Hofstede’s variables
Uncertainty avoidance
Degree of discomfort with uncertainty and ambiguity, leading to the support of beliefs that promise certainty and the maintenance of institutions that protect conformity Masculinity/femininity
A preference for accomplishment, heroism, severity and material success as opposed to a preference for
relationships, modesty, and attention to the weak qualities of life
Individualism/collecti vism
A preference for socially closed surroundings where individuals care for themselves and immediate kin, as opposed to dependencies on groups of others
Schwartz’s variables
Conservation Security, conformity and tradition are priorities, andmaintaining the established order of things.
Hierarchy Legitimacy of ascription of roles and fixed resources such associal power, authority, humility, and wealth Intellectual autonomy
Values that stimulate autonomy to pursue goals and
intellectual interests, including curiosity, open-mindedness, creativity
Affective autonomy Promotion and protection of attainment in positive affectiveexperiences such as pleasure, excitement, and variety Competency Values that polarise the dominance of surroundings throughself-affirmation, such as ambition, success and risk Harmony Concepts relating to being ‘one with’, as in unity with nature,and protection of the environment Egalitarian
compromise
Includes concepts such as equality, social justice, and responsibility.
Characteristics of culture for Hofstede and for Schwarz
Although Hofstede’s work has received much criticism, many researchers continue to rely on his work even in studies that do not include countries covered in the early research.
CHINESECULTURE AS ANEXEMPLAR OF THEINFLUENCE OFCULTURE ON ER
Hofstede assumes that national territory corresponds to cultural homogeneity but China is not homogenous. There are strong regional differences with many religious and ethnic cultures and sub-cultures. Problems with his use of the words ‘individualism’ and ‘collectivism’ have different meanings to different countries. For instance, employee loyalty- Japanese employees may be loyal to their organisations and Chinese employees may be more loyal to their families. But both adopt the principle of collectivism which differs from Western individualism. The fifth dimension of Confucian dynamism, or long-term orientation, was
identified much later than his original work and China and other
Confucian-influenced countries scored very highly on this dimension than other parts of the worlds.
Other studies of Chinese culture take different approaches using Confucianism directly which is seen as influencing the way employees perceive the organisation
as a symbolic family, amplified by early Maoist ideology that emphasised group rewards. This implies a stress on hierarchy, order, authority and mutual obligations. Harmony and benefits in exchange for loyalty with a concern for face, respect and integrity and the avoidance of direct criticism being important.
Confucianism is an important and influential foundation for Chinese culture and behaviour providing the moral doctrine of human relationship, social structures, personal behaviour and ethics. Its principles extol loyalty, love, obedience, obligation and submission, seniority and trust.
A recent focus on efficiency, productivity and performance-based rewards have threatened these traditions and values leading to sub-cultural generational differences. Studies reveal that dominant constructs included respect for seniority, communication efficiency and selfless contribution and analysis showed 8 critical sets of relationships; hierarchy bureaucracy equality family aspects harmony security loyalty stability Factor analysis of this data revealed 5 themes;
equality security loyalty
harmony bureaucracy
Culture arguments, such as those of Hofstede, linking Chinese economic performance to Confucian values, neglect the ways culture changes: cultures interact and influence each other. Confucianism stresses holism, realism, pragmatism. Chinese culture flourished more when open to other cultures (Tang dynasty) than when culturally closed (Qing dynasty). Ideas have been blended with foreign ideas, indigenous elements reinterpreted and cultural elements refocused. An about-face on Confucian values may occur if li (profit) is put ahead of yi (justice). Guanxi (networks, connections) which may once have been good for business and efficient financial channels may now be seen as developing into ‘cosy’ relationships.
Ethnic overseas Chinese family business emphasises interpersonal or relational trust rather than institutional trust, paternalistic authority, and personal ties, accessing capital through social networks. Differences from Western cultural values emerge in terms of trust (personal versus institutional), identity (e.g. individual versus collectivism), and authority (hierarchy versus autonomy as reflected in power distance) These effect organisational structure and inter-organisational relationships. Simple structures such as centralised decision-making, paternalism, nepotism, focus on cash flow and specialisation based on owner’s expertise are common features of business. Firms are adaptive and opportunistic, sharing information that is hard to obtain, often accessed through inside information, contacts, bribery andGuanxi relationships. drawbacks to this model include limitation of growth, nepotism and a lack of integration with professional ‘outsiders’.
