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Marzena StorContinental Frameworks for HRM Effectiveness and Efficiency in MNCs: European, American, Asian, and African Perspectives

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The main goal of the paper is to provide a general outline for the fundamental determinants that should be taken into account when measuring human resource management (HRM) effectiveness and efficiency in multinational companies (MNC). These determinants are discussed from an economic perspective and within the framework of four continental HRM models: European, American, Asian, and African. As to effectiveness and efficiency, differences relating to both their understanding and measures as applied are considered (disciplinarization and contextualization). The paper is divided into six sections. Firstly, after a short introduction, the author discusses theoretical concepts of efficiency, effectiveness, and efficacy of HRM within the scientific discipline of economics. Then, the author describes several selected characteristics of the continental models of HRM determining the measurement of efficiency and effectiveness. The next part of the article is devoted to some exemplary comparistic dilemmas that MNCs have to face in their business practice. Final conclusions make up the last part of the paper.

Key words: HRM efficiency, HRM effectiveness, continental models of HRM, multinational company

Introduction

An increasing interest in measuring human resources and human resource related activities can be observed over the last decade. One may say it is to justify expenditures for the existence of the human resource management (HRM) function. However, there are two major reasons. The first is that measurement reflects the strategic and competitive importance of human resources to businesses and the second suggests that to earn credibility, human resources must be expressed in financial terms. That is why human resource accounting (HRA) has developed both in management theory and practice. It involves accounting for the company’s management and employees as human capital that pro

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vides future benefits. In the HRA approach, expenditures related to HRM are reported as assets on the balance sheet as opposed to the traditional accounting approach that treats costs related to a company’s human resources as expenses on the income statement that reduce profit. All this results in attempts to find the best measures for HRM efficiency and effectiveness as HRM is expected to help managers manage companies and reach intended organizational goals.

Measuring HRM effectiveness and efficiency in a multinational company (MNC1) is much more complicated than in a home enterprise. One of the reasons is that in the case of a home company HRM efficiency and effectiveness is calculated in generally the same environment. In the case of a MNC there may be many environments in the form of foreign subsidiaries and, in consequence, it may be impossible to evaluate and compare the performance results achieved in various local subsidiaries. Hence, the main goal of the paper is to provide a general outline for the fundamental determinants that should be taken into account when measuring HRM effectiveness and efficiency in multinational companies. These determinants are discussed from an economic perspective and within the framework of four continental models of HRM—European, American, Asian, and African. The models are composed of comparable elements (characteristics) selected on the basis of the presumable weight they may have in the evaluation of HRM effectiveness and efficiency. Mini cases are provided to exemplify the dilemmas that the MNCs encounter in their business practice. However, the first thing that must be done is to define HRM effectiveness and efficiency. This will be accomplished through two phenomena: the disciplinarization and contextualization of efficiency and effectiveness concepts.

The Economic Perspective on HRM Efficiency and Effectiveness

When talking about efficiency and effectiveness in vernacular, nonscientific language, these two terms are often used interchangeably by the general public. However, when it comes to business and its management, the scientific lexicon needs to be applied. On the surface, this appears to be easy: providing the common scientific definitions and then continuing the discussion. Yet two fundamental problems may stay unsolved:

� Whether there is a real common agreement between scientists or management on how to understand efficiency and effectiveness, and

1 In this paper a multinational company (MNC) is defined as an economic entity whose particular components (elements of organizational structure) are located in more than one country [Stor, 2010:701].


Continental Frameworks for HRM Effectiveness and Efficiency... 11

� What efficiency and effectiveness measures should be applied.There are many factors that influence on the final choices in this area. In the context

of selecting, applying, and interpreting definitions and measures of HRM efficiency and effectiveness in MNCs, two such factors are worth special consideration, namely:

� Disciplinarism (e.g. economics vs. other sciences and scientific disciplines), and � Contextualism (e.g. geographical region and culture).

Specific scientific disciplines may differ in their assessment of efficiency and effectiveness.2 Some even introduce efficacy as an additional term supporting the assessment of the former two (disciplinarization of a concept). Since HRM is both an interdisciplinary and multidisciplinary field of knowledge, various disciplinary concepts may be preferred depending on problems being analyzed.3 Furthermore, even though the consensus on definitions within a given discipline seems to be achieved, their cultural interpretation in a given country with respect to what and how to measure may reveal differences in various parts of the world (contextualization of a concept).

