HRM in China

"Napoleon called China a sleeping dragon and

said there would be woe to the world when the
dragon awakes. As the world knows,......
 Nice Reminder 　温馨提示
“Tell me, and I will forget,
　听到，我会忘记，
　 Show me, and I may remember,
　看到，我会记住，
　 Involve me, and I will understand.”
　参与，我会明白。

　　　　　　　　　　　—— Confucius
　　　　　　　　　　　　　　孔子　　　　　
 Hofstede’s Model
• Chinese culture has been categorised
as high in power distance.
• low in individualism, moderate in
uncertainty avoidance and
masculinity.
• High in long-term orientation.
 Importance of the following attributes
of Chinese management culture :
respect for hierarchy
• Orientation towards groups
• preservation of face
• importance of relationships in the decision-making
process as characterized by the avoidance of conflict
and delegation of all authority to the appointed leader
• decisions are rarely debated
• Leaders never challenged publicly
• Being equal and average, avoiding
• Competition or conflicts, and emphasising relations,
are popularly accepted work values in China
In recent years, however, China has been moving from complete
collectivism and high power distance to a mix of collectivism
with individualism and lower power distance. The Chinese are
beginning to adopt a more individual-led management culture
and give employees more responsibilities and rights.
Individualism and competitiveness are stressed but
conforming to the organisation is still the rule. Moreover,
collectivism will continue to predominate as an integral part of
the socialist political system. As Branine (1997) points out,
socio-cultural values are reinforced by the tacit socialist norm
of solidarity, equality, mutual assistance, honesty, friendship,
and obedience to the law. Such norms and values have their
roots in the country’s history and ideology and have continued
to influence aspects of work behaviour and employment
relationships.
 Challenges

• Ten Hot Topics and Difficult Issues

• HRM Focus in China
• Issues and Challenges for the Science
of HRM
 Difficult Issues
1. Culture
• Under traditional Chinese culture, organizations first
considers equality in compensation system, not
motivation.
• China is a society paying much attention to the
issues of face, network, and guanxi.
• Some of the Chinese cultural phenomena affect
human resource management in China.
 Human Resources: the Core of Cross-
Cultural Management

– Cultural differences affect the efficiency of

organizations through people’s minds,
values and behavior.
– It is also humans (for example, the
managers) who implement cross-cultural
management.
 For Example:
Multinational Staffing Policies
Four Approaches:
• Ethnocentric: All key positions are filled by parent-country
nationals.
• Polycentric: HCNs are recruited to manage subsidiaries in
their own country and PCNs occupy positions at corporate
headquarters.
• Geocentric: utilizing the best people for the key jobs
throughout the organization, regardless of nationality.
• Regiocentric: defining as functional rationalization on a
more-than-one country basis, one way is to divide its
operations into geographical regions and transfer staff within
these regions. (regional headquarters)
 Cross-cultural Management

• Cross-cultural management is a fascinatingly

complex subject. Cross cultural knowledge
and awareness can assist executives to
improve management skills. More
importantly, it can also help business leaders
make the right strategic decisions.
 2. Concept

• Many HRM problems caused by unclear concepts.

• Human resource management is the theory,
techniques, methods, and tools for studying the
adjustment of people and their relations in the
organization, connection between work and its
relations, matching the people and work in order to
fully develop human resource management, tap
people’s potentials, motivating people, promoting the
work efficiencies and meeting the organizational
objectives.
 3. System

• Companies do not have prefect governance

• Many state-owned enterprises have no core
competencies
• Private firms are managed by family members and
relatives, it is difficult to practice human resource
management system.
 4. Methodology
• At present, organizations start to pay attention to
human resource management, but they do not
know how to do it.
• We need not only to learn HRM theories, but also
study HRM methods, techniques, and tools.
• Many HR managers are learning different kinds of
new methods and tools, such as KPI, 360 degree
feedback, balance score card, etc., But they do
not know what the best and suitable tool is for
their firms.
Issue in Chain's culture
 1. Legal Requirements
• China government gradually raised the level for
normalizing the labor market and enforcing the laws
(Labor Law, Contract Law, Employment Promoting
Law, etc.).
• Facing the competition challenges and managing
becomes more and more multiple and flexible, company
human resource management should meet the
government legal requirements.
 2. Self Innovation

