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MODULE TITLE: Human Resource Management__________________________

MODULE NUMBER: HRM11771 2015-6 TR1 003___________________________

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DATE OF SUBMISSION: 23rd November 2015______________________________

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4019077International Business Management

HUman Resource Management

Edinburgh Napier University

EXECUTIVE SUMMARY

Gamecorps as one of UK fast-growing computer software chain stores, wanted to

expand its business to China, it has open various stores located in European

countries. In order for this organisation to internationalise its operations, one of many

things to consider is the HRM approaches. China and UK possess various

differences in cultural value, by utilising Hofstede’s five dimensions these differences

can be explained and analysed to give better understanding for corporate functioning

purposes. The 5 dimensions are power distance, uncertainty avoidance, Long term

orientation, masculinity, and individualism. The next concern is the company

orientation, optional choices are ethnocentrisms, polycentricism, and geocentricism,

to maintain the corporate home country value and maximising customer services in

host country ethnocentric and polycentric approach is used. In polycentric approach,

the need of local staff is important, hence its recruitment and selection practices

need to be taken into account, recruitments tools such as online and newspaper

advertisement can be sued to attract strong motivated individuals, as for the

selection practices need to be conducted in correct and impartial procedures to give

opportunity to all candidates.

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Index

Executive Summary 2

1. Introduction 4

2. Key cultural differences in China and Europe and its significance in the HRM

approach. 4

2.1 Cultural differences Based on Hofstede’s Dimensions 4

2.2 Significance of cultural differences in HRM approaches 7

3. Organisation Orientation 8

3.1 Ethnocentric Approach 8

3.2 Polycentric Approach 9

3.3 Geocentric Approach 9

3.4 Suggestion on EPG orientation for Gamecorp 10

4. Policies and Practices for recruitment and selection of local staff. 10

4.1 Recruitment and Selection Policies 10

4.2 Recruitment and Selection Practices 11

4.2.1 Recruitment Practices 11

4.2.2 Selection Practices 11

5. Conclusion 12

6. References 13

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1. IntroductionIn this globalization era, business internationalisation has become more

common, this is due to competition between each participants in their own respective

industries, various firms is trying to expand their business not only in their home

country but others as well to gain higher profit and outwits their competitors in the

eye of international customer/consumer. In order to gain high efficient and effective

operation in business expansion, Human Resource Management (HRM) is one of

the key component in achieving this target. Human Resource Management (HRM) in

general is body of management activities however in modern context it is more than

traditional personnel management, it has four objectives to be completed namely

staffing, performance, staff-management and administration, and these four

objectives formulate the basic of HRM activities. In international level, HRM has

comparable function as the common HRM with the only difference is the application

in global context (Briscoe et al., 2009), and subsequently addressing broader issues

including cultural differences. Understanding international HRM, may help in multiple

countries operations stability and global company perseverance.

Gamecorp plc as one of UK-based chain of computer software stores, has

decided to expand its business to China. Currently, Gamecorp has establishes

outlets in various European countries (Paris, Berlin, and Milan), in this report as HR

consultant various consideration will be taken account into for Gamecorp in starting

new business in China. Firstly, discussion on the key cultural differences (referring to

Hofstede’s cultural dimensions) between China and UK and its significance for HRM

approach. Secondly, identification on orientation of organisations utilising the EPG

model, and finally policies and practices recommendation which is suitable for

recruitment of local staff.

2. Key cultural differences in China and Europe and its significance in the HRM approach.

2.1 Cultural differences Based on Hofstede’s DimensionsCulture by definition is what differentiate the members of one society to

another, and perhaps stated as collective programming of mind (Hofstede, 1980 in

Pan and Zhang, 2004). Hofstede introduce five cultural dimension in order to simplify

the idea of cultural differences, namely: Individualism vs collectivism, masculinity vs

femininity, hierarchy or power distance, Uncertainty avoidance, and time orientation

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(long vs short) (Hofstede, 1980). In regards of these dimensions analyses on UK and

China cultural differences will be conducted, the data of these dimensions

representing each countries is shown in figure 1.

