2.) What is “globalization”? What are the major changes to organizations brought about by globalization? How does it impact on China business and human resources practices?
What is globalization?
Amicably, globalization has been hotly debated in such business arena over the years and has contributed a lot to such country’s economy and business such as in its market approaches and manpower activities particularly in China’s business and human resource practices as the focus for this assignment. As such definitions of globalization do vary widely and that perhaps, one of its core feature involves the “permeability of traditional boundaries of every kind” that would include physical borders such as Chinese nation states and less tangible borders such as those of cultural norms integration (Cited from, Parker, 1998, p. 6). Truly, globalization do integrate government plans like in their regulation with regards to such internet activities those that may include e-business in China and possibly create novel laws in such internet business. For instance, several Chinese efforts to introduce website censorship in order to series certain European Union directives dealing with issues such as copyright, internet businesses have been faced with growing tide of Internet regulation. Indeed, globalization brings about rapid changes in China as such business success relating to e-business may evenly require some regulation ranging from common global standards going direct to such legal reinforcements of such electronic signature for example.
What are the major changes to organizations brought about by globalization?
The major changes to organizations due to globalization will be centering on several globalized organization that amiably depend on people, those people who are “willing to take personal initiative and to cooperate with one another, who have self-confidence and commitment to Chinese company and who are able to execute relatively routine tasks with the same proficiency as they are willing to learn new skills and ways to take the company to the next stages of ambition” (Cited from, Bartlett and Ghoshal, 1995, p. 11). Thus, the change within human resource is visible by then as globalization of human resource in Chinese organization can basically embrace some of underlying social process that may override the constraints of China’s geography and ethnicity indirectly (Cited from, Levitt, 1983). For instance, some of the members, no matter where they work, are acculturated to embrace the values and the beliefs of the globalized Chinese organization (Cited from, Nahavandi and Maleksadeh, 1988).
Furthermore, within the sanctions of globalized organization, it can be that the, human resource management or HRM will be acting as control system that ensures acculturation of such business members from within the organization and amiably directs their behavior towards better accomplishment of an ideal organizational mission and business objectives (Cited from, Eneroth and Larsson, 1996). Moreover, HRM in China in function does consists of aspects in selection, rewards, appraisal, social duties and the development of individual workers in order to contribute such desirable achievement to be utilized in realizing business environment functions as well as organization goals from within (Cited from, Eneroth and Larrson, 1996, p. 8). Thus, there can be changes within China’s HRM structure and context as brought about by strong effect of globalization, there can be such acknowledgment reality implying crucial dimension of global business approach or strategy, the change reflects as globalized organization in China do venture well into diverse structure arrangements that requires integration of business markets in lieu to certain strategic utilization of human resource practice, backed with economic support and application of technology and its related advances. Aside, such changes has equated the process of globalization in promoting awareness to democracy of such business economic growth in China and the opportunity to strengthen human resource management in practice that possibly converge the interests of stable countries as well as the rich nations.
How does it impact on China business and human resources practices?
According to Secretary General of UNCTAD, the two causes of the South East Asian crises were: “excessive openness to the world economy” and “inability to manage this openness” on the part of the South East Asian governments. Rucipero recounts that, after the liberalization the 1990s, the trade deficit of those countries was three percentage points of GNP higher than it was in the 1970s, while their average economic development growth rate was lower by two percentage points. For his own opinion, globalization failed to assure sustainable economic growth in the developing countries (Cited from, UNCTAD, 1999). Believing that, other involved parties like, in business do simply blamed globalization for deepening vertical and horizontal income inequalities. Special criticism was reserved for those neo-classical economists who talked about wealth “trickle down” effects.
Besides, through joining the World Trade Organization, China has demonstrated her commitment towards further economic reform and engaging global economy. However, one of the critical areas of debate has been in the area of employment relations: issues such as implementation of international labour standards, the role of trade unions, working conditions, wage-price factors in relation to cost of production and export competition in global market, social protection and social inequality against fairness and justice, power of multinational corporations, global division of labour versus Chinese labour diversity in industrial democracy against power control and corruption and others (Cited from, Chan and Chuen, 2001). However, the imbalance of power within HR labour relations is quite obvious in such Chinese enterprises wherein management power has expanded without setting very defined limits and where labour has become increasingly passive and vulnerable. However, it is crucial for global community and the Chinese people to seek informed perspective on the current situation and the future engagement of Chinese economy into the global economic system, as well as China’s underlying reforms within economic and business levels.
