Even though authors differ in their views regarding Human Resource Management, it still remains an important factor in the success and failure of an organization. Human Resource Management has different models, in which the company applies; Price (2004) enumerated the different models. The Harvard model is one of the most influential models of Human Resource Management, the Harvard model was developed by Beer and colleagues in 1984 and it views employees as resources. It outlines four Human Resource policies: (a) Human Resource Flows which includes recruitment, selection, placement and promotion. (b) Rewards System which includes the payment system (c) Employees Influence that includes levels of authority and responsibility (d) Work Systems which includes the definition of work. These four HR policies will lead to Commitment, Congruence, Competence and Cost Effectiveness. The University of Essex (2006) enumerated the strengths of this model and these are: managers were portrayed as situated choice-making actors, the importance of stakeholders is acknowledged in a wider society and admission of bargained nature of workplace relations. On the other hand, there are weaknesses on this model and these are: the commitment to bargaining is weak, the model is prescriptive, and it does not give an understandable theoretical comprehension of the nature of feedback and linkages between elements.
The next model that Price discussed is the Michigan Model; it was developed by Formbrum and colleagues in 1984, it demands human resources strategy to have a tight fit in the strategy of the business in the overall aspect. It has four common Human Resource Processes: (a) Selection in which the organization matches the people to jobs (b) Appraisal of the performance of the employees (c) Rewards in which it stresses the real importance of salaries in obtaining results (d) Developing the skilled individuals. The strengths of this model is it offers a simple commonsense rule of human resource management, it focuses the significance of “internal coherence”, highlights on matching the internal strategies to the external needs and focuses a key tension in HRM practice. The weaknesses of this model are it tends to prescription, it is focused on market and organizational needs, it states little regarding stakeholders and their interest and the status of model is unclear. (University of Essex, 2006)
According to the Asia Pacific Management Forum (2006), years ago, Human Resource Management is almost an alienated term in Asia. The organizations in Asia do not have an idea that an efficient management of employees had a major effect on the performance of an organization. Universities did not offer any units in psychology and governments ignored subjects such as management and Human Resources.
China is the country having the biggest population in the world, and because of the booming economy of the country, investors are flocking in China. Fang Lee Cooke (2005) wrote that China has one of the largest and highest labor forces in the world having a population of 1.3 billion. Moreover, the author discussed that when China opened its economy it had great effects on a number of sectors. A lot of workers are having a wide opportunity in terms of employment and career choices and because of these the employers are meeting more pressure in terms of quality, adaptability and enhancement of the performance of employees. Introduction of new Human Resource Management is needed in order to address this issue.
And prior to the Open Policy in 1979 China did not practice Human Resource Management., the management of people in China was different and has many special characteristics; according to Budhwar and Debrah (2001) the People’s Republic of China manages its employees through renshi guanli or personnel management. In personnel management, the recruitment, selection, rewards system, disciplinary measures is concerned with the “bread and butter” activities, any company has to execute a set of procedures according of this kind. China has a centrally planned economy before opening up to the world market and made its transition to a socialist market economy. There have been a number of problems the foreign investors faced when their companies established in China. Zhu and Dowling (1994) discussed that training and development of the employees in China is needed because of the low efficiency and productivity in the enterprises in China added the fact that there is relatively poor educational background of Chinese workers and there is an unsuitable match of the skills and requirements for the job.
And because of cheap labors in China a number of companies have import their managers to China. However, the foreign workers encountered problems in the workforce. In the study conducted by Schack (1997) Taiwanese managers told the problems with local workers in China such as poor job commitment and work discipline, high turnover rates, not interested in learning new skills, intergroup hostilities and poor training and education. In addition, Chow and Luk (1996) made a comparative study on women managers in China and Hong Kong the study revealed that managers from China were not as mature as in Hong Kong. Women managers in Hong Kong regarded their job as a path to career development while managers in China regarded the monetary reward as their motivation for the job. Moreover, Hong Kong managers concentrate on planning whereas managers in China concentrate on directing.
