Comparing America and China on national cultural and institutional characteristics and various HR practices

Required to present information about the home and host countries of your allocated company based on your desk/secondary research of both countries. This should include collecting data on the following issues:

1. The major national cultural and institutional characteristics of both parent and host countries.

2. Human Resource Management (HRM) and other employee-related values and practices (e.g. performance oriented; participative leadership style, etc..) of both home and host countries.

In this era where there is a lot of cut throat competition in International Market, acquisitions and mergers have to be done carefully. Culture-focused for understanding culture is too necessary (Mooij M. and Hofstede G., 2010). All of this requires a great extensive research on all the parameters that of major national cultural and institutional characteristics along with the HRM practices. The business and trade between China and USA has been emerging fast and the various negotiations on businesses have been frequent thus here a comparison on the same for an American (USA) telecommunication company taking over a firm in China. With GLOBE Model (Venaik S. and Brewer, P. A., 2008) and Hofstede Model (Hofstede’s (1980, 1984)) in consideration, this research has been carried out so that a company which belongs to telecommunication sector in US can actually get to know the business culture of China. (Hofstede G. 1984) (Hofstede G. 1980)            

(Venaik S. and Brewer, P. A. 2008)
GLOBE MODEL: (The GLOBE Study 2004)

GLOBE is a long-term study effort designed to explore the complex nature and effects of culture on leadership, effectiveness of the organization etc. along with the condition of human resource involved (House et al., 2004) and also in international business. (Fredrie W. Rohm Jr., 2010).

HOFSTEDE MODEL:

Geert Hofstede has explored every kind of cultural dimension in more than 70 companies of IBM. The survey which was conducted twice around 1968 and around 1972 developed a model that identifies five primary Dimensions: Power Distance (PDI), Individualism (IDV), Masculinity (MAS), and Uncertainty Avoidance (UAI), Long-Term Orientation (LTO).

Here the home country i.e., the U.S.A is Neo- liberalism. Whereas China is Socialist and Marxist. (Cyert R., and March J. 1963)

Neoliberal theory asserts that a largely free capitalist system not only symbolizes the model of free individual choice but also achieves best economic performance in terms of competence, economic growth, technical development, and organizational justice. Here U.S.A. being the neo- liberalist country has always achieves the best performance as far as the economic growth is concerned.

In countries such as China, many experiments are happening with forms of enterprises and many  involve significant degrees of worker involvement and self-governance. Thus here if we see in order to make sure that the country progresses, China makes sure that the work gets done by equal participation from the workers. (Schweickart, D. 2002)

In America, the colleagues may rarely go to clubs together and attend the office party in order to know each other personally.
And more in detail it can be said that Americans don’t essentially mix, or want to socialize with their people at work outside work. Generally people keep their personal and professional lives different. (Hofstede G 1982)

Neo-liberalism V/s Marxist

On the other hand, Chinese people are most satisfied with trust and thus try to foster the same. They try knowing personally the people they work with. In the Chinese culture, trust is crucial in building the confidence needed in business partners. Moreover knowing about your business partner in details and following the business etiquettes is quite necessary because endowing now in the guanxi can actually pay big business bonuses later. (Venaik S. and Brewer, P. A. 2008)

Americans put a premium on being efficient, frank and getting things done quickly. In Chinese culture, it’s very difficult to manage with the slow place they work at. (Lewis, R. 2014)

Chinese have a solider respect for hierarchy and etiquette than Americans. But when Chinese have Americans working at higher positions, they show respect irrespective of gender. (Owens, C.W. 2007)

Business culture – time-tested and conservative practices

China and US have a different business culture — result of different history and practices they have had (Fredrie W. Rohm Jr. 2010)

China (Masculinity)

Everything is in harmony and change is viewed as troublesome because of the population they have

US (Masculinity)

Efficiency and effectiveness is must and end result is the main important thing

Logical reasoning on facts (Hofstede G., and Hofstede G.J. 2005)

China always has four important social groups: relatives, schoolmates, personal friends. There is a lot of importance of “guanxi” (connection). Also privacy is not highly valued and individualism is not singled out

US constitution guarantees the rights and thus a great stress on individualism for personal achievement and thus more towards individualism in the Hofstede’s Model. Relatively few norms. In US its generally separate personal and business relationship and friendship can be formed and melted quickly. (Mooij M., and Hofstede G. 2010)
China has a reflection to silence and this not to exaggerate which has direct implications on marketing of a product in that country.

