Professional Documents
Culture Documents
To cite this article: Mark Easterby-Smith , Danusia Malina & Lu Yuan (1995) How culture-sensitive
is HRM? A comparative analysis of practice in Chinese and UK companies, International Journal of
Human Resource Management, 6:1, 31-59, DOI: 10.1080/09585199500000002
Keywords
HRM, China, culture, careers, appraisal, manpower planning
O Routledge 1995
Mark Easterby-Smith, Danusia Malinu and Lu Yuan
Introduction
The rise of human resource management in the U K and North
America, both as practice and theory, has been well documented
(Storey, 1989; Towers, 1992; Hendry and Pettigrew, 1992). In particu-
lar it has been noted that there can be a marked divergence between
normative theory and actual practice (Legge, 1989), or between
rhetoric and reality. This has resulted in a growing concern to under-
stand H R M practice in different settings. Some studies have concen-
trated on looking at practices within companies in the same country
(Storey, 1992, 1994; Fox and Mcleay, 1992; Strauss, 1992; Warner,
1993), others have started to compare practices between different
countries, both within Western Europe (Brewster and Tyson, 1991;
Pieper, 1990; Thevenet, 1991; Bournois, 199l), and further afield
(Storey et al., 1990; Markoczy, 1993; Child and Markoczy, 1993).
It is evident from these studies that the primary concerns of H R M
practitioners in each country vary considerably. Thus, in the USA
there is a primary emphasis on the implementation of employment
legislation around issues of discrimination and equal opportunities, on
the development of flexible employment contracts and on efforts to
increase employee participation (Strauss, 1992). Concerns in the UK
have focused around the reduction in the power of trade unions and
the linkages of H R M with corporate strategy (Storey, 1992); and in
France, there is more emphasis on language tuition and on meeting
minimum levels of expenditure on training which have been estab-
lished by national legislation (Bournois, 199I). In Japan the dominant
features are generally held to be high levels of employer/employee
commitment and a strong emphasis on training and development in
the workplace. But the recent study by Storey et ul. (1990) showed
that the generalization did not hold for the companies in their sample.
The distinctive features noted in their study were: efficient centralized
career planning and a very high level of formal qualifications among
managers.
This leads to a consideration of the relationship between culture
and HRM, which has been studied along two main routes: firstly,
according to whether it is possible to transfer models of management
from one national setting to another (Ouchi, 1981; Hofstede, 1987),
and more specifically whether there are cultural limitations to the
transfer of H R M practices from the USA to Western Europe (Guest,
1990; Thevenet, 1991). In this respect there is a marked difference
between the mainly US authors who tend to take a universalist view
(Globerman, 1986), and the majority of European authors who take a
How culture-sensitive is HRM?
culturally relativist view. Secondly, and this derives largely from the
European concern to achieve greater business integration, how to
establish HRM systems which will make it easier for 'Euromanagers'
to work effectively between, and across, national boundaries (Potel,
1993). Moreover, the increasing internationalization, and globaliza-
tion, of business makes it more pressing than ever to understand how
to establish HRM procedures which can deal with considerable cul-
tural and national differences. Underlying all of this is the question
about which elements of HRM are, or are not, culture-sensitive.
This paper addresses this question through reviewing the results of
a comparative survey of HRM practices in four Chinese and four UK
companies matched as far as possible by size, technology and indus-
try. After explaining the methodology and providing some back-
ground information about the context of Chinese business, the central
part of the paper describes current practices in five main areas of
HRM in the Chinese and UK companies. An analysis is then made of
the similarities and differences observed, both within and between
each country, and of the extent to which these differences may be
attributed to cultural or other contextual factors.
Methodology
Recent authors (Storey et al., 1990; Hendry, 1991; Pennings, 1993)
argue for more direct comparisons of corporate practices between dif-
ferent countries because this enables procedures and processes to be
understood more clearly in relation to contextual factors. This lack of
direct comparisons is one of the major weaknesses of much of the ear-
lier international research on human resource management. The cur-
rent study attempts to avoid this problem by looking at matched
companies in both China and the UK, and generalizations are then
based on well-grounded data.
