HRM ASSIGNMENT.

HRM ASSIGNMENT

China
Executive Summary
With the due passage of time, China has witnessed a sharp growth in terms of economy and has
integrated into the world economy. This projects the efficiency and the progress of the economy.
However, when multinationals enter the Chinese market they are of the assumption that
attraction of the employees would be easy considering the vast population. However, the
problem lies is the attraction and retention of the skilled labors and the same issue is highlighted
in the report below. The analysis is done with proper issues and discussion that coins the fact that
retention, as well as selection of employees remains a huge challenge.
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Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
1. Re-entry and career issues..................................................................................................................5
2. Recruitment and Selection..................................................................................................................5
3. Training and development...................................................................................................................6
4. Pay and compensation in China...........................................................................................................6
5. Performance management..................................................................................................................7
6. IHRM in China......................................................................................................................................9
7. HRM ethics and future challenges.....................................................................................................10
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13
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Introduction
It is of common knowledge that China is having one of the best marketplaces for conducting
business because of its large unified economic spaces and the businesses that are blooming under
the influence of the huge population. The economic space and other influences are just some
factors which attract the entrepreneurs towards the growth of fame and fortune that they may
achieve by starting their business in China. China has already proved to be one of the biggest
markets and is also continuously growing on a global level. Hiring good quality skilled labor is a
daunting task and the major issues is happening owing to this problem (Kotabe et. al, 2011).
Also, a sense of fear is observed in the environment because of the countless stories of foreign
aspirants who have tried to start their business in China but have failed because of the
unforgiving conditions. The language barriers, lack of transparency, local competition and many
other factors have made it difficult for the foreign aspirants to start the business. The discussion
explores the difficulties that are present in the organization owing to the various factors. Though,
China is progressing and flourishing yet there are major negatives in the area concerning HRM.
The same is highlighted and discussed in the report below.
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1. Re-entry and career issues
China’s accelerated evolution to the global financial powerhouse is leading to a strong demand
and HR challenges for the candidates and other administrative staffs. There are plenty of job
openings in China that attracted applications in thousand numbers, finding the correct person is
difficult, as well as time consuming. Further, it is a bigger challenge to retain the right person in
the right job. For instance, in 2010 there were 50 new foreign law firms that were opened in
China and began tracing for personnel who are qualified. For such firms, the best course of
action was to get experienced people and that can be done by finding similar ones working in
similar roles (Hogg et. al, 2016). Due to this, many multinationals reported a turnover among
their Chinese employees of 30% in a single year while some reported more than 30%.
As competition enhances for skilled employees, the more stress is upon recruitment and
selection. Hence, the demand on the HR function has increased rapidly. It was before few years
ago that the multinationals used to attract the best candidates from the top universities. The
career choices were lucrative in such universities. They used to enjoy prestige and offered
foreign travel. In the current scenario, holding on to a staff that is valuable is endowed with
higher challenges. The purchasing power of the middle class of China denotes more future
growth for companies in China and is likely to happen when the recruitment and selection is well
driven (Grohsjean et. al, 2016).
2. Recruitment and Selection
In China, the process of recruitment has underwent a huge change in the past three decades. Few
years back, the recruitment process was dominated by the central government and the Chinese
enterprises contained no formal personal department as the workers were assigned by the
government. However, the reform changed the entire course of conduct. New labor laws came to
the forefront and the employers are able to recruit both graduates and people with expertise from
different companies without the government intervention. The profession of HR is still
developing in China and few years ago it was limited to the function of administration,
recruitment and payment of taxes (Grohsjean et. al, 2016). Talent management, organizational
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development and corporate function were new terms and concepts. This makes hiring good
quality staffs a major challenge and with the due passage of time, it is becoming difficult to
recruit high quality professional and managers.
3. Training and development
The development of the Chinese market is a major onus on the multinational companies.
