FACULTY OF BUSINESS, ENVIRONMENT AND SOCIETY

HUMAN RESOURSE MANAGEMENT (M11HRM)

ASSIGNMENT

Module Leader: Terrence Wendell Brathwaite

Submitted by:

Student ID 3064975

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Table of Contents

Table of Contents.............................................................................................................2

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 .........................9

National culture and rewards related preferences ...................................................9

The role of value orientation ..................................................................................10

Distributive justice ..................................................................................................10

Socially healthy pay and pay differentials ..............................................................11

Performance-related pay (PRP) ..............................................................................11

Employee benefits ..................................................................................................12

NATIONAL CULTURE AND SPECIFIC HRM ISSUES........................................................12

Selection and Recruitment.........................................................................................12

Training...................................................................................................................13

Motivation and reward system................................................................................13

Diversity at workplace.............................................................................................14

Merits and demerits of diversity at workplace.........................................................15

CONCLUSION .............................................................................................................15

.................................................................................................................................. 16

RECOMMENDATIONS.................................................................................................. 16

REFERENCES............................................................................................................... 17
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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.

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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.

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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 helpful for someone who is entering into the new business or
employment. Each country has its own culture and this cultural difference can influence
workplace value and business communication.

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Power distance:

If power distance score is higher, there are unfair relationships between the superiors and
the subordinates. It 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. The 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 has 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 is 77 and
the world average is 56.5. US score is 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
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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 low in UA. The culture is more open to unstructured ideas and situations. The
score is 40 when compared to world average which has 65. This 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 are willing to work beyond the official hours. They do not have a paid
overtime. The company will provide full support to their families in every situation. They
look after employees’ wellness in return for the commitment. (Henderson 2008).

The score of India is 45. The world average scores 40 in this dimension. US is having high
individualism. The score is 90 which show that they have less bonds with others.
(http://www.geert-hofstede.com)

Masculinity / Femininity:

This is not about the discrimination in gender terms. It refers traditionally male and female
values. Countries like Japan and Australia have masculine cultures. They lay more value
for ambition, accumulation of wealth and material possessions. Countries like Netherlands

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and Sweden are feminine culture. They put value for relationships and quality of life rather
than ambition. Countries like USA, UK is Anglo culture. They are moderately masculine.
This dimension is renamed as ‘quantity of life versus quality of life’. (Henderson 2008)

India scores 56 in this dimension which is high. There is a gap between males and females
in India. It may generate more competitive and assertive female population. US masculinity
score is 62 that show there is a gender differentiation. (http://www.geert-hofstede.com)

Long-term and Short-term orientations:

Later Hofstede start the fifth dimension of culture. That is ‘long term versus short term
orientations’. This defines the term horizons of a society. Countries like China, Asia, and
Japan scored high and most of the western countries scored very low. (Henderson 2008).

India scores 61. and the world average is 48. The US score is 29 and that shows it meet its
obligations and tends to belief cultural traditions. (http://www.geert-hofstede.com)
Power Uncertainty Collectivism Masculinity Long-term
Avoidance Orientation
Distance

India High low medium high High

China High Medium High Medium High

U.S. Low Low Low High Low

France High High Low Medium Low

Table 1: Cultural dimension measures by Hofstede ( http://www.geert-hofstede.com )

The analysis of Hofstede is done with India and US. The graphical representation of the
dimension is shown below:

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Figure 2 : Hofstede dimension analysis between India scores and US scores
(http://www.geert-hofstede.com)

Pay and reward system

Most of the employees believe that pay and rewards are the most vital part of the HR
management. Each country has a different approach towards the workers, for the time and
commitment they are bringing to their work. [Haris, Hilary 2003 : 91-95]. In this world most
of them are rewarded when they get older and when they are turning up. Also in many
parts of the world they receive payment when they start to be attracted to the work. As long
as they appear in the work they get rewarded always through annual increment and so on.
Sometimes people are awarded when they get older or when they are kind or when they
have more experience. [Haris, Hilary 2003 : 91-95]

FACTORS THAT CREATE DISTINCTIVE NATIONAL REWARDS SYSTEM

National culture and rewards related preferences

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CULTURE-is the main point that make a difference in the national reward system. The pay
system varies from country to country. The efficiency of the various pay formulas and
techniques is influenced by the national culture. Researchers are made to discover the
robust set of influences that culture can have on the rewards behavior. Comparisons of pay
systems focus on four aspects. In each we can have a cultural basis.

