Human Resource Management Practices in South East Asia and Australian Companies - Essay Example

Management Name Institution Date Contents Contents 2 Introduction 3 The difference between South East Asia and Australia 4 Conclusion 10 Reference 11 HRM PRACTICES IN SOUTH EAST ASIA AND AUSTRALIAN COMPANIES Introduction Human Resource is one of the vital assets for any business and the main sources of realizing competitive (Yeung and Olds, 1998). HRM can be defined simply as the different organizational activities and operations aimed at coordinating and directed a pool of work force towards realization of firm’s goals and objectives (Yeung, 2000). This notwithstanding, the popular belief that human resource management is universal has been questioned by different scholars. Since most human resources strategies which are successfully implemented in some nations, may not work in other regions (Jackson et al., 2000). This paper aims at contributing information to the current literature on HRM practices. Using a case of South East Asian and Australian firms, this paper attempts to explore the factors which determine HRM practices implemented in different regions. Studies done so far are not extensive especially with respect to the two countries. In addition, there is a lack of clear examples of comparative research on HRM in specific countries based on political, legal and social environments. Subsequent to this introductory section, section 2 contains detailed information related to HRM practices. This section specially gives unique characteristics of the two regions and how they influence HRM practices. The next section 3 highlights some of the similarities across the two regions. The last section 4 presents conclusion drawn from the findings and discussions. The difference between South East Asia and Australia There is marked difference between South East Asian and Australian companies in terms of business firms’ perspective. Contrary to Australia based firms, South East Asia is associated with economies with strong social and institution embedment. The economy is quite conservative; where old tradition is hard to break’ especially in opaque and corrupted firms. Most organizations in South East Asia are differentiated by inward-oriented, inter-firm networks and that most companies rely on personal relationships in most of their dealings, and have very firm and well defined government intervention not only in business but also on the entire economy. These qualitative differences in business systems result in a mosaic of distinct political economies in this region. (Yeung, 2000: 400). A case in point is Singapore where the developmental government has actively developed the island economy into a major joint in the world economy (Yeung and Olds, 1998). Instead of establishing industrial networks composed exclusively by local companies, the government prefers the development and deepening of global–local linkages through which Singapore can gain from the influx of foreign based high-technological businesses or companies (Jackson et al., 2000). In addition, the state quite active in establishing an ‘external wing’ for the country’s economy through home based firms guided by statutory boards and government-linked firms (Yeung 2000). The exceptional arrangement of state–business affairs in Singapore, a mostly Chinese society, offers an institutional base of a business system quite different from a typical Chinese firm. In other South–East Asian countries, it seems that political-economic alliances based on patron–client relationships have taken priority over state-driven industrial and business networks in these still developing economies. This preference for political connections is particularly important in the context of the state’s ethnic-biased redistribution economic policies through which indigenous capitalists (known as pribumi in Indonesia and bumiputra in Malaysia) have offered special considerations with an institutional outcome of some form of capitalism in the economies (Jackson et al., 2000). In this case, Chinese business systems have embedded themselves in the political-economic alliances of the host South-East Asian countries. Some Chinese’s tribes have strengthened their intra-tribal group networks to overcome hostile business and institutional challenges in the host nations, other more pragmatic ethnic while still other Chinese have formed patron–client relations with traditional Asian capitalists (Yeung, 2000: 410). This process of ‘network juxtaposition’ has brought about a modified or a hybrid network structure in South-East Asia, mainly composed of family networks and political-economic alliances. Besides this, other tribes have opted for an ‘exit-strategy’ by adapting their business activities across borders. In their internationalization processes, these ethnic Chinese from South-East Asia have once again leveraged on their transnational networks of personal and business relationships (Yeung, 2000: 411). On the contrary, Australian companies often preferred shared services and devote more of their resources in maintaining their customers. It is estimated that more than two thirds of Australian companies use HR shared services centers leaving only a third for foreign-owned businesses do. At the Social-cultural level, Hofstede (2001) argues that there are four elements that can be used to distinguish one country from another. This includes power distance, type of dominance, culture of uncertainty and individualism v/s collectivism. All these are discussed in the section below with specific comments about differences between Australian based HRM practices and that of South East Asia. Australian firms show high individualism implying loosely knit social networks where more emphasis on personal care based on close or immediate relations. Apart from this, they are based, loyalties and obedience motivated by professional judgments on economic rewards and personal success. Consequently, they tend to have greater support for Protestant work ethic, individual decision-making, and job promotions as guided by value for market and high attainment (Dahl, 2004). This is quite different from South East Asia companies which are oriented collectivism, a tendency of people belonging to groups and to look after each other in exchange for faithfulness. Because of this, the companies tend to be less inclined to the Protestant work principles with little individual initiative, and promotions based on seniority (Sagie and Aycan 2003). Power distance (PD) defined as the dependence relationships in a particular country are also other distinguishable aspects between the companies form the two regions. PD relates to the degree of the inequality in society and how to handle the differences. Equality of treating people in the same way regardless of their wealth, power, often exist irrespective of rules between members of few societies. According to Hofstede (2001), PD equated to the degree to which subordinate members of organizations in a country expect and recognize that power is disseminated unequally (Dahl, 2004). Australia has low power distance with flatter organizational structures and less centralized authority. As a result