OLES OF CALTURAL FACTORS IN HUMAN RESOURCE MANAGEMENT PRACTICES IN THE COMPANIES IN SOUTH ASIA
Abstract
several studies have been conducted to find a solution to the issues related to cultural diversityof employees working for companies and Multinational Corporation(MNCs).Its only a few papers that have put into concideration to how culture also plays a major role in shaping important Human Resource (HR) practises .This icludes job security,compensation policy, training and development,selection and recruitment,decentralisation and teamwork and information sharing. The paper suggest that prospective employees or job seekers should endevour to familiarize themselves with the organizational culture before accepting the job. The hosftede's (1980) culture dimensions are refered as a source to explore the relationship between critical HR practices and employers relating to south Asian companies in South Asia.the significance of the study is the practical application of the findings which will guide the management in finding proper HRM practices and strategies in order to achieve the organizational perfomance. Data used for the study is only collected from the manages,this being a liitation to the study.
keywords:HRM practices,organizational perfomances, cultural diversity, culture dimensions,workforce management
INTRODUCTION
For the last two decades ,HRM practices together with HRM strategy and HRM style have been vital foe achieving organization desire goals.There has been tremendous development in tthe transport and telecommunication sector making the world a “Global Village”. This has opened door for oportunities to corporations across their national boundaries expanding their market share ,reducing cost hence effciency..International movements of goods and services have grown exponentially to US$ 7.9 trillion (ulrich & BrockBank 2005).For companies to achieve competative advantage they are focussed on HRM practises along with the HRM strategy and styles.The study is done in order to compare between Foreign MNCs and the locan South Asian companies inthe scope of HRM practises (Budhwar,2001)
In case of HRM practises, mainly four aspects are considered namely perfomance management, compensation and benefits,recruitment nd selection and training and development. Many studies (Ali & Opatha, 2008) (Haque & Azim, 2008) (Chang & Huang, 2005) found that only HRM Practices without HRM Strategy and Style cannot make sure the desire organizational performance. In order to achieve the organizational performance it is very vital to adopt the appropriate HRM strategy and style.There are basically three HRM practises namely Accumulator,facilitator and utilizer(snow,1978). this strategies can be employed based on the culture and types of the organisations.
In the view of style;there are two basic styles namely participative and autocratic of the HRM practises. participative style are widely used as they certenly boost the HRM practices and also infuences the organisation perfomance.
this paper focuses on the comparison between Foreign MNCs and local South Asian companies regarding the impact of culture on HRM practices answering the questions
what is the impact of culture on HRM Practices?
what is the differences between foreign MNCs and locaal south Asian companies regarding HRM practices in South Asia?
SOUTH ASIAN HRM PRACTICES
The core issues in HRM style are almost the same in all South Asian countries even though the inner style may vary. manages are keen in developing their skills and expertise based on their gathered experience.Most firms follow unique policies tin running their organizations with approach related to the HRM style.This is shown in comparative statement on HRM practices on South Asian countries shown in table 1
Bangladesh
Hofstede's study and the Bangladeshi culture
culture can be generalised as consisting of patterned ways of thinking,feeling and reacting. The essential core of culture consists of traditional ideas and their values (Lluckohn, 1951). Geert hofstede (1980) one of the world wide pioneers in the field of studying culture ,defined culture as „Culture is not a characteristic of individuals; it encompasses a number of people who were conditioned by the same education and life experience. When we speak of the culture of a group, a tribe, a geographical region, a national minority, or a nation, culture refers to the collective mental programming that is different from that of other groups, tribes, regions, minorities or majorities, or Nations (p. 12).‟
The culture of bangladesh dating back to more than 2500 years ago has a unique history.The culture of Bangladesh is and over time has assimillated influences from Hinduism,Jainism,Buddhism and Islam which combines with tradition.Most Bangladeshis (about 86%) are Muslims, but Hindus constitute a sizable (13%) minority (CIA Factbook, 2008).
Hofstede‟s (1980) study did not include Bangladesh; however, two significant neighbors, India and Pakistan, were included. Despite some differences, Bangladeshi culture is quite similar to Indian and Pakistani culture due to historical and religious bindings amongst the people of these three countries. The observations of commonalities between these countries have also been the experiences of the researchers through personal interactions and field observations. This can be explained through a number of historic facts. Bangladesh was once part of the undivided Indian subcontinent and for a time, also part of Pakistan (1947-1971). Pakistan, a predominantly Muslim (about 90%) country, has many common practices with Bangladeshi Muslims in terms of their societal practices (CIA Factbook, 2008). As India has a good representation of both Islam and Hinduism, it too possesses cultural similarity with Bangladesh. Therefore it is useful for this study to use as a framework the findings of Hofstede in regard to Pakistan and India and extrapolate from this the most likely cultural dimensions to be found in Bangladesh (see Table 1). Moreover, we propose the use this framework to undertake a study of the most common HR practices used by MNCs to explore how these cultural dimensions manifest themselves within the identified HR framework.
Cultural
Dimension
Description of the dimension
Hofstede’s
findings on
India and
Pakistan
Most likely cultural
dimensions for
Bangladesh
Uncertainty
avoidance
(Hofstede, 1980)
Refers to the degree that people are
comfortable with ambiguity. Individuals
who are high uncertainty avoider place
great emphasis on stability and certainty,
and favor a variety of Mechanisms that
increases a sense of security. Individuals
low in this dimension are more
comfortable with risk taking and are more
willing to move forward without knowing
what lies ahead (Hofstede, 1980)
India – Weak
uncertainty
avoidance
Pakistan –
Strong
uncertainty
avoidance
Strong uncertainty
avoidance: due to
widespread poverty in
the country, high
unemployment rates,
difficulty in finding a new
job, uncertainty in
economic progress,
latent fatalism because
of religious influence
Individualism –
Collectivism
(Hofstede, 1980)
)
Refers to the extent that individuals focus
on individual needs and wants as
opposed to the needs of the group.