• Chinese government proposes to establish

Innovated nation, the key is the talent.
• How to improve self innovation and creation
motivation through management is a very
important subject to HRM.
 3. Internationalization of Talent

• From 1978-2005 ， China attracted US$600 billion FDI and

invested US$50 dollars abroad. MNCs have established more than
800 R&D or engineering centers in China. China needs more
internationalized talents
• What is the criteria for internationalized talents? Sony hired Howard
Stringer as Chairman of the Board and CEO, Pepsi Cola hired Indra
Nooyi as CEO, PingAn hired Richard David Jackson as
President of the Commercial Bank (Someone has a good command of a
foreign language, understand market economic rules, has
international views, operation capability, and good performance.)
 4. Frequent Changing leadership

• Multinational companies, state-owned enterprises,

and private firms are all facing the problem of
frequent changing leadership and high turnover rate.
• How to select employees, especially the senior
managers? Is it a good idea for the state-owned firms
to have all managers to retire at the age of 60?
 5. Layoffs

• Company’s layoff brings challenges to the employee

relations.
 6. Labor Cost and Compensation

• Labor cost increased, especially key positions.

• How to determine compensation, based on time,
piece of work, technical capability, knowledge,
management, performance?
 7. High Work Pressure

• Entrepreneurs, managers, professional

people, and even workers feel high work
pressures.
• How to balance life, work, study, and
family? How to deal with the conflicts
 8. Labor Relations

• Lots of conflicts between employers and employees

and between management and employees
• Union Law
• Case: Wal-Mart, Apple Computer Inc. , KFC,
McDonald’s, and Pizza Hut in China
 9. Labor Market and College Graduates

• College graduates feel more difficult to find jobs:

700,000 college students could not find jobs when
graduated in 2004; 900,000 in 2005; 1.2 million in 2006;
and the number might reach 1.5 million in 2007. China
will change from “degree society” to “competency
society”.
• Shortage of technical people
 10. Professional Education and
Training programs
• Fast growing professional degree programs: MBA,
EMBA, MPAcc, MPA, Engineering, etc.
• Company training, EDPs
HRM in China
 Some of the Modern HRM Theories
from other Areas
• Resource based theory from political science
• Work cost theory from economics
• Human resource strategy theory from corporate
strategy
• System theory from sociology
• Behavior theory from psychology
 Three Important Focuses in HRM in
China

• Global HRM
• Strategic HRM
• Evaluation on HRM efficiency and
effectiveness
 I. Global HRM
• Globalization has potential implications for virtually all
of the research needs and directions we already have
identified.
• Today's increasingly global, competitive marketplace has
driven considerable changes in labor markets, and has
transformed the practice of Human Resource
Management.
• Expanded multinational operations within large
companies, combined with increased technology and
communication capability, have led to vast diffusion of
global “best practices” in HRM.
 Global HRM
• As a global company, the only way to succeed is
to develop an effective global human resource
management system with personnel capable of
designing and implementing transnational
business strategies.

• In most cases firms have historically gone from

domestic, to international, to multinational, and
finally to global operations. At each phase, the
approach to human resource management
changes significantly along with the changes in
competitive strategy, company structure, the
product or service being marketed, profit margin,
and expenditure required for research and
development.
 Global HRM
Four issues should be researched as firms
go to global operations

• Expatriate, Local Managers and their career Development

• Function of Global HRM, such as recruitment, training,
performance evaluation, compensation, Labor relations, etc.
• Cross Cultural Management
• Managing diversified workforce
 Phase I: Domestic

• Culture
– In domestic firms, international cross-cultural
differences are not important.
• Human Resources
– There are no expatriates. Therefore, cross-
cultural training and development is not an issue.
 Phase II: International

• Culture
– Cultural sensitivity becomes very important to
market and clients in each foreign country.