The reason for choosing a comparison between China and the UK
(apart from the obvious commercial benefits likely to be derived from
better mutual understanding) was that there are marked cultural and
institutional differences between the two countries. In particular, in
China there is a stronger emphasis on relationships, group orienta-
tion, respect for age and hierarchy, and more significance is placed on
'face' than in 'Western' countries (Lockett, 1985). Moreover, China is
still fundamentally a centrally planned society despite the substantial
movements towards decentralization and the market economy which
have been set in train since 1979, and this is in marked contrast to the
UK in the early 1990s. These differences would therefore suggest that
Mark Easterby-Smith, Danusia Malina and Lu Yuan
Management appointments
Both executive and Party members have an influence on managerial
appointments in China, although there is still some confusion in the
respective roles and responsibilities of directors and Party secretaries.
The Director Responsibility System which was introduced in 1985
gave the final approval of all personnel management and labour
appointments to the director, after consultation with the Party secre-
tary (Child, 1988) and the Enterprise Law of May 1988 strengthened
the authority of this post even further - defining the Party and Union
as supportive and complementary to the role of enterprise directors.
The events of 1989 have, however, changed this a little as indicated by
the following comment from a senior manager in Sino-Oil:
Before 1989 the decision was almost made by the general manager himself. But
now the consultancy of the Party secretary is necessary. The decision would be
reached jointly. But the final approval comes from the Party's standing com-
mittee.
We were given three examples of senior appointments in different
companies which show first the director and then the Party secretary
being dominant, with the third case being determined jointly by both
individuals. Thus in Sino-Oil the Party secretary was said to have
been more influential because he had had a major hand in appointing
the director in the first place. In Sino-Chem the director was domi-
nant because he had an extremely strong personal network and was
highly regarded for his experience and business expertise. In the third
case the position of the Party secretary had been institutionalized into
the executive hierarchy by appointing him as vice director, and this
resulted in some equalization of influence. So it appears that in prac-
tice the relative influence varies according to a number of factors,
including the personal networks of the respective parties, their length
of service - and possibly the distance of the organization from Beijing
(the Party being weaker the further it is from Beijing).
In contrast to the diversity above, all companies reported in identi-
cal terms the criteria that were used to select managers for appoint-
ments. These were categorized into four principles: 'good moral
practice' (de), 'adequate competence' (neng), 'working hard' (qin) and
'excellent performance records' (ji). The first of these was seen to be
How culture-sensitive is HRM?
the most important, although it was often linked to two further crite-
ria: political loyalty and harmonious relations with others. The latter
criterion was of particular importance in executive appointments
where the opinions of colleagues and current subordinates were
solicited by members of the personnel department about the candi-
date's suitability for the post. Indeed, for the top level of the com-
pany, where the posts came under the overall scrutiny of the ministry
there was a special evaluation unit within the ministry which had the
job of conducting surveys of the opinions of co-workers of all candi-
dates before making a recommendation to the ministry personnel
committee. This element of 'democracy' was seen to be a vital element
in all personnel decisions, and can be linked to the strong cultural
emphasis placed on the maintenance of harmony and good relations
with others in China (Osigweh and Huo, 1993).
Until the early 1980s graduates and junior managers were all
assigned to companies by their respective ministries or bureaux. There
is still a major shortage of the former, and some companies have
entered into contracts with appropriate universities for the supply of
additional graduates in exchange for financial support. During the last
decade Sino-Met, for example, has 'bought' over 100 graduates at a
cost of about 10,000 yuan (approx. £800) each. The assignment of
other managers to companies was not popular because many of them,
such as retired army officers and political cadres, were allocated on
political merit and were not seen as being of much use by the com-
pany.