In this article HRM efficiency and effectiveness are considered from an economic perspective. Thus, no concepts from other scientific disciplines should be expected. Within the economic sciences we assume that:4

� Efficiency is the ratio of output to input, � Effectiveness is the extent or degree to which targeted objectives are achieved, and � Efficacy is the capacity of something/somebody to produce an effect.

Hence we usually say that being effective is about doing the right things, while being efficient is about doing things in the right manner. In judging the effectiveness of HRM activities, we are usually concerned with whether or not the function is doing the right things. Unfortunately, in the assessment of effectiveness, who conducts the assessment and what specific criteria are used, or should be used, are problematic. As one might surmise, the idiosyncratic values of individuals and groups play a large role in determining what the right things are. As a result, the biases of special interest groups vying for influence and power can render the reliability and validity of the results questionable, at best. HRM efficiency, by contrast, is typically associated with an internal, value–free assessment of the function. Efficiency can be viewed as maximizing outputs relative to

2 This leads to the conclusion that efficiency and effectiveness are multidimensional (see more in Winkler, 2008:147–192).3 This includes such disciplines and subdisciplines of science as general management, psychology, sociology, physiology, organizational behavior, cultural anthropology, international relations, economics, law, communication, political sciences, accounting, finance, taxes, informatics, applied linguistics, and many others. 4 See also [Stor, 2009:37].


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inputs, and, in contrast to effectiveness, is concerned with doing things right [Wright et al., 1990:4]. In consequence, the HRM function can be judged as being:

� Efficiently ineffective – keeping cost down, but ultimately not really providing the services the internal customers (or stakeholders) need,

� Inefficiently effective – providing first class service, but at champagne prices that the company cannot pay,

� Efficient and effective – keeping cost down and providing first class service, � Inefficient and ineffective – providing poor but expensive services to the internal

customers (or stakeholders).In business practice, the effectiveness of the HRM function is often judged in con

nection to efficiency criteria. This may cover such issues as whether personnel requisitions were promptly filled, whether the last knowledge management programs increased the value of human capital, whether the union contract was settled with a minimum of new and costly benefits, whether the rates of absenteeism and turnover were maintained or reduced, whether employee work commitment increased after the implementation of empowerment program, and many others.5 The long–run effectiveness of the HRM function, however, both in terms of the organization and the environment, often depends on its being somewhat inefficient, at least in the short–run. For example, preparing job descriptions, conducting orientation meetings, providing career, retirement, and outplacement counseling, and processing complaints, grievances, and suggestions are essentially inefficient activities, but critical to long–run effectiveness. A continuous trade–off goes on between efficiency and effectiveness in most organizations. Both are necessary. The ongoing problem, of course, is to determine an optimal mix [Wright et al., 1990:4–16]. All this depends on HRM efficacy, in this case both human and organizational capacity to bring about desired effects. Ideally, within HRM, we expect that the right people do the right things right. Anyway, as presented in Figure No. 1, the measurement of efficiency, effectiveness, and efficacy can take on different forms and apply different instruments.

Different perspectives on increasing the effectiveness of HRM as a contributor to organizational success are evident in business and management research, and, as mentioned previously, HRM effectiveness is often evaluated in connection to efficiency criteria. S. Gibb suggests that there are two dimensions that underpin most existing research [Gibb, 2000:58]:1) The extent to which concern with HRM effectiveness involves an internal, organiza

tional orientation or an external, general standards orientation,

5 See more: (Łańcucki, 2004:4–12; Huselid et al., 1997; Łukasiewicz, 2009; Baron, Armstrong, 2008, Cascio, 2001; Ramlall, 2003; US Human Capital Effectiveness…, 2010; Borkowska, 2007).