• Human Resources
– The international firms now include many
expatriates. Good people but not great people
(not future CEOs) are sent abroad.
 Phase III: Multinational
• Culture
In the multinational phase, cultural sensitivity becomes slightly less
important outside the firm. While multiculturalism begins to
become less important outside the firm, it becomes more important
inside of the company. Staff from different parts of the world work
together on a day-to-day basis. By this stage, attention to
developing cross- cultural skills is needed for working both inside
and outside the organization.
• Human Resources
The person making decisions for foreign operations is no longer
an expatriate marketing expert, but rather a valued manager of a
worldwide line of business. In this phase, as the approach
changes to multinational, the managers who are sent abroad tend
to be more senior and therefore, more central to the company's
core management.
 Phase IV: Global

• Culture
– A global organization needs to understand cross- cultural
differences both inside and outside the organization. Managing
global boards and senior executive committees requires a
sophisticated understanding of cultural differences in interaction
patterns and in attitudes towards time, influence, and problem
solving styles.
• Human Resources
– In this global Phase, the number of expatriates again increases.
Managers are sent abroad as the "glue of the company" to
coordinate and integrate strategic activities, not merely to
complete particular tasks.
 Cross Culture HRM in China
• In particular, multinational companies have increasingly set
up operations for manufacturing and services in China,
bringing with them HRM practices from all around the
world. The importation of new management practices has
changed the nature of the labor market and the practice of
HRM, and will potentially have an impact on Chinese
society.

• These external forces are paralleled by unprecedented

economic reform and the enactment of employment laws that
are changing the nature of organizational forms and
management practices within China. China's entry to the
World Trade Organization has further heightened the global
competition in the Chinese domestic markets.
 HRM Professionalization and HR
Competence
• The word professional is often used to judge a person’s work
behavior and to signify a superior performance.
• Competence refers to an individual’s knowledge, skills, abilities,
or personality characteristics that directly influence his or her job
performance.
• Human resources have become increasingly integral to the
success of firms. At the same time, HR professionals have
identified the key competencies required for their field. No longer
merely a "personnel" function, HR is essential to a business’s
success. To this end, HR professionals at all levels should
establish industry-wide certification programs that embrace not
only the classic administrative aspects of the position but also the
financial and general business knowledge that helps ensure that
HR will drive a firm’s success.
– HR certification programs
 HR Competencies
• Most of the theoretical work and research on professionalization
originated from the sociological literature rather than the industrial
and organizational psychology or management literature. As a
result, much of the research on professionalization emphasizes the
processes underlying the formation of a profession rather than the
process through which professional skills are identified,
developed, and maintained.
• There is arguably an even greater need for research examining
how HR competencies, once identified, can be most effectively
developed.
– Which HR competencies can be acquired effectively through
formal HR training (i.e., HR graduate programs), and which
require experiential learning or significant on-the-job
experience?
 Human Resource Management System
Model based on Strategy
Pphilosophy and Mission

Culture and Values

Business Strategy

Demand on Employees Individual Needs and

by firms self-actulization

Value Evaluation and Distribution

（ Performance Appraisal and Compensation ）

HRM Management and Development System

HRM Techniques HRM System HRM Mechanism HRM Process

 Strategic HRM Model
Strategic Competency
Integration, restructuring, acquiring, and
using resources in order to adapt the
Evolution market change and operation ability of Renewal
Evolution Renewal
HRM
HRMPractices,

creating market change.

Core
Core Competence
training,
training,performance

Learning and Innovation

Practices,such

Knowledge
compensation,

Knowledge Knowledge
compensation,etc.

Knowledge
performancemanagement,

Competence
Change Knowledge Transformation
Change Knowledge Transformation Integration
Creation Integration
Creation
Value
Value
suchas

Rare
Rare
Intellectual Capital
Difficult
management,

System Difficult
asrecruitment,
etc.

