Human Resource Management (HRM) in China a cross-cultural approach for successful HRM strategies of Western MNEs in China

Transcription

1 Human Resource Management (HRM) in China a cross-cultural approach for successful HRM strategies of Western MNEs in China Presentation of Master Thesis by Dr. Oliver Prüfer at Management School of Fudan University on October 19th, 2007

2 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 Q & A for successful HRM strategies of Western MNEs in China 2

3 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 Q & A for successful HRM strategies of Western MNEs in China 3

4 1 INTRODUCTION: HR PROBLEMS OF WESTERN MNEs IN CHINA Job-Hopping Employee s overall performance Recruitment Adaptation problems of expatriate managers HR PROBLEMS Misunderstanding of Chinese market requirements Promotion Training Retention Figure 1: Examples for current HR problems of Western MNEs in China for successful HRM strategies of Western MNEs in China 4

5 1 INTRODUCTION: HR PROBLEMS OF WESTERN MNEs IN CHINA Two goals of this master thesis To contribute to a better understanding of HR problems of Western MNEs in China by exploring fundamental cross cultural phenomena To give general recommendations for future HRM strategies of Western MNEs in China for successful HRM strategies of Western MNEs in China 5

6 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 Q & A for successful HRM strategies of Western MNEs in China 6

7 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING 1. Edward T. Hall Most of our difficulties stem from our ignorance. Honest and sincere people in the field continue to fail to grasp the true significance of the fact that culture controls behaviour in deep and persisting ways, many of which are outside of awareness and therefore beyond conscious control of the individual. (Hall, 1990, p. 25) for successful HRM strategies of Western MNEs in China 7

8 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING The best reason for exposing oneself to foreign ways is to generate a sense of vitality and awareness an interest in life which can come only when one lives through the shock of contrast and difference. (Hall, 1990, pp ) for successful HRM strategies of Western MNEs in China 8

9 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING 2. Fons Trompenaars & Charles Hampden-Turner The middle layer: Norms and values The outer layer: Artifacts and products (explicit) The core: Assumptions about existence (implicit) Figure 2: A model of culture (Trompenaars & Hampden-Turner, 2004, p. 22) for successful HRM strategies of Western MNEs in China 9

10 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING Trompenaars & Hampden-Turner: Five dimensions 1) Universalism vs. particularism (rules vs. relationships) 2) Communitarianism vs. individualism (group vs. individual) 3) Neutral versus emotional (range of feelings expressed) 4) Diffuse versus specific (range of involvement) 5) Achievement versus ascription (how status is accorded) These five value orientations greatly influence our ways of doing business and managing as well as our responses in the face of moral dilemmas. (Trompenaars & Hampden-Turner, 2004, p. 29) for successful HRM strategies of Western MNEs in China 10

11 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING Research results: Three examples (survey with international managers) 1) Universalism vs. particularism Percentage of respondents opting for a universalist system rather than testifying in favor of a friend : USA 93%, Germany 87%, Japan 68%, China 47% 2) Communitarianism vs. individualism Percentage of respondents opting for individual freedom : USA 69%, Germany, 53%, China 41%, Japan 39% 3) Neutral vs. emotional Percentage of respondents who would not show emotions openly : Germany 35%, USA 43%, China 55%, Japan 74% for successful HRM strategies of Western MNEs in China 11

12 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING 3. Geert Hofstede Specific to individual Specific to group or category PERSONALITY CULTURE Inherited and learned, individual Learned Universal HUMAN NATURE Inherited Figure 4: Three Levels of Uniqueness In Mental Programming (Hofstede, 2005, p. 4) for successful HRM strategies of Western MNEs in China 12

13 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING Geert Hofstede: Five dimensions 1. Power Distance (More Equal Than Others) 2. Individualism vs. Collectivism (I, We, and They) 3. Masculinity vs. Feminitiy (He, She, and (S)he) 4. Uncertainty Avoidance (What is Different is Dangerous) 5. Long-term vs. Short-term Orientation (Yesterday, Now, or Later) for successful HRM strategies of Western MNEs in China 13

14 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING Country/ Dimension Japan score (rank) China score (rank) Germany score (rank) USA score (rank) 1 Power Distance 54 (49-50) 80 (12-14) 35 (63-65) 40 (57-59) 2 Individualism 46 (33-35) 20 (56-61) 67 (18) 91 (1) 3 Masculinity 95 (2) 66 (11-13) 66 (11-13) 62 (19) 4 Uncertainty Avoidance 92 (11-13) 30 (68-69) 65 (43) 46 (62) 5 Long-term Orientation 80 (4-5) 118 (1) 31 (25-27) 29 (31) Table 1: Scores/ranks of some Western and East Asian countries for Hofstede s five dimensions for successful HRM strategies of Western MNEs in China 14