Figure No. 1., Economic Perspective on Efficiency, Efficacy, and Effectiveness in Business and HRM

Source: Own work.HRM(ZZL) 6-2012eng_Stor_M_9-35

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2) The extent to which the value of either an objective or a subjective framework for operationalizing HRM effectiveness is adopted.As a consequence, we receive four primary combinations of perspectives on eval-

uating HRM effectiveness, which are presented graphically in Figure No. 2. These are [Gibb, 2000:58–60]:1) Internal orientation and objective factors – covering the internal fit (both verti

cal and horizontal) of HRM activities to business objectives, goals, and needs, and often involving a strategic approach to HRM,

2) External orientation and objective factors – adopting a standard set of best practices and measuring the attainment of clearly defined objectives, including the profitability of good people management as well as applying HRM audit and accountancy,

3) External orientation and subjective factors – encompassing benchmarking with perceived leader organizations whose HRM practices are deemed to be superior and successful and thus worth copying, and

4) Internal orientation and subjective factors6 – involving obtaining and analyzing the views of managers and employees as customers or end–user of HRM within the organization.

Figure No. 2. The Matrix of Perspectives on Evaluating HRM Effectiveness

Source: [Gibb, 2000:59].

So far we have discussed HRM efficiency and effectiveness from the standpoint of economics and one may assume that the final agreement on how these terms and as

6 See for example: [Managing HR on a global scale…, 2009].



sociated measures are defined has been reached. However, recognizing the same definitions may be unequal to the same understanding of them. This is a matter of so–called contextualization.

Salient Characteristics of the Continental Models of HRM

Contextualization can take various forms—from very general to very detailed. This may include the analysis of such contextual factors as globalization [see e.g., Colakoglu et al., 2006:210; Friedman, 2007:166–167], religion, national culture [see e.g., Dicke et al., 2004:6; Hofstede and Hofstede, 2005], policy, history, economic or technological development [see e.g., World...], managerial concepts and practices, social and labor relations, interpersonal relations within teams or between superiors and their subordinates, formal and informal networks of mutual dependency [see Trompenaars and Hampde–Turner, 1997], and many others. In practice, this means that the same economic definitions of HRM effectiveness and efficiency may be interpreted differently in particular countries and, what is even more surprising, may result in applying different measures to measure the same things.7 For MNCs operating worldwide this is something of a snag: How can you compare the performance results of specific local subsidiaries when different measures of HRM effectiveness and efficiency are employed?

In this article the contextualization of HRM effectiveness and efficiency is nested in the framework of four continental models of HRM—European, American, Asian, and African. Of course, creating a framework for each continental model demands maintaining a rather high level of generality. The reason is that the individual countries encompassed by continents—national models of their HRM—may differ a great deal.8 Therefore, to come to final conclusions on what the continental models are we have to skip the details. Although there are some books in which the authors try to conduct a comparative cultural analysis among the continents mentioned above [see Bloom, 1996:268;

7 See examples showing the relations between HRM efficiency and employee compensation and promotion, team performance appraisal, loyalty to the company, etc. in Japan [Mazur, 2004] and examples from France explaining how employee relations influence the general standing of the company and its efficiency in particular [Doucouliagos and Laroche, 2002].8 The evidence comes from empirical research and models of national culture built on these research results. Among the best known models are F. Kluckhohn and F. L. Strodtbeck’s 6–D model [see Kluckhohn and Strodtbeck, 1961], E. Hall’s 2–D model [see Hall, 1976], G. Hofstede’s 5–D model [see Hofstede and Hofstede, 2005], F. Trompenaars and C. Hampden–Turner’s 7–D model [see Trompenaars and Hampde–Turner, 1997], J. J. Distefano, and M. L. Maznevski’s 7 –D model [see Distefano and Maznevski, 2000], S. H. Schwartz’s 6–D model [see Sagiv and Schwartz, 2000], and R. Inglehart and C. Welzel’s 4–D model [see World...], where D is an abbreviation that stands for dimension.


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Waters, 1995:279], faced with too many issues, they too often treat the continents as culturally being highly homogeneous [Montezemolo and Kearney, 2000; Stor, 2004; Stor, 2011]. In our study we will try to focus on only those phenomena that are comparable at the continental level of HRM. This means the most salient characteristics of the models with respect to their subjective weight to HRM effectiveness and efficiency. This is all to solve the following problem: What are the most fundamental determinants for the measurement of HRM effectiveness and efficiency within the continental models of HRM from the standpoint of MNCs?