In addition, one aspect of globalization debate is on the terrain of social regulation, specifically the regulation of the labour market and employment relations. One side of the argument claims that globalization appears to be eroding the power of nation-state, limiting its capacity to regulate labour relations and in turn reducing the potential leverage of organized labour to influence such regulation (Cited from, Elger and Edwards, 1999, pp. 1-40). The argument claims that there in fact, remain important actors in the regulation of labour, and this is not just through the passive provision of support and infrastructure to firms or industrial districts but also entails active choices regarding the way in which labour is regulated (Cited from, Elger and Edwards, 1999, p. 27). As for the case of Chinese economic reform and open door policy, consequence for terrains of labour market regulation and labour relations at macro level and micro level is vividly challengeable and complex. Another terrain of globalization argument has been closer to China’s home ground, for example the impact of globalization on labour markets and human resources within the East Asian region (Cited from, Warner, 2002, pp. 384-98; Zhu and Warner, 2003). There can be about labour-markets, one of imperative factors influenced by globalization and such influence had direct impact on human life of the people. Since labour is one of main resource of Asian developing countries, the HR in manpower market will amicably register to such impact due to the changes in business parameters of the country (Cited from, Warner, 2002, p. 388). Certainly, some of the critics regard globalization as being part of “zero-sum game” wherein benefits found in HR practice are not properly distributed between the key business players within the organization (Cited from, Warner, 2002, p. 388). Aside, presence of tough competition by means of providing cheap labour in order to magnet foreign investment can eventually result in race to the bottom within process of certain business operations (Cited from, Chuen, 2001, p. 34).
Ideally, Budhwar and Debrah (Cited from, 2004) mention that, HRM practices are largely driven by external factors in China within the important economic conditions, company size and the owner’s background and culture that HRM in China comprise set of practices in the service of the employers to maintain employment relationships. As there is a need to develop global approaching of competing in terms of production and human resource upgrading as the issues related to personnel management which does not only include personnel administration but there can be strategic point of view. Henceforth, HRM implies critical success factor for foreign companies operating in China as it stresses on the importance of focusing on human resource strategies that enables different context that the global approaches had impacted the people in terms of its culture, government, laws and systems as well as the culture of Chinese business.
Thus, globalization can brought about changes in business environment creates pressure which makes adaptations of business strategy inevitable and hence adaptations of human resource management in China. It can be true that there are certain preferences and shifts in company policies regarding manpower and succession planning, recruiting; training, performance and compensation management which is determined by the owner’s business is striving. The HR policies and practices have casual relationship with business realities in lieu of maintaining an optimum employment relationship through the challenges that brings global impact to human resource approaches and its HR practices. The impact has geared towards the intervention that has been minimal from setting up initiatives for long-term manpower development as the government may not favor laws mandating trade unionism from within such minimum wage for human labor. Hence, Snape and Chan (Cited from, 1999) offer three reasons for this: the small size of establishments in manufacturing and private sector services, cultural resistance of workers towards joining unions and openly challenging their employer’s hostility towards unions.
Instead of work-related issues, unions engage mostly in activities outside the workplace and providing educational and health services to members. The consequence of institutional permissiveness for HR managers is that they can adopt a set of highly versatile and flexible HR practices based on individual employment contracts (Cited from, Cheung et al., 2000; Ng and Wright, 2002). Firms can adjust their compensation based on individual performance and prevailing market conditions. Conversely, individuals can negotiate their wages and salaries according to their individual bargaining power. Furthermore, HR priorities should be prepared to place even more resources on supporting activities. Helping the business sectors meet their needs, university education should focus on training personnel for logistics management, process engineering, information systems, finance and management.