Power Distance Individualism Masculinity Uncertainty Avoidance

Long term orientation

35

89

66

35

5150

76

60

75

61

35

67 66 65

83

68 71

43

86

63

80

20

66

30

87

Cultural dimensions comparisons

UK Italy German France China

Figure 1. Cultural dimension comparison between China and European countries (Hofstede Center, 2012)

Power Distance

This dimension is associated with inequity acceptances level, high power

distance nations acknowledge status and power distinction as essential, preferring

domineering leadership, and relies on condescending decision making and

instruction, whereas low power distance leadership pursues advisory and

participative decision making (Sue-Chan and Ong, 2002). Shown in figure 1, China

has higher power distance compared to European countries, high power distance

may affect the lack of employee participation, employee prefers decision being made

by managers and do not like to take extra responsibilities, i.e.: Chinese employees

adopt high power distance value and organisation are highly centralised, the value

ruling hierarchical power relations is the core of Chinese organisational culture

(Khatri, 2009). It is expected that Chinese employee will not conduct two way

discussion with their managers and questions manager decision in comparison with

Europeans counterparts.

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Individualism and Collectivism

The second dimension involves Individuals extent to pursue their own

activities and goals rather than involvement to the success of larger groups. In

individualism society is seen as medium to provide requirements for individual,

personal responsibility, where families ties are not prioritized. Usually this concept is

infused since young age, taught to make own decisions, interpret own value, solve

own complications, and create own ideas. However collectivist, see themselves as

members of group and have strong responsibility to it (Ferraro, 2002). UK and other

Europena country has considerably higher number of Individualism score compared

to China, suggesting it is a collectivist cultured country. In collectivism organisational

environment, significant decision is made in group, jobs are intended for optimizing

social conditions, awards are nominated on the idea of equality, and accountability of

company failures and success lies within group (Marcus et al., 2013) . These

characteristics are expected from Chinese employee behaviour, hence affecting

differences in HRM strategies than UK individualistic employees.

Masculinity and Femininity

In Masculinity dimension, demand men are expected to show assertiveness,

ambition, aims for material achievement and competitive, while women is meant to

serve and care. In femininity however, men are not demanded to be ambitious or

dominance and may seek another life aspect other than materialism. Masculine

culture attempt to present diversity between women and men behaviour and

approach life fulfilment (Arrindell et al., 2003). UK, China and others European has

similar score in masculinity, proposing all countries adopt masculinity culture, striving

for success, driven by wealth/material as goals, and involved in competition.

Uncertainty Avoidance

This dimension reflects human fortitude against uncertain circumstances. It

is when individual despise uncertainty, ambiguity and unpredictability. High

uncertainty avoidance culture is attempting to avoid such situation and find order,

structured, interpretable situations, comparably low uncertainty avoidance culture are

flexible, comfortable with ambiguity, new ideas, variance in circumstances and

changes in regulations (Venaik and Brewer, 2010). China and UK both has low

uncertainty avoidance (30-35) compared to European countries (65-86), showing

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high level of tolerance in unpredictable element in life, at professional cases,

uncertainty avoidance level is described as employee feeling of uneasiness about

uncertainty or ambiguity, and degree of effort to avoid such conditions by asking for

rules and guidance. (Zhang and Zhou, 2014).

Long Term Orientation

This orientation referring to people choice of focus and efforts on time

orientation, this dimension retain Confucianism value particularly in Asia country.

Long term orientation society nurtures virtues and oriented towards future rewards,

specifically perseverance and thrift, while short term is static, respect tradition,

saving ”face” and performing social responsibility, .(Maleki and de Jong, 2013).

China shown as highest long term orientation countries among others while UK is

the lowest, signifying the idea to operate business in China requires long term

investment, and trust is build based on history or reputation in fulfilling obligation,

whereas for UK trust are put in system therefore legal bind of contract or signed

written agreement (Wang et al., 2008).

2.2 Significance of cultural differences in HRM approaches Comparison of cultural differences has revealed commonly China based on

Hofstede national culture dimension is high in power distance, collectivist, and long

term oriented, while UK is low in power distance, individualist, and short-term

oriented, however both country display resemblance in moderate level of masculinity

and low uncertainty avoidance. These three significant culture dimension distinction

revealed that Gamecorp HRM strategies in UK may not be applicable in China

subsidiary.