totocopy
copy
recruitment,

Store
Store
Human Resources Organized
Customer
Social Psychological Organized
Human
Capital Capital
Capital
　 　 Capital
 Evaluation on HRM Efficiency and
Effectiveness
• (1) HR Index Survey, such as
Morale measurement,
• (2) HR Reputation
• (3) HR Accounting
• (4) HR Auditing
• (5) HR Case Studies
• (6) HR Cost Control
• (7) HR Benchmarking
• (8) HR Key Index, such as employee work
attitude, absenteeism, overtime, and
organization performance
• (9) HRM Efficiency Index, such as GE uses
Employee Relations Index, some firms use
HR Performance Index.
• (10) HR Management by Objectives
• (11) HR Profit Center
• (12) Analysis on Investment and Return
• (13) HR Index: 15 factors
• (14) Application of HR Evaluation Methods
 How to Combine Theory and Practice
• Unlike other fields, HRM does not have a grand or
integrative theory. Furthermore, some have
criticized HRM as being an a theoretical, problem-
driven field. The state of HRM theory is the result
of HRM's diverse theoretical roots, coupled with the
fact that earlier HRM academic pursuits simply were
designed to address (immediate) practitioner
problems.
• Human resource management field is a
multidisciplinary field with roots in psychology,
sociology, management, education, economics, etc.
• The field of HRM continues to evolve in practice as
it does as an area of research and scholarship.
 How to Combine Theory and Practice

• There should be more collaboration between

nonacademic and academic field. HRM researchers
should recognize the importance of such
collaborations.
– Business-university research partnerships
• Such partnerships and collaborations can stimulate
theory development and testing (from anecdote and
observation to theory) on real-world problems and
issues.
 How to Use Multi-level
Analysis
• Historically, scholars have had more experience in the
field of HRM at developing theory at the individual
level of analysis.
– A large number of studies have examined individual practice
independent of any other HR practices that might exist.
• However, since 1980, with the influx of work in
business strategy and its integration with HRM, there
has been more of a macro focus in certain areas in the
field.
– Some recent studies have focused on sets of HR practices.
These studies treat multiple HR practices as a system.
 The Individual Level Analysis
• Traditionally, micro HRM research has explored the
impact of HR practices on individuals. Based on
foundations, such as industrial/organizational psychology
and industrial engineering, this kind of research largely
explores how HR can increase individual productivity,
quality, or satisfaction. It often entails manipulating
relevant HR practices in an experimental format, and then
examining the impact on individuals or assessing
individuals on some characteristic (skills, abilities,
attitudes, etc.) and relating the assessments to some
performance measure (productivity, absenteeism,
turnover). In all cases, however, the goal of the research is
to identify and account for variance among individuals.
 The Organization Level Analysis
• More recent macro HRM research examines the impact of HR
practices using the organization (corporation or business unit) as
the level of analysis. Most often this research assesses variables
through asking an informed respondent to provide the relevant
value for his/her organization. This kind of research tends to
focus on the variance in relevant variables across organizations,
assuming relative uniformity in the variable within the
organization.
• This focus on the macro or organization level also has promoted
the importance and significance of HRM, because the typical
dependent or criterion variable used is organization performance.
In recent years, due to an increasing global and competitive
environment, organizations have been downsizing and
streamlining operations. As such, despite an increased strategic
view of HRM, organizations have been outsourcing HRM
functions such as training (Ford).
 The Organization Level Analysis
• By taking a macro view of HRM, especifically a
strategic view of HRM, both HRM researchers and
professionals have the potential to underscore the
importance of HRM by highlighting its importance to
organizational performance.
• The field of HRM is now in a position to deal more
effectively with research at different levels—individual,
group, division, organization, and so forth.
– A typology of HRM research
 A typology of HRM research
Number of HRM practices

Organization Strategic HRM Isolated functions

Industrial relations (i.e. research aimed at
High performance work demonstrating a relationship
system between a particular functional
Level of analysis

area and firm performance)

Psychological contract Traditional / functional HRM

Employment relationship Industrial / organizational
psychology

Individual

Source: Wright, P. M., Boswell, W. R., Desegregating HRM: A Review and Synthesis of Micro and Macro Human
Resource Management Research, Journal of Management, 2002, 28(3), 247–276
• Researchers are beginning to learn and use more
complex statistical techniques such as repeated
measures regression and hierarchical linear
modeling. These techniques enable researchers
to simultaneously test out individual, group, and
organizational level effects. More multilevel
data sets become available and researchers have
a much better understanding in multilevel
statistical techniques.
Thank you ！