HR Practices in CHINA

Contents• Introduction

• Country’s Overview

• HR Practices

– Recruitment & Selection

– Training & Retention

– Motivation & Reward System

– Work culture

– Expatriate management

• Case study & its analysis

• An articles abstract

• Conclusion

Introduction• IHRM?

• China has become the world's fastest growing major economy.

• Over the past 25 years of economic reform in china have led to impressive growth

and significant integration.

• China is now the largest recipient of foreign direct investment (FDI) in the

developing world.

• Due to these developments, it resulted in major changes in the management of

industrial enterprises and hold considerable implications for human resource (HR)

practices in the nation with the largest workforce in the world.

• Chinese are beginning to adopt a more individual-led management culture and give

employees more responsibilities and rights.

• One of the major challenges faced by the companies i.e. both MNC’s & domestic

companies are to acquire talented employees.

Country’s Overview• China- People's Republic of China (PRC).

• Location- East Asia

• Capital city- Beijing

• Population -1.3 billion people.

• Language - Mandarin Chinese

• China is governed by the Communist Party of China

(CPC) under a single-party system.

• China is the world's largest exporter and second

largest importer of goods.

Contd..

• China is the world's second largest economy by both

nominal GDP and purchasing power parity (PPP).

• It is a member of United Nations Security Council,

multinational organizations, WTO, APEC, BRIC, Shanghai

Cooperation Organization, and G-20.

• China has been characterized as a potential superpower -

academics, military analysts, and public policy and

economics analysts.

HR Practices • In china, Human Resources in the industrial sector

were classified into two groups:

• Cadres-administrative staff or white collar employees

such as managers, engineers and senior technicians in

government organizations and in enterprises.

• Workers- lower level employees.

• Due to this division, there had been difference in –

wage scale, performance appraisal.

Changes in Traditional HR practices • The responsibility for labour allocation has shifted

from a centralized planning authority to forecasting

and planning departments within enterprises

• A contract labour system has replaced traditional

lifetime employment

• Productions and reward systems moved from

emphasizing equality to rewarding efficiency and

performance.

Major HR practices in China• Recruitment & Selection• Training & Retention• Motivation & Reward System• Work culture• Expatriate management

RECRUITMENT & SELECTION

• Companies in china recruit candidates

mainly on basis of:

• Skills

• Employment history

• Total work experience

• Language abilities

• Career goals

Talent pool

• Companies in china face an overall talent pool

that can be broken into three general categories

of employees.

• Full expatriates

• Local hires

• Local –plus

• Each category has different salary and

benefits packages.

Recruitment techniquesAdvertisements

• Advertisements are not permitted in the news media without “the prior approval of the local labour and social security department”.

• Advertisements are usually placed in local papers or specialised industry publications.

Job fairs

• The common recruitment avenues are the labour market, personnel exchange seminars

• The job fairs are sponsored by the Labour Bureau.

Campus Placements

• To recruit potential applicants, many companies regularly go to college or university campuses to interview students

• They can negotiate the job terms directly with the students

Global Image

• The development of technology parks and technology development zones in China, there has been a concomitant growth in the use of Western HR strategies among multinational companies.

Business management services

• China has excellent technical education, there is a dearth of managerial training because, in the past, managers were promoted on the basis of their political party allegiance, and many parts of the country remain ‘provincialzed’ as shown in the HR inflexibility.

Corporate Co-ordination

• International Communications and PR companies are developing offices throughout China to assist local and overseas businesses work together effectively to meet the demands of Eastern and Western markets.

Selection Techniques

Interview

• The interview is a common selection tool

for many companies and is the dominant

method used. Punctuality is very

important in China and in greeting the

applicant the employer will not look at

them directly because lowering of eyes

shows respect.

Tests

• Technology tests, technical tests, problem solving tests and English proficiency tests.

• Traditional companies rarely use psychological or aptitude testing, psychometric testing of abilities and attitudes, interests and motivations, needs and aspirations and/or personal management style has been adopted from Western HR practices, especially in the Healthcare industry.

Behavioural Event• Interactive role play, simulation exercises

and leaderless group discussion (LGD).

