Impact of Cultural Differences on HR Policies

The report was aimed at understanding the impact of cultural differences on Human Resources practices in multinational corporations. The report chose two countries with different cultures to analyze the differences. The two countries chosen were Australia and Japan. The report used examples of companies such as Woolworths Australia and Toyota Japan to elaborate on the topic. Two HR practices in particular were highlighted including recruitment and selection and training and development. Hofstede’s Cultural Dimensions was used to analyze the differences in culture between the two countries.

Running head: IMPACT OF CULTURAL DIFFERENCES ON HR POLICIES
IMPACT OF CULTURAL DIFFERENCES ON HR POLICIES
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IMPACT OF CULTURAL DIFFERENCES ON HR POLICIES
Executive summary
The report was aimed at understanding the impact of cultural differences on Human Resources
practices in multinational corporations. The report chose two countries with different cultures to
analyze the differences. The two countries chosen were Australia and Japan. The report used
examples of companies such as Woolworths Australia and Toyota Japan to elaborate on the
topic. Two HR practices in particular were highlighted including recruitment and selection and
training and development. Hofstede’s Cultural Dimensions was used to analyze the differences
in culture between the two countries.

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IMPACT OF CULTURAL DIFFERENCES ON HR POLICIES
Table of Contents
Introduction......................................................................................................................................3
Conflict due to cultural differences.................................................................................................3
The HR function of Recruitment and Selection..............................................................................4
Training and Development..........................................................................................................5
Cultural differences in HR policies.............................................................................................6
Similarities and differences in HR practices in Australia and Japan...............................................7
Similarities...................................................................................................................................7
Differences...................................................................................................................................8
Recommendations............................................................................................................................9
Conclusion.....................................................................................................................................10
References:....................................................................................................................................11

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IMPACT OF CULTURAL DIFFERENCES ON HR POLICIES
Introduction
The aim of the report is to analyze the impact of cultural differences on Human Resource
policies. Cross-cultural differences in the contemporary business scenario have become one of
the most important aspects of the overall organizational process. Several companies today
operate on an international level. Companies like Toyota, General Electric, Wal-Mart, British
Petroleum and many others are multinational corporations that have functions in more than one
country (Mudambi, Pedersen & Andersson, 2014). For these companies to be effective, it is
essential that they focus on the local influence on the countries where they operate, the local
practices, and the cultural differences and boundaries that is present. The pressure of ensuring
cultural efficacy and compatibility falls on the HR manager, focusing especially on the retention-
oriented compensation and training and development. Hofstede’s Cultural Dimensions theory is
an effective measure of cultural distinctions the companies could use while determining their
international endeavors.
For the present report hence, recruitment and selection, and training and development
have been chosen as the two HR practices. The countries chosen for comparison are Australia
and Japan. The reason for choosing the countries is that the cultural differences are quite
remarkable.
Conflict due to cultural differences
With the progressing fast globalization of business sectors and utilization exercises, it has
become basic that business managers develop a comprehension of basic leadership, intercultural
exchange and cross-cultural communication in case there is strife when the organization works
globally (Masciulli, Molchanov & Knight, 2016). At a time when worldwide partnerships enter

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remote and new working conditions, with often in general dissimilar practice than the
organization's native country, there is an inevitable clash with civilization, corporate social
responsibility or CSR, and operational practices of the local workers. Often, organizational
managers can relieve these contrasts and resulting clashing practices with improved
comprehension and intercultural communication abilities. Features, for example, the changing
worldwide market and organization structure contribute largely to the cultural conflicts when
organizations internationalize.
As per Den Hond and de Bakker (2016), open borders, coordination of business
regulations, strategic administration across the globe, and the lone currency have quickened
global economic incorporation, which has prompted more noteworthy portability of
organizations as well as individuals within the western borders and beyond. Quick
internationalization in the west in particular, which is home to huge numbers of the Fortune 500
organizations, has prompted significantly more development throughout the globe. Company
structures have likewise started to move towards progressively unique and adaptable basic
models that are progressively composed around teams because of the increasing globalized
business era. Portions of an organization might be framed, disbanded and changed to react
quickly to changing business requirements often containing persons from various nationalities,
organization areas, and organizational groups. Within this unique situation, the job of culture and
the differences in culture secures criticalness and worth to the company.
The HR function of Recruitment and Selection
The recruitment and selection process of any company depends on various factors. Job
analysis is one such factor where the company recruits candidates after thoroughly going through