The European Model of HRM

The approach to HRM in Europe and North America has evolved from different scientific discipline—sociology and psychology—which have different assumptions regarding the nature of the relationships between people and organizations. In Europe, HRM evolved from a more sociological perspective. It pays more attention to the social system, the economic and political context, and the nature of the relationship between key actors, such as government, unions, and management. The primary concern is who has the power to decide, leading to efforts to promote industrial democracy (the workers decide) and industrial policy (the government decides). This results in legislation for worker representation on the board of directors, for example. Thus, the nature of the employment contract, which defines the relationship between the employer and employee both legally and psychologically, differs. Whether or not explicit, the psychological contract between the individual and the company establishes mutual expectations. The legal contract determines what is regulated and to what degree [Schneider and Barsoux, 2003:149].

European organizations operate within a restricted economy that is constrained at the international (European Union) level, at the national level by culture and legislation, at the organizational level by patterns of ownership, and at the HRM level by trade union involvement and consultative arrangements. However, what is interesting is that these constraints are often believed to be supportive. This means that the system, under which European enterprises function, constrains them on one side, but supports them from the other. Therefore, the European model of HRM goes beyond seeing these features as external constraints and integrates them into the concept of HRM.

When compared with the American model, companies here have a narrower scope of choice with respect to HRM—greater regulation of recruitment and dismissal, the formalization of educational certification, and the quasi–legal characteristics of the industrial relations framework. Apart from that, there are legislative requirements on pay, health and safety, working environment, and hours of work. Furthermore, workers have the right to establish union representation and organizations are obliged to establish



and operate consultation or codetermination arrangements as well as a plethora of other legal requirements. The effect is that managers are relatively limited in their decisions associated with employees.

State involvement in HRM means more than merely acting the legislative role. The state in Europe has high involvement in underlying social security provision, a more direct interventionist role in the economy. In comparison with America it provides far more personnel and industrial relations services and is a more substantial employer in its own right by virtue of a more intensive government–owned sector [Brewster, 1995]. What is generally characteristic for the societies in Europe is an underlying belief that the responsibility for the social security of citizens belongs to the state or government.

European countries are more heavily unionized than North American ones. Labor union membership and influence varies considerably by country, of course, but is always significant. Nevertheless, labor unions are highly recognized in Europe. This is because union recognition for collective bargaining is required by law. Collective bargaining may take place at different levels, depending on the country’s practice and law—European, national, industrial, sectorial, trade, and organizational (particular company).

Another characteristic of the European HRM model worth emphasizing is its philosophy. Namely, this model is associated with a balanced stakeholder philosophy, covering both internal and external stakeholders, as well as with the concept of Social Partners—the government, the representatives of employers, and the representatives of employees.

In the European model of HRM such issues as economic, technical, socio–political, educational, etc. are perceived as rather intrinsic aspects of the HRM concept than external factors influencing HRM from the outside of the organization. Hence, the European approach to HRM is very much of a contextual and social character [Nikandrou and Apospori, 2003:1].

Finally, it is believed that HRM strategy should be seen as contributory to the corporate strategy rather than dependent upon it or developed from its assumptions and requirements. In relations between corporate strategy and HRM strategy, it is assumed that HRM strategy cannot be considered as the dependent variable.

The American Model of HRM

The American model of HRM has its roots in psychology, its prime concern is the improvement of worker motivation. This leads to focusing on the individual, analyzing employee needs, reward systems, and job enrichment. This approach is evident in the current interest in performance management.

The relationships between the employer and employee are considered contractual, based on notions of fair exchange, such that both parties guard their rights, preserving autonomy and independence (self–determination). Many HRM practices, such as


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performance appraisal, equal opportunity recruitment and promotion, and training programs addressing ethics or diversity issues, are in fact designed to avoid lawsuits [Schneider and Barsoux, 2003:149].

American culture is more individualistic and much more achievement–oriented than European culture. Tolerance of income disparity, respect for those who accumulate wealth through entrepreneurial endeavors, and the absence of stigma attached to those whose entrepreneurial initiatives fail are the hallmarks of a national culture [Reynolds, 1999:20]. In the American HRM model they bet on successful people (achievers), employee competition, and individualization of labor relations. Well–trained and well–paid managerial staff is the driving force of success. What characterizes this model is the coherence of internal regulations with a changing external environment. In this sense, this model is adapted to face the challenge of global competition.