TRAINING & RETENTION

• Some of the major training methods

are:

• Technical training(both expatriates & Local

employees)

• Language training( expatriates)

• Pre – departure training(expatriates)

• Training on work culture( expatriates)

Retention Strategies

Retention

strategies

MOTIVATION & REWARD SYSTEM

• To increase the quality and quantity of production of

their companies and greater development of the

company.

• Rewards comprise the incentive systems such as

promotions and stock option.

• Stock option has emerged as the latest method.

• Human resources are managed by two methods-

positive and negative.

WORK CULTURE

Respect for age & hierarchy

Face & harmony

Group orientation

Personal relations or guianxi

Features of Chinese work

culture

EXPATRIATE MANAGEMENT • From top executive to professional, the % of expatriate from

western, expatriate from Hong Kong and expatriate from Taiwan is decreasing, but % of expatriate from Asia Pacific and locally hired foreigner is increasing.

• 15% - 23% of companies planned to reduce hire of expatriate in 2009, but almost the same amount of companies also indicated the intention to hire more expatriates in 2009. About 35% of companies would like to increase hire of locally hired foreigner and locally hired returnee respectively.

• Top issues: managing expatriation cost, localization• Compensation approach:

• Home country/balance sheet approach is very popular for expatriate.

• mixed approach is an alternative way for expatriate from Hong Kong .

• local plus approach is an alternative way for expatriate from Taiwan.

• Types of Expats: Expatriate from western countries, Expatriate from Asia Pacific but outside Greater China, Expatriate from Hong Kong, Expatriate from Taiwan, Locally Hired Foreigner, Locally Hired Returnee

Locally Hired Foreigner

• Medical Benefit

• Insurance• Housing

Benefit• Car Benefit• 5. Home Visit

Assistance

Locally Hired Returnee

•Medical Benefit• Insurance• Housing Benefit• Car Benefit• Retirement Benefit

Expat fromWestern Countries

•Housing Benefit• Insurance• Medical Benefit•Home Visit Assistance• Car Benefit

Expat fromAsia Pacific

•Medical Benefit• Insurance• Housing Benefit•Home Visit Assistance• Children Education•Benefit

Expat fromHong Kong

•Medical Benefit• Home Visit Assistance•Moving/Relocation•Assistance• Insurance•Housing Benefit

Expat fromTaiwan

•Home Visit Assistance• Moving/Relocation•Assistance• Medical Benefit•Insurance•Housing Benefit

Expat allowan

ce

Case study & its Analysis

“A FIRST-TIME EXPATRIATE'S EXPERIENCE

IN A JOINT VENTURE IN CHINA”

Source: 7th Editions of (1) Strategic Management and Business Policy and (2) Cases in Strategic Management.

by Thomas L. Wheelen and J. David Hunger.

CASE OBJECTIVE• To demonstrate the effect on the internationalization

process of a company, of corporate HRM practices such

as selection processes, re-entry and succession planning.

• To illustrate the importance of HQ support for expatriate

employees.

• To demonstrate the effects of drastic changes in a

corporation's internationalization strategy on

expatriates.

Case problem

• An apparent failure on the part of

Controls Inc. to understand the

negotiation process for JV contracts

in China

• No proper structure/method of

selection process

1.Critique the apparent expatriate selection process used by Controls Inc?

• Selection process was

haphazard(chaotic)

• No formal process

• No proper planning, Co-ordination

which is governed by organizational

politics.

2.Was James Randolf a good choice for this position? Justify your arguments.

• Randolf was a very good choice for this position.

• But, Randolf selection seems more accidental than

based on an understanding of what was required for

the position by HQ.

• Conventional wisdom suggests that one should not

generally send a 50-year-old employee on a first-

time expatriate assignment as a senior manager.

Selection Criteria

• Technical Criteria,

• Management Skills

• Personal Attributes

• Cultural Skills

3.What are the consequences of badly managed expatriate

management programs

• Company should include

international management

experience as an integral

management development strategy.

• Unlikely to develop managers who

can function effectively as global

leaders.