Companies are now exerting much more control over appointments
and it is becoming normal for vacancies to managerial posts to be
filled by candidates from inside the company, unless there is some
special expertise required which does not exist in the company at that
time. We encountered only one example of a senior outside appoint-
ment being made. This was the director of a new power station that
was being built by Sino-Met. Since the company had no past experi-
ence of electricity generation they head-hunted a senior manager who
was nearing retirement from the local electricity company to run the
plant for the first few years of its operation. Furthermore, the normal
career route is within and up the operational line: production experi-
ence is prized far more than functional experience in support areas
such as finance and marketing - but this is what one would expect at
the moment since the major problems within Chinese companies are
seen to be around productivity and quality. Only recently, with the
implementation of market-based industrial reforms, the introduction
of greater financial autonomy for companies and the realization of
overcapacity in some traditional industries such as heavy engineering,
Murk Eusterby-Smith, Danttsia Malina and Lu Yuan
has there been any appreciation that skills outside the production area
might be important in top management positions.
There is a growing use of examinations for appointments at junior
levels. Thus when Sino-Chem identified a total of 106 administrative
vacancies within the HQ in 1989 they designed a standard examina-
tion. This exam covered knowledge of enterprise management, compe-
tence in writing and relevant professional knowledge. Two-hundred
and forty applicants responded to the advertisement, and those who
passed the exam were then interviewed before a final selection was
made. The enterprise reforms of 1992 have further encouraged the use
of exams, but Warner (1994) reports on the basis of data collected in
mid-1993 that exams are still being used primarily at the level of tech-
nicians and assistant engineers, and not at the level of cadres.
Again we found considerable similarities between the UK and
Chinese companies in the area of appointments. All four of the UK
companies had explicit policies of growing their own talent from
inside, hence, as with the Chinese companies, external appointments
were relatively rare. Three companies (Chem, Oil and Con) all
recruited future managers from the graduate market (using the 'Milk
round' and other methods); Brit-Met preferred to recruit employees
direct from school and would then sponsor the more promising ones
through university. The particular advantage claimed for this system
is that, once appointed to management, these graduates very rarely
leave. There may be some justification to this claim since at Brit-Con,
which is, like Brit-Met, the dominant employer in its locality, gradu-
ate turnover had recently become uncomfortably high.
The procedures for making appointments to management posts
vary a little between the UK companies, with Brit-Chem being the
most elaborate, and Brit-Met being the least so. Taking the Brit-Chem
example first, there is a career development manager for each business
area who maintains 'vacancy running lists'. These specify both the
likely timescale in which certain posts will become available, and the
competencies required for each vacancy. This system of competencies
has been used for a number of years, and managers have become
accustomed to using 'competency' jargon when discussing perfor-
mance; it is also evident that, as the needs of the business have
changed over the years, the priority given to different competencies
has changed (notably towards giving more emphasis to the cluster of
human relations, or HRM, competencies in recent times).
The process of filling a particular post starts with the identification
of the vacancy, and the approval from the business director to replace
the person. The manager with the vacancy or the local personnel
manager will contact the chairman of the relevant career working
How culture-sensitive is HRM?
party (see above) to see what possible candidates are available with
the right profiles. These profiles will include not only the appropriate
combination of competencies but also the appropriate potential grad-
ing. However, in addition to the rational lists of competencies, etc.,
there are other criteria which are applied informally - although their
existence is widely known within the company. Thus, for key posts, in
addition to an exceptional track and performance record, the individ-
ual should: (i) have worked in another country; (ii) have experience of
more than one business area in the company; (iii) have functional
experience in some depth; and (iv) have managed a substantial num-
ber of people at some stage in the career. Much of this was encapsu-
lated into the notion that the individual must have contributed
consistently to the 'bottom line'. Once a short-list of candidates has
been drawn up it is generally up to the immediate manager to inter-
view them, with assistance if appropriate from the local personnel spe-
cialist. The final decision over an appointment has to be ratified by
the 'grandparent', or business manager.