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the actual requirements for the position. The next factor to consider is recognizing the difference
between the job descriptions and posting. While the description clearly puts forth the technical
features of the job, posting is mostly the sales pitch put by the company. Following this, the
knowledge about where to post the job, screening the candidates and preparing the interview
questions come. Gamage, (2014) states that when the recruitment part is looked after, the
selection process begins. This is done after assessing the candidate’s past performance on
handling tough situations. One important aspect of the selection process is doing reference
checks. It is the process of checking the past employment records of the candidate by making
calls to the previous employer. This helps the company in making sure that the candidate has
competence to fill the job posting. Levashina, Peck and Ficht (2017) while talking about the
importance of reference check, state that companies often ignore this aspect either intentionally
or inadvertently. The authors further state that the importance of reference check during the
selection process is vital in ensuring that the company chooses a fitting candidate who could
contribute towards its overall development.
Training and Development
The training and development practice of the HR department is another important part of
the organizational process. Most companies perceive training and development as a necessary
piece of the human asset improvement movement. According to Kadiresan et al. (2015), the turn
of the century has seen expanded spotlight on the same in companies globally. Numerous
organizations have commanded training hours of the year for workers keeping in mind the way
that innovation is deskilling the workers at a quick rate. Training means the transformation in the
employee’s skills, attitude, and knowledge with the outcome of improved behavior.
Development on the other hand, refers to the opportunities prepared for the employees to grow.

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As opposed to training, development is a long-term process focusing on the current job. In the
views of Tummers et al. (2015), training and development not only help the employees increase
their skills, it also helps the organization in retaining competent employees. They further argue
that while training addresses employees’ weaknesses and improved performance, development
ensures consistency in the performance.
Cultural differences in HR policies
Prior to explaining the differences in the recruitment and selection function in the two
countries, it is crucial to understand the impact of cultural differences in the HR policies
regarding the same. While some multinational corporations apply ethnocentrism while making
HR policies in terms of recruitment, others look for polycentrism and geo-centrism.
Ethnocentrism is a social demeanor wherein one's very own way of life is viewed as unrivaled
than others. At the point when the organization extends its business, it will in general pursue
similar approaches and practices in the host nation that it follows in the nation of origin. The
workers feel negative about such social frame of mind as they think that it is exceptionally tight
and self – focused. In polycentrism, the parent organization appoints a manager from the local
background in the abroad subsidiary because the local manager would have a better knowledge
about the culture of the host country. Geo-centrism means employing any person with requisite
skills and qualification as the manager whether local or foreign. The selection process in
countries like Asia follows extensive selection while some countries like Australia follow short
selection process.
In training and development aspect, a manager thinks that it is difficult to prepare
individuals from various nations having particular culture, language, nourishment and dressing

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tendencies, standards and qualities and so on. To cite an example, the Australians like to keep a
distance of in excess of six inches while interpersonal correspondence while the Arabs
communicate in close distance. Likewise, the essentialness of words and motions is diverse in
various countries, which makes it harder to communicate successfully. HR managers think that it
is hard to prepare individuals from differed cultures.
Similarities and differences in HR practices in Australia and Japan
Hofstede’s cultural dimensions that include power distance, individualism, masculinity,
uncertainty avoidance, long-term orientation and indulgence, is a powerful tool to examine the
cultural differences between Australia and Japan. When the cultures of the two countries are
compared, it is revealed that Australia scores low in power distance, masculinity, uncertainty
avoidance, and long-term orientation than Japan with the exception of individualism (Hofstede-
insights.com, 2019). It means that companies in Australia establish hierarchy only for
convenience whereas in Japan, people are conscious of their hierarchical position. Furthermore,
the Japanese society is opposite to Australia in that it is collectivist in nature and relations and
families are valued more. In terms of long-term orientation, Australia scores low, this means that
the people exhibit immense respect for traditions.
Similarities
When it comes to Human Resource Management recruitment and selection process,
Japan boasts the four pillars of long-term employment, promotion and compensation based on
seniority, employee training programs that are company driven and trade unionism. The
recruitment is done at the university level. Independent hires, lateral contractors with focus on
special tasks, recruitment of agencies and temporary employees are practiced. Much focus is

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given on hiring time and the hiring could be done mid-career as well. The recruitment
advertisements are given through websites, newspapers, special meetings and seminars. Hiring of
the candidate is reference-based and internship system is also followed. This is similar to the
recruitment process followed by Australia companies with the use of technology, private
recruitment agencies and use of newspapers and websites for advertisement being encouraged.
Another similarity is in the use of online interviews for recruitment and selection. In both
Australia and Japan, resumes are still used and personal networks are utilized to seek help.
In terms of training and development, Japan relies on the traditional training styles. In
Japan, training of the employees is based on performance rather than on promotion (Hbr.org,
2019). Apart from that, the Japanese give on-the-job training as well as off-the-job training to the
employees. The training is given to support the employees in improving their technical skills and
acquiring qualifications. The primary focus of training is to prepare the employees for all the
processes rather than for just one process. Similar process of training is followed in Australia
with on-the-job and off-the-job training being given importance. Australian companies too
mostly give value to performance rather than promotion when it comes to training.
Differences
The differences are mostly on the perceptions of hierarchy and communication styles. In
Japan, the recruitment and selection process has to go through the top management in the
organization because there is stern adherence to hierarchy in organizations. This is evident from
the Hofstede cultural dimension scores for power distance as well. In contrast to this,
organizations in Australia do not depend solely on the top management for the recruitment
process and the HR manager if given the responsibility to select suitable candidates.

