Impact of National Culture on Human Resource Management

Table of Contents

ABSTRACT 3

INTRODUCTION 3

PERSONNEL MANAGEMENT (PM) AND ORIGIN OF HRM 4

HOFSTEDE'S MODEL OF CULTURAL DIFFERENCES 5

FACTORS THAT CREATE DISTINCTIVE NATIONAL REWARDS SYSTEM 10

National culture and rewards related preferences 10

The role of value orientation 11

Distributive justice 11

Socially healthy pay and pay differentials 11

Performance-related pay (PRP) 12

Financial involvement 12

Employee benefits 12

NATIONAL CULTURE AND SPECIFIC HRM ISSUES 13

Selection and Recruitment 13

Training 13

Motivation and reward system 14

Diversity at workplace 15

Merits and demerits of diversity at workplace 15

CONCLUSION 16

RECOMMENDATIONS 17

REFERENCES 18

ABSTRACT

The main aim of the study is to analyze the impact of national culture on human resource management. When considered in a cross-cultural context, the human resource strategies vary a lot. Hofstede's work is most prevalent in cross-cultural management studies. So his dimensions in national culture are used in the analysis of India and US. This study defines how pay, motivation and the reward system are influenced by the culture. The cross-cultural merits and demerits are mentioned in this report. This report also concentrates on national culture influences on human resource management. This report shows that the national culture influence on human resource management practices. Therefore, this report says that the human resource practices are bounded by culture, values of the society.

INTRODUCTION

Human Resource Management (HRM) is highly influenced by culture. Many aspects of HRM are different in different countries. When studying about the impact of culture on HRM it is necessary to see what is meant by culture. Culture is a complicated concept among the researchers. In anthropological and sociological terms, culture refers to the values and attributes of the community the people belong. "Hofstede defines culture as the collective programming of the mind based on a broad tendency to prefer certain states of affairs over others" (Tayeb 2008). Tayeb defined culture as historically evolved values, attributes and meaning which are learned and shared by the members of the community and which influence their way of life. All researchers give different meanings to culture. It is different between nations. HRM can be influenced by culture. Some HRM functions like recruitment, pay, reward system, training, and development are underpinned by associated culture values.

PERSONNEL MANAGEMENT (PM) AND ORIGIN OF HRM

Personnel management is a traditional administrative function. They are maintenance oriented. These are usually performed by the personnel department in an organization. They will react, respond only when problems arise. The main motivators of PM are compensations, rewards, job simplification and so on. PM is criticized in many ways. Employees are viewed as ‘economic animal' who can be motivated through the manipulation of reward system. The power is playing in many organizations .the managers want the employees to do what they want. Attention is little paid to the views of the employee. (Tayeb 2008)

HRM is an American invention in early 1980s. it was practiced in some companies and the positive record adapted it many companies. Then it came to European countries. The effective HRM leads to higher productivity and higher performance. HRM also deals with personnel functions buts they are planned and implemented with regard to the companies' strategies. (Tayeb 2008)

According to Porter, The strategic role of HRM is to support activities of the organization. HRM is different from personnel management in three ways. (Tayeb 2008)

Firstly, Personnel management focuses on the management and the sub-ordinates and HRM focus on the entire management team.

Secondly, the line managers have the main role in HRM and to achieve profit by coordinating resources. But this is not in case for the personnel management.

Thirdly, the aspect of the HRM is the management of organizational culture and the personnel management has no role in this.

HOFSTEDE'S MODEL OF CULTURAL DIFFERENCES

In 1980's Hofstede found the five dimensions of national culture that can be used to illustrate the different values in different native cultures of different countries. These dimensions can be used to illustrate how people in a different culture act and how they behave in work related factors.

These dimensions are power distance, uncertainty avoidance, individualism/collectivism, and masculinity/femininity.

Figure 1: Hofstede's Model of Cultural Differences

Hofstede's study has been criticized in many ways but it is very useful to know the cross-cultural framework. It is very helpful for someone who is entering into the new business or employment. All should be aware of the different cultural differences. Each country has its own culture and this cultural difference can influence workplace value and business communication.

Power distance:

If power distance score is higher, that means there are unfair relationships between the superiors and the subordinates. It also shows the inequalities of power and wealth are allowed in the societies. Power distance is high in countries like India and France. Their employees have to show respect to the higher authorities. The decision making is centralized. That means managers will not include the employees while taking decisions about their appraisals. In countries like Australia and Israel, there is a low inequality culture. Employees feel free to consult with the managers in whatever situations they are. They do not feel it as a disrespectful manner. They have the flexibility in their work. Here decision making takes place in the presence of the employees. (Henderson 2008).

India indicates a high power-distance score that shows the high level of inequality of power and wealth within the society. The people accept this as a cultural norm. The score of India is 77 and the world average is 56.5. US indicates a low power distance of 40 that shows they have greater equality of power. (http://www.geert-hofstede.com)

Uncertainty Avoidance [UA]:

The extent to which how easily the culture corporate with the changes. If UA is high, it creates a rule-oriented society. If UA is low the society is less rule-oriented and they are highly tolerance to variety of opinions and also they take greater risk. France has high uncertainty avoidance score, when compared with the lower U.S. score. Americans do not displace or dismiss any employee whose work is unsatisfactory; they consider it as a gain in efficiency. But the French need for continuing relationships with long-time members of the company, whose trusted presence reduces uncertainty. Countries like Japan and Greece have high UA. The employees in companies in these countries are attracted to long term commitment. Companies in countries like Denmark Hong Kong, the people are not able to corporate with the changes very easily and they find things in a sensible way rather than following theories. They will try to find out the need for change and work accordingly. People do not want to work in a stable work atmosphere. (Henderson 2008).

India is having a low ranking in UA. The culture is more open to unstructured ideas and situations. The dimension score is 40 when compared to world average which has 65. This dimension score is high for US. They have 46. That means they have less rules and greater level of tolerance. (http://www.geert-hofstede.com)

Individualism / Collectivism:

It is the extent to which the culture encourages the individual. Countries like USA, UK they have individualist culture. They give importance to individual achievement. Here the aim is to be a good leader. People work only the normal hours and they want to get paid if they work overtime. They do not consider the relation to overlap with the private relation. Where individualism is high people are expected to take care of themselves and their family. Countries like Iran and Peru they have collectivist cultures. The entire organization works like one family. They support each other. Their aim is to be a good member of the organization. They