Introduction

To manage people effectively is a complex endeavour. Indeed, there are many different best practices or approaches being employed by companies to manage people – and that differences can be particularly obvious when consider about how the Western and Eastern based companies manage the workforce. To investigate further into such differences, this report will critically evaluate if there are contrasting people management approaches between Western and Eastern based companies. Then, the implications due to such differences will also be discussed and highlighted, as to better inform on how to deal with international human resources management strategically. To facilitate the discussion, the contents in this report will be separated into two main parts. In the first part of this report, the differences of people management approaches in western based versus eastern based companies will be presented and explained. Then, upon understanding about the differences; some implications due to such differences will be also be presented and highlighted. Conclusion will also lastly be offered to readers on those critical lessons to be learnt from this report.

Differences of People Management Approaches

It would not be hard to comprehend why there are differences people management approaches between Eastern versus Western based companies, given that the business environment or the national situations (political, economic, cultural, society and institutional) between the western and eastern countries do differ significantly (Ke, Chermack, Lee & Lin, 2006; Chien, 2006; Warner , 2011; Fu, 2000; Froese, 2013). Due to the environmental or contextual differences, companies operating in the different countries or regions of the world must adapt or adjust accordingly, to suit to the people and the external environment that they are operating within (Zhu, Cooper, Fan & De Cieri, 2013; Wang, 2011; Liang, Marler & Cui, 2012). To further explain that, some of the contrasting differences will be articulated below.

Recruitment and selection approaches. Any experienced manager would understand about the importance of recruitment and selection process in reaching out to the talents, and in recruiting them towards achieving the mission or vision of an organisation. Perhaps for that, in the western companies, there are strict and comprehensive recruitment and selection practices (such as job interview), which are designed to screen through the applicants and to find the candidates that best fit the company and the job (Huo & Von Glinow, 1995). Indeed, and often, the use of psychometric and assessment tests are also common for managers to critically evaluate the applicants (Chow, 2004). However, in many companies in China, for example; job interview is used more as a way to provide information to the applicants, rather than the opportunities to test out the candidates (Huo & Von Glinow, 1995). To explain, this is largely due to the influence from the ‘rice bowl policy’ and ‘central planning and command economy’ in China in the past few decades. Anyway, such differences show how the institutional factor may affect the people management approaches adopted in the firms located in the different countries.

Performance appraisal approaches. Performance appraisal is crucial element of people management process, as that is the link to align and adjust people actions, attitudes or behaviours towards supporting the achievement of the organisational goals or business objectives of an organisation. For that, it is then not surprising that performance appraisal techniques are being perceived as crucial in many of the western companies. For example, some of the common performance appraisal techniques employed in western firms include 360 degree feedback appraisal method.

It is not proper to mention that performance appraisal is not being implemented in eastern based companies, but a review of the literature found that many of those eastern based companies had faced with many challenges when trying to adopt performance apprsial techniques originated from the west. To explain, the performance appraisal within companies in eastern countries, such as in China is challenging – perhaps due to the Chinese (or perhaps, eastern people) emphasis on harmony, face and non-confrontation (Tsang, 1994; Fu & Kamenou, 2011; Wang, 2011). In a way, manager cannot confront directly or critique the subordinates directly, in order to save the face for the subordinates (Dessler, 2006). Due to such problems, it can be hard for the manager to correct the weaknesses of the employees. Rather, alternatives or indirect methods must be used to amend the employees’ mistakes, or in adjusting the behaviours of the employees to suit the needs of the company. In short, while the technique used in both western based or eastern based firms might be same, the approaches in which these techniques are deployed do differ significantly.

Communication process and approaches between people. In many of the eastern countries, there is a culture of high power distance that affects the communication approaches between people in organization. Contrary to that, the western world has a low power distance culture (Huo & Von Glinow, 1995; Fu & Kamenou, 2011); and that affect how managers in the firms from different region of the world deal with the employees. Perhaps for that, it is not uncommon that eastern manager (such as in China, Japan and India) usually will have only one-way communication with the employees (i.e., giving orders and commands); while two-way communication is much preferred in the western world (Dessler, 2006). Then, the communication approaches are also affected by the cultural tendency for maintaining harmonious relationships between people (Fu & Kamenou, 2011; Li & Chia, 2011). To explain, the ways the managers communicate to employees in eastern-based companies cannot be too ‘direct’ or ‘frank’, as that will embarrass the employees, not to mention that majority of the eastern managers would also not comfortable to confront directly with the subordinates (Lan, 1995).

For that, it can be easy to observe that the approach the communication taking place during the people management process in eastern based firm do differ when compared to the situation in western based firms; when the western people tend to be more direct or ready to confront others in workplace (i.e., critique is not being taken as personal). For that, it would be valid to assert that from the communication point of view, there are different approaches that should be deployed to deal with people or workforce in a company.

Ways to reward the employees. It would be valid to mention that performance-based reward is common and widely accepted in the western countries; and at least is perceived or argued to be crucial in contributing to better performance (Chow, 2004; Huo & Von Glinow, 1995). In other words, performance based evaluation and appraisal process is the key approach adopted in western based firm in managing the workforce, so to align the performance of the workforce to the compensation to be received by them. However, the ways of which the management may choose to reward the employees in eastern countries may differ. For example, as discussed by Cai, Morris & Chen (2011), it is found that managers in China tend to reward based on certain ‘soft factors’ such as: seniority of an employee, loyalty of an employee and relationships between the particular employees to the managers. Indeed, Chow (2004) even argued that such approaches are even more common and widespread in state-owned enterprises in China. Yet, Dessler (2006) also commented that reward based on seniority is not something occurring in developing Asian countries, but also can be found in developed Asian countries such as Japan.

