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Sample Assignment: HRM Strategies to Help with Company ABC’s International Expansion in China
1. Company background
Company ABC is a UK based large, local company that has been targeting the business of Human Resources Outsourcing for more than 30 years since its establishment, it is now leading the Human Resources Outsourcing industry in UK in term of building up project based Human Resources Outsourcing services for a number of leaders in the domestic industries by providing comprehensive human resources outsourcing solutions to the small to mid-size companies. The core competitiveness of Company ABC is that it provides small-to-mid-size companies with a breadth and depth of human resources solutions which are usually available only from the largest companies. And some of the Human Resources Outsourcing services are:
ü Full administration of employee benefits programs
ü Employee relations
ü State and federal compliance with HR audits, handbooks and investigations
While Company ABC is currently experiencing steady growth which enhances its current dominance in the domestic market, the company has witnessed the fast growing business opportunities in China with the economy booming in the past two decades, and to keep the business growth of the company faced by the steady but rather slow growth in the domestic market the management team of the company has decided that it should expand geographically into the Chinese Human Resources Outsourcing business within the coming two years. Based on the common industrial practices that business locations of Human Resources Outsourcing should be closed to the client companies, the company decided to build up a wholly owned subsidiary company in Shanghai, the most prosperous city in China as a start point of entry strategy into the booming market.
2. HRM strategies to help with Company ABC’s expansion
2.1.1 Strategic HR planning
As written in the previous study, strategic planning mainly relates to the entry of employees into the organization (acquisition), the development of people skills (development) and the exit of people from the organization (departure) and it is believed that effective HR planning is of much strategic significant due to its role of aligning the organizational business objectives. Due to the importance of strategic HR planning, it would be necessary for Company ABC to locate the needed talents in sufficient numbers to power the strategic advancement by adhering to the HR planning process.
2.1.2 Strategic recruitment
Recruitment is probably one of the key tasks that Company ABC would have to deal with in the near future when the company is expanding the business into China because it is not cost saving to recruit all the employees from the domestic labor market and send them to China and also the company would need to local talents in different positions due to they are more familiar with the industry and Chinese market. The strategic recruitment prepares a good quality pool of labor force in the future to the company which is linked to the company’s future need of talents during the expansion.
2.1.3 Management of change
With the implementation of the new business strategy to expand the business oversea, the internal external changed environment such as change of corporate culture, uncertainty level and more complex macro-economic conditions would create challenging situations for company to achieve the business objectives as set in the beginning. So it is critical that the company have strong ability to respond to the pace of change. Here human resource department could help with three major tasks: the first task would be to determine the need for change. And such needs could be identified by evaluating the performance of the employees to the working and performance requirements; the second tasks would be to help reduce the resistance to change by using ways such as counseling and encourage employee participations; and the third job is to implement the changes designed to change one or more key organizational variables such as structure, systems or culture and also ensure that such change will not be later abandoned.
2.1.4 Management of diversity
With the planned expansion of the business, there will also be an anticipated increase in the number of employees and the complexity of labor force in term of different employees with different background, ages and color and in other dimensions. To manage workforce diversity well in Company ABC, the human resource management should play three important human resource roles which are in strategic level, managerial level and operational level (Stone 2011, p.684). Firstly, at the strategic level of the company, it should contribute to the developing of management systems that support diversity in the work place. And in the managerial level which seems to be in a lower level but still with great importance, and at this level the human resource management of the company would need to enact, integrate and implement the human resource policies which respect the principle of diversity into business practice of the company; and in the operation level, the human resource of the company need to provide detail guidance to the relative employees in term of face to face interview, coaching, counseling and dispute handling if there should be any. And in case of dispute and complaint making, fast and effective handling of the case to make the company’s diversity principle clear to the relative parties would be very critical to stop the dispute from upgrading to a more influential and serious conflicts.
3. Potential HR related issues in oversea expansion
3.1 Lack of employee motivation
3.1.1 Theoretical review of employee motivation issues
Motivation is defined as a psychological force that determines three factors: the direction of a person’s behavior, a person’s level of effort and a person’s level of persistence in the face of obstacles (Lauby 2005, p.16). By this definition of motivation, we can refer the employee motivation as the extent measuring how persistent and how hard the employees could keep on focusing on the particular tasks and jobs desired to be done by the company. According to Stone (2011, p.422), employee motivation is one of the most challenging aspects of human resource management manifesting itself by employee morale, output, absenteeism, effort, labor turnover, loyalty and achievement and the importance of employee motivation is also made obvious by the external trends in business such as increasing cost pressures, workforce diversity, downsizing and the advent of contingent workers and the lean organization. Here we will use two of the most popular motivation theories, Frederick Herzberg (1959)’s two-factor theory and McClelland’s achievement motivation theory, to analyze how the employees are motivated are motivated in the working environment and why some of them are not motivated like others.
