Challenges in HRM Research in China

Challenges in HRM Research in China Shuming Zhao Professor and Dean School of Business Nanjing University Nanjing 210093, China Tel.: 025-83592077 Fax: 025-83317769 E-Mail: zhaosm@nju.edu.cn

Nice Reminder　温馨提示 “Tell me, and I will forget, 听到，我会忘记， Show me, and I may remember, 看到，我会记住， Involve me, and I will understand.” 参与，我会明白。 ——Confucius 　　　　　　　　　　　　　　孔子　 © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Today’s Agenda • Ten Hot Topics and four Difficult Issues • HRM Research Focus in China • Issues and Challenges for the Science of HRM © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Ten Hot Topics on HRM1. Legal Requirements • China government gradually raised the level for normalizing the labor market and enforcing the laws (Labor Law, Contract Law, Employment Promoting Law, etc.). • Facing the competition challenges and managing becomes more and more multiple and flexible, company human resource management should meet the government legal requirements. • Research topics: External environment of HRM, such as law, labor market, competitors, etc. influencing HRM. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

2. Self Innovation • Chinese government proposes to establish Innovated nation, the key is the talent. • How to improve self innovation and creation motivation through management is a very important subject to HRM. • Research topics: Innovation, creation, entrepreneur, entrepreneurship, etc. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

3. Internationalization of Talent • From 1978-2005，China attracted US$600 billion FDI and invested US$50 dollars abroad. MNCs have established more than 800 R&D or engineering centers in China. China needs more internationalized talents • What is the criteria for internationalized talents? Sony hired Howard Stringer as Chairman of the Board and CEO, Pepsi Cola hired Indra Nooyi as CEO, PingAn hired Richard David Jackson as President of the Commercial Bank(Someone has a good command of a foreign language, understand market economic rules, has international views, operation capability, and good performance.) • Research topics: internationalization of talent, professionalization, marketization, and internationalization of managers © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

4. Frequent Changing leadership • Multinational companies, state-owned enterprises, and private firms are all facing the problem of frequent changing leadership and high turnover rate. • How to select employees, especially the senior managers? Is it a good idea for the state-owned firms to have all managers to retire at the age of 60? • Research topics: Employee Turnover rates, Employee engagement, employee satisfaction, etc. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

5. Layoffs • Company’s layoff brings challenges to the employee relations. • Research topics: layoff, employee relationship © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Labor Cost and Compensation • Labor cost increased, especially key positions. • How to determine compensation, based on time, piece of work, technical capability, knowledge, management, performance? • Research topic: human capital, compensation system, higher performance organizations, performance management and appraisal. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

7. High Work Pressure • Entrepreneurs, managers, professional people, and even workers feel high work pressures. • How to balance life, work, study, and family? How to deal with the conflicts • Research topics: improving the quality of work-life, balancing the conflict of work, family and life © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

8. Labor Relations • Lots of conflicts between employers and employees and between management and employees • Union Law • Case: Wal-Mart, Apple Computer Inc. , KFC, McDonald’s, and Pizza Hut in China • Research Topics: Labor relations, collective bargaining, trade unions, and union leaders © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

9. Labor Market and College Graduates • College graduates feel more difficult to find jobs: 700,000 college students could not find jobs when graduated in 2004; 900,000 in 2005; 1.2 million in 2006; and the number might reach 1.5 million in 2007. China will change from “degree society” to “competency society”. • Shortage of technical people • Research topics: human resource planning, educating and training college students, employment for college graduates © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

10. Professional Education and Training programs • Fast growing professional degree programs: MBA, EMBA, MPAcc, MPA, Engineering, etc. • Company training, EDPs • Research topics: organization development, organizational competences, organizational learning, training and development, career planning and development © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Four difficult Issues1. Culture • Under traditional Chinese culture, organizations first considers equality in compensation system, not motivation. • China is a society paying much attention to the issues of face, network, and guanxi. • Some of the Chinese cultural phenomena affect human resource management in China. Research Topics: Multinational Business Management, Managing Foreign Companies in China, Managing Chinese Companies abroad, Cross-cultural Management, etc. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Human Resources: the Core of Cross-Cultural Management • Cultural differences affect the efficiency of organizations through people’s minds, values and behavior. • It is also humans (for example, the managers) who implement cross-cultural management. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