Chinese culture is very distinct from Western culture, primarily as a result of its community nature as opposed to what is referred to as the utility paradigmof the West (Newell).
Characteristics Utility paradigm Community paradigm
Nature of knowledge and factsObjectively defined concepts Tacit and sociallyconstructed Knowledge acquisition Can be captured and
codified
Developed through group-based knowledge sharing
Best practice for organisational improvement
Objective rules universally applied to all organisations
Principles that organisations use to locally define their own rules
Knowledge migration
Transfer through formal explicit processes (e.g. notes) enhanced by exposure to exemplars
Personal/ local knowledge developed through group learning processes that create experience Dominant metaphor Memory Group processes Critical success factors Identified by Western
narrative Trust and belonging
Relating the Western commodity and the Chinese community paradigm of culture
Guanxi, or personal networks and interpersonal relations are of key importance when conducting business and authority is based on interpersonal relations rather than legal rationality. Guanxi is essential if approval is to be granted to access any kind of business in China, producing personal obligations such as responses to requests for assistance by someone in the network.
Another cultural attribute is loss of face. Chinese do not attempt to convince others that they know best and so dialogue and encouragement are more important than linear communication and persuasion. A study showed that about 70 values affect the Chinese belief system which run across 8 categories;
national traits
interpersonal relations family/ social orientation work attitude
business philosophy personal traits
time orientation
relationship with nature Of particular interest are 6 generic categories;
respect honour synergy allegiances learning sensibility
ERANDCULTURE IN THEMIDDLE EAST
The ME is the birthplace of monotheism and the conduit for the transfer of much Chinese, Indian and classical knowledge to the West during the European Middle Ages. In recent years there has been a lot of investment from MNCs and with its
strategic importance in the energy sector (gas and oil), it has given rise to significant actors in finance, tourism and property (e.g. Turkey, Iran, GCC countries).
One issue is in actually defining what constitutes the ME with some including Cyprus, Turkey. It is a diverse area in terms of religion, language, governance, economy, and labour, with some countries reliant on external labour and some being major importers of labour. Literacy and education levels vary but common themes run across the region;
the influence of national and international politics on ER the impact of religion, ethnicity and culture on ER
the influence of Western multinationals on ER the significance of gender in ER
In most of the region, there is widespread gender inequality in career paths, especially in rural areas, though in other countries, upper class women are afforded better career opportunities than in most Western countries. For example, reported discrimination in Turkey is lower than the EU average with women playing an active, economic roles, including senior level. In Iran, gender segregation has opened up many career opportunities for university-educated women, even with the role of women reduced due to the Islamic Revolution.
In addition, economic nationalism such as ‘Arabisation’ has restricted the autonomy of HRM, where locals may see public-sector employment as a right, resulting in Western or Asian expatriates filling all levels within the private sector, often with little employment security.
It has been pointed out that perhaps there is no such thing as the ‘Middle Eastern HRM model’, i.e. a model with Middle Eastern characteristics. There is a mosaic of policies and practices developed in different historical contexts. For example, North African organisations are more influenced by European countries, in particular, French policies in relation to gender equality and the right to strike. Public sector HRM is based on extensive legal foundations, detailed regulations and centralised decision making. There is little evidence of strategic HRM and explicit HR strategy links between HR activity and corporate strategic planning and integration of HR practices. This is partly because an Anglo-Saxon concept such as HRM is unfamiliar and partly because real power lies with a powerful ruling elite or monarchy.
Israel is partly influenced by European (British) practice such as EO laws and US concepts of HRM strategy. There is also evidence of convergence between public and private sector HR practice.
Some have characterised management styles in the Arab world, especially in the Gulf states, as distinctive and constituting a fourth paradigm where the style is held to consist of;
family businesses
autocratic but consultative ownership
a rhetoric of consultative decision making within an essential hierarchical structure where joint decision making may be seen as a weakness, and one-to-one consultation is preferred.