126.96.36.199 Frederick Herzberg (1959)’s two-factor theory
Herzberg’s two factor theory was proposed by Frederick Herzberg (1959) in his famous book, “The motivation to work” which was constructed on the observations made by Maslow but distilled its finding into a more straightforward “two-factor theory” of human motivation in the work place (Wright 2009, p.149). The two factors actually refer to hygiene factors and motivators which are concluded in Frederick Herzberg’s study. Herzberg suggested that hygiene factors are basic needs at the work place such as company policies, relationships, salary and security. And hygiene factors are necessities to employees, bad working attitude and dissatisfaction would be made if there is some hygiene factors being absent though improvement in such factors alone is not enough to provide true job satisfaction; and motivation factors such as achievement, recognition and responsibility in contrast are those factors by meeting which will lead to satisfaction and the absent of which will not reduce much dissatisfaction with work.
188.8.131.52 McClelland (1988)’s achievement motivation theory
David McClelland (1988) identified three important needs or motives in the social content which include the need for achievement, the need for affiliation and the need for power. And because of the different intensity of these three motives from one person to another, people are found to be motivated to different degree. By naming these three major motivators McClelland (1988) believed that employees can not motivated solely by extrinsic motivators such as salary and people will be intrinsically motivated by the need for achievement, the need for affiliation and the need for power though money could be used as an indicator of success, power and achievement.
3.1.2 Reasons for the lack of employee motivation
After the review of the relative theories in the employee motivation, in this session we will rationalize the possible lack of employee motivation during Company ABC’s entry into the Chinese market in the expatriates.
184.108.40.206 Increased number and level of obstacles
As mentioned above, one of the three critical components in the definition of the term Motivation is a person’s level of effort and a person’s level of persistence in the face of obstacles (Lauby 2005, p.16). This definition implies that even when an employee keeps the similar or unchanged level in all these three dimensions which measures the degree of employee motivation at work, when the obstacles are escalated and increased in numbers the original motivation level could be insufficient to motivate the employees to overcome the increased obstacles. For example, an employee used to be feeling motivated to work in face of some routine difficulties in the everyday work during office, and he perceived that he has a kind of personal value achieved by solving such difficulties; but if he is sent to build up the subsidiary company in Shanghai from scratches which means that the employees would have to cope with many more obstacles which he or she may not have encountered before and probably would be much more complicated and difficult to handle. So the employees would be demotivated though the motivation degree in the work place has not changed too much.
220.127.116.11 Absence of hygiene factors
As mentioned above, though the enforcement of the hygiene factors alone could not bring employee motivation and satisfaction, hygiene factors are necessities to employees, bad working attitude and dissatisfaction would be made if there are some hygiene factors being absent. In several cases, employees would feel that there is absence of hygiene factors. For example, when employees are deployed from the current positions to the oversea positions in China, the employees would on their own calculate whether the pay increases could cover the increase of cost of living due to the positions are in Shanghai, one of the places with the highest living cost in China, if pay increases are not significant or much less than the salary level in the same industry, employees could feel that there is absence of one of the most important hygiene factors, sufficient salary. In another case, with the establishment of the new companies and hiring of the new employees, there will be an interim period in which the company policy would gradually built up and enforced into the actual work, but probably during such interim and temporary period the expatriate employees would feel a sense of disappointed because the previous well established company policy is absent and there could possibly be some disobedience to the company policies and regulations by the new recruited local employees such as cleanness and no food policy in the working place.
18.104.22.168 The need for affiliation
As analyzed above, David McClelland (1988) identified three important needs or motives in the social content, and one of them is the need for affiliation. The need for affiliation refers to the need for belongingness and friendship or the desire to be a member of a personally important social group (Kardes, Cronley & Cline 2011, p.107). Though the expatriate employees tend to be working in senior positions than the later joint local worker which means that they could have reinforced the need of power by have a number of staff under them, the existence of the culture difference in term of different education backgrounds, living environment and religious beliefs could keep the expatriates from the local staffs groups and thus the need for affiliation would not be reduced.