Although North America is a melting pot of people of different religions and with various values, the predominant influence in this culture is the Puritan work ethic: If you work hard and achieve success, you will find favor in the eyes of God. They tend to assume that material comfort is a sign of superiority, that the rich are a little bit better than the poor, and that people who work hard are better than those who do not. They believe that money solves many problems and you can get it by working hard. This often leads to a stereotypical view that the poor are poor because they do not undertake appropriate efforts. Thus, poverty is their own choice.

American entrepreneurs are strongly oriented toward the local community in which they operate. Although there is no such pro–social policy in America as in Europe, it is the United States that has the biggest numbers of charitable organizations as well as where different advocacy organizations have been created.

The American model of HRM is based on the assumption that enterprises are independent and autonomous and thus free to develop their own strategies.9 It is related to the American view of their country as the land of opportunity in which any individual, through hard work or self–improvement, can be a success, with the ideal model of the rugged individualist or self–reliant small businessperson, and a vision of the frontier men-tality. We can see these ideas in the comparatively low levels of support, subsidy, and control provided, or at least commonly understood to be acceptable, from the state [Brewster, 1992]. It can be framed in the statement that American managers are brought

9 Anyway, this explains why American companies encountered cross–cultural problems when they tried to transfer some of their best practices to certain national settings. Examples abound in literature, including managing by objectives in France, individual incentive plans in Denmark, participative management techniques in Russia, performance appraisal systems in Hungary, and open door style management in Italy [Bonache, 2000:26].



up on theories of management’s right to manage. As a consequence, the American approach to HRM exhibits universalism and a tendency to find the best solutions that can be successfully applied in different circumstances [Nikandrou and Apospori, 2003:1].

There is a widespread belief in North America that HRM is the dependent variable and business strategy is the independent variable in this relation. Moreover, HRM strategies should be determined by experts closely following the business strategy [see Fombrun et al., 1984:37; Brewster, 1992:72]. Hence, HRM strategies are developed from the business strategies as their role is to support the enterprise in pursuing competitive advantage. What is also interesting is that institutional or cultural issues, such as labor unions, national legislation, or labor markets, are perceived as external factors of HRM, so—in contradiction to the European model of HRM including the “intrinsic external factors”—they influence HRM from the outside.

The Asian Model of HRM

What characterizes the approach to HRM in the Asian model is cohesiveness, encompassing harmony, conflict avoidance, information sharing, loyalty, deference to authority, humility, self–restraint, on the job–training, and teamwork. These are things that are clearly visible in HRM strategies and policies in Japanese business practice. For example, while Japanese strategy tends to include a strong element of cooperation (e.g. labor with management, private sector with government, and even between business rivals), American business strategy is characterized by independence. In fact, antitrust law in the United States precludes many cooperative strategies that are typical in Japan [Palich and Gomez–Meja, 1999:596].

In the Asian model of HRM, harmony is one of the most important elements of the working environment, interpersonal relations among workers, and social relations between supervisors and subordinates. Furthermore, this fundamental role of harmony is ascribed to teamworking skills and undertaking activities that are beneficial to the team to which one belongs. Such belongingness may be extended over the whole company. Thus, people may treat not only their own working team as family, but the whole enterprise as well. Performance appraisal is usually based on group results and the appraisal of employees’ behavior is conducted with inclusion of good interpersonal relations with other workers. Motivating employees means motivating the group of employees. Thus, what we encounter in the Asian HRM model is group motivation. This motivation is accompanied by pay based on group results.

However, we should not assume that all Asian people are motivated exclusively by group rewards. A good example is China, which stereotypically is considered a country whose people are “group–results–and–rewards” driven. The changes are visible. Before the Chinese government opened the market, state–owned enterprises dominated the


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labor scene. In those companies, the workers always thought that they can have meals provided from the big wok (Da Gun Fian) no mater whether they work hard or not. Moreover, they did not want to be outstanding, they just needed to be average. As new companies entered the market, among them MNCs with good employer reputations, managers found monetary rewards, including individual rewards, a very effective way to motivate workers to meet output standards. As a result, sometimes a good worker could double his or her base salary thanks to high quality work performance [Jaw and Liu, 2004].