However, there is a major obstacle that comes in the way of the attraction and development of
the local Chinese talent to ensure the completion of the goal. Global has understood the
advantage of having strong training and development that leads to honing of the skills. Cultural
distance has ensured major changes in the business practice of multinationals in China ranging
from marketing to product deign to government relations. In this scenario the apt example is that
of KFC that developed a Pecking duck-flavored sandwich and Bill Gates met with the President
HU Jintao to have a discussion on the privacy of the software (Harzing et. al, 2016). Beyond the
focus group and different market studies, companies need senior talent who can understand the
local needs and ensure smooth movement of the business and work in tune to the business
operations.
Knowing the requirement to localize, multinationals are struggling to attain the desired result due
to the scarcity of qualified personnel. As per McKinsey, known for the management consultancy,
such a situation has been described as the supply paradox as it is not easy to find hires of proper
acceptability. In the year 2005, the company forecasted a looming war for talent linking on
research that suggest less than 10% of job candidates on average will be needed to work in a
foreign company that spans across different industries. Recruitment is even difficult as it is
traced that the best students do not always turn up to be the best employee. There are various
MNC that prefer not to hire graduates from the pioneer universities from China and decide to go
with the candidates from the second-tier and other regional universities that have more in hand
experiences and candidates are driven by ambition (Hogg et. al, 2012).
4. Pay and compensation in China
Adoption of the that conducting business in China is not very easy because it consists of various
kind of challenges and uncertainty is because of the stability issues, slow GDP growth rate, low
standard of living, overheated property market and high corporate debt. The new policy
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proposals of the US presidential administration are also said to create more uncertainties and
stability in the Chinese Market. The presence of the uncertainty in the market has influenced the
business of many multinational companies of China in their establishment on the maintenance of
operations (Harzing et. al, 2016). The companies based on manufacturing, energy, real estate,
and commodities trading. One of the most important factors to play safely e while conducting
business in China is to maintain the perils inline by fulfilling all the complex payroll laws, tax
requirements employment consideration and any other factors in relation to it.
Employment considerations
Another is for employers of China are not executing the payroll successfully in compliance with
the national employment guidelines. There are various different laws and regulations that are
related to the treatment of employees, basic principles of labor laws in China and equal treatment
of employees in terms of gender and race. Also, it has been mentioned that children's under the
age of 16 have no right to work. Another Chinese labor law states that every employee needs to
sign an employment agreement with the organization so as to simulate the multinational
companies on the basis of their business structures which are eligible to sign employment
contracts directly with the Chinese workers (Dewhurst et. al, 2012). In some of the cases if the
company is a representative office then it can hire local employees from the third party licensed
local service units.Generally, employees are required to give proof of residence of the city their
living into the employer so that they can maintain appropriate social insurance paperwork from
the first day of work. The employees can be heard on the basis of the tenure they will serve like
permanent or temporary. A contract can be signed for a fixed period of time or until the
occurrence of a certain event which will make the employee liable to work ok under the
compliance of the contract. People working from abroad need to obtain an employment
certificate or work visa and presented in front of the authorities (Kotabe et. al, 2011).
5. Performance management
Adapting observed that China has made several commitments in order to improve the
functionality of its activities and deal with human resource management so as to make several
administrative reforms that can help them to focus on the structural changes that have occurred
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in the last three decades (Dewhurst et. al, 2012). Also, these reforms were said to be
implemented by the central government in a top-down manner.
It was observed that the reforms were very much applicable because they helped China to
improvise their audit capacity and focus on the targets that we need to be achieved by the local
government. It was observed that the local authorities were not able to assess important functions
because of irregular management skills (Hogg et. al, 2012). Although it was observed that the
semi-vertical and vertical systems were being operated in the functional area which was
differentiated on the basis of responsibility, authority, and Central provincial graphical position.
Compensation and severance considerations
Adoption observed that the government of China has set minimum wages in accordance with the
company’s labor laws for certain jobs. Generally, internet is off reserve that the employees are
working in according to the standardized National guidelines under which it has been stated that
an employee will work 8 hours a day with average working week time of not more than 44 hours
with two days off the week (Hogg et. al, 2012). Also, salaries are said to be paid monthly.
