02-03-2013, 11:49 AM
The application SHRM in context and system
The application SHRM.docx (Size: 17.46 KB / Downloads: 16)
INTRODUCTION
The Significance of National Cultures for Compensation and Reward Systems
The assumption that HRM systems must fit national cultures is based on the belief that
"most of a country's inhabitants share a national character..." that is "...the collective
programming of the mind which distinguishes one category of people from another...the
category of people is the nation (Hofstede, 1993: 89).” This belief leads to a search for distinct
national cultures whose influence is critical, if not the most important, for understanding
international compensation systems (Earley & Erez, 1997; Hofstede, 1993; Rousseau &
Tinsley, 1997). Typical of the national culture model is Gomez-Mejia and Welbourne's (1996)
work in which they caution scholars and managers about exporting theories and practices
derived from U.S.-based research and experience. Their strategic model relies on national
cultural attributes such as those proposed by Hofstede (1980; power distance, individualismcollectivism,
uncertainty avoidance, and masculinity/femininity) or Trompenaars (1994;
individualism versus collectivism, achievement versus ascription, universalism versus
particularism, neutral versus affective, specific versus diffuse). Luthans et al. (1997) explicate
this international HRM contingency model using national cultural attributes as the dominant
determinant. Accordingly, countries with high power distance scores (Malaysia and Mexico)
should exhibit more hierarchical pay structures, while those manifesting low power distance
(Australia and the Netherlands) would choose more egalitarian systems. In nations identified
as individualistic (US, UK, Canada), compensation and rewards would support employability
and individual and performance-based pay. Those in more collectivist nations (Singapore,
Japan) would choose more group-based approaches, and so on (Welbourne & Gomez-Mejia,
1996). This literature on national culture models is implicitly prescriptive; it dictates that
compensation and reward policies must be developed to align with and reinforce national
cultural attributes. The national cultural model predicts these national level attributes will be
more significant than organizational level attributes. One reaction to such thinking is that it
engenders blatant stereotyping. We fear it parallels biased notions that all women desire time
off because of their caring and nurturing values, while all men desire more time at work to
pursue their more aggressive values.
It has long been recognized that compensation and reward systems, because of their
social as well as economic significance, exemplify and reinforce cultural norms (Mahoney,
1979; Tolles, 1964; Belcher, 1955; Schloss, 1898). However, none of these early writers
suggested that social and cultural norms necessarily coincided or were equivalent with national
boundaries. Indeed, 100 years ago, Schloss (1898) recognized that organizations (e.g., mining
and textile companies) developed their own unique social norms, and that the compensation
systems of these companies were related to these norms. We believe that the national culture
model requires a leap of logic by defining social norms and cultural values as primarily national
in character rather than held by smaller groups of people. Geopolitical boundaries do not alone
determine cultural values and social norms. This obvious point matters when examining a
strategic perspective toward international compensation. Anecdotal and empirical evidence
suggests that organizations and local cultural values within a nation are probably necessary
contextual variables to consider. Nations are comprised of subgroups and cultures. The former
Czechoslovakia included Czechs and Slovaks; now each of these two republics includes
groups which are reported to exhibit Hungarian and Roman cultural characteristics. Historically,
China is a composite of several groups and even today in modern China, Chinese make
culturally laden distinctions between Shanghai, Beijing, and Hong Kong. Listening to political
pundits during election time, one quickly realizes that the United States is comprised of many
different subcultures which do not conform to geographic boundaries (for example, in the U.S.
groups with strong cultures may include orthodox Jews, Amish & other Mennonites, jazz
musicians, professional athletes, and academics). As pluralism and other influences of
globalization increase around the world, some cultural researchers believe that the cultures of
small subgroups will continue to become much more important for shaping human behavior
than norms at larger societal or national levels (Berger & Luckmann, 1995). Even when viewed
at the national cultural level, revisions may already have occurred. Chen’s (1995) data suggest
that work-related values are changing in China and the U.S. and that these changes are
related to differences in reward allocation preferences.
Indeed, management research is beginning to present evidence that suggests national
cultures may not be the correct level of analysis. For example, Wagner (1995) found significant
variation in values toward individualism within one culture and that this variation predicted
differences in cooperation within groups. Bloom, Milkovich & Zupan (1997) studied values
toward individualism-collectivism and risk taking among employees from four companies, two
in the U.S. and two in Slovenia. Distributions of the scores from measures of these two values
were created for each country. The means of these intra-country distributions were slightly
different; Slovenian employees tended to be more risk-taking and individualistic than U.S.
employees (We note that Hofstede’s [1980] work suggested that Yugoslavs, of which Slovenia
is a former republic, should be risk averse and collectivistic). The striking feature, however,
was that the variances of the distributions were virtually the same. Thus, there is significant
overlap between the two distributions: One can find risk averse collectivists and risk taking
individualists in the U.S., Slovenia, and most likely many other national cultures. This research
suggests it may be misleading to pay attention to mean levels across national cultures without
accounting for the significant variation within countries. Studies by Fahr, Early, and Lin (1997)
and Wagner (1995) show effects of cultural diversity (individualistic versus collectives, risk
aversion, etc.) can be studied within a nation rather than among nations. Consequently, it may
be erroneous to use national origin as a proxy for cultural attributes. Closer scrutiny may reveal
that political, economic, institutional, and other forces rather than national culture explain a
significant amount of variation in the expressed desires of employees from different countries
(Lee, et al., 1995; Pearce, et al., 1994; Yeung & Wong, 1990). For example, U.S. workers want
two weeks vacation, not because of culture, but because that is the norm in the U.S. In
Germany, it is likely to be one month of vacation. Transfer a U.S. worker to a German
company, and s/he will likely grow accustomed to and want the month; two weeks is no longer
sufficient. Transfer a German to the U.S. and health care insurance, bonuses and options
become more important than vacation, which the worker couldn’t use anyway.
National Systems: The Importance of Differences Within versus Differences Between
Are compensation and reward systems in a global context better.