From Hofstede’s perspective, Arab cultures are seen as masculine, relatively long-term in orientation, middling on individualism, uncertainty avoidance and power distance.
Some have noted that HRM often reflects Islamic values and that an Islamic work ethic can be identified, influencing a range of attitudes towards organisational change and commitment. A distinctive feature of Arab HRM is held to be the role of networks. Like the Chinese Guanxi, interpersonal connections are rooted in family and kinship, but also extend into business life. This phenomena is often termed wasta (or piston in French-influenced North Africa). In the Arab world, this is often ‘professionalised’ with ‘mediators’ interceding on behalf of clients to obtain advantages in jobs, tax breaks, information, and favours. In public-sector organisations, this embraces R&S, compensation, promotion and other ER activities. Wasta is less-publicly acknowledged and many condemn such activities as illegal or unethical, unlike the guanxi in China, while these same critics seek wasta benefits for themselves and relatives. In Iran, nepotism is common and in Turkey, favouritism is still an issue.
However, HRM policies in the ME are adopted and implemented within specific national contexts that are influenced by culture, political ideology, economic conditions, the legal system as well as confessional differences in religion. The public sector remains dominant with some countries such as Turkey and Jordan embarking on privatisation programmes. This is accompanied by a change in HR practice away from a centralised service model towards the expansion of T&D, PM and ER initiatives. There has been government intervention to reduce layoffs, replace expatriates and develop local managers. Job security in the public sector has been reduced resulting in high unemployment. generally, MNC apply ‘strategic’ HRM more than local firms though with greater pressure on performance. Large private-sector firms tend to offer higher pay, though lower job security than many public-sector organisations. In Gulf countries, pay is higher in the public sector with employees reluctant to take up private-sector employment; public sector jobs are perceived by some locals as a ‘right’. Here, T&D and appraisal programmes are far more extensive in the public sector. The public sector gives locals priority in recruitment, whereas the private sector often employs expatriates; public organisations tend to use written procedures, rules, job analyses and structured training programmes.
The ME public sector faces significant challenges, including declining real incomes, political interference, poor management and difficult working conditions all of which lead to demoralisation and demotivation. Problems of moonlighting, retention and corruption are also common. HRM systems are outdated and ineffective with low salaries, inability to fire low performers, no performance standards, no rewards for performance, difficulty in attracting talented people, promotion based on seniority and nepotism and ineffective management.
Some countries are reforming their HR infrastructure but due to a lack of professional HR players, long-term strategies are absent.
ER in the ME, as well as elsewhere, needs to enforce impartiality, transparency and openness in its decision making and can learn from regional and global experiences
ERINRUSSIA
Few books have explored HRM in Russia as it has generally been treated as ‘Eastern Europe’. However, the size, multi-ethnic composition, fast-growing economy and increasing international collaboration with foreign companies demand a deeper, more complex analysis of business in Russia, in particular, of HRM and ER.
National politics continue to influence ER/HR. Challenges for ER and for HRM in general, include seeking out the best expertise, committing significant resources to ER, overcoming the lack of evaluation of HR activities, and addressing the lack of specific skills. HRM practices can affect performance of employees and enhance organisational performance in general.
Recruitment channels in Russia consist of the internal labour market, and the ‘extended internal labour market’ or the social network of the firm’s current workers which both deliver different costs and benefits to the firm.
In the Russian context, former employees maintain contact and may return after employment elsewhere, and firms prefer to recruit from the extended internal labour market rather than the external one.
Deriving from the Soviet era, and perhaps deeper Russian cultural traditions, personal, particularistic relationships influence paternalistic recruitment practices, and loyalty to the boss is a major selection criterion. This contrasts with the meritocratic criteria often regarded in the West as good practice. Recruitment is often highly centralised in the hands of the CEO, with informal criteria dominating, and the HR function reduced to administering paperwork.