3.1.3 Influences created by the lack of employee motivation
22.214.171.124 Underperformance of employees
An employee whose motivational drive is lacking, despite being competent and well resourced, he or she could still be performing in an under average level because he or she is not motivated to get the job done (Shields 2007, p.574).
*Performance = Capacity x Commitment
*Capacity=Competencies x Resources x Opportunity
Performance = Competencies x Resources x Opportunity x Commitment
Formula 1 Maximizing Performance
Source: Opm.gov 2001
As the formula shows, performance could only be achieved by the present of a number of factors such as Competencies, Resources, Opportunity and Commitment, but lacking the commitment could totally result in low performance though the other factors are there. And with the lack of employee motivation or low employee motivation, even in our practical working experience it is very common for us to observe that when employees are not motivated, the most fundamental change that we can see is the change of attitude to work or the commitment to work and to the company. Laziness, inactiveness and passiveness in work could be seen if the employees are not highly motivated in term of frequent lateness and frequent application of medical leave and unwillingness to do overtime. All these demotivated working behaviors and some of which are in contradiction with the company’s policy could lead to underperformance of the work done by the demotivated employees. And for Company ABC, it is obvious that the company are in need of those who are motivated to work with extra effort to get the job done with high performance rather than having under-performing employees.
126.96.36.199 High expatriate failure rate
When weakening commitment to work is upgrading to weakening organizational commitment, high employee turnover rate could be witnessed in term of quitting the international assignment or resignation. Lack of motivation to work overseas, especially where the firm attaches low value to international assignments is found out to be one of the key reasons why international assignments fail (Shenkar & Luo 2004, p.513). And the high expatriate failure rate not only slow down Company ABC’s strategic pace in enlarging its business in China, but it also lead to a lot of immediate and indirect cost to the company such as the expenditures in transportation, accommodation and trainings.
188.8.131.52 Complaints making
If employees are not motivated to work, then they may possibly be very irresponsible and always try to attribute the failures to the company’s strategies making, inappropriate arrangements and demanding goal setting but not their low work commitment and passion. The behaviors of complaints making by those who are not motived to work, not only will affect their own working performance and efficiency, but it will also influence the emotion of other colleagues and as a result some rumors will be generated and the overall work performance would be impacted.
3.2 Communication issues
3.2.1 Possible communication issues
Rather than confining the definition of communication to the process of information transmission, Carey (2008, p.205) broadens the traditional definitions to include the drawing-together of a people that is culture as the content of a communication. As suggested in many researches China like many other typical Asian countries has a high-context culture in which considerable importance is given to the non-verbal or situational cues (Stone 2011, p.724). And what is more, it is important that people get into the network groups such as family relationship, membership and other social groups to assist the effectiveness of communication. Possible communication issues that will show up within the international business expansion for Company ABC may include:
184.108.40.206 Direct communication VS Indirection communication
While Chinese are more usually use the indirection communication which has been attributed to the long-held tradition in China “to nurture the subtle, fragile bonds and links in human relations” (Mao 2006, p.177), within the typical western culture, employees and managers are expected to express their own view in a more direct way. Under such circumstances, a number of misunderstandings could be resulted in. For instance, if the Chinese manager does not want to accept an offer, he or she may say that sometime of consideration would be needed. And if the western managers could not understand the hints behind the verbal and behavioral expressions, inefficiency and frictions at work could be made. In another case, when western managers directly criticize the subordinates because of their misconducts or underperformance, it would be difficult and embarrassing to them especially when such critic happens with the attendance of other colleagues because in China the “face” issues are something that really matter and critic should be given in a more indirect way such as the form of giving suggestions to the employees.
220.127.116.11 Talk on behalf of oneself VS Talk on behalf of a group
Another difference of communication style between the Chinese culture and western culture is the way they refer to their work, whether it is on behalf of oneself or on behalf of a group. For example, it is common practice to refer to the individual achievement as a result of the collective effort contributed by leaders, team leaders and even the ruling party of China. And western managers sometimes can not understand this traditional mind and thinking and become very confused.