Chinese management and business systems are highly centralised and

hierarchical, decision making is not independent, managers are unwilling to take

individual accountability and follows guidance of supervisors, therefore they are tend

to avoid any conflict/debate which may be taken as insubordination by their

superiors. Secondly, long term orientation culture in China may suggest employee

expect long term job security offered by firms, it is one of consideration for HR

managers during recruitment (Zhang and Edwards, 2003)

Finally, China is culturally collectivist, it is often seen that organisations

works in group, this influence motivation strategies, such as performance feedback,

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which is more toward the achievement as a group rather than individual. The

Performance appraisal for collective society is viewed as personal development than

for administrative purposes, both on the job and off the job behaviour is equally

important, and personality review is commonly included in collectivist performance

assessment (Cheng and Cascio, 2009).

3. Organisations OrientationIn globalisation of companies, DR Howard V. Perlmutter introduced

distinctive international firm’s managerial orientations, named the EPG model,

stating that senior management at international organisation should take account of

three orientations: Ethnocentric, Polycentric, and Geocentric, in order to construct

and increase company’s multinational competences (ProvenModels, 2015).

3.1 Ethnocentric Approach

This orientation concentrates on home country organisational culture,

ethnocentrism believe own ways of performing things to achieve one’s objective is

the best regardless of any culture involve and will not adjust to any local practices

(Ahlstrom and Bruton, 2010). In HR context, staffing in organisation which adopt

ethnocentric, the company key managerial positions will be filled by those from home

country, usually if the company relocate, numbers of managers from company

headquarters will be reposition to the new subsidiary (Hill, 2005).

Application of ethnocentrism orientation aids the organisation issues in lack

of qualified staff for new outlets, it is also an efficient method of keeping company

culture integration and facilitate home country in controlling foreign branches.

Another positive outcome is reduced cost for training new employee and by

transferring managers from headquarters, it helps moving the company core

competencies as well, since managers already possess main company

organisational and operational expertise. Although ethnocentrism provide positive

effect in expanding company, some issue like prejudice may arise in perspective of

cultural differences on marketing and management decision making process.

Secondly, in terms of cost, managers requires high compensation for moving from

one country to another, not to mention time for adaptation which ultimately may not

be efficient for the company.

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3.2 Polycentric Approach

This orientation take account of other countries particular nation

specifications, using benefits from any local subsidiary activities. Opposing

ethnocentric, the main characteristic of this orientation is decentralisation is exhibited

in establishing company oversea subsidiaries. The objective of polycentricism is to

ensure the success of local markets, focusing the strategy in developing exact

modified programs for each international outlets (Wach and Wojciechowski, 2014). In

HRM angle, company will employ local managers in running the host country

operation.

Polycentric is less expensive to execute since there is no necessity for

cross-cultural training programs, and it is also less likely that local managers make

mistake in decision making due to cultural misunderstanding such as language

barriers or local decision making procedures (Dolinska et al. 2005). Another

advantages regarding polycentric approach is flexibility in manager’s action

regarding local business operations since it is not strictly controlled by the home

company, although it may lead to confusion should the coordination between host

and home subsidiaries is poor ,causing conflict in company policies (Beamish and

Calof 1994).

3.3 Geocentric Approach

Geocentricism is when organisations treats all international markets as one

global market (sociologically and economically uniform), assuming that some

differences can be purposely overlooked. It is the combination of both polycentric

and ethnocentric framework, trying to generate global strategies that is responsive to

local needs and wants, it makes no special distinction in home or host country, the

main strategies is making the best of very opportunities present of every market,

similar to theory of comparative advantage (Drachal, 2014).

This orientation utilise human resources management effectively and

increase the possibility of international management team development, also

allowing the firm to be more competitive in global market as all are drawn closer

toward each other, seen as the segments of the global market and handled with

identical technique. Geocentricism also enhance the local market responsiveness

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better over other approach, however it is more costly to be implemented due to

relocation and training of managers and there are other factors that may interrupt the

application such as labour standards, customer needs and wants, and countries

rules and regulations, which is diverges significantly in various countries, thus this

orientation is a big challenge for a company.

3.4 Suggestion on EPG orientation for Gamecorp

Based on observation of all orientation advantages and disadvantages, the

best framework to be executed in China will be mixture of ethnocentric and

geocentric approach. In early stage of business expansion in new region, it is widely

accepted to apply ethnocentrism in which all organisational arrangement follow those

already present in the home country (Dolinska et al. 2005). Gamecorps wishes to

establish its robust corporate character in China outlets, it is more effective to send

the key mangers to each local stores will aid the organisation to achieve this as they

have more knowledge on the organisation. In order to deliver excellent customer

service and effective sales performance, employing locals will assist in fulfilling this

(adopting Polycentrism), as they understand local cultures (erasing culture or

language limitations) and leading to comprehending customer preferences and

requirements. The mixture of both home and host country staffing improves the

organisations in maintaining its value while understanding the host country condition.