It is crucial to clarify that it is not that performance-based reward system in eastern countries such as China or Japan is not being practiced. However, it would be valid to assert that high differential of pays between workforce is often something to be avoided by the people in the east (Bruton, Ahlstrom & Chan, 2000; Chow, 2004; Lewis, 2003). Very often, manager would emphasise on equality of pay as well (i.e., compensation tends to be egalitarian) – in which that resulted in a situation whereby the highest pay received in a firm may be no more than four times the lowest salary. This is a huge difference if considering about the pay differences in western countries, such as in United States - which is between 50-1 towards 100-to-1 (Huo & Von Glinow, 1995).

Training and development approaches. It is undeniable that training and development is crucial for the growth and human capital development of a company, particularly under such a competitive business environment. However, there are different approaches being applied by managers in western based versus eastern based firms. To explain, as the eastern countries are largely developing countries, and that there is still lack of high skill knowledge workers, there are needs to focus more extensively on training and development of the people or workforce in a company. For that, the training of employees is an important part of human resources management process in many eastern based firms (i.e., especially in technology oriented companies) – given that it is necessary to train the workforce intensively before getting them to deliver the desired results for the company (Li, Zhao & Liu, 2006; Chow, 2004; Ke, Chermack, Lee & Lin, 2006). For that, it would then be not surprising that training and development is more important part of people management process in those developing countries in the east, such as in China (Bruton, Ahlstrom & Chan, 2000; Chow & Liu, 2007). In other words, eastern based companies, especially those in developing countries would need to develop truly comprehensive training and development programmes – as to better equip the workforce with the necessary skill so to enhance the competency of the workforce in achieving the organisational mission. Nevertheless, it would also be interesting to note that some eastern based firm do include other agenda in the employee training and development programme. For instance, Chow, (2004) discuss that some of the stated owned enterprises in China do include cultural-political components aimed at indoctrinating employees with Communist ideology, moral values and patriotism in the training and development programmes in these enterprise. This is definitely something very rare, or not existence in western based enterprises.

Signs of Convergence. Overall, the discussion presented above shows that there are real differences on people management approaches between eastern based versus western based companies. Nevertheless, it is also crucial to highlight that not all people management approaches on the two regions differ. Indeed, there are some signs that some approaches deployed or employed in dealing with people management issues in the different firms do converge. For instance, there are some signs on gradual abandonment on the reward system that value over age and seniority (Taylor, 2005). This is particularly true in recent year, as when facing competitive pressure from the market, pay must be competitive. For examples, more and more domestic based companies in China have adopted various policies, including bonuses, subsidies, merit pay, or pay for performance (Chow & Liu, 2007). Then, there are also increasing adoption of performance oriented reward system put in place in many of those firms to better align employees’ performance to their compensation (Dessler, 2006). With that in mind, some implication from the research findings yielded from this report will be provided below.

Implications

There are many critical implications due to the discussions presented above. First of all, the discussions presented indicate that adaptation to suit local settings is critical, for a firm to stay relevant, or to be more strategic, in the context of managing the human resources in a particular country. Indeed, many evidences support such notion, as there are signs that western human resources management practices must be adjusted to fit the eastern cultural or societal situation - for business effectiveness and performance (Wang, Chen & Chu, 2010; Smale, Björkman & Sumelius, 2012).

Aside from that, the impacts of culture towards how people interact with each other in the different countries are not something to be neglected, especially in the context of international human resources management. This is particularly true given that the eastern society seemed to exhibit strong degree of certain tendency, such as: emphasizing on guanxi, valuing seniority, wish to maintain harmonious relationships among people, exhibiting high power distance, having a high context culture and so on, as compared to the situations in the western countries (Fu & Kamenou, 2011).

Yet, it is also crucial to understand that there might not be a single ‘best practice’ to be adopted or deployed in the context of effective people management, as issues such as political, economic, cultural, society and institutional differences can necessitate a firm to deploy different practices to deal with people from different regions. Such idea is crucial especially for those multi-national firms – when the firm need to deal with a diverse workforce across the globe.

Nevertheless, it is however not proper to assume that all of the western human resources practices will not be useful in the eastern part of the world. Many scholars had actually found that some or certain human resources management practices originated in the western countries can be applied effectively in eastern countries, such as: integration of human resources development activities with organization mission and goals, the involvement of line managers in the design and delivery of human resources management, the alignment of human resources management with organization culture and values (Han & Zhao, 2013), the focus on motivation and supporting staffs for better performance (Lin, 2012), or the adoption of high-performance human resource practices to engage employees (Sun & Pan, 2011; Chow & Liu, 2007).

Conclusion

To conclude, there are many examples on which people management approaches in eastern versus western based companies differ. Those differences can be due to a variety of reasons, such as due to cultural differences, or the institutional differences. Then, the differences of people management approaches can range from the perspectives of the following areas: selection and recruitment, reward system, performance appraisal, training and development, communication process and so on. Nevertheless, it is also discussed that some of these differences are converging. In certain cases, there are possibilities that western management practices can also be applied in eastern countries. However, many of the evidences still point to the necessities of adjusting or adapting the people management approaches to the situation. For example, it would not be effective to forcefully deploy a people management approach that is effective in western countries to manage people in eastern countries – since the people in the eastern countries behave and think differently. Such idea is crucial, particularly in the field of international human resources management. For multinational corporations needing to manage a diverse workforce located in different region around the world, it is therefore, critical not to adopt only a single approach in dealing with the workforce. For effective people management, it would be better off to stay flexible, adaptable and alert to how certain people management approaches can be improved or refined to effective manage the employees for better corporate performance.

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