china reward and performance system

Human Resource Management in Multinational Corporations

Human resource management is important for all multinational corporations. This is due to the high prices associated with individuals who are not engaged in any commercial practice. Human resource management is critical because it enables organizations to weigh the gains and disadvantages of their operations. Furthermore, it is critical for multinational corporations to provide effective human resource management in order to handle the various structural constraints that exist across countries. As a result, human resource professionals must implement efficient human capital strategies such as recruiting, flexibility, incentives, work-life balance, marketing, and staff relations, among others. Nevertheless, these practices can be different depending on the culture of the specific nation. Effective human resource management has the following advantages; ensures reorganization of a company, increases flexibility to technological changes, empowers the workforce, enhance competition for human resources and puts more emphasis on core competency. The paper will discuss the reward and performance system in China and how the program is designed.

Reward System

Due to the competitive business environment, the company needs to take actions that ensure employees work to their full potential. For example, workers reward and recognition can go a long way in motivating the employees to change their working habits. Motivation schemes ensure that workers in a company utilize their ability well. The company can provide bonuses to employees who exhibit high productivity. Moreover, the firm can give flex time to the employees. This involves giving the workers the chance to report to work early, leave later or work at home for a certain number of days. Furthermore, the company can provide employees with the company’s shares (Cooke, Saini and Wang, 2014 p. 230). This strategy creates a sense of ownership and devotion among the employees towards the business. Workers who own part of the company’s shares have a greater interest in seeing the firm succeed by working harder and inspiring other members of the team. Other recognition and reward systems may include providing free vacations, saying thank you, providing reloadable gift cards, keeping staff healthy, provision of offsite employee activities, and recognizing monthly heroes.

Studies show that there are problems associated state-owned enterprises in China because of overstaffing. The reward differences are low because most managers are not willing to differentiate their workforce leading to poor motivators. Moreover, most of the human resource managers are putting more focus traditional progression of the employees on the basis of length of service and age rather than apply education and training to the employees. Furthermore, there is less communication between the employees and the departments thus resulting in low productivity by the employees (Li and Zhou, 2005 p. 1748). However, due to the reform of the reward system, managers have shifted towards western human resource policies because of decentralization of control and introduction of foreign firms in China. There exist differences between Chinese culture and that other nation in the west. First, Western companies are characterized by a shift from the industrial relations to employee relation. Moreover, they are characterized by a change from personnel management to human resource management. On the other hand, China has a shortage of skilled local managers who can establish appropriate reward systems. Due to the introduction of foreign firms, the old habits of China are dying. Employees have started earning individual bonuses which they share with their colleagues with the fear that they will be a target of jealousy.

Performance System

The performance-related reward systems focus on two concepts: notion of equity and idea of equality. The notion of equity stipulates that employees should be rewarded depending on their level of performance. Those who perform better should be given more rewards. Rewarding employees by their performance motivates them to put more effort to get more rewards. As a result of this, there is increased organizational performance (Renwick, Redman and Maguire, 2013 p. 11). On the other hand, the norm of equality stipulates that employees should be given an equal amount of rewards irrespective of their contribution. Therefore, companies need to analyze the employee’s goals, mission, and objectives before determining the kind of performance-related reward system. Furthermore, performance-related reward system can either be applied to individuals or groups. Individual rewards motivate the employee individually while the group-based ignores the outstanding individual performers. Group measurement is easier than personal measurement because job processes are interrelated. Moreover, group measurement makes employees feel like part of the company.

Cross-Cultural and Diversity Management

The company must be prepared to encounter different cultural diversities in China. Therefore, it must be ready to accommodate the cross-cultural issues that arise from the various cultures in China. Employees need to be trained on the appropriate approaches to understanding the cross-cultural and intercultural relations in China. Cross-cultural awareness is essential because it helps human resource managers when selecting and adjusting the personnel for the multinational firms (Wei and Atuahene-Gima, 2009 p. 91). Lack of cultural knowledge may lead to a positive or negative impact on the performance, effectiveness, assignment, and retention of the most talented employees. The firm should investigate the attitude of the Chinese towards certain kinds of electronics Understanding the culture of the Chinese ensures effective communication, team building, good scheduling saving of time.

Desirability

China is considered as a nation with large power distance which values its status. Thus, it is suitable and efficient to engage employees in management and increase the stability of vocational humanistic policies. The country advocates for collectivism and therefore it is easy to create a harmonious relationship between the managers and the employees. Institutional factors of China favor the multinational companies to transfer their resources to China. These institutional factors include national industrial relations, the conduct of business and employment laws (Cooke, Saini and Wang, 2014 p. 230). Employment laws stipulate how enterprises should recruit, train and provide incentives to the employees. Furthermore, the Chinese labor laws allow employees to form unions that protect their rights and seek incentives. Moreover, China has a corporate governance which advocates for the protection of foreign investors who enter the country. The human resource management laws stipulate how incentives should be provided to the employees.

Feasibility

However, multinational companies face some legal challenges in China. For instance, foreign representative offices need to go through a specific human resource management agency before they are allowed to hire new employees. Moreover, China faces the challenge of a shortage of talent. Studies show that merely 10% of Chinese candidates can work in areas such as finance and accounting (Björkman and Xiucheng, 2002 p. 860). Furthermore, the cultural diversity in China is a challenge to the Multinational Companies. It is therefore difficult for human resource managers to recruit qualified employees who are fit to carry out a given task. Additionally, multinational companies encounter the pressure to hire from China’s government. The government and party structures pressure firms to hire more employees than they need. Moreover, the government pressures the multinational company on the level of incentive provision.

Conclusion

The multinational company should, therefore, investigate the incentive and performance systems that are applied in China. Moreover, the company should also explore the cultural diversity in China before deciding the kind of incentive system to be used. Different factors such as rules and regulations, corporate governance, and employment practices must be considered to establish the company in the shortest time possible.

Bibliography

Björkman, I. and Xiucheng, F., 2002. Human resource management and the performance of Western firms in China. International Journal of Human Resource Management, 13(6), pp. 853-864.

Cooke, F.L., Saini, D.S. and Wang, J., 2014. Talent management in China and India: A comparison of management perceptions and human resource practices. Journal of World Business, 49(2), pp. 225-235.

Li, H. and Zhou, L.A., 2005. Political turnover and economic performance: the incentive role of personnel control in China. Journal of public economics, 89(9), pp. 1743-1762.

Renwick, D.W., Redman, T. and Maguire, S., 2013. Green human resource management: A review and research agenda. International Journal of Management Reviews, 15(1), pp.1-14.

Wei, Y.S. and Atuahene-Gima, K., 2009. The moderating role of reward systems in the relationship between market orientation and new product performance in China. International Journal of Research in Marketing, 26(2), pp. 89-96.