The world of business is converging in a great movement towards globalisation of organisations, services and facilities. Yet those who work with Asians in Asian companies soon come to realise that behind the façade of globalisation, local ways of managing people predominate. This conclusion may contradict research by Judge Business School and others on HRM in international organisations in the 15 November issue of PM (“A world of difference?”), but for those on the ground, cultural differences are an inescapable fact of life.
Local approaches differ from one country to another in this vast and complex continent and are being slightly diluted by the influence of western culture, particularly in foreign-owned organisations. But there are some common themes to be found in the ways of managing people that contrast with those in western organisations.
Without wishing to resort to stereotypes, it is generally true that in Asia the ties of family and community are much stronger than in the west, that individuals have less expectation of being supported by the employer or the state and that they value self-respect and respect for those in authority – particularly older people. This leads to strong cohesion, even uniformity, in the workplace, with people ready to work hard, to put in long hours and to educate and train themselves. Pay tends to be based on seniority and status rather than performance, while hierarchies remain much flatter than in the west – although most Asian economies have a small elite class that is treated differently to the rest of the workforce.
As economies are often dependent on western consumers, the main drive in managing people is cost, not value. Foreign clients will often charge end-users 10 times what the Asian firm is paid for goods and services. Most Asians are employed in town and village enterprises (TVEs), which are out of sight of western visitors, and the cost imperative drives these employers to regularly use manipulative and occasionally exploitative means of managing people.
In much of Asia, senior HR posts are occupied by former military officers or political appointees. Although there are young managers keen to learn and apply HRM techniques, they are not influential. The role of the HR function is mainly to deal with government – for example, the local labour office – and keep trade unions, where they exist, from causing problems.
Most HR staff are involved in routine tasks such as record-keeping and reports (making sure they hide problems from head office, especially if it is in a foreign country). An HR manager who enthusiastically tried to implement western HRM practices would be forced to adjust to local practices or lose support and consequently their job. HR is not a strategic function and is used for cost control in getting and keeping staff. However, HRM does make an important contribution to organisational stability in times of rapid economic and social change by maintaining morale and productivity.
When it comes to getting and keeping a job, people use influence and connections (“guanxi” in Chinese; “wasta” in Arabic; “kon” in Japanese) rather than ability. But this is not as problematic as it may seem because it helps to build the cohesion and community spirit that are so important in Asian workplaces. Whereas western organisations tend to have a clear hierarchical pyramid, Asian companies often have links between higher and lower levels that depend on relationships outside work: family or political connections, or shared membership of a group, such as a club or clan.
Employers will use referrals from existing employees as a standard way of recruiting, with the recommending employee being expected to be responsible for the performance of recruits. This sponsor will be challenged if the recruit turns out not to be up to the mark and expected to put pressure on their friend to improve. I have even known a sponsor to leave when a recruit was sacked for theft.
This approach to recruitment is simply realistic, as in many Asian countries there are so many potential candidates for each job that employers do not advertise for fear of being swamped with applications and having numerous candidates queuing at work premises. One Middle Eastern organisation I am familiar with had 10,000 applicants for a job, while another had at least 1,000 unsolicited applications a day. For recruiting large numbers of staff, agencies will be used.
Although pay hierarchies in many Asian countries have traditionally been flatter than in the west, in recent years many firms have been influenced by incoming Anglo-Saxon companies with big differentials. In China, 20 years ago, a boss might be paid 10 times as much as the average employee. This has grown to 500 times, with benefits well beyond the comprehension of shopfloor staff.
Such wide pay differences are partly down to the limited number of new recruits with the expertise and connections business wants. Asia has excellent education and training institutes, such as India’s institutes of technology, China’s Tianjin University and the National University of Singapore, but most establishments churn out graduates with qualifications and skills that employers feel they don’t need.
Deferred payment bonuses are paid in the form of a thirteenth month at year-end or at Eid in Muslim countries or Lunar New Year in China. Incentives tend to be of the “share in success” type and are short-term because employees have learnt to distrust medium- and long-term incentives that are not honoured. Individual bonuses are not popular.
Differences in pay tend to depend, instead, on aspects beyond an individual’s control. A foreign worker will not get the same as the host-country national – usually a western passport holder will get more than a citizen while someone from a poor Asian country will get less. Men are paid more than women. Women also rarely have access to the range of benefits, such as free or subsidised housing, granted to men. Older employees will regularly get more pay than youngsters. The head of HR at one Saudi company I knew received less than his secretary, a man 20 years his senior. He accepted this, telling me that it was justified by the greater expenses incurred by an older person.
Performance management and assessment are resisted. As the Judge researchers found, there are often regulatory impediments. There are also cultural barriers, with people disliking having to make frank judgments on a colleague’s performance. Even the most bullying supervisor would find it difficult to rate someone as “average” or, worse, “below average”. Annual appraisals, usually instituted by foreign managers, are not taken seriously and few subordinates or co-workers would risk giving a negative report as part of 360-degree feedback.
For most Asian employers the use of scorecards is seen as too remote from the immediate issues of cost control, productivity and profit. There is little interest in assessing the “soft” factors, such as behaviour and attitudes or competencies, as these are considered to be subjective and driven by interpersonal factors beyond work performance. Nevertheless, those with little influence or power can lose their job as a result of poor performance. Equally, employees who believe they have been unfairly assessed or rewarded will move from the employer out of self-respect, even when they have no other work.
Induction training is used to socialise new workers and instil loyalty, which plays a major part in motivating staff. Building a community, not simply a work team, is a key factor in Asian organisational success. But employers are reluctant to train employees further for fear of poaching or pay inflation. In rapidly expanding economies there are plenty of opportunities, so employees will study hard with help from family members and friends in the expectation of getting a better paid job.
However, those with foreign qualifications and those from the social elite (who are usually the same group) will be treated by senior management as “talent” and moved rapidly up the hierarchy with further training, often overseas.
My nearly 30 years of working in Asia ended only a month ago and I am now starting a research project in Chinese TVEs. So this description of what really goes on in Asian workplaces – as opposed to what some managers may tell researchers – is not some out-of-date trip down memory lane. Although there are western influences creeping in, the reality of working there is still very different and there are some lessons managers in the west can learn from their Asian counterparts. The traffic in knowledge and resources should not all be one way.
Most Asians work much harder and more diligently than westerners – mainly because work is such a crucial part of life and because there is a genuine desire to create a better life for themselves, their children and extended family. There are also many excellent employers in Asia who combine Asian and western ways of managing staff. They are taking a long-term view of success and motivating and guiding employees to achieve standards of production and services beyond those most western organisations aspire to. These employers, their managers and staff do not need westerners to teach them how they should manage in a globalised environment – they may soon be the ones who dominate the globe.
Wes Harry is reader in international HRM, Lancashire Business School, and an honorary visiting fellow at City University London and the University of Strathclyde. He worked in Asia for almost 30 years, heading HR and other functions at two major regional banks and two airlines and advising state enterprises.
Some of the issues in this article are covered in Wes Harry’s and Chris Rowley’s How Asian Managers Deal with Human Resources: Local not Global, to be published shortly by Chandos Oxford.