Because of the labor agreements, the Chinese employees are facing a lot of problems because
generally over time is required for many kinds of jobs. According to the labor laws it has been
stated that not more than one hour per day can be we assign to overtime work with a maximum
of no more than 36 hours per month. Normal overtime pay is set at 150% of normal wages
whereas if the work is performed on weekends then it will be 200% of normal wages.
An employee can resign from his work and terminate his employment by giving a prior 30 days
written a notice. A notice should be provided to the employer so that all the conditions can be
satisfied with his or her employment contract and no violation of laws of company policies may
be observed in the future. Severance is also calculated as one month's salary for every year of
service (Hogg et. al, 2012).
Bonus considerations
Parts of China have made it customary to pay salary on a 13-month basis with the final month
paid just prior to the Chinese New Year. Many of the employees term this as a New Year bonus
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which is played in the employment contract. Some companies are also said to provide 14th and
15th-month bonuses in accordance with the performance reviews of the employees.
There are various problems of broad and bribery in China because which the Western companies
should be very impulsive about the compensation bonuses and award programs so that the
compensation arrangements can be made on incentive-based systems. Working in accordance
with the local partners can also help the multinational organizations to reduce the risk and
improvise the cultural norms for assessment of compensation programs.
Taxes, benefits, and withholdings
The organizations in China are said to hold 15% of the employee’s wages so as to pay the China
tax bureau before the 15th of each month. The tax deductions from various regions in China have
been observed but 40% of the employee’s salary is said to be included in it. Employers and
employees both are required to contribute to China's social insurance schemes so that the
government can help them to save money and fulfill their own personal needs whenever
required. The organizations are also required to withhold and pay shares tax, bonus tax or
severance tax when applicable.
6. IHRM in China
With the flowing time, it has been observed that the complexity of workforce management in
China has increased. There are various factors that have resulted in this complexity. Human
resource management profession, the attitude of the workforce and the changes in the laws in
relation to the employment-related activities are various sociological trends because of which
this complexity was observed. In the Chinese organizations, the human resource department tries
to recognize the relationship that exists between the strategy, technology, people and other
processes so as to make the management of the organization most successful in nature. Almost
all organizations in China have realized the importance of HR but there are few still fields in
which the progress of HR is observed to be slow.
The improvement in the field of human resource management in China has also given rise to
various other fields like personal relations, industrial relations, employee relations, and human
resources among which the most suitable name that can be considered as a human resource. This
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is a very powerful word and it helps to show the organization that human capital is the most
important factor that it needs in order to complete its goal and objective.
A lot of reformations and modernization are taking place in China because of which the
industries are facing problems. Various changes in the industries like increase entrepreneurial
autonomy, increased volume of private and rural enterprises, high value foreign direct
investments, large volumes of export in the developed world and increased globalization have
been observed in the international market because of which the competition has also increased.
Various other dramatic reforms and also taken place in the Chinese economy after the influence
of the managers in the Chinese community. The function of managers varies from various
problems of people to the knowledge of the market, financial management and thinking
practically in order to go with the present conditions of the market and work in accordance to the
joint ventures. This reform has also resulted to raise questions about the Chinese manager’s
attitudes in order to compete and also to maintain the markets insecurity, volatility, and increased
independence (Phillip et. al, 2012). The localization of the administration groups of the overseas
investment business is trying to put up cost reasons so that strong reasons can be provided to the
universal management progress of local managers and experts.
7. HRM ethics and future challenges
It has been observed that the management facility in China is related to an exact science and a
defined understanding base that connects quantitative and operational data for conducting
specialized functional expertise. A proper knowledge-based program for training manager should
be taken into consideration so that conventional number oriented subjects and individual oriented
subjects can be taught to them in order to improve their skills (Phillip et. al, 2012). Also by using
this approach, professional, custom and other ideologies of the managers can be created, which
can help them to understand the hypothesis and management of the Chinese business.