Paternalism is one of the most fundamental characteristics of the Asian HRM model. On one hand, managers are expected to be good fathers and their decisions may go far beyond those connected with work. On the other hand, workers are expected to have high commitment to and acceptance by their managers and employers. Support and development of networks of mutual trust and obligations is yet another important characteristic.

Generally, the role of the state and government in determining the conditions for labor relations is relatively strong. At the same time, the role of labor unions is rather weak. On average, they do not have much to decide and do. Why is this so? Firstly, a characteristic of the Asian model is non–adversarial relationships. Secondly, there are only a few labor unions (or even one labor union as is the case in China) that are controlled by the state. Thirdly, there is a low public rate of industrial conflict.

The emphasis on harmony, respect for elders, acceptance of hierarchy, and group–oriented interests over individual interests traditionally have had a strong influence on HRM philosophy and practices. Many organizations have adopted paternalistic HR management systems integrating these elements. Seniority is still important for reward and promotion, and employers are often hesitant to dismiss employees due to considerations of maintaining harmony at the level of the workplace and local community. Recruitment and selection are very often based on personal relationships.

The Asian model of HRM is widely seen as basically non–adversarial. Open conflicts leading to actions such as strikes have been constrained by culture, ideology, and law. Conflict management has been handled in a variety of ways in the respective national context, but it has been largely congruent with the values common to Asian societies regardless of their political system. As mentioned earlier, respect for authority, the search for social harmony, the important role of personal relationships, and social connections, seem to be the most evident characteristics of the Asian model of HRM.

The African Model of HRM

In the African approach to HRM there is a clear dichotomous division into a worldview rooted in the world of developed countries and in the world of developing countries: the



first being the Western world, mainly Europe and North America, and the latter being Africa. Permeating the Western worldview into Africa is associated with both the colonial past of the continent and with the growing number of foreign direct investment bringing management concepts.

Societies as well as management in Africa are generally perceived to be fatalistic, resistant to change, reactive, short–termist, authoritarian, risk–reducing, collectivist, context dependent, and basing decisions on relationship criteria rather than impartial (or universalistic) criteria. This makes African management run counter to the expectations of Western management, which is normative, proactive, including employees into the decision making process, and promoting flexible activities [Azolukwam and Perkins, 2007:2–3].

The peculiar paradigm for HRM in Africa is the concept of ubuntu—the notion that I exist because of others. Ubuntu is said to signify an indigenous African philosophy of management that captures the complex social relations among people and the idea of caring for others as though they were members of one’s own family [Mbigi and Maree after Kamoche et al., 2004a:8, 46].

Given the nature of African society, which is characterized by extended family, patriarchal, and often collective decision–making, HRM cannot simply be viewed as a set of practices expected to contribute to the achievement of organizationally defined objectives. Managers often have to satisfy many stakeholders, some of whom represent institutional interests that contribute little to organizational strategic issues, but impact profoundly on the organization’s very existence. This may happen when instructions are received “from above” to hire or promote particular people or when training activities are undertaken for political reasons rather than prescription and, more importantly, the application of standard management tools cannot always be expected to work [Kamoche et al., 2004a:5].

An important factor determining HRM in Africa is the colonial and post–colonial past of Africa [Kamoche et al., 2004a:5]. The legacy from the colonial era still hampers efforts to develop flexibility, responsiveness, and accountability. As a result, African management systems appear to be predominantly control oriented—a legacy from the colonial era, giving rise to standardization of work functions in organizations, inhibiting flexibility, and low transferability of skills [Azolukwam and Perkins, 2007:4].

The main goal of individual work, teamwork, or any other community–shared work is to contribute to the integration and development of men and women in the communities. For the African worker, the community, not necessarily collective work, takes precedence over the individual. They invest most of their time and energy in the development and maintenance of social ties. Whether they live in the countryside or the city,


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their personal development depends not on the work they do or on the salary they earn, but on the members of the community and their network of relations.

Social relations and trust are very important in the labor environment. Sometimes in MNCs, management teams assume that the easiest way to motivate people to increase the volume of production is by offering them a pay raise. However, this alone may prove unsuccessful when the workers do not feel any social or interpersonal ties with the management and when they see no benefits for local people and their honor [Mutabazi and Derr, 2007:264–248]. Both employees and managers value interpersonal harmony. For the average African employee, working relations are very important because they make a significant part of his or her world. African workers expect their managers to be interested not only in the career advancement and job environment of employees, but also to be humane by caring about non–work activities that might affect employee performance [see more in Gbadamosi, 2003].