There has also been a greater emphasis on equal opportunities with the growth of pressure groups calling for greater rights for women and the beginning of an interest in racial issues. There is the presence of local Chinese family business having significant number of employees as the success was built on businesses in textiles, garment manufacturing and trading and that these family businesses have grown alongside economy to expand into innovative markets. Moreover, business decision makers and management have reached to the third generation succeeding their founders and their HR policies are more comprehensive and formalized even though the HR policies are different from those promulgated by the strategic partnership model. Thus, Redding (Cited from, 1993) and Westwood and Chan (Cited from, 1992) suggested that the Chinese heads and their businesses encapsulate the ethnocentric values of Confucian paternalism, patriarchy and personalism as seen in their power connected to ownership, a distinct style of benevolently autocratic leadership and personalistic as opposed to neutral relations and the management style is paternalistic emphasizing harmony and compliance (Cited from, Westwood and Chan, 1992) The Chinese management style propagates unique employment relationships marked by delicate blend and balance between a western outlook and traditional Chinese values.
However, the there has been a useful development which was accompanied by major growth in the financial and business services sectors and the associated upgrading in the occupations by a rise in the educational standards. The need to sustain harmonious relationships in the workplace is critical and a good deal of energy needs to be expended in establishing, building up and maintaining good interpersonal relationships and social networks, both within and outside organizations. This can be prime requirement in Chinese organizations that business relationships in these countries are facilitated on guanxi, which describes the quality of relationships that are developed over time and which centre on the social rules of favors and reciprocity and mutual obligation as guanxi networks are essential feature of doing business in China. There has such issue of diffuseness as it tends to mean that life spheres are less differentiated and fragmented in specific cultures as apparent where people in order for them not to engage in work related activities at any time in connection to such own business. There are influences in the development of HRM in China there refers to management practices as being used to regulate employment relationships in sizable organizations (Cited from, Armstrong and Long, 1994). The human resource management approach had taken over and that the labor pool had made available by the influx of combined immigrants from China (Cited from, Cheung et al., 2000).
During certain times, human resource management were administration oriented, perceived as less strategic and so personnel management would be a more fitting characterization as there was plentiful supply from the refugee pool and the postwar baby boom (Cited from, Chen, 2000) as some of the managerial positions were often filled by expatriates. (Cited from, Ng and Ip, 1999). The Chinese companies had adjusted to new business environment with revised HR measures (Cited from, Fosh et al., 1999; Cheung et al., 2000) as it was more cautious in recruitment and moved towards performance-based compensation as the companies needed to tackle new HR issues such as downsizing and employee retrenchment and identified the need for more structure and flexibility HR practices. (Cited from, Cheung, 2001). More companies have adopted strategic HRM as compared to traditional HRM. There was also more outsourcing of HR functions in training, development and recruitment. There is a spectrum of relative degrees of HRM partnership that underpinned HR policies and practices from strategic partnership administration at the other. This relative continuum of HR involvement in the business strategy is attributable to the size and the ownership of the firms. (Cited from, Redding and Wong, 1986; Shaw et al., 1993; Snape et al., 1998). However, the HRM functions are still found to be separated from the decision and power core of the businesses and from other business operations in the company, performing an administrative rather than strategic role. There was the effect of globalization as externally oriented and open economy and adopted international regulation and set up human rights commission (Cited from, Ng and Wright, 2002).
Positively, China possibly expresses growth in lieu to the development of HRM from such business that the country is open with and do compete from within the reality of a fast changing globalized business market as it can be that, several Chinese businesses will need to be more HR adaptive and eager to adopt to such changes and be effective in its HRM practices and principle oriented manners of handling employees/staff. Then, supporting the role of China in providing ideal service to people coming from positive dominance within the accessible functions of their business society. Lastly, there is a need for China to have precise advantage in technology utilization as it emphasizes global paradigm for the Chinese companies like the SME’s operating the country, to apply and execute well such as those planned and developed ways in strategically driven HR practices that do speed up the requirement within Chinese business in terms of better people management that is ideal for future situations that can change China as a whole.
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