In US, there is an uncomfortable style with gaps of silence. Moreover there is a lot of exaggeration. Thus so has to be the way of marketing.

(Pitta D. 1999)

HRM Practices:

In this world where there is a lot of change in the International market, thus a lot has been changed when it comes down to hiring people and working for the corporates in the International market. (McCrae R. R., Terracciano A., Realo A., and Allik J. 2008)

Selection of employees: In USA, employers tend to use personal interviews more for selection. The personnel selection procedures in US starts with individual’s capability and technical precondition for the job they are doing selection. Thereafter work experience plays an important role.

In China employers give importance to test scores and are the top criteria of assessment in the selection processes.
(Thomas, S. & Scroggins, W. 2008)

Performance Appraisal/ Orientation:

The USA’s outlook is quite individualistic here and result oriented and thus employee’s productivity is quite important. For example, employers in America tend to rank pay for appraising performance.

In China on the other hand this technique is too trivial as the Chinese managers place greater importance on ethical characteristics, loyalty and obedience. Thus this leads to low amount of feedback in the same.
(Gao, G. 2015)

Training and Development:

In USA, training expenditures per employee amount to a great amount where as in other countries is not that substantial. (ATD Staff 2013)

US organizations assign longer duration of hours in training per year in comparison to the ones in China.

Approaches to Relationships (In group collectivism, power distance index, institutional collectivism)

U.S.A. – the outsider system of corporate governance is considered by wide dispersed ownership. Here only the shareholder’s value is the main goal. (KöÅŸklü, A.2008) By 2000, of the key pillars in the U.S.A. outsider model of corporate governance were okay and predictable and it was a benchmark for good practices. Shareholder engagement would be completed by all the institutional stockholders. (Jackson, G. 2010)

China- Outsider where shareholders are considered mainly. China has always been celebrating hard work and achievements.  To succeed in China, the companies has to really work hard because they face a lot competition from the domestic market and to reach at the top. And in the long run shareholder’s value is kept in the loop. (Jackson, E 2011)

Compensation:

With balance sheet approach in US, this will be mostly covering all the premiums, hardship allowances and protects them from various cost differences.

In China, the compensation gives a lot of security to the employees as compared with the one in USA. As in China it works on carrying out various calculations as per the varying compensations. Like with the result of inflation, variations in the prices. (Conyon & He 2011)

HR Culture:

Time is money for people in US and thus they have the people deemed to encourage risk taking behavior. Also the decisions related to business are taken in high speed. In China, here is low individualism and high collectivism and a tendency towards group orientation thus the team will always be working in teams.

U.S. managers are task-oriented, rather than boss-oriented. To the Chinese hierarchal position is quite important. U.S. employees need cultural training to understand the significance of the cultural differences so they can adapt themselves accordingly. (Cheng & Seeger 2012)

Conclusion

Hofstede Culture Model and GLOBE

In both GLOBE Model and Hofstede Model, China has a higher score than US in Long term orientation. Also China is a collectivist and US is more on individualism. Thus here we can talk about legal obligations in a country like China whereas it’s easy in US.

When critically assessing the HRM systems in USA due to indifferences in culture. Thus it’s evident to say that the employee’s perceptions about the culture and HR is quite different and thus before entering into the business, everything should be taken into consideration.

There is a lot of difference in terms of every kind of practice in terms of business and lot has been changed in the past few years reading the way business is done. Thus as a consultant to the USA telecommunications company, I would say it’s possible to do business in China only if it’s done in the way they like it. Because the home country has to also abide by the rules of host country.

References

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