Diversity, and especially ethnic diversity, plays a very special role in Africa.10 Implementing Western–like programs that are to promote diversity may bring measurable advantages. Members of ethnic groups become more committed to their work if they feel included in the mainstream of social and organizational activities. However, sometimes such programs cause problems. Ethnic diversity often contributes to the exclusion of talented and capable employees because groups favor their families and friends [Azolukwam and Perkins, 2007:5]. Nevertheless, it is believed that these programs can act as a panacea to all kinds of African nepotism—family, friend, political, ethnic, tribe, national, and so on [compare: Debrah et al., 2004:251].

Comparative Juxtaposition of Four Continental Models of HRM

It is from the perspective of the MNC that we may ask a final question: Are there any characteristics of the continental models of HRM that are directly comparable? Addressing these characteristics, the management of a MNC may prepare more adequate HRM efficiency and effectiveness measures and formulate some HRM developments in advance. Of course, once again we have to remember that the problems being discussed are at a very general level. Some selected comparable characteristics of the continental models are presented in Table No. 1. They were selected on the basis of the presumable weight they may have in the evaluation of HRM effectiveness and efficiency.

10 Individual African countries are much more ethnically diverse than European ones. There is a much bigger number of various ethnic groups in a much bigger number of countries.



Table No. 1. Selected Differences between Continental Models of HRM

Characteristic elements

Europe North America East Asia Africa

The goal of business

Maximizing profits is not the main goal of business

Maximizing profits is the main goal of business

Bringing measurable advantages to the employer

Bringing measurable advantages to the employer

Perceiving the fac tors of external envi ronment (e.g., economic, technological, legal, political, societal, cultural, and ideological)

Conviction that these factors should not be perceived as forces exerting external influ ence, but as specific entitative and im plicit aspects of HRM.

They are outside the organization, but they have to be taken into account as they exert meaningful influence on the activities within HRM.

External local factors of cultural, societal, and politi cal nature are so strong that they influence HRM like intraorganizational factors. In some cases reli gion plays an important role.

The relational factor is one of the most important. It is understood as a certain intimacy of interpersonal re lations with local decision–makers and their families. Political and often religious factors are the forces that determine intraorganizational activities.

The autonomy of HRM and organiza tion from legal and institutional environment

Low High Medium Medium

HRM strategies They contribute to busi ness strategies or even make up a part of them.

They result from business strategies; they are to support their implementation (dependent variable).

Elements of strong cooperation be tween employees and managers are often included.

They are often based on a rich array of nepotism: family, friend, tribal, national, ethic, political, etc.

The location of the fundamental frame for labor relations (hiring, dismissal, remuneration).

At the state level. At the state and business level.

Much more at the business than state level.

At the level of state, local deci sion–makers (for mal and informal), and the business organization.


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Involvement of labor unions in consulta tions and agree ments in the sphere of employee and managerial issues.

Strong and at different levels: national, industrial, sec torial, and business. Tripartite collec tive disputes involving labor unions, em ployers’ asso ciations, and government representatives

Medium at the industrial and sectorial levels, sparse at the business level. Tripartite dis putes in govern mental organiza tions. In other types of organi zations the agreements are made at the level of the employer and labor un ion.

Excluding China where a statewide labor union exists, most collective bargaining is con ducted at the business level.

Medium at differ ent levels: na tional, industrial, sectorial, and business. Some times tripartite disputes appear.

Relations between employers and labor unions

The relations between em ployers and labor unions are adversarial and antago nistic.

The relations between employ ers and em ployees are con tractual, based on the rule of fair exchange and mutuality.

The general rule is that the labor unions support employers and managers, and only in second place do they under take activities for the benefit of those employed.

The relations between employers and employees are antagonistic.

Social security Significantly determined by the state. The conviction that social security is a state re sponsibility.

Generally deter mined by the state. The con viction that social security is not only a state re sponsibility, but also that of the individual citizen.

Generally social security is very poorly developed by the state; sometimes there are even no social security programs at all. At the orga nizational level they usually cover some basic living needs.