of this, relationship between superiors and subordinates is viewed as that of partners thus enhancing a democratic style of HRM .According to Mead, state with low power distance orientation has workers who are not used to strict regulation or supervision. He adds that in these cultures, technical skills and competence employed to acquire expert authority as opposed to signaling social class or standing. Again, in these economies, there is less focus on the gap between the subordinates-staff and their superiors with frequent and more direct contact. Employees are given more rights and privileges in taking part in key decision-making processes particularly those concerning them (Sagie and Aycan 2003). It is also important to note that in Australian companies, communication is more open, with enough information passed either from top-to-down or down-to-up. This encourages organizational openness increasing workers’ loyalty to the company. Besides, information sharing also result in the company’s that aid in increasing staff’s commitment. South East Asian companies are quite different from the Australians as they tend to have hierarchical structures of management associated with high or wide power distance and more centralized authority particularly as a result of monarchy system of governance. In a typical South East Asian company, the manager is seen as the person charged with most decision concerning the company with very minimal engagement from the sub-ordinate staff. Apart from making key decisions, they also give or issue precise instructions to employee (Hofstede 2000). In other words; the major responsibility of making decision within the companies lies in the hands of top management. This is acknowledged by all employees as a result of the wide gap between the two extremes. Furthermore, most workers in these systems are more anxious and perceived fear of punishment for when of any violation of laid down rules and ways as well as deviation from management. In these countries active engagement is highly valued by top management and supervisors (Sagie and Aycan 2003). According to Schuler and Jackson (1999), management in the Asian cultures takes prefer more performance appraisal based on the behavioral criteria as opposed to result oriented appraisals. Workers tend to have a minimal risk when they follow the laid down rules and procedure. Another sticking difference concerns the level of uncertainty. Australian companies exhibits low uncertainty avoidance and generally accepts risk taking as part of business operations. In addition, there is a clear tendency in the direction of informal interactions with each other, relying more on the words of others, trusting based on non- contractual agreements as well as depending on informal norms as opposed to clearly laid rules or laws. Again, most companies are less calculative when taking risk and show less resistance to change. Meanwhile, majority of South East Asian companies are characterized by a moderately high in uncertainty avoidance. Following this, precision is highly emphasized and there is usually a lot of anxiety about ambiguous environments or situations and unusual risks. People from cultures high in uncertainty avoidance like predictability and like to know what others will do. This cultural avoidance of the uncertain should carry over into how one approaches the hiring situation, where an organization is faced with a decision about an unknown person. Organizations in cultures high in uncertainty avoidance will use a more extensive choice process. Specifically, they will use a more divergent method and use them to a greater extent, do more types of verification of backgrounds and verify to a greater extent, use more types of tests and use them to a greater extent, and conduct more interviews (Ryan et al 1999). The last striking feature between the two countries relate to masculine or feminine orientation. The South East Asian companies prefer feminism and as a result of this, top- managers often use intuition as opposed to logical thinking in tackling day to ay management challenges. Australian companies tend to take a moderately masculine societal structure and as a result of this, Managers are more aggressive. Money and rationality dominate. The two countries are also differentiated in terms of context, defined as a social or cultural orientation where the information surrounding an event is inextricably linked with the meaning of that event. South East Asian companies have high context cultures so, most information resides in the person and therefore greater emphasis placed on ‘interpersonal chemistry’ and ‘body language’ as manifested in informal, word-of-mouth, personal contact. Also in these cultures activities may be carried out simultaneously; management s characterized by less focus on time management, and there is a thin line between work and domestic activities. (Sorge, 2004). On the other hand, Australian companies tend towards low context where interaction between people is explicit, unambiguous and formal in tenor. There is a lot of emphasis on time management, meeting deadlines and promptness as well as a clear differentiation between and work and home life. Conclusion In summing up, to a larger extent, HRM practices cannot be compared between South East Asian and Australian companies due to their unique political and social-cultural differences However, the uniting factor in all these differences is linked to the overall aim of HRM practices in improving both performance and the company’s competitiveness. Although there are clear and significant differences in HRM practices based on the two regions; South East Asia and Australia, the major goal of Human resources management revolves around survival in the competitive world of business. With more research and empirical studies, the analyses presented in the current paper may be modified or confirmed to make more contribution to HRM studies. Reference Aycan, Z. (2005). The interplay between cultural and institutional/structural contingencies in human resource management practices, International Journal of Human Resource Management, 16 (7), 1083 – 1119. Dahl, S. (2004) Intercultural research: the current state of knowledge, discussion paper no.26, Middlesex University. Hofstede, G. (2001). Culture's consequences: comparing values, behaviors, institutions and organizations across nations. Thousand Oaks, Calif.: Sage Publications Jackson, T., David, C, Deshpande, S., Jones, J., Joseph, J., Lau, K. F., Matsuno, K., Nakano, C., Park, H.-J., Piorunowska-Kokoszko, J., Taka, I., & Yoshihara, H. (2000) Making Ethical Judgments: A Cross-Cultural Management Study. Asia-Pacific Journal of Management, 17(3): 443-472. Ryan Ann Marie, Farland Lynn Mc, Baron, Helen Shl and Page Ron (1999).An International Look at Selection Practices: Nation And Culture As Explanations For Variability In Practice, Personnel Psychology359-391 Sorge, A. (2004) ‘Cross-national differences in human resources and organization, in A.W.Harzing and J. Van Ruysseveldt (eds) International Human Resource Management (2ndedn.), London: Sage Publications Yeung, Henry Wai-chung (2000). 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