In Brit-Met the career management system relies on the appraisal
process for key information about employees. For instance, immediate
(and often temporary) replacements for senior posts tend to be identi-
fied, along with longer-term successors, from appraisal data. The indi-
viduals on this list were described as 'young, which means under 40
years old'. There is also a list which identifies younger people who are
considered to have potential for senior management some time in the
future. Until 1986 virtually all senior management appointments were
made from inside, but recent problems in identifying the right candi-
date for senior management vacancies has led to a number of cases
where'external candidates have been sought via 'head hunters'. When
it comes to making appointments, psychometric tests and other
sophisticated selection tools are not used, and most decisions are
made on the basis of interviews conducted by senior managers with
the assistance of personnel managers.
We have summarized in Table I the main criteria reported to have
been used in making appointments. Inevitably, this is a composite pic-
ture, especially for the UK where the differences are more marked.
However, it does highlight the major distinction between the UK and
China, where the former tends to use 'hard' performance criteria and
the latter emphasizes 'softer' criteria such as relationships and loyalty.
We have explained above the recruitment and selection procedures
in the Chinese and the UK companies as described by senior managers
and personnel specialists, and to a large extent we found from specific
case examples that the rules were adhered to. However, we did find
several exceptions to the rules in the UK companies and a consistent
Mark Easterby-Smith, Dunusiu Malina and Lu Yuan
Performance appruiscrl
It is consistent with the above observations (see Table 1) that the
development and maintenance of harmonious relations was also an
important element in the appraisal procedures of our four Chinese
companies. In addition, in all the companies there was an emphasis
on self-evaluations and 'democratic' soundings of opinions.
In practice, a manager was normally expected to carry out a writ-
How culture-sensitive is HRM?
We try and say it's not for pay purposes . . . on the other hand if a bloke does
a super performance then it should be reflected in the pay. So while there is
not a direct link, there's got to be some consistency between the two.
In Brit-Con there was a strong emphasis on the developmental aspects
of the process, such as the identification of training needs and discus-
sion of possible future career moves.
A common feature in all the UK systems was the assumption that
appraisal was based around an annual meeting between the manager
and hisher boss. There were always safeguards if there was a dis-
agreement between the two, and completed protocols were normally
reviewed by the boss's manager; but we encountered no cases of peer
(or subordinate) opinions being solicited as direct inputs to the
process. Opinions from those on the receiving end of the procedure
varied within each company. The two most common opinions were
either that appraisal was a good opportunity to have a focused discus-
sion with one's boss about progress, o r that it was largely a bureau-
cratic chore from which very little positive benefit ever emerged.
Thus in the area of appraisal there are some consistent differences
between the Chinese and U K companies. In the UK it is conceived
largely as a top-down process focused around an annual interview
between the individual and his or her boss in which performance tar-
gets are reviewed. In China the system is based on an annual self-
assessment by the manager and there are no automatic one-to-one
interviews with the boss. The opinions of colleagues and subordinates
are regarded as highly significant. This demonstrates a system which is
far removed from contemporary Western critiques which stress con-
trol (Townley, 1993) and the primacy of the interview (Beaumont,
1993), very much along the lines that we have noted in our compa-
nies. The question that emerges is whether these features are compo-
nents of 'appraisal' per se or just of the national settings in which the
appraisal systems are located. We will return to this later in the paper.
Reward systems
Wage determination has always been a major issue in China since the
revolution, because policy on distribution has significant implications
both for national ideology and local motivational issues. It is this
interplay between the two levels of analysis that has been at the heart
of the prolonged series of reforms and adjustments that have taken
place since a national, Soviet-style, wage system was introduced in
1956 (Takahara, 1992). Although national systems are now intended
only as guidelines for enterprises we found uniformity between the
companies in our sample. Our comments in this section therefore con-
How culture-sensitive is HRM?