For Example: Multinational Staffing Policies Four Approaches: • Ethnocentric:All key positions are filled by parent-country nationals. • Polycentric:HCNs are recruited to manage subsidiaries in their own country and PCNs occupy positions at corporate headquarters. • Geocentric:utilizing the best people for the key jobs throughout the organization, regardless of nationality. • Regiocentric:defining as functional rationalization on a more-than-one country basis, one way is to divide its operations into geographical regions and transfer staff within these regions. (regional headquarters) © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Cross-cultural Management • Cross-cultural management is a fascinatingly complex subject. Cross cultural knowledge and awareness can assist executives to improve management skills. More importantly, it can also help business leaders make the right strategic decisions. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

2. Concept • Many HRM problems caused by unclear concepts. • Human resource management is the theory, techniques, methods, and tools for studying the adjustment of people and their relations in the organization, connection between work and its relations, matching the people and work in order to fully develop human resource management, tap people’s potentials, motivating people, promoting the work efficiencies and meeting the organizational objectives. • Research topics: human resource management in a transitional period, functions of human resource management, human behavior, etc. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

3. System • Companies do not have prefect governance • Many state-owned enterprises have no core competencies • Private firms are managed by family members and relatives, it is difficult to practice human resource management system. • Research topics: human resource management system innovation in different regions, different ownership, different industries © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

4. Methodology • At present, organizations start to pay attention to human resource management, but they do not know how to do it. • We need not only to learn HRM theories, but also study HRM methods, techniques, and tools. • Many HR managers are learning different kinds of new methods and tools, such as KPI, 360 degree feedback, balance score card, etc., But they do not know what the best and suitable tool is for their firms. • Research topics: HRM theories, methods, techniques, and tools. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Today’s Agenda • Ten Hot Topics and four Difficult Issues • HRM Research Focus in China • Issues and Challenges for the Science of HRM © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Some of the Modern HRM Theories from other Areas • Resource based theory from political science • Work cost theory from economics • Human resource strategy theory from corporate strategy • System theory from sociology • Behavior theory from psychology © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Three Important Focuses in the Research of HRM in China • Global HRM • Strategic HRM • Evaluation on HRM efficiency and effectiveness © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