18.104.22.168 Independent thinking VS Consensus with the majority
Because of the culture difference, Chinese employees would seek consultations with colleagues, families and direct managers when they are going to make important decision. But differently, western employees in many cases woud based on their own understanding of the situation and make decisions. This could result in disputes staffs from different culture background are gathered together to make decisions. In another word, Chinese staffs focus on collectivism compliance rather than personal feelings (Reuvid & Li 2005, p.426).
3.2.2 Cultural clashes as the major source of communication issues
As proposed by Reuvid (2005, p.269) that with the increasing exposure of one culture to another in the context of economic globalization, there will definitely be some cultural clashes when the two cultures are in interaction with each other. There are a number of theories and models proposed to explain the cultural differences and the impact on in the work place. And the most important work was done by Greet Hoftstede in the last century which majorly deals with the clustering countries on work-related value dimensions (Johann 2006, p.5). The five identified cultural dimensions are: Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI) and Long-Term Orientation (LTO). And the obvious differences in some or all of these five cultural dimensions could become a major source of cultural clashes which further causes a lot of issues such as the communication issues. As commented by Geert Hofstede, Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster (Geert-hofstede.com 2009). Below are some comparisons made in three of the selected cultural dimensions made by Reuvid and Li (2005) in the book “Doing business with China”.
Figure 1 Complaints made by Chinese and western managers in PDI
Source: Reuvid & Li 2005, p.268
Figure 2 Complaints made by Chinese and western managers in UAI
Source: Reuvid & Li 2005, p.268
Figure 3 Complaints made by Chinese and western managers in IDV
Source: Reuvid & Li 2005, p.268
3.2.3 Influences created by communication issues
22.214.171.124 Loss of business opportunities
Trust is believed to be critical for any business to survive in the market of China, as without trust tie, a company may not even get the capital needed. For example, in China, trust was not placed in the constancy of money or the financial system, but in various binding yet elastic relationships between people (Wilson & Dirlik 1995, p.293). And also whenever new partnership relationship is to be built up, the social activities are all needed to be handled with care before a contract could be put on the desk to the partners despite that they are very promising good offers and will be beneficial to both side. This cultural tradition could be found in personal life. In China, trust is firmly embedded within the family while there is less trust outside the family (Dowling & Yap 2007, p.446). Similarly there is family like personal social network which is different from individual to individual. And normally a business man will only do business with those who are already in his personal social network in which people are trustworthy, and if any outsider want to do business with him it will take long time to get inside through talks, family life sharing, drinking and eating and other social activities. And introduction by a friend could be helpful. But in a word, communication is fundamental in building up trust and social network ties before actual business can start in China, so there is no doubt that Company ABC would lose business opportunities due to the difficulties in building up trust if there are serious communication issues.
126.96.36.199 High cost of relationship maintenance
As just said, if employees and managers in Company ABC have difficulties in communicating with the people with the Chinese cultural background it would not be easy to operate the business in China because trust are not yet built with the customers, suppliers, bankers, government officials and other important players in the market. And even Company ABC manage to survive in the complicated social context by building up weak relationship instead of a firmed one, the cost of maintenance of such weak relationship will be very high. One important concept that determinates such high cost is the concept of “renqing” which is widely accepted in the Chinese culture and it means human relations in English. As suggested by Yang (1957, p.292), “renqing” covers not only sentiment but also its social expressions such as the offering of congratulations or condolences and making of gifts on appropriate occasions. And because “renqing” involves social exchange, it is important inherent and implicit obligation for people to keep equity in mind even for a long time’s basis (Chen 2004, p.47). This equity principle means that that if A has once provided assistance to B, and now B is requesting A to do him/her a favor then A should not say no provide that the cost of providing such help will not be much more than how much A has once paid to help B. The better the relationship is built, the obscure the request for such equity in renqing system would be and the longer period of time for paying back such emotional debt would be allowed. For Company ABC, with weak tie built with the key parties, even it could get help from others it would incur high cost for such relationship maintenance due to the difficulties to get such “reqning” and the short period of owing “renqing” allowed.
4. HR strategies to be used to overcome the identified HR issues
4.1 Enhance employee achievements motivation
To enhance the employee achievement motivation and increase the passion and commitment at the work place, McClelland proposes four methods, and now we will see how these four methods could be appropriately applied in the case of Company ABC to add the achievement factors into jobs in term of high responsibility, participation and so on.
