, and the Koreans generally do not job hop, long-term job security is an important issue. Most of the large companies recruit twice a year mainly in June and November, and the smaller firms tend to recruit only once a year. Personal interviews are a growing trend in many Chaebols.
According to Chen, once a new candidate is hired he is assigned to major departments such as Finance, Planning where they are given a 7-8 days in house training. According to Usong. et. al. studies of the Korean firms have revealed that the young candidates are highly motivated towards the company and the country. Companies prefer young candidates, as they are more capable of taking risk and making quick decisions. Min Chen also states that many Chaebols have their training centres for the employees and they put great emphasis on employee development and on the job training like the Japanese.
Reward and Promotion System: The reward and promotion system is based on seniority level, which highlights the Japanese style of management. “Korean companies have combined seniority with performance in distributing their rewards” (Min Chen). Korean companies pay the salary to employees on the seniority basis but the bonuses are awarded on performance basis. Promotion is an important matter for any employee around the world. “In many Korean companies, top management is actively involved in promotion decisions. Promotion is based on number of criteria: seniority, performance, personality, family ties, school and region”. (Min Chen)