Trade unions
There is only one union in China, the National General Trade Union
(ACFTU), and all enterprises contain branches of this union.
However, it is difficult to gain an understanding of the role of the
union without considering at the same time the Party and the execu-
tive. The official position is that executive directors are responsible for
business operations, the Party holds responsibility for strategic issues
to do with business and personnel matters and the union looks after
policy on employee remuneration and welfare. A key role for the
union is the organization of annual meetings of the Workers'
Congress, which receives reports from directors and discusses general
strategic issues. According to the Enterprise Law of 1988, the
Congress is the highest legitimate body within a state enterprise,
although it normally delegates its powers to a management committee
comprising directors, Party and union officials and representatives of
employees. The union also has further influence through its president
who is a member of the enterprise executive committee and through
its statutory role in representing workers when any disciplinary or dis-
missal proceedings are invoked.
In practice, however, we found much ambiguity about the role of
the union. There are many overlaps among the actors and structures
involved. Thus as one manager in Sino-Chem commented in relation
to the membership of the executive committee:
It is only a problem of names. Sometimes it is called the Executive Committee.
Later it is called the Party Expanded Committee. After the Enterprise Law
was published it became the Managerial Committee, but most of the members
are the same personnel, in terms of the directors, the Party secretary, the union
chairperson and other important executives.
With the constant triangular relationship between executive, Party and
union, the role of the union is to support the Party in the discharge of
its functions. With the exception of the example above, the union is
not perceived as an independent political force within the enterprise
Mark Easterby-Smith, Danusia Malina and Lu Yuan
regarding targets can be accounted for by the fact that in China rela-
tionships with employers are seen in terms of personal obligations
rather than impersonal contracts (Laaksonen, 1988).
Thus it is clear that the activity of 'appraisal' can be constituted in
ways very different from the prevailing practice in the UK. Whether it
will continue in this way in China is another question; but it is hard
to imagine that the significance of harmony and 'face' will diminish
very quickly in Chinese society despite growing foreign influences and
the pressures of the market economy. It is well over a decade since
Deng Xiaoping first suggested that it was good for individuals to 'get
rich', and this idea still has not had much effect in state enterprises.
Nor have features such as face and the significance of relationships
lessened in Chinese business communities outside the People's
Republic (Redding, 1990).
The differences with regard to pay and renzuneration systems repre-
sent another step along the scale towards cultural differences. The lim-
ited differential in salary between people at the top and bottom of
Chinese (state) organizations is exceptionally small even in relation to
Japan. Despite the exhortations from Party leaders that it is good for
people to get rich, and the gradual introduction of the responsibility
system (providing for group and individual profit retention) in both
industry and the countryside, there is still limited acceptance of overt
differences in remuneration: the 'red eyed' syndrome is very strong. As
mentioned earlier, this is also recognized by companies which choose
to establish bonus systems providing equal shares across different sec-
tions of the same organization. In contrast, UK companies maintain
large differentials between those at the top and those at the bottom,
and there has been a distinct trend over the last decade towards
greater internal differentiations as evidenced by the increase in local
(rather than national) pay negotiations and agreements, and the rise of
performance-related pay for managerial staff. Although this latter is
now apparently giving way in some cases to competency-based remu-
neration systems, it is still indicative of individual differentiation.
These changes in UK companies may be explained by fashion - by
changes in reward strategies and greater adoption of the 'HRM' phi-
losophy - and thus they are largely contextually dependent. However,
the general resistance to change in China can be attributed mainly to
cultural factors, such as the high levels of collectivism (Hofstede,
1991), the need to maintain harmonious relations within the organiza-
tion (Osigweh and Huo, 1993) and the general distrust of mechanistic
methods for producing differentials (Warner, 1993). We should also
note here the cautionary point of Pennings (1993) who observed from
a recent cross-national study of executive 'compensation' schemes that
How culture-sensitive is HRM?
financial rewards have very different significations in France and the
Netherlands, in contrast to the USA. Also of relevance to the current
study is his plea for more direct comparative research in this area,
especially with countries that diverge significantly from 'the US
norm'. In our comparison between China and the UK we can see just
how strong these differences are.