 Point of decision- taking

 Management criteria for pay determination decision
 The impact of certain reward strategies on employee behavior
 The content and practice of the actual packages in different countries”
[Haris, Hilary 2003 : 91-95]

The reward system is influenced by culture in many ways.

The role of value orientation

Culture is one point that determines the organizational orientation. Shaping process is the
main elements of the culture. Hofstede's research on national cultural management
explains dimensions of variation in culture that affect the work of different teams.

Distributive justice

It is concerned with the rules and standards by which decisions are to be made and
perceived. [Haris, Hilary 2003 : 91-95]. Five pay categories are against employees that may
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determine fairness. They are social (eg. Friends), financial (paid amount is compared with
the financial needs), historical (pay is compared with the previous earnings), organization
(pay is compared within the organization), market (pay compared outside the organization).
Employees can change their way of work if they are not paid properly. This can affect their
productivity and performance of the company.

Socially healthy pay and pay differentials

There are limitations placed around the range of the pay. They are measured by metrics.
There are pay differentials seen across the world between the pay of the workers and the
senior manager. This is increasing every year. [Haris, Hilary 2003 : 91-95]

Performance-related pay (PRP)

This is according to the performance of the employee to work. For example, according to
the number of units they produced. PRP is generally used for managers and other
Professional staffs. The main problem is the difficulty to evaluate the performance of varies
tasks. It is impossible to measure the performance when it comes into charity work and
other public works. countries like USA, UK are made use of the PRP which are tending to
back off while some countries are yet to extend the coverage of PRP. [Haris, Hilary 2003 :
91-95] Some arguments are also raised against PRP. Pay should be linked to performance
because the company needs mainly performance and that is fair. But it varies with different
cultures. Some argues that pay should be given to those for the perfect skills they acquire
and what they can do. This system aims to reward employees for developing their abilities
not their activities [Haris, Hilary 2003 : 91-95]

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Employee benefits

Employee benefits differ from country to country. A reward package in cash, career break,
holidays, bonuses etc is some of the employee benefits. There is no best way to meet all
the contexts. In reward scheme the nationality is taken into account which is an issue of
every international organization. Recently the financial involvement in the form of profit
sharing etc shows the development of another form of reward. [Haris, Hilary 2003 : 91-95]

NATIONAL CULTURE AND SPECIFIC HRM ISSUES

Selection and Recruitment

The procedures used for the selection and recruitment in organizations are different in
different countries due to the difference in the societies and other organizational factors. In
US, the selection is done by the assessment process, interviews and written test. In the
Middle East the selection for higher positions is done informally that is through the relatives,
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friends. Some companies do not have a separate department for recruitment. In Japan,
they will select highly educated persons and they will provide training more months in
cross-functional areas. So that they could work more flexible and can do any work as per
the requirement. In America, the business schools have tied up with some countries and
they will provide training for students and make them fit for the job. In Britain, the recruiters
will select the person who is right for the desired job and then provide them the full training.
(Tayeb 2008)

Training

There are induction programmes and on-job training for the skilled jobs. Learning new skills
have more demand now. Competencies have arisen for new skills. Some countries like UK
provide apprenticeships. In some countries, the training is not prescribed by law. And in
France they are prescribed by law. Countries like US, Japan spends their time and money
for the training. (Tayeb 2008)

Motivation and reward system

Managers think about motivation theories when they start to think about how to improve the
company performance. Motivation is about motives and needs. They internally drive the
employees for the better production. Needs can be social or physiological. Motivation is
needed in reward management for much reason. One is it enables the organization to work
for employees so that they can be more flexible in their work and they can be satisfied and
enjoy their work. Secondly, it allows employees more satisfied with the employers. If they
are satisfied they can be more productive. Finally, it helps to control the behavior of
subordinates more powerful. It helps to determine the company goals and make safe their

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achievements. Different elements are considered as motivators in different organizations.
There are content theory and process theories. In content theories, some use money as a
motivator. The company has to find out what motivates the employees. Team working is a
powerful tool for determining the reward system. Incentive schemes are also useful for
employees to achieve the target. The process theories say about how the behavior change
occurs. They use the concept of justice and fairness. (Beardwell 2004 : chapter 13)