15 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING 4. Richard E. Nisbett: Four dimensions 1. Stability vs. Change 2. Causal attribution East and West 3. Categories vs. relationships 4. Either/or vs. both/and for successful HRM strategies of Western MNEs in China 15

16 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING One example: Figure 5: What goes with this? Nisbett, 2003, p. 141 for successful HRM strategies of Western MNEs in China 16

17 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING Figure 5: What goes with this? Nisbett, 2003, p. 141 for successful HRM strategies of Western MNEs in China 17

18 2 CROSS-CULTURAL APPROACHES: TOWARDS A BETTER UNDERSTANDING Figure 5: What goes with this? Nisbett, 2003, p. 141 for successful HRM strategies of Western MNEs in China 18

19 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 Q & A for successful HRM strategies of Western MNEs in China 19

20 3 LABOUR LAW ISSUES IN CHINA CULTURE AGAIN About labor law and culture Historical context Economic dimension Importance and some characteristics of PRC Labor Law Recent development: New Employment Contract Law Particular rather than universal enforcement of law Recommendations for HR managers of Western MNEs in China 1) Importance of knowing relevant laws and regulations (Jungheinrich) 2) It is better to fulfill the most restrictive requirements 3) Keep guanxi in mind it helps (Microsoft)! for successful HRM strategies of Western MNEs in China 20

21 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 List of references for successful HRM strategies of Western MNEs in China 21

22 4 CULTURAL IMPRESSIONS OF CHINESE WORKPLACE BEHAVIOUR Results from the analysis of Chinese workplaces in FIEs Hierarchy and loyalty Ambiguity of harmony and competition (Confucianism and use of stratagems) Practicality and emotion Problems of German expatriate managers in China Implications 1) Cultural roots will further shape Chinese employees behaviour 2) A sophisticated practice of handling relationships is crucial 3) Western desire for universal rules should be partly set aside for successful HRM strategies of Western MNEs in China 22

23 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 Q & A for successful HRM strategies of Western MNEs in China 23

24 5 WESTERN MNEs THE CHALLENGE OF HRM IN CHINA Cross-cultural communication channels between local units and global unit China Business Strategy & Local Strategic HRM Country C s Business Strategy & Local HRM Country B s Business Strategy & Local HRM Global Business Strategy & Strategic HRM Cross-cultural communication channels between local units Country D s Business Strategy & Local HRM Figure 6: A cross-cultural communicative model for strategic HRM (Prüfer, 2007, p. 98) for successful HRM strategies of Western MNEs in China 24

25 5 WESTERN MNEs THE CHALLENGE OF HRM IN CHINA Three questions 1) What are adequate goals, structures and methods of future HRM strategies of MNEs in China? 2) What makes a good HR Manager in a MNE in China? 3) What are the requirements for developing such cross-cultural qualities and competencies of future HR managers in China? for successful HRM strategies of Western MNEs in China 25

26 5 WESTERN MNEs THE CHALLENGE OF HRM IN CHINA 1) What are adequate goals, structures and methods of future HR strategies of MNEs in China? Goals 1) Focus on a long-term strategy 2) Adapt all HRM policies to Chinese cultural foundations of its business and working environment Structures/Methods 1) Clear hierarchy, but without high-rank/low rank attitude 2) Sensitive awareness for the actual situation/changes of atmosphere 3) Focus on quality of supervisor-subordinate relationship (loyalty/trust) 4) Creating harmony through business and private relationship focus 5) Strategic career planning (management development, e.g. job rotation) 6) Retention measures: Creating a motivating company atmoshphere for successful HRM strategies of Western MNEs in China 26

27 5 WESTERN MNEs THE CHALLENGE OF HRM IN CHINA 2) What makes a good HR manager in an MNE in China? 1) Proficiency in dealing with legal matters (e.g. knowledge of relevant laws and regulations on national and local level, will and ability to act responsibly concerning the fulfillment of the most restrictive regulations) 2) Recruitment skills: Hard and soft factors (e.g. very good intuition to forecast a candidate s abilities and potential, good network of relationships) 3) High training related skills (e.g. in identifying training necessities, choice of training method, choice of training expert, good network of relationships, clear quality evaluation skills, trans-cultural competency) 4) Ability to continuously shape development (e.g. handling retention and promoting issues, strategic management development planning, flexible creation of new positions according to market requirements) for successful HRM strategies of Western MNEs in China 27