4.1.1 Arrangements for accomplishment feedback
As stressed by McClelland (1988) that achievement motivated staffs do not keep their motivation to succeed unless they receive rapid feedback on what they do. Just like what parents reward their children when the children are making a right decision or doing a good job, accomplishment feedback help enhance the good job done by providing timely recognition. There are several things to be noticed: firstly, the goal accomplishments must be made known to the public in a timely manner for them to serve the function of gratifying employees’ esteem need (Schneider & Bowen 1995, p.165); the goal and degree of difficulty and benefit of the task should be made clear to the public so that the accomplishment itself would become a reward without additional benefit given to the employees; thirdly, direct manager’s timely feedback could be very encouraging to the employees’ continual effort on the same direction to make further success.
4.1.2 Identify and promote achievement models
In order to show explicitly what kind of job and how the job should be done, the company could use reward system to reinforce the correct employees behaviors and here the tool Goal Achievement Model to inform the employees about the value system and goal that they need to achieve (Thomas 2005, p.257). And to human resource department, it needs to set up a measurement system to check and reward the successful change in adherent to the model. With the successful adoption of the Goal Achievement Model, it is expected that the employees in the company would soon realize what they need to do to achieve the success and win the reward.
4.1.3 Help modify self-image and make self-encouragement
Some individuals have such a low level of self-confidence or self- esteem that they assume they are unworthy and distrust positive feedback and focus on negative issues and the gaps (Sims & Veres 1999, p.24). And in contrast Ashford (1988) found out that people with high self-esteem were better at coping with stress and pressure during the organizational change than people low on self-esteem. For Company ABC, there are three techniques that the human resource department could do to help modify the self-image. The first technique is to advise the line managers of employees who are lacking self-confidence to provide frequent encouraging teaching and coaching to the employees to let them know that they can do the job and encourage them to try to do the job with confidence; the second way is to hold seminars and invite famous writers or successful colleagues with optimistic characteristics to participate in the seminars to influence the employees by sharing their experiences; and the third way is to hold competition at work or in the after work entertaining activities to get the employees familiar with the competition and to modify the self-image to a more competitive and ambitious business environment.
4.2 Prepare for the communication issues
Cross-cultural preparation helps to alleviate two concerns for the expatriate: the culture clashes that a different culture would produce and the unsuccessful communication on the job (Adekola & Sergi 2007, p.240). It is necessary for Company to prepare for the cross cultural issues and as mentioned, communication relative challenges are among the priority.
4.2.1 Expatriate selection for international assignments
Given by the possible communication issues and the great expected impacts of such communication issues which are mainly caused by the cultural clashes, expatriation is unlike relocation for work in the domestic context, expatriates who relocate to another country which China in this case must adjust to the host culture with different living conditions and interactions in term of language and communication style (Evers, Anderson & Voskuijl 2005, p.460). So the expatriate selection should be the very first step to prepare for such communication issues by selecting those who are more capable to adjust to such cultural differences. To achieve this target, the human resource department in Company ABC could add the following factors into the criteria of expatriate selection as a way to reduce the negative impact of the social clashes: Willingness of the candidates to accept an expatriate assignment, relative working experience in China or other Asian countries, whether the spouse of the candidate is a foreigner and Chinese language proficiency and other factors that make the candidates in a more advantageous position in communicating in a high context cultural environment.
4.2.2 Cross-cultural orientation
Cross-cultural orientation programs are designed to teach members of one culture ways of interacting effectively with minimal interpersonal misunderstanding in another culture (Adekola & Sergi 2007, p.240). The cross-cultural orientation in Company ABC should include three key components: the first component of the orientation program is to provide a general and brief introduction of the Chinese culture in term of living customs, way of communication and dressing and so on, this part of the program should cover every part of the culture that the expatriates may need to deal with; the second part of the cross-cultural orientation programs is the orientation of the most frequent concerned issues met by the new expatriates which would be best if it is held by the experienced expatriates colleagues who have similar experiences, addressing the concerns and managing the expectation of the expatriates are two important goals in this part of the programs; the last but not least component is the language training program. Knowing what people talk about is fundamental basis for effective communication. But mastering the foreign language does not necessarily equal to no cultural clashes. Language is art, learning the meaning of the vocabulary in paper could not contain all the necessary information, so the language training should be focusing on explaining the hidden meaning of the Chinese expressions.
List of references
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 Abraham H. Maslow developed the Hierarchy of needs consistent of five hierarchic classes. And it shows the complexity and progressing of human requirements and needs.