When employees are motivated they will be committed to achieve the goals and anyone
who is not motivated will be dysfunctional is the company. It is difficult to identify the
individual needs of individual employees to set the goal. They consider what thing can be
motivate the employees. These are some criticisms for content theories. The key criticism
of process theory is that they are unconscious in decision making. They do not understand
the full range of options available to them. They consider only how the motivation helps.
(Beardwell 2004: chapter 13) Reward system is one of the key policy of HR. This aims to
develop commitment, competence and is one of the facts that show the difference between
the performance management and HRM. Reward strategies are techniques of the
organization to protect the behavior and values. (Beardwell 2004: chapter 13) Performance
outcomes can be measured in many ways like accountabilities skills acquisition, self-
assessment, paired comparisons, ranking, rating scale, behaviorally anchored rating scale,
development plan approach, 360 degree appraisals. Also there are potential issues with
performance appraisal. Some of them include: Role of line managers -they may not have
the required technical skills, Demotivation consequences- when people make a judgment
on another the resistance begins, interpretation spins, and conflicting roles. (Beardwell
2004 : chapter 13)

Diversity at workplace

The diversity at work place is increasing. Because of the increase of multinational

companies in national boundaries, it is very common practice to see diversity in work place.
Diversity is the responsibility of all. Managers play a key role in creating and developing a

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diverse culture in the organization. Diversity cannot be achieved without the ownership of
the management.

Merits and demerits of diversity at workplace

The merits are they increase the interpersonal skills of the employees, they increase the
teamwork skills, they increase the skills of the organization, people can interact with each
other and they can develop patience and competencies to compete with other companies

The demerits of diversity at workplace are they increase the conflict of interest, the minority
feels suppressed by the majority, there will be rise in language problem, dress code etc.

CONCLUSION

In conclusion, the research on culture says that the multinational companies which
attempts to harmonies reward system will encounter opposition across different countries.
The cultural study of PRP differs. The individual PRP is a valuable and necessary HR
policy objective. Companies employ people within the particular culture and laws.
Companies are aware of the differences when they decide HR policies and practices. And it
means the knowledge of fair practice in HRM differ from country to country. [Haris, Hilary
2003 : 91-95]

Hosfede’s work is criticized for identifying the different cultures of different nations. It seems
appropriate for small countries. We can see that there is no one same culture for USA or

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CHINA or INDIA. Many people have doubts on this point and they are not convinced with
this. There will be many exceptions in all countries. It is immensely helpful to think about
different cultures in different countries and their differences. Culture is having a strong
impact on every HR function.

Values, behavior, performance is linked together. Performance management is useful only

to some extent. Management adapts different forms of reward system. They may be
confusing, complex and finally they occur in a fail. So management should first understand
the value of the reward system and then start to implement it. They need to pay for the
skills. A different pay system has to be applied for different organizations. Some of the new
pay systems are merit based pay system, team based pay system etc.

RECOMMENDATIONS

As per the analysis we can see that the HRM practices are influenced by the national
culture. So it is ideal for managers to consider culture component in order to formulate and
adopt the HR concepts from other countries. Work place culture needs to be balanced. All
the employees have to give back for their organization. So we need to create an
environment where people want to contribute and collaborate. We need to motivate people
and also create an environment which motivates them to give back to this. This report
recommends finding and developing a different management practice which is consistent
with the company’s cultural values. So if we adopt these with the company environment, it
can result in an outstanding performance. The company has to enhance their management
practices with its environment to achieve this. Thus, the company can provide a successful
performance.
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REFERENCES

Beardwell, Ian., Holden, Len., Claydon, Tim. (2004). Human Recourse Management a
contemporary approach. 4th edn. Prentice Hall.

Haris, Hilary., Brewster, chris., Sparrow, Paul. (2003) International human resource
management
[online] available from
<http://books.google.co.uk/books?id=s3WpPyiz3IIC&pg=PA92&lpg=PA92&dq=THIERRY-
PSYCHOLOGICAL+ANALYSIS+OF+REWARD+BEHAVIOUR&source=bl&ots=s9kOMY95
EC&sig=gd2FFjux9KIEv89FSlYq34Ia_M&hl=en&ei=2Ni4S66fKaT20wTgwe0v&sa=X&oi=bo
ok_result&ct=result&resnum=4&ved=0CA4Q6AEwAw#v=onepage&q=&f=false>

Henderson, Lain. (2008) Human Resource Management for MBA students . 1st edn. CIPD.

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Hofstede, Geert. (2009) Hofstede’s cultural dimensions (India) [online] available from
<http://www.geert-hofstede.com/hofstede_india.shtml>

Tayeb, Monir H. (2008) International Human Resource management. Oxford press

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