Furthermore, Ahlstrom, Bruton, and Chan (2000) discussed the challenges a firm faces in Human Resources when establishing a business in China. First, is on the selection, in China connections is important in facilitating a business without connections the business will be in a slow process, another challenge in the selection process is the belief of the government in which private firms should be absorbing excess employees from state-owned companies, in which leads to overstaffing in private firms, and empire-building is also a challenge in the selection process. Next is Training and Development, the Chinese Employees are risk averse and seldom takes initiative. The third is on Appraisal and Reward, the appraisal on the performance for non-production revealed to be a problem and loyalty of employees is hard to get. And finally Control and Socialization, the top managers use the firm’s money to use for their own personal needs without paying interests, the iron rice bowl mentality of Chinese workers does not fit well in the private sectors in which most of the companies are owned by foreign investors.
As stated earlier, foreign firms have are facing challenges regarding the Human Resource Management in China. In alleviating the challenges the organizations must do something like on the Selection process, the organization can diminish if not eliminate the challenges brought about by connections, through establishing strong social networks with other foreign firms with the same product or making the company visible to the community in order to develop strong networks that have access to right people and resources. And on the overstaffing of clients, Ahlstrom et al discussed that overstaffing can also be an advantage because some of the workers know connections that could enhance the organization in terms of production or elsewhere. And in empire building, the organizations must be watchful that the employees will not recruit their friends and family members that do not fit in the job qualifications.
In Training and Development, it has been studied quite a number of times on the inefficiency and mismatch of workforce in China, in order to address this issue on the organization, the workers should be trained properly on what not to do and do on their job including the top managers. Learning new skills must be installed in the minds of the workers and explain to them the benefits of learning the new skills. An example is in the study of Shack in which the Taiwanese managers adopted production-based remuneration, fines, employee education and attention to welfare and satisfaction. In addition Weldon and Vahonacker (1999) suggested that work firms in China written job descriptions must always be updated because Chinese employees wants written rules and regulations.
In Appraisal and Rewards, organizations must imposed fines on top managers that cause more of a problem than a help to the firm via moving him or her to a lower position or even firing the manager. Giving more incentives and good compensation packages to the employees must also be done to retain them.
In control and socialization, managers that spend the company’s money on their extracurricular activities must either be fired if proven guilty or demoted from the position if the involvement is minimal. However, instilling the value of competitiveness and socializing must be done not only to the managers as well as the production employees. Weldon and Vanhonacker stated that some firms hire new graduates in which the value of aggressive socializing and professionalism are taught and nurtured via mentoring.
Shifting from personnel management to Human Resource management has generated advantages. By employing Human Resource Management of private firms there is a considerable difference between the satisfaction of employees in the joint venture and state-owned companies. According to the study of Egri and Yu (2005) the employees of the joint venture are more contented with the HRM of joint venture enterprises than in state-owned enterprise.
The Harvard Model of Human Resource Management is the best practice model can be applied in China, as discussed earlier the Harvard Model thinks employees as resources. And when a company thinks its employees as a useful and essential support in increasing the production and profit of the company, therefore the organization will scrutinize the recruits for placements and will give good compensation packages for good performing employees.
In the book of Armstrong (2003) he wrote that according to Beer et al the founders of Harvard framework the model is based on the philosophy that the issues of historical personnel management can only be resolved when the top managers produced a perspective on involving the employees in enhancing the organization and the HRM policies that the company may use to attain the objectives. Without a central belief or strategic vision, provided by the managers, the Human Resource Management is most likely to stay as a set of self-governing activities, in which each activity is maneuvered by its own practice.
Beer et al stated, as cited in the book of Armstrong, that there are many pressures that requires a wider, extensive and more strategic viewpoint with consideration on the human resources of an organization. Long-tem views in the management of personnel and regarding people as prospective assets that a variable cost.
The concept of Harvard model has been expanded by Walton (as cited by Armstrong), that gives emphasis on commitment and mutuality. Walton stated that the new model of Human Resource Management is made up of policies that advance mutuality such as mutual goals, influence, respect, rewards and responsibility. Walton’s belief is that programs promoting mutuality will evoke commitment that will lead to better economic performance and greater human development.
And according to Walton a best practice model stresses commitment than compliance and argues in favor of procedures on culture management in order to attain cultural control. In which the Harvard model displays.
David Guest (as cited by Armstrong), have expanded the Harvard model and defined four policy goals: The Strategic Integration, High Commitment, High Quality and Flexibility. He believes that the search for competitive advantage in the market via supplying high-quality products and services by having a competitive price associated with high productivity and the ability to introduce and manage change in reaction to the modifications in the market and the progress of research and development.