Cultures that lean towards the
individualism side of the cultural
continuum stress responsibility and
achievement by individuals. In collectivist
cultures emphasize group efforts,
teamwork, and group membership
(Wagn
India –
Collectivist
Pakistan –
Collectivist
Collectivist: due to
family orientation, social
structure, sense of
responsibility, affiliation
with groups or other
people
Masculinity –
Femininity
(Hofstede, 1980)
Refers to the degree that individuals
exhibit masculine behaviors like:
dominance, independence or feminine
values and behaviors like: openness,
interdependence. In high masculine
cultures differentiated sex roles,
independent performance, achievement,
and ambition are clearly visible. In
feminine cultures equal sex roles, quality
of life, and helping others are more
emphasized (Wagner & Hollenbeck,
2005, Hofstede, 1984)
India –
Masculine
Pakistan –
Masculine
Masculine: due to wide
gender differences,
assertiveness of the
people for money and
other things because of
poverty
Short – long term
orientation
(Hofstede, 1984)
Short-term orientation focuses on the
present or the past, honors traditions,
and consumes resources to meet the
current needs. On the other hand, longterm oriented cultures, resources are
saved to meet long-term or future vision
of the society (Hofstede, 1984)
Study not
conducted in
India and
Pakistan
Short-term oriented: due
to poverty people want
to maximize short-term
gain and they are not willing to wait for a lo
THEORITICAL FRAMEWORK
Recruitment and selection
Recruitment and selection process is affected by the culture of the organization. The method of recruitment and selection is effective if it fits with the organizational performance (Milikic, 2009). Various research works have focused on several aspects of recruitment and selection. According to (Miah & Bird, 2007) participative management style refers to the attitude of a superior who, except in unusual circumstances, makes decision by consensus and then issues organizational goals only after all members involved are consulted and the opinion thoroughly considered. In participative HRM style people can feel empowered and they can take decision independently. People can be more active and participative. If this is the scenario HR manager of that organization can recruit the right person at the right time at the right place without any biasness and nepotism. According to (Huselid, 1995) HRM practice has positive relationship with organizational performance including work attachment, firm financial performance, and productivity. In an another study, (Delaney & Huselid, 1996) found that practices consistent with a high involvement HRM strategy, such as highly selective staffing, incentive compensation, and training, were positively linked to organizational performance (Katou & Budhwar, 2006) their study of 178 Greek manufacturing firms found support with the universalistic model and reported that HRM policies of recruitment, training, promotion, incentives, benefits, involvement and health and safety are positively related to organizational performance. In previous research it has found that organization which follow participative HR experience better firm performance than the organization which follows autocratic style. Given this we are lead to the following hypothesis:
In Southern Asia,employees prefer the companies to hire new employees through internal advertisement and references rather than hiring externally through open competition.
Perfomance management
Compensation and benefit packages are one of the major HRM practices. Compensation and benefit refers to all forms of financial payment and reward received from organization as part of employment relationship (Ahmed, Tabassum, & Hossain, 2005). Pay structure is the relative pay of different jobs (job structure) and how much they are paid (pay level) (Noe, Hollenbeck, Gerhart, & Wright, Human Resource Management, 2006). In one research (Ahmed, Tabassum, & Hossain, 2005) study we have found that compensation and benefit practices are highly associated with firm‟s performance (Delaney & Huselid, 1996). Good compensation and benefit package can motivate employees. Motivated employees can make the firm more profitable. Organization which follow participative HRM style have HRM policies which are very much result oriented and their intention is to create innovative and creative employees (Khatri, 2000). This organizational environment encourages employees to be more innovative and creative. Company performance is heavily depends on the compensation and benefit system especially the financial pay and rewards (Zhou, Georgakopoulos, I., & Konstantinos, 2011). So Pay and reward practices often considered the most powerful tool which connects employees to the organizational interest (Ehnert, 2009). Given this we are lead to the following hypothesis:
In South Asia, employees do not resist salary differential and that benefits are paid to different employees based on subjective decisions of the top management rather than the known structured compensation policy.
findings
Cultural context play a major role in proper management of organization human resources as a country's historical,social and political differences (Tanure &Duarte,2005).HR practises can influence long term competietive organization advantage only when they are parallel with the culture and other contextual factors (Ahmad %Schroedaer2003,Guest 1997). this paper has discussed two salient HR practices (i.e perfomaance management and recruitment and selection). South Asia is mainly composed of developing nations with significant socioeconomic development. Business organisations need to attract ,retain adn manage their resources effectively in order to maximize on this oprtunities.Studying culture in Bangladesh and how culture ans contextual issues affect them can benefit MNCs in two ways.First ,understanding impact of contextual factors on workforce and also enables MNCs HR managers to find out which practises lead to better individuals and also firm perfomance.
overally, this paper is a step on finding and investigating favourable culturally congruent elements of HR practises among MNCs in the non-western.Future qualitative analysis will be of great benefit in identifying specific employees cognitive and behavioural outcomes in job commitment, satisfaction and motivation as this are also affected elements of HR practices.
References
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