Conclusion
Our conclusions cover three areas: firstly, a summary of the substan-
tive findings regarding HRM in Chinese companies, and also a few
points about the UK companies where unusual features are identified;
secondly, some observations about the extent to which HRM appears
to vary as a result of culture or context; and, thirdly, some comments
about the limitations of the present study and the directions in which
we believe future work would be profitable.
The study has demonstrated that large Chinese companies do
indeed have highly sophisticated methods for planning managerial
resources, on similar lines to those in some of the more advanced UK
companies. There appears to be much variation in procedures for
making appointments in both countries, and it was noticeable how
often the supposed 'rational' systems for making these decisions in
UK companies were circumvented. Appraisal procedures in the UK
focus on the contractual relationship between the individual and the
company, mediated through an annual interview with the boss;
whereas the process is much more diffuse, and conceivably more
'democratic', in the Chinese context. It islalso likely that it will be
some time before the Contractual Labour System will have much
impact on such matters in China.
Although there are attempts in both countries to link pay and
rewards more closely with performance, there is very strong resistance
to this principle within Chinese companies - and even in UK compa-
nies there are other variants such as the introduction of 'competence'
payments. Finally, there is a basic difference between unions in China
and the UK, in that the former have a more collaborative stance to
management compared with the traditional adversarial position of
UK unions, but there are also signs in both countries of unions
becoming more marginalized.
The main differences in HRM between the two countries, therefore,
appear in the 'softer' areas where relationships are important:
appraisal, reward systems, the process of assessing potential and the
basic stance of unions towards management. These differences can be
Mark Easterby-Smith, Danusia Malina and Lu Yuan
linked to known cultural factors such as the greater concern for rela-
tionships, for harmony and the preservation of 'face' in China. Other
variations in HRM are not clear-cut between the two countries, and
they also show a lot of variation within each country. These are more
likely to be a product of industrial or local institutional differences.
Examples come primarily from the organizational elements of HRM
such as manpower planning, the relative contributions of specialists
and line management in assessing potential, and the institutional
structure of unions.
At this stage one must conclude that, despite a few areas of similar-
ity between the UK and China, there are strong cultural factors which
limit the adoption of many features of HRM in China. This provides
further support to those who adopt a culturally relativist view of
management and HRM. Furthermore, the comparative analysis of
this study demonstrates just how much both practices of, and debates
about, HRM are dependent on the cultural assumptions underpinning
them. Lack of awareness of this dependency will greatly limit the rich-
ness of theoretical insights, the potential for generalization and the
utility of any prescriptions that evolve.
We are aware that there are a number of gaps and shortfalls in this
study. For example, it focuses on large organizations and, therefore,
does not encompass the rapidly developing private sector and the
smaller businesses that are burgeoning in the coastal areas of China.
We have not covered training and education, for good reasons we
believe, but any complete analysis would also need to take account of
these areas. And we have not been able within this study to monitor
changes in companies over time - beyond the three years that were
required for data collection.
We have tried to compensate for this by relating our findings where
possible to other studies carried out previously, but it is clear that,
with the rapid developments taking place in China at the moment,
genuine longitudinal studies are likely to be of the greatest significance
in the future. These could focus on the processes whereby legislation
such as the 1992 reforms is having an impact on enterprises, on how
the move towards more individualistic contracts is affecting the role
of unions and on how the moves towards privatization are affecting
attitudes towards differential rewards.
Murk Easterby-Smith
The Management School
Lancaster University
Danusia Malina
Department of Retail and Marketing
Munchester Metropolitan University
How culture-sensitive is HRM?
Lu Yuan
The Judge Institute
Cambridge
UK
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