The successful growth of China as supremacy in the business world can be obtained only with
the help of highly qualified and professionally trained administration. It is observed in China that
the management trainee process is not only associated with economic progress but also it is
related to the political and ideological beliefs (Fan et. al, 2016). It is observed that management
process is a very important means of improving the competitive benefit, engagement in joint
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ventures internationally, cross-cultural implications and implementation of other training courses
because of which the incorporation of strategic HR system is made necessary for the Chinese
industries. Generally, the organizations use of formal appraisal system in which structure is
developed within which managers try to evaluate the performance of their subordinates and
compare them with each other in order to set formal performance standards. By conducting
formal appraisals, managers can try to measure, record and evaluate their own memory and
perceptions so that they can take correct decisions of appraisal based on the information and
observations collected by them. Evaluations have also been made in order to communicate
information to the subordinates (Phillip et. al, 2012). Hence, at a basic level the Chinese
managers tried to use the formal appraisal systems in order to focus upon the procedures that can
be used to set standards and observe the performance of their subordinates by using which the
evaluations can be conducted.
After setting the performance standards, an evaluation is being made in which the manager tries
to acquire relevant information about the performance of the subordinates on the basis of their
behavior and efficiency. When it is observed that the performance standards are based on the
behavior and outcomes, more accurate information can be observed in order to make more
accurate evaluations of performance (Fan et. al, 2016). This will also help the managers to you
have a systematic approach towards the process of giving appraisal towards subordinates by
keeping proper records and information of the employees. But, it is generally observed that
Chinese managers try to prefer subjective measures. Unfortunately, it was observed that the
Chinese managers combined there II performance criteria with the other outcomes because of
which in the final stage of formal appraisals it is very hard for them to make the overall
evaluation over the different pieces of information that have been collected by them. A lot of
methods have been suggested by the Western researchers which can be used for evaluating the
standards and rating the subordinates after comparing them to each other. The Western concept
basically focuses on differentiating employees on the basis of their odds in relation to the
Chinese conventions. Also, earlier it was believed that all the decisions should be taken without
inclination on either side because any kind of extreme aura harsh ratings can be given by the
managers on the basis of personal reasons. But, it is generally observed that the Chinese
managers are not giving their subordinates poor ratings because of the fear of damaging
relationships with them.
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The responses of performance appraisal and feedback of the Chinese employees are also very
necessary for evaluation because of the different type of cultures present in the organizations.
The current situation in China tends to focus upon the structural outcomes of the related
performance appraisals because of which it is important for the managers to also evaluate the
implicit models of performance. It has been noticed that a basic understanding of the ways of
formal systems which are designed and used by the Chinese managers are missing.
Conclusion
Multinationals are clearly stressing the importance of localizing the organization in China
however, the talent management challenges are immense. It needs to be noted that the top local
talent is limited and critical in nature. Chinese companies are assuming a place of special
importance and attractive to work. Further, various countries has left China owing to the fact
that they were not able to locate the issues in an effective manner. For the multinationals that
continue to remain in China will face an uphill task in terms of attracting and developing local
talent in China. There are number of factors that are of major concern like the economic scenario
or the currency and financial risks, the HRM continues to rank the list in terms of challenges that
does business in China. The imbalance that exists between the business opportunities in China
and the qualified talent always remains a potential risk. Moreover, the shortage of talent remains
the biggest flaws. The shortage that exists in the area of international and domestic and concerns
the area of marketing, sales and management makes the process more complex. Hence, the
discussion clearly emphasizes that unskilled labor is not an issue however, when it comes to
individuals with skills, the same creates a large problem.
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References
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Fan, D., Cui, L., Li, Y. & Zhu, C.J. (2016). Localized learning by emerging multinational
enterprises in developed host countries: A fuzzy-set analysis of Chinese foreign direct
investment in Australia. International Business Review. 25(1): 187-203,
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[Accessed 16 April 2019]
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Phillip, D, Richardson, A and Michael Wu. (2012) Talent Management at Multinational Firms in
China. Available from: https://knowledge.wharton.upenn.edu/article/talent-management-at-
multinational-firms-in-china/ [Accessed 16 April 2019]
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