28 5 WESTERN MNEs THE CHALLENGE OF HRM IN CHINA Success is to a great extent a question of trust Success takes place, following the beliefs of quite a few expatriates, especially if both the Chinese and the German side is able to create an integrative company process, which in the best case is extended into private life or which is initiated in the private life with positive effects for the working together in the company. (Wittkop, 2006, pp ) for successful HRM strategies of Western MNEs in China 28

29 5 WESTERN MNEs THE CHALLENGE OF HRM IN CHINA 3) What are the requirements for developing such cross-cultural qualities and competencies of future HR managers in China? Future Chinese HR managers 1) Intensive period of personal development and learning in the global business unit/headquarter Future Western HR managers 1) Deep interest in Chinese culture 2) Long-term orientation 3) Good preparation for China (e.g. readiness for personality change, professional preparation, cross-cultural development, also based on practical experiences, improvement of English and Chinese proficiency, willingness to learn more about Chinese philosophy and tradition) for successful HRM strategies of Western MNEs in China 29

30 AGENDA 1 Introduction: HR Problems of Western MNEs in China 2 Cross-cultural approaches: towards a better understanding 3 Labour law issues in China - culture again 4 Cultural impressions of Chinese workplace behaviour 5 Western MNEs: The challenge of HRM in China 6 Q & A for successful HRM strategies of Western MNEs in China 30

31 謝謝 THANK YOU VERY MUCH 謝謝 THANK YOU VERY MUCH 謝謝 Q & A for successful HRM strategies of Western MNEs in China 31

32 LIST OF REFERENCES FOR PRESENTATION References (1) [1] Adler, N.J. and Bartholomew, S. (1992): Managing globally competent people, in: Academy of Management Executive, 6: 3, [2] CEIBS (2006): OBI China: Going, Going, Gone The Beavers's Failure to Break the Cultural Boundary. [3] Chow, Daniel C. K. (2002): A Primer on Foreign Investment Enterprises and Protection of Intellectual Property in China. Chapter Six: Employee Issues and the Workplace in China, The Hague, London, New York: Kluwer Law International, [4] Fernandez, J. A. and Underwood, L. (2006): China CEO. Voices of Experience From 20 International Business Leaders, Singapore: John Wiley & Sons (Asia) PTE LTD. [5] Hall, E. T. (1989): Beyond Culture, New York: Anchor Books. [6] Hall, E. T. (1990): The Silent Language, New York: Anchor Books. [7] Hall, E. T. and Reed Hall, M. (1990): Understanding cultural differences, Yarmouth, Main: Intercultural press. for successful HRM strategies of Western MNEs in China 32

33 LIST OF REFERENCES FOR PRESENTATION References for (2) [8] Hofstede G. (2005): Cultures and organizations: software of the mind/geert Hofstede and Gert Jan Hofstede, New York: McGraw-Hill. [9] Lauffs, A. (2004): Labor Law, in: Freshfields (ed.): Doing Business in China, Vols. 1, 2 & 3 (loose- leaf service) (2004) (hereafter DBIC), Chapter 6. [10] Nisbett, R. E. (2003): The Geography of Thought. How Asians and Westerners think differently... and Why, New York, London, Toronto, Sydney: Free Press. [11] Perlmutter, H.V. (1969): The tortuous evolution of the multinational corporation, in: Columbia Journal of World Business, 4: 1, [12] Perlmutter, H.V. and Heenan, D. (1979): Multinational Organization Development, Reading, MA: Addison-Wesley [13] Prüfer, O. (2007): Human Resource Management (HRM) in China - a cross-cultural approach for successful HRM strategies of Western MNEs in China. Shanghai. for successful HRM strategies of Western MNEs in China 33

34 LIST OF REFERENCES FOR PRESENTATION References for (3) [14] Shen, J. (2005): Towards a generic international human resource management (IHRM) model, in: Journal of Organisational Transformation and Social Change, volume 2, number 2, [15] Trompenaars, F. and Hampden-Turner, C. (2004): Riding the Waves of Culture. Understanding Cultural Diversity in Business, London: Nicholas Brealey Publishing. [16] Wittkop, T. (2006): Intercultural competency of German expatriates in China. Qualitative analysis, modelling and praktische Empfehlungen, Wiesbaden: Deutscher Universitätsverlag. This title was translated into English, published only in German under the original title: Wittkop, T. (2006): Interkulturelle Kompetenz deutscher Expatriates in China. Qualitative Analyse, Modellentwicklung und praktische Empfehlungen, Wiesbaden: Deutscher Universitätsverlag. for successful HRM strategies of Western MNEs in China 34

35 謝謝 THANK YOU VERY MUCH 謝謝 THANK YOU VERY MUCH 謝謝 for successful HRM strategies of Western MNEs in China 35