As mentioned earlier is the most influential HR Management model of all. The model can be used to almost all firms whether private or public owned in China because the basis of the model is that employees are as important as shareholders and customers and that the companies must address their needs. And as stated earlier one of the challenges of a company in China is loyalty of employees, by letting the employees know they are equally important as customers by in the for of good compensation packages the work force will retain and will not look for another company.
In applying the Harvard model the important stakeholders must be taken account first because the stakeholders have the power on the programs of the Human Resource Management. Fleming (n.d.) identified the key stakeholders that have influence in the HRM policy.
Government. According to Fleming, government has the authority on the public sectors, just like in China where most of the companies are state-owned, the government has the power to change and reform the policies, shifting from personnel management to a Harvard model of HRM.
Management. The second key stakeholder Fleming identified is the management according to Storey (1992), the ability of Harvard model to draw the managers to carry out consistency, direction and structure to the policies on employees that are already old fashioned and cannot be utilized to address the requirements. The top managements of both state-owned and private owned companies in China have the capacity to improve the outdated policies of the Human Resources.
Unions. The union is the third key stakeholder Fleming determined. According to Guest (1995) Human Resource Management is defined by a number of people including Bach as unitarist in form, and it only focuses more on the outlook of the management which serves as a threat to labor unions. However in the context of the Harvard model which the groups of employees such as the labor unions are an important component. There has been a relationship among key stakeholders; the relationship gives labor unions an opportunity to participate in the reform policies within the organization. In this way, the employees can be assured regarding their employment stability as well as the company will be assured on the loyalty of the employees.
According to Fleming, an important matter in the HRM models including Harvard model is integration. Guest, (as cited by Fleming) identified three levels of integration.
• Integration with business strategy
• Integration with HRM policies.
• Integration with the line management function.
Integration with Strategy. Guest (1987) defined the Strategic integration in the Harvard model as the capacity of a company to incorporate issues on HRM into its strategic plans, assure that the diverse phases of HRM adhere and provide the managers to integrate a viewpoint of the HRM in to decision-making. In state-owned companies in China associating the HRM with the strategy in business will pose a difficulty because of different purposes, stakeholders and procedures. An example, if a state-owned company incites a strategic goal of delivering more efficient service to the public, the Human Resource management will develop and train the employees, however due to the mismatch of workers there the goal of giving better service will be impaired. On the other hand, the entrance of foreign investors since the open door policy provided new ideas regarding HRM in which it provided the opportunity for top management of public sectors to learn and eventually will incorporate the policies in their own firms.
Integration with HRM policies. Fleming discusses that in developing an integrated HRM policy, it is important to evaluate the responsibilities of the Human resources at a central level. He wrote that by assessing first at a central level, policies can be identified whether it retain on the central level or not. According to Taylor (n.d.) in the Harvard model policies are influenced by different stakeholders in which were stated earlier. By having representatives on the different sectors of the organization an integrated HRM policy will be developed balancing the various interests of the stakeholders.
Integration with the line management function. Chinese workers as mentioned in the study of Ahlstrom et al have the mentality of “do more, risk making more mistakes; do less, make fewer mistakes; do nothing, make no mistakes.” In order to have a successful transfer of HRM from the central level to line managers, the Chinese managers must be trained to take the responsibility on the management issues on his or her department. A challenge when establishing business in China, in which public and private firms must face.
The Harvard model of Human Resource Management can be applied in almost all the private organizations in China. However, application of the Harvard Model in the state-owned organizations will be quite a challenge since China is a Socialist nation. Although Harvard Model is the most influential and popular model among the Human Resource Management, the state-owned organizations will not find it difficult to apply it in their own firms. As the trend of globalization occurs nowadays, the private and public organizations will adhere to Human Resource Managements in order to enhance the production and capability of its employees, in which will lead to better revenues and sales for the company as well as good compensation packages for its employees. The Harvard Model of HRM will still face a number of challenges when implementing it for the first time in China where the rice bowl mentality of workers still exists. Different measures must be made to ensure that the employees are well taken care of by the organization, to avoid losing the workers to other firms offering better salary and compensation. The Harvard model is the best practice and high performance HRM that can be applied in an emerging economy such as China according to Taylor, it can represent the multiple constituencies’ strand of industrial sociology, the multiple needs of psychological contract and the relational contracting element of the perspective of economics.
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