ERINMULTINATIONALENTERPRISES
Internationalisation and the effective use of international employee resources located outside the home/parent country are major issues affecting firms in an increasingly global economy. A key question is: Why do multinational enterprises (MNEs) adopt different ER policies and practices in such areas as recruitment and selection, performance management, talent management and career development? A MNE’s ER policies and practices can be seen as the product of the interaction between three factors;
Home (parent) country factors relating to its HRM system; e.g. American, British or Japanese systems. MNEs often remain deeply rooted in the national business systems of their country of origin (rather than being global, rootless and footloose entities)
Host country (local) factors: cultural context, local regulations and practices
Firm-specific factors: e.g. senior management’s attitudes towards internationalisation, the international strategy, structure and corporate culture of the firm
It has been argued that an MNE can choose four generic orientations to ER, depending on its orientation to ‘foreign people, ideas and resources’;
Ethnocentric the international approach where the MNE exports the home system, making strategic decisions at headquarters (mother-daughter
relationship with subsidiaries) and filling key positions with parent-country nationals
Polycentric the multinational or multi-domestic approach where an MNE adapts its ER policies to the local ER system (e.g. the role ofguanxi in China, wasta in the ME, loyalty and extended internal labour market of Russia). Foreign, local, subsidiaries enjoy autonomy as ‘sisters’ and HCN occupy key positions. This strategy is common in places where local responsiveness is important such as advertising and food industries. This strategy minimises standardisation as each subsidiary goes its own way and can lead to innovation and creativity remaining more localised instead of dispersed throughout the global ‘firm’.
Geocentric the global approach and through global sourcing of talent, promotes employees to positions and subsidiaries regardless of nationality. It is likely to employ TCNs. This approach is designed to maximise global standardisation as well as global learning and global ‘dispersal’ of innovation and creativity (through seminars, international transfer of employees, and training) and also maximises local responsiveness by using HCNs or ‘cosmopolitan’ TCNs instead of ‘ethnocentric’ PCNs. This orientation is characteristic of transnational companies which seek to maximise global efficiency, national responsiveness and worldwide learning. A subsidiary may therefore create a new HR/ER system that is different from both the home and local systems.
Regiocentricthe regional approach where the MNC employs managers from a particular region (e.g. EU, US, East Asia), enjoying regional (but not global) autonomy with common ER policies being developed across a region (but not globally).
Global staffing is a key aspect of HRM in the global firm and is seen as a key ER practice in controlling and coordinating dispersed global operations. One reason for this is the continuing problematic performance of expatriates which is costly in human and financial terms for the individual and organisation with indirect costs involved such as reputation and loss of business. So talent management has emerged as a key issues for organisations and is crucial to MNEs as they seek to internationalise their operations, resulting in greater international diversity in workforces.
Cultural distance between countries is also an issue: where subsidiaries are located in ’distant’ countries, MNCs seem to prefer to deploy PCNs even though these people may be less than willing to go to these locations. Also, the age of the subsidiary affects choice: the longer a subsidiary has been in operation, the fewer PCNs may be used as the need for control diminishes in long-standing, successful affiliations. Companies have several motives for using international transfers;
to fill positions with technically qualified staff to facilitate management development
to facilitate organisation development through knowledge transfer and standardising corporate structure, culture and policy
In addition, companies may use PCNs for various purposes, often mixed for any one assignment, believing that;
they have a better understanding of, and commitment to, corporate strategies;
they will accept HQ-determined rules more easily
liaison with corporate HQ will be easier, sharing a common language and social connections
they are more likely to exercise control on behalf of the company
Expatriates may experience, however, various degrees of ‘failure’: early return and underperformance (more likely for US than European expatriates). They may struggle to adapt to culture, language, family separation or, if families are with them, their failure to adapt. These adjustment/ adaptation problems may be reduced if careful attention is paid to systematic ER. The recruitment method of the PCN is important (formal or informal recruitment), the selection criteria (loyalty, commitment, performance, competence) needs to be considered.
Rarely is the nature of the ‘job’ taken into account. Is it to: fill a position?
open a new branch or process? operate in a joint venture? transfer knowledge to locals? or a mix of these?
Rarely is the subsidiary taken into account: doing so, though, may build trust. The person’s motives for going are also not often considered. Is it: