Emergence Of Ihrm

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The emergence of international human resource management Peter J. Kidger a a Lecturer in Human Resource Management, University of Salford, UK

Online Publication Date: 01 September 1991 To cite this Article: Kidger, Peter J. (1991) 'The emergence of international human resource management', The International Journal of Human Resource Management, 3:2, 149 - 163 To link to this article: DOI: 10.1080/09585198100000003 URL: http://dx.doi.org/10.1080/09585198100000003

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The emergence of international human resource management

Peter J . Kidger Introduction Management is becoming increasingly world-wide in outlook. As international competition intensifies it is no longer sufficient to understand the local context. The vision must be wider. This is particularly the case in Europe as a consequence of the approach of the single market in 1992. The internationalization of management also involves the developnient and exchange of ideas and practices across national boundaries. In the. global village that communications technology has created, ideas and techniques are traded as managers learn from international competitors. Will the result be the development of an international consensus of good management? To what extent is such a development constrained by the diversity of national culture, history and political structures? British managers have frequently bccn urged to learn from the management practices of other countries thought to be performing better than the UK. At different times the USA, Sweden, West Germany and, more recently, Japan have been the comparators. However, any manager considering whether to introduce what is apparently a successful idea from another country has to consider whether account should be taken of national culture differences. Are management practices culture-bound or culture-free? Similar questions face the manager in a multinational corporation with subsidiary ventures around the world. Can management policy developed within the culture of the multinational's home country be transferred elsewhere? Can policy and practice be universally applied or must they be adapted to fit the local culture? Are national culture and corporate culture potentially opposing forces in the multinational organization? And what are the implications of this on the question of whether and how to develop a cadre of internationally orientated managers? These are some of the practical issues faced by managers which relate to the development of international human resource management. 'Human

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Peter Kidger resource management', or HRM, is fast replacing 'personnel management' as the general English-language term for the policies and practices involved in managing people in organizations. Although the phrase is not completely new, it has been said to have recently taken on a special significance which implies a greater recognition by managers that people really are critical to success (Storey, 1989). HRM can however represent different things to different people, and there are several models on offer (Keenoy, 1990). While the term is used here in its generic sense, its connotations of seeking excellence in employee management and of representing leading-edge practice also make human resource management the appropriate term in relation to the questions raised above. HRM has been called an American concept which 'also overlaps in some respects with the stereotypical view of Japanese management' (Guest, 1989). T o that extent it may ;~lreadybe considered international. However, in international business, the personnel-relations function is an area of activity which has been thought to be most affected by cultural differences (Globerman. 1986). In considering the emergence of international human resource management, it seems useful firstly to review the culture context of HRM before considering the extent to which practices may begin to converge on the world scene. I t is argued that, despite cultural differences, there are grounds for suggesting that a body of ideas on good practice is emerging on a world-wide basis. The field of international human resource management should embrace both international diffcrcnccs and international commonalities.

The culture context The practice of human resource management in an organization is contextual and should not be seen in universalistic terms (Sisson, 1989). The contexts can conveniently be divided into the external, societal environment (the cultural, legal, political. social and economic contexts) and the internal, organizational environment (size, technology, objectives, resources, etc.) (Negandhi, 1983). Organizations in the same environment will not necessarily act in the same way because of differences in corporate cultures and in managers' perccptions of the meaning of external events. There is now wide acceptance of the concept that an organization may have its own distinct culture. This may have developed over a period of time. but can be created on the basis of what is appropriate to the organization's needs and environment and can be managed through the processes of recruitment, induction, appraisal and reward (Sathe, 1983; Hunt, 1984). Like any society, an organization may have various subcultures, but in the strong culture company there is an overriding and

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lnterr~uriot~ul hurnarz resource munugement unifying corporate culture (Deal and Kennedy, 1982). This is normally the predominant management culture, determined by the CEO or top management team. The founder has often had an important role in shaping corporate culture (Schein, 1984), and this can be seen in businesses like Marks & Spencer (Sieff, 1984). The dominant value system (normally that of executive management) may be considered as a mediator between national and corporate culture. Corporate culture will be affected by the social culture, but other contingencies mean that there are differences between the cultures of organizations in the same country. Despite, or perhaps because of, a multitude of attempts there is not a universally agreed definition of culture. Schein (1985) describes a culture model in three layers: behaviour and artefacts; beliefs and values; underlying assumptions. He sees, culture as the 'assumptions which lie behind the values and which determine the behaviour patterns'. In contrast Adler, Dokter and Redding (1986) distinguish between (a) the shared ideas which shape and influence social action and (b) the action itself as played out in the social system. They note that 'culture' is generally defined as the former, but suggest that progress in understanding the relationship between culture and management practice will be more likely if culture is accepted as being: an observable aspect of human behaviour, manifest in social interaction and tangible objects like organizations, but resting on symbolic frameworks, mental programmes and conceptual distinctions in people's minds. While corporate culture has sometimes been expressed simply as 'the way we do things around here', it is important to recognize what is in the mind as well as what can be observed. Cultural differences become more significant as they are manifest in different behaviour patterns. while behaviour cannot be fully understood without reference to beliefs, values and underlying assumptions.

Culture and HRM Descriptions of HRM generally emphasize the importance of the management of culture (Legge, 1989) and both national and corporate culture have significance for international human resource management. Studies of cultural differences between managers from different parts of the world have generally surveyed attitudes, and a summary of comparative

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Peter Kidger studies is given by Ronen (1986). In one of the best-known pieces of research on cultural differences between national groups, Hofstede (1980) measured values and beliefs and found statistically significant differences between national groups of managers. These were described in terms of four discrete dimensions labelled Power Distance. Uncertainty Avoidance, Masculinity-Femininity and Individualism-Collectivism. The consequences in the form of nianagement practices were inferred from the culture differences. Managers in the same society were not uniform but tended to be more similar in thcir cultural bclicfs to one another than to managers in other socicties. Differences between sonie countries are slight while those between others are marked. Countries can be clustered in regions, reflecting the fact that the usual equating of nation and culture is convenient but inexact (Ronen, 1986). It would be reasonable to concludc from such research that cultural diffcrcnccs will mcan that cvcn successful pritctice may not readily transplant from one country to another, or may do so only with modification. I t -should be noted. however, that Hofstcde's rcscarch also shows that differing national cultural attitudes can coexist within an organization with a strong corporate culture. His study originated in a survey of national differences within IBM. a multinational corporation which is often quoted ;is a n examplc of a n organization with a distinct corporate culture (Peters and Waterman. 1982). Despitc this Hofstcde found significant differences in the attitudes of eniployccs around the world. which he attributed to national culturc. Elscwhcrc hc has noted the fact that 'There is something American about IBM the world over' and that in well-integrated multinationals with a strong organization culture, employees are both similar and diffcrcnt (Hofstede. 1985). Laurent (1986). in looking particularly at the international management of human resources within multinational organizatic~ns,questions the depth of organizational as against societal bchaviour norms. Hc suggests that personnel in subsidiaries may adjust thcir behaviour to head office requirements at a superficial level while deeper rootcd societal values affect the meaning they give to thcir actions and may Icad to different outcomes to those anticipated. International human resource managemcnt therefore has to solvc 'a multi-dimensional puzzle located at thc crossroad of national and organizational cultures'. In this regard the multinational may be a special case but it is not unique. Any organization that develops a distinct corporate culture may carefully screen applicants and socialize employees into thc culture, but the extent to which the latter is 'mcrcly cornplied with or truly incorporated' (Sathe, 1983) will vary and is always problematic. People are both conformist and adaptive and will modify their hehaviour to what is required, including

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Intertratiotral human resource managenlent apparent acceptance of beliefs or ideas. A process of adjustment occurs when people join organizations, which maintains the coherent corporate culture but does not necessarily mean a complete unification of beliefs and assumptions. An alternative to the unitarist view of organizational culture is the suggestion that the challenge for HRM specialists is to develop policies which are accommodative of multiple value systems, cultural diversity and differing interests (Horwitz. 1990). In the multinational. management philosophies or principles may appear in mission statements and be quoted world-wide as part of the cullure 'glue' which maintains corporate unity. This is despite the problem that all value statements are potentially culture affected, and may as a result be differently interpreted in different subsidiaries. The underlying values of equal opportunity. reward based on performance. individual participation. selection on merit and so on are all culturally biased. Indeed the whole idea of an organizational culture which can be created and imposed may itself be culture bound (Adler and Jelinek. 1986). Schneider (1988) illustrates how underlying beliefs about man's relationships with others and with nature may affect the acceptability and potential successfulness of key human resource management practices. She contrasts particularly Western and Eastern beliefs and discusses them in relation to planning and staffing, appraisal and compensation. selection and socialization. Schneider poses the question: 'To what extent can corporate culture override national culture differences to create a global company?' Reviewing some of the evidence she concludes that what may be created is a cultural mosaic rather than a melting pot. and that national culture may provide a counter to the creation of international organization man.

The case for convergence All societies in which people are employed by others will have developed ways of dealing with the employment relationship which reflect the predominant assumptions of societal cultures. The convergence thesis is that differences that might arise from the differing beliefs and value orientations of national culture are superseded by the logic of technology (Negandhi, 1979). Technology shapes and constrains the way work is organized. The adoption of the technology of the developed world may require the adoption of certain management techniques. These may go against the grain of societal culture, but if they are necessary to the management of people within the marketing, production and financial processes they are likely to be adopted. This is an evolutionary process, so that, while culture may be regarded as a contextual contingency (Child, 1981), over time cultural differences are of diminishing importance (Child

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Peter Kidger and Tayeb, 1983). Since countries face similar problems in an increasingly unified market-place. it has been argued that despite cultural and historic differences, there will be a best management style for the future (Prentice, 1990). Levitt (1983) descrihed technology as 'a powerful force [that] drives the world towards a converging commonality'. He was referring to the global market-place and the converging demands of consumers, but one could similarly refer to a converging comnionality of management. Greater international competition and the recognition of world-wide environmental problems have begun to build a common context. International best sellers. international conferences and the influence of international organizations all contribute to the establishment of an international management culture. Hanaoka (1986) suggests: There is an internationill drive towards convergency for 'good management' or 'excellent niani~gement'.In the excellently managed company personnel nianagerncnt is intlucnced only slightly by national culture. Hanaoka contends that comparative research studies in Japan and the USA show convergence of the rnanagcmcnt characteristics of large firms in the two count~.ics.He feels that national cultural diffcrenccs have resulted in overstatement of the peculiarity of Japanese management. He hypothesizes that there is an inverse relationship between degree of cultural influence and management level of sophistication and excellence. The internationally orientated organizations arc those whose practices will tend to converge. The perceived success of Japanese cornpanics in international niarkets has led to a great deal of interest in Japanese management practice. Since there are clear cultural differences between Japan and EuropeIUS, it may be that these have created an expectation of a culturelpractice link. I f the features of the large Japanese companies irre identitied as lifetime employment, teamworking. concern with quality. absence of overt status differences. it can certainly be argued that similar priorities are found in the 'excellent' American and 'winning' British companies (Peters and Waterman. 1982; Goldsmith and Clutterbuck. 1984). In some instances Japanese methods originatcd i n the West but were developed in Japan and re-exported. Cultural diffcrenccs have not prevented this cross-fertilization of practice. The synthesis of itleas is also illustrated by the pragmatic approach adopted by Japanese companies which have begun to operate in Britain. Pang and Oliver (1988) studied personnel strategy in eleven Japanese manufacturing companies in the U K . They set out to discover how widely

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Ittterr~utiot~ul humar~resource management 'Japanese' management methods are used by Japanese companies in the UK and how well they are working. The picture that emerged is of Japanese methods being adapted not imported wholesale. In fact the main policy seemed to be to introduce personnel practices which will best fit the main business strategy. Support for a view that the differences between the internationally orientated and other companies is as important as differences between countries can be drawn from the comparisons made by Purcell et ul. (1987) between the industrial relations practices of UK and foreign-owned plants in Britain. The foreign-owned plants were more likely to employ personnel specialists, have written policy statements, use job evaluation, operate briefing groups, organize quality circles and generally devote more resource to personnel management. In other words, they followed what textbooks would generally regard as good practice in HRM. While it would be restrictive to see international human resource management solely as something that exists in the multinational organizations, it is reasonable to acknowledge that MNOs are key players in the international transfer of ideas. At the present time, American, Japanese, and European organizations are emerging that share some characteristics that might be deemed international HRM. Good practice models can be built from what is happening in the global firms (Evans er ul., 1989). The extent of convergence should not be exaggerated nor should 'superficial resemblances [be] pressed into support for minimising cultural differences' (Brooke, 1987). What is required is to become clearer ahout what aspects of organizational life vary because of cultural difference and what aspects are, despite culture, converging. Adler er (11. (1986) suggest that it is structures that will become similar while people's behaviour will show culturally based dissimilarities so that 'we should probably expect to observe the most profound differences at the informal rather than the formal organizational level'. The distinction between structures and behaviour may be oversimplified, but a reminder of the importance of the informal level in organizations is useful in this context. The world-wide convergence of human resource management concepts may result in similar sounding espoused policies while operational policies are more reflective of cultural and other differences.

A study of convergence

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The recent growth of influence of Japanese management on the West follows the perhaps longer period during which Western practices have been the model for the East. Differences between occidental and oriental

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Perer Kidger culture have not prevented Western management ideas predominating in the Chinese states of Taiwan, Singapore and Hong Kong. The results of a small study of Hong Kong and UK companies may illustrate this. Hong Kong has been exposed to the influence of BritishIAmerican values through the presence of expatriate managers and teachers in higher education. A good number of their better qualified young people have studied in the West. There are therefore clear reasons why Hong Kong organizations are likely to follow Western management practices. On the other hand. Hong Kong is a Chinese culture which has been shown to be different from the UK (Hofstede, 1980; Adler er al.. 1986). This might be expected to provide a pressure for divergence. The study examined the HRM policies and practices of three pairs of organizations. These were matched on the basis o f industry and ownership, and as far as possible on size. The three industry types were also chosen to represent a traditional industry. a modern hi-tech industry and a service industry. They were: Textile companies with similar manufacturing processes. both locally owned private sector companies; electronic companies, both manufacturing subsidiaries of the same US owned multi-national; passenger transport organizations. both in the public sector. The Hong Kong organizations were selected through consultation with a senior member of the Hong Kong IPM. 7'hey were companies considered to have good personnel practices. The UK comp:~riieswere chosen later, to match the Hong Kong sample. All the conipanies had a personnel/HRM department and information was gathered via semi-structured interviews with the senior HRM executives of those departments. The first part of the interview concerned policy. strategy and priorities. and the factors that were determining them. Participants were then asked about the policies and procedures that were being followed in relation to employee resourcing, development, relations and rewards. The general aim was to assess whether any similarities in human resource management related more to national culture or to industry/ownership. The results were consistent with the view that organizational contingencies are more important factors i n determining HRM than societal culture. In looking at similarities and differences, in general each company seemed closer to its match in the other country than to its compatriot companies in different industries. I t is also noteworthy that the HR specialists spoke the same personnel language arid had much the same perception of what constituted good practice. The textiles companies were family businesses which had grown and

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international human resource management

faced a very competitive market-place. The role of the personnel function was similar between the two. Although there was a head-office-based senior personnel executive, most activities were carried out in the manufacturing units which had their own personnel officers. Similarities included:

- an absence of human resource planning, although forecasts were made as part of annual budgeting;

- pay systems which included incentives and relied on such traditional methods as overtime and shifts to meet fluctuations in demand; safety concerns related to the use of dangerous machinery; - use of immigrant labour; - shortage of similar skills which had led both companies to promote special training schemes for key technicians; - staff assessed for salary purposes but no proper appraisal schemes. -

The Hong Kong textile company was more paternalistic in a way consistent both with its being a family firm and with Hong Kong culture. Personnel priorities were to maintain organizational stability. The British firm had its welfare provision and valued long service but its personnel priorities were more directed at change. ii reflection of a less stable environment. As is common in its industry in the U K , the British company recognized unions, and this obviously affected aspects of practice and priorities. By contrast. the HR executives of the two electronic subsidiaries were more concerned with issues of culture, employee involvement and their contribution to business strategy. Both saw the organization's culture as not entirely compatible with the values of the local society from which their labour force is drawn, so that one of the H R M tasks was to promote assimilation and build commitment to the company. Recognition of individuals was part of the corporate culture which was reflected in similar forms of individual consultation, and in this they were different from the other organizations. Other similarities that could be ascribed to the common industry/technology included remuneration policy and work patterns. Both saw themselves as 'upper quartile' companies in terms of pay and benefits. The American parent had an international mission statement of employment policy, and this formed one of the constraints within which their own policies were formed. The parent also shaped the broad role of the HR function, which had to understand the business and commercial constraints but was also expected to be the 'corporate conscience' in personnel matters. Corporate policy however was not so detailed as to produce complete uniformity. Differences between the electronic companies emerged in the kind of welfare provision felt appropriate, and in the tendency for the Hong Kong executive to refer to their conformity to corporate policy while

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the British executive quoted several instances of where they had resisted or changed proposals from corporate HQ. The latter difference should not be exaggerated but is consistent with Britain's lower ranking on Hofstede's Power Distance index. The passenger transport organizations ran services which had started in the last ten years. Both reported that as public sector organizations they were expected to be seen as 'good employers'. The work technology, which defined the kind of work-force needed, together with the nature of being a public service provider, were the main causes of HRM priorities. In each case this was to recruit and maintain a work-force to deliver the service at acceptable cost and quality. T o both HR departments industrial relations was the key area, although the different histories of employee representation in the two countries meant that this did not translate into identical activities. Manpower planning. recruitment sources. pay levels policy, safety, work patterns and discipline procedures showed similar practices. Training needs were similar, although the British company has a more developed training plan concept. The Hong Kong company formally appraised all personnel; the British only staff. Hong Kong used job evaluation, the British company did not. Both organizations had formal consultation mechanisms. The Hong Kong HR executive noted that appraisals were difficult for the Chinese who hide their feelings and are concerned not to lose 'face'. He characterized employee motivation as primarily concerned with the best available wages. By contrast the British executive felt that operatives wanted job satisfaction iis well as good money, citing as evidence that their most boring jobs had the highest sickness and absence rates. The Hong Kong company made more o f providing welfare facilities. In all these areas, culture may be an influence. A final point is to note that the personnel1HR functions in the organizations studied can be neatly arranged using the typography of Tyson and Fell (1986). 'l'he textile companies may he said to have 'clerks of work' and the transport companies. with their industrial relations concerns, 'contract managers'. The electronic companies' HR executives came nearest to the 'architect' model. I t is not intended to claim too much for such a small study, merely to use the results to illustrate the argument. Industrial organizations in Hong Kong can be divided in the way Hanoaka suggests between the local predominantly family-ownetl businesses and thc larger companies with professional managers. The companies in the study were of the latter group and were in general following the prescriptions of the Western personnel management textbooks. The influence of national culture was discernible, and equally the different culture and industrial history of Britain affected the U K companies' practice and priorities. Generally however differences

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lnterr~atiottalhuman resource management

seemed to relate more clearly to the organizational contingencies, and to support the convergence thesis, at least among companies with an identifiable HR function.

The scope of international HRM Within the UK. current thinking on managing people at work is drawing upon ideas from the USA and Japan as well as from Europe. Thurley and Wirdenius (1989) have advocated the development of a distinct European managerial approach to fit the new European society and as a counter to AmericanIJapanese hegemony. A truly international view would perhaps also require distinctive contributions from other culture regions such as the Muslim world and Africa. In the UK the personnellhuman resource management debate has resulted in a number of attempts to define HRM and establish what it is about (Armstrong, 1988; Fowler, 1987; Guest, 1987; Hendry and Pettigrew, 1990; Sisson, 1990; Storey, 1989). The issues that constitute the agenda for current HRM thinking include: the integration of HRM with business strategy; the development of a distinctive corporate culture; the creation of a skilled, flexible and committed work-force, which is adaptive to changing circumstances; - the implications of the concepts of culture and commitment for the recognition of trade unions. -

Integrated market-related strategies, a unifying corporate culture and a committed work-force can all be argued as necessary responses to forces of competition, technology and social change which are or will be common throughout the world. They could therefore be seen as internationally relevant. However, while technologically advanced production processes niay require a skilled, flexible and committed work-force, the techniques for achieving this will be affected by cultural, educational, legal and political differences. Even where a technique achieves universal interest, implementation in another culture may not be straightforward, as is illustrated by the history of quality circles in Britain (Collard and Dale, 1989). The creation of a unified corporate culture and personnel policy linked to corporate strategy may be open to question in a diversified company where different business units are pursuing different strategies (Purcell, 1989). An international company may similarly pursue different strategies in different countries and may either decide that HRM policy should follow local strategy or seek to determine some overall HRM principles that niay

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Peter Kidger create some commonality of iniernal culture. A related issue is the extent to which the company seeks to build a truly international management team. One of the key issues in defining HRM in the U K has been the role of trade unions (Fowler, 1987; Guest, 1989). HRM has been seen as embodying unitarist and individualist values which may not see any reason why employees would want the protection of union membership. This aspect of HRM may be considered a reflection of its American and Japanese origins. The power and effectiveness of unions, and their legal standing, varies greatly between countries. The union context will in many situations be important while in others it will be non-existent. A rhodel of H R M that completely ignores the potential for conflict and differing employer-employee objectives would seem unrealistic. Of course managements may establish non-union consultation and procedures to deal with conflict. but pragmatically international HRM should allow for the union dimension. Looking to the future in the European context, Thurley (1990) has identified four principles as likely building blocks for a European personnel management model. These arc: the need for dialogue between the social partners of the organization; the need to build organizations on a multicultural basis; the need to provide opportunities for participation in decision making; the need to provide for continuous learning by staff and objective evaluation of results. Although Thurley has carefully related these principles to the EEC context and specifically to the Social Charter, they could easily form part of the agenda of international HRM. The building of multi-cultural organizations in particular will be a major challenge for human resource management. Despite the claimed advantage of a strong company culture, i t may be better for organizations wanting to be adaptive for the future to aim for Schneider's mosaic rather than the melting pot. The cultural context is important when translating principle into practice, and successful international managers may be those who see cultural differences as an opportunity rather than a threat.

Conclusion Forces of convergence are a t work within and across national boundaries. Managers under pressure to change and improve will look for and adopt ideas that are currently considered as contributors to excellence. In the area of human resource management, patterns of normal practice exist and are followed by 'progressive' organizations. An international crosssynthesis is emerging in those countries which are at a similar stage of industrialization, share common technology and are part of an international

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International humun resource management competitive economy. World-wide communication through books, articles, conferences and multinational organizations promotes the flow and adoption of ideas. Forces of divergence are also at work. Within the current body of practices there are differences between organizations arising out of their differing sizes, technologies, histories, organizational cultures and competitive positions. These differences exist within and across national boundaries. National culture is an important part of the external context. and its influence should be neither ignored nor exaggerated. A full picture of international HRM must include both the common and the different. lnternational HRM will not consist of identical practices since HRM is not identical within a single industry in one country, let alone on a world-wide stage. Rather it will be about choices which managers must make to meet objectives within given contexts. One aim of future research should be to discover not just whether an international body of practices is emerging but whether practices have the same significance in different countries. Where there are differences the aim should be to see if they relate to specified cultural, educational or political differences in such a way that a knowledge of the societal culture will enable one to predict if and when the introduction of practices from other countries will be successful. lnternational human resource management is emerging both as a body of practices and as a field of study into those practices and the theory and principles that underpin them. If it is recognized on a world-wide basis that 'success goes to those organizations which arc able to recruit and develop the right people and not just at the top' (Tirnpcrlcy and Sisson, 1989), t h e n international HRM will continue to grow in significance.

Lecturer in Hirmun Resolrrce Murtagemet~t University of Solford, 1lK

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Peter

Kidger

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