I. Global HRM • Globalization has potential implications for virtually all of the research needs and directions we already have identified. • Today's increasingly global, competitive marketplace has driven considerable changes in labor markets, and has transformed the practice of Human Resource Management. • Expanded multinational operations within large companies, combined with increased technology and communication capability, have led to vast diffusion of global “best practices” in HRM. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Global HRM • As a global company, the only way to succeed is to develop an effective global human resource management system with personnel capable of designing and implementing transnational business strategies. • In most cases firms have historically gone from domestic, to international, to multinational, and finally to global operations. At each phase, the approach to human resource management changes significantly along with the changes in competitive strategy, company structure, the product or service being marketed, profit margin, and expenditure required for research and development. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Global HRM Four issues should be researched as firms go to global operations • Expatriate, Local Managers and their career Development • Function of Global HRM, such as recruitment, training, performance evaluation, compensation, Labor relations, etc. • Cross Cultural Management • Managing diversified workforce © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Phase I: Domestic • Culture • In domestic firms, international cross-cultural differences are not important. • Human Resources • There are no expatriates. Therefore, cross- cultural training and development is not an issue. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Phase II: International • Culture • Cultural sensitivity becomes very important to market and clients in each foreign country. • Human Resources • The international firms now include many expatriates. Good people but not great people (not future CEOs) are sent abroad. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Phase III: Multinational • Culture In the multinational phase, cultural sensitivity becomes slightly less important outside the firm. While multiculturalism begins to become less important outside the firm, it becomes more important inside of the company. Staff from different parts of the world work together on a day-to-day basis. By this stage, attention to developing cross- cultural skills is needed for working both inside and outside the organization. • Human Resources The person making decisions for foreign operations is no longer an expatriate marketing expert, but rather a valued manager of a worldwide line of business. In this phase, as the approach changes to multinational, the managers who are sent abroad tend to be more senior and therefore, more central to the company's core management. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Phase IV: Global • Culture • A global organization needs to understand cross- cultural differences both inside and outside the organization. Managing global boards and senior executive committees requires a sophisticated understanding of cultural differences in interaction patterns and in attitudes towards time, influence, and problem solving styles. • Human Resources • In this global Phase, the number of expatriates again increases. Managers are sent abroad as the "glue of the company" to coordinate and integrate strategic activities, not merely to complete particular tasks. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Cross Culture HRM in China • In particular, multinational companies have increasingly set up operations for manufacturing and services in China, bringing with them HRM practices from all around the world. The importation of new management practices has changed the nature of the labor market and the practice of HRM, and will potentially have an impact on Chinese society. • These external forces are paralleled by unprecedented economic reform and the enactment of employment laws that are changing the nature of organizational forms and management practices within China. China's entry to the World Trade Organization has further heightened the global competition in the Chinese domestic markets. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Topics needed to be researched • What is the current state of HRM practices in China? what theories may explain the variations in HRM systems? • How do multinational companies influence HRM practices in China? What processes may lead to or what may account for any similarities or differences in HRM practices or systems between the MNCs and the Chinese firms? • What have been the consequences of different HRM practices or systems in China? © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Topics needed to be researched (Continued) • What have been the intended and unintended consequences (individual, group, company, or societal) of different HRM practices? • What are the roles, competencies, and behaviors of HR professionals in Chinese firms compared to MNCs and what may account for potential similarities or differences? • What are the developments in industrial relations in China including the role of unions and labor laws on HRM practices and labor-management relations? © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

HRM Professionalization and HR Competence • The word professional is often used to judge a person’s work behavior and to signify a superior performance. • Competence refers to an individual’s knowledge, skills, abilities, or personality characteristics that directly influence his or her job performance. • Human resources have become increasingly integral to the success of firms. At the same time, HR professionals have identified the key competencies required for their field. No longer merely a "personnel" function, HR is essential to a business’s success. To this end, HR professionals at all levels should establish industry-wide certification programs that embrace not only the classic administrative aspects of the position but also the financial and general business knowledge that helps ensure that HR will drive a firm’s success. • HR certification programs © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

HR Competencies • Most of the theoretical work and research on professionalization originated from the sociological literature rather than the industrial and organizational psychology or management literature. As a result, much of the research on professionalization emphasizes the processes underlying the formation of a profession rather than the process through which professional skills are identified, developed, and maintained. • There is arguably an even greater need for research examining how HR competencies, once identified, can be most effectively developed. • Which HR competencies can be acquired effectively through formal HR training (i.e., HR graduate programs), and which require experiential learning or significant on-the-job experience? © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

2. Human Resource Management System Model based on Strategy Pphilosophy and Mission Culture and Values Business Strategy Individual Needs and self-actulization Demand on Employees by firms Value Evaluation and Distribution （Performance Appraisal and Compensation） HRM Management and Development System HRM Process HRM Mechanism HRM System HRM Techniques © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Strategic HRM Model Strategic Competency Integration, restructuring, acquiring, and using resources in order to adapt the market change and operation ability of creating market change. Evolution Renewal Core Competence HRM Practices, such as recruitment, training, performance management, compensation, etc. Learning and Innovation Knowledge Transformation Knowledge Integration Change Knowledge Creation Value Rare Intellectual Capital Difficult to copy Store System Organized Human Resources Human Capital Customer Capital Social Psychological Capital Capital © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

3. Evaluation on HRM Efficiency and Effectiveness • (1) HR Index Survey, such as Morale measurement, • (2) HR Reputation • (3) HR Accounting • (4) HR Auditing • (5) HR Case Studies • (6) HR Cost Control • (7) HR Benchmarking © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