The home country managers can be assign to administer training program for

employees on the organisations code of practice and operation standards, to help

preserving stability between subsidiary in China and UK headquarters.

4. Policies and Practices for recruitment and selection of local staff.4.1 Recruitment and selection Policies

The best policies applied for Game corps based on Chinese culture as well

as Gamecorp’s aims which are producing high standard of customer services

managed by staffs with suitable knowledge and good sales ability while conserving

the corporate identity, is therefore the policies made for local staffs. This policies

main focus is on equity and transparency, concerning recruitment and selection by

giving same opportunity to both internal and external human resources without being

partial on candidate’s personal relation and only judging based on their

achievements. Recruitment sources should be the wide pool of talent, and

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diversification should be created, in order to improve organisation performance.

Implementing this will attract and recruit potential employee with various

backgrounds, skill, and ability, who possess high commitment to organisation. Finally

to ensure confidentiality of all data on personal information, the data storage must be

secured.

4.2 Recruitment and Selection Practices

4.2.1 Recruitment Practices

Internal and external means can be executed for the selection practices,

occasionally internal recruitment refer to promotions within concept, attempting to

develop organisation current employees. While options for external method includes

newspaper advertisement, universities, and online employments (Zhou, 2006).

Internal recruitment candidates should be identified through the company

HRM system, and then offered the job. It will encourage passionate and good

employees, as they are from within the company, information on their performance is

known and they are more accustomed to company operation. Executing this strategy

may improve organisation performance, while maintaining corporate identity

(Decenzo and Robin, 2001). In this case, this method might be used in finding

suitable managers to be sent to China subsidiaries.

For external recruitment, advertisement in newspaper and universities career

fair are generally used in China for recruiting entry level, sometimes internship

program for university graduate to obtain work experience. However for higher

managerial position require specialized publications to be utilised (Zhou, 2006). One

of recent option for employment is through online method, exploiting company

recruitment website where the job specifications and requirements along with

provided benefits (Galanaki, 2002). On the website, organisation value and

background should be included for the benefits of individuals applying for the

positions offered, it is to ensure that the corporate value suited for them hence

eliminating those who does not share the same value as the company. Alternatively

using recruitment agent or commercial job posting service may be aiding in providing

classified job advertisement in which the interested candidates can give response to

it.

4.2.2 Selection Practices

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The selection for Chinese applicants must be based on some attributes like

motivation, company knowledge, initiative, leadership and loyalty (Huo and Glinow,

1995). This can be attained by the suggested selection practices includes evaluating

CV, interview (phone or face to face), competency test, and valuation measure. The

first step in selection practices is the screening of CV which comprises scanning

software, next is the selected individuals are invited for interview, and in this stages

is to verifying the CV credibility and examining required skills, experience, and

personal qualities. In order for equality among interviewees, the same set of question

and structure should be used for all candidates. The third stage is aptitude test and

followed by assessment measure. For the fourth stage, assessment includes

interactive role play, simulation trainings and leaderless group discussion (Dickie and

Dickie, 2005). Finally the candidates is re-invited for second interview before they

are hired to be employed in the positions offered.

5. ConclusionOne of many International HRM challenges is cultural differences, it is

complex yet significant factor in globalisation of organisation. Hence by using five

Hofstede’s national dimensions, UK and China has shown distinctions in cultural

value, which influence HRM strategies of Gamecorps subsidiary in China. As Game

corps expand its business in China Ethnocentric and Polycentric approach should be

applied, for the benefit of maintaining original company identity while implementing

superb customer services operates by locals who understand China customer

requirements. However these orientation may change dependant on the future

operations. The local staff recruitment and selection practices should be impartial

and with correct procedures to obtain the highest quality employee who not only

qualified for the position but shares Company value as well, it can be realised by

using available tools and sources for hiring. In conclusion business internalisation is

complex and requires various identification and planning strategies, to prevent any

management and business issues.

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