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The similarities and differences could be understood when seen from the perspective of
the top companies in both the countries. Japan’s company Toyota focuses on graduate
recruitment program while the recruitment policy of Woolworths Australia is focused more on
following the various acts and policies of recruitment (Wowcareers.com.au, 2019). Toyota
recruits trainees and gives them the opportunity to grow along with the company
(CORPORATION., 2019).
As evident from the discussion above, it is clear that the cultural differences are little but
the similarities are more when it comes to the Hr practices of Australia and Japan. However, it is
also evident that the cultures of the two countries are quite distinct especially in terms of overall
organizational process. These differences in the cultures exert great influence on the HR policies.
As Karin Andreassi et al. (2014) observe, cultural differences mostly influence the HR practices
when done in countries outside the native country.
Recommendations
Based on the discussion, it could be recommended to the multinational corporations that
they look into each aspect of the HR practice carefully. As the discussion has revealed during the
recruitment of the candidates, many companies do not give much importance to reference checks
but it is important especially when doing business in a different country.
Secondly, it could be recommended that the HR managers apply geo-centrism when
recruiting people for subsidiaries operating in a different country. This would ensure the
recruitment of a candidate with overall qualifications.

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Lastly, doing a thorough analysis of the organizational culture while recruiting employees
must be acknowledged.. It could therefore be recommended that the HR managers train and
develop their employees for cross-cultural functions.
Conclusion
Therefore, as it could be seen, HR management and policies are largely influenced by
cultural differences. It has been found in the discussion that the same HR practice could not work
in different cultural settings. The report used the examples of Australia and Japan to demonstrate
the impact of cultural differences on HR practices.

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References:
CORPORATION., T. (2019). Toyota | Global Newsroom | Toyota Motor Corporation Official
Global Website. Retrieved 28 August 2019, from
https://global.toyota/en/newsroom/toyota/
Den Hond, F., & de Bakker, F. G. (2016). Boomerang politics: How transnational stakeholders
impact multinational corporations in the context of globalization. In A Stakeholder
Approach to Corporate Social Responsibility (pp. 321-338). Routledge.
Gamage, A. S. (2014). Recruitment and selection practices in manufacturing SMEs in Japan: An
analysis of the link with business performance. Ruhuna Journal of Management and
Finance, 1(1), 37-52.
Hbr.org. (2019). What We Can Learn from Japanese Management. Retrieved 28 August 2019,
from https://hbr.org/1971/03/what-we-can-learn-from-japanese-management
Hofstede-insights.com. (2019). Country Comparison - Hofstede Insights. Retrieved 28 August
2019, from https://www.hofstede-insights.com/country-comparison/australia,japan/
Kadiresan, V., Selamat, M. H., Selladurai, S., Ramendran, C. S., & Mohamed, R. K. M. H.
(2015). Performance appraisal and training and development of human resource
management practices (HRM) on organizational commitment and turnover
intention. Asian Social Science, 11(24), 162.
Karin Andreassi, J., Lawter, L., Brockerhoff, M., & J. Rutigliano, P. (2014). Cultural impact of
human resource practices on job satisfaction: A global study across 48 countries. Cross
cultural management, 21(1), 55-77.

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Levashina, J., Peck, J. A., & Ficht, L. (2017). Don’t select until you check: expected background
checking practices. Employee Responsibilities and Rights Journal, 29(3), 127-148.
Masciulli, J., Molchanov, M. A., & Knight, W. A. (2016). Political leadership in context. In The
Ashgate research companion to political leadership (pp. 23-48). Routledge.
Mudambi, R., Pedersen, T., & Andersson, U. (2014). How subsidiaries gain power in
multinational corporations. Journal of World Business, 49(1), 101-113.
Tummers, L., Kruyen, P. M., Vijverberg, D. M., & Voesenek, T. J. (2015). Connecting HRM
and change management: the importance of proactivity and vitality. Journal of
Organizational Change Management, 28(4), 627-640.
Wowcareers.com.au. (2019). Our recruitment process - WOW Careers. Retrieved 28 August
2019, from
https://www.wowcareers.com.au/page/Careers/Come_and_work_for_us/Our_recruitment
_process/