(8) HR Key Index, such as employee work attitude, absenteeism, overtime, and organization performance • (9) HRM Efficiency Index, such as GE uses Employee Relations Index, some firms use HR Performance Index. • (10) HR Management by Objectives • (11) HR Profit Center • (12) Analysis on Investment and Return • (13) HR Index: 15 factors • (14) Application of HR Evaluation Methods © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Today’s Agenda • Ten Hot Topics and four Difficult Issues • HRM research Focus in China • Issues and Challenges for the Science of HRM © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

How to Combine Theory and Practice • Unlike other fields, HRM does not have a grand or integrative theory. Furthermore, some have criticized HRM as being an a theoretical, problem-driven field. The state of HRM theory is the result of HRM's diverse theoretical roots, coupled with the fact that earlier HRM academic pursuits simply were designed to address (immediate) practitioner problems. • Human resource management field is a multidisciplinary field with roots in psychology, sociology, management, education, economics, etc. • The field of HRM continues to evolve in practice as it does as an area of research and scholarship. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

How to Combine Theory and Practice • There should be more collaboration between nonacademic and academic field. HRM researchers should recognize the importance of such collaborations. • Business-university research partnerships • Such partnerships and collaborations can stimulate theory development and testing (from anecdote and observation to theory) on real-world problems and issues. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

How to Use Multi-level Analysis • Historically, scholars have had more experience in the field of HRM at developing theory at the individual level of analysis. • A large number of studies have examined individual practice independent of any other HR practices that might exist. • However, since 1980, with the influx of work in business strategy and its integration with HRM, there has been more of a macro focus in certain areas in the field. • Some recent studies have focused on sets of HR practices. These studies treat multiple HR practices as a system. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

The Individual Level Analysis • Traditionally, micro HRM research has explored the impact of HR practices on individuals. Based on foundations, such as industrial/organizational psychology and industrial engineering, this kind of research largely explores how HR can increase individual productivity, quality, or satisfaction. It often entails manipulating relevant HR practices in an experimental format, and then examining the impact on individuals or assessing individuals on some characteristic (skills, abilities, attitudes, etc.) and relating the assessments to some performance measure (productivity, absenteeism, turnover). In all cases, however, the goal of the research is to identify and account for variance among individuals. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

The Organization Level Analysis • More recent macro HRM research examines the impact of HR practices using the organization (corporation or business unit) as the level of analysis. Most often this research assesses variables through asking an informed respondent to provide the relevant value for his/her organization. This kind of research tends to focus on the variance in relevant variables across organizations, assuming relative uniformity in the variable within the organization. • This focus on the macro or organization level also has promoted the importance and significance of HRM, because the typical dependent or criterion variable used is organization performance. In recent years, due to an increasing global and competitive environment, organizations have been downsizing and streamlining operations. As such, despite an increased strategic view of HRM, organizations have been outsourcing HRM functions such as training (Ford). © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

The Organization Level Analysis • By taking a macro view of HRM, especifically a strategic view of HRM, both HRM researchers and professionals have the potential to underscore the importance of HRM by highlighting its importance to organizational performance. • The field of HRM is now in a position to deal more effectively with research at different levels—individual, group, division, organization, and so forth. • A typology of HRM research © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

A typology of HRM research Number of HRM practices Organization Level of analysis Individual Source: Wright, P. M., Boswell, W. R., Desegregating HRM: A Review and Synthesis of Micro and Macro Human Resource Management Research, Journal of Management, 2002, 28(3), 247–276 © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Researchers are beginning to learn and use more complex statistical techniques such as repeated measures regression and hierarchical linear modeling. These techniques enable researchers to simultaneously test out individual, group, and organizational level effects. More multilevel data sets become available and researchers have a much better understanding in multilevel statistical techniques. © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Dr. Shuming ZhaoProfessor and DeanSchool of BusinessNanjing UniversityNanjing, 210093P.R. ChinaTel.: 86-25-83593419 (D) 86-25-83592077 (O)Fax: 86-25-83317769E-mail: zhaosm@nju.edu.cn © Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Challenges in HRM Research in China