Generally, social security is very poorly developed by the state; sometimes there are even no social security programs at all. At the orga nizational level they usually cover some basic living needs.

State intervention ism

Relatively strong Relatively weak Excluding China, relatively weak

Medium

The nature of the HRM model

Situational, contextual

Universalistic Close to contingency

Contextual–relational





Hiring an employee

Considered in categories of risk—very complicated and time–con suming proce dures of potential em ployee dismis sals, the image of ethical em ployers can be easily dam aged.

Considered in investment categories—what the organization can gain employing a particular per son, what the potential benefits are, what this person can contribute into the organization.

Considered in the cost category—whether the current processing capacity demands hiring a new worker, what the produc tivity is to be. Contribution to good social rela tions is also im portant.

Considered in economic and cost categories as well as in categories of promoting own groups to which an individual be longs, or in a cate gory of the debt that a newly–hired per son’s family will have to pay back.

The general charac ter of culture

Individualistic, but oriented toward team achievements and social cooperation.

Individualistic and directed to ward individual achievements and individual competition.

Collectivistic and oriented toward achievement by the team, organization, managerial staff, and first of all harmony in relationships.

Fatalistic, authoritarian, and reac tive, directed to ward collectivism and community dependence.

The Framework for work and work management

Task performance. Essentially the way in which the final results are gained versus taking proac tive activities towards side effects.

Goal achievement. Essentially the way in which the final results are gained versus conclusions on efficiency and effectiveness for the future.

Reaching results. Essentially the way in which the final results are gained versus maintain ing social har mony and em ployee loyalty.

Fulfilling demands. Essentially the way in which the final results are gained versus enhancing pater nalistic and family–character relations between supervisors and subordinates.

Tolerance of mea ningful income dis parity

Low tolerance of income dis parity as a result of social injustice.

Tolerance of high income disparity as it is the driving force for entrepreneurial behavior. It is also a sign of good individual efforts.

Tolerance of high income disparity as a result of possessing different statuses in the organization and society.

Tolerance of mea ningful income disparity as a re sult of possessing different statuses in the organization and society.


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Providing support because of individual level of achievements

Lack of success may re sult from a chain of unfa vorable circumstances. This is why those who experience different prob lems, occupy lower organi zational and social positions should be supported.

Lack of success results from undertaking insufficient efforts. Therefore, lower organizational or social position is a result of some body’s own deci sion. As a conse quence, those who are suc cessful should be supported be cause they put in a lot of effort to improve their situation.

If individual support is delivered then its goal is to increase team success. Individuals are expected to support teams.

Supporting individuals within the range of groups to which they belong. For example, these groups include work ing groups, ethnic groups, tribal groups or village groups. The goal is to promote own people.

Source: Own elaboration based on [Mayrhofer and Brewster, 2005:39–40], [Schneider and Barsoux, 2003:150], [Brewster, 2006], [Pocztowski, 2003:16–22], [Mayrhofer et al., 2000], [Jackson and Schuler, 1995], (Porter et al., 2006:422–436], [Borkowska, 2006:555], [Brewster, 1995:2–3], [Bloom et al., 1996:44,89], [Reynolds et al., 2000:20], [Nikandrou and Apospori, 2003:1], [Rowley and Benson, 2002: 99–103], [Rowley et al., 2004:919–930], [Jaw and Liu, 2004], (Zhu et al., 2007], [Azolukwam and Perkins, 2007:2–4], [Kamoche et al., 2004], [Anakwe, 2002:1042–1059], and [Woźniakowski, 2007:19].

For international entrepreneurs and management teams who intend to go abroad or who manage their enterprises abroad, such comparisons as the one in the above table seems to be very useful. It helps them to determine what kind of approach within HRM would be the most promising, what kind of people and with what kind of qualifications they should hire locally to support their businesses as well as create and maintain good relationships with local employees and local environment. Finally, it would help to define and choose the best HRM effectiveness and efficiency measures.

Exemplary Comparistic Dilemmas

In this section we focus on some exemplary cross–cultural problems that MNCs need to solve when they want to establish HRM effectiveness and efficiency criteria in their local subsidiaries, but with an intension to compare the local results worldwide—across the whole of corporate subsidiaries. The infographics below serve as visual representations of the issues being discussed (Figure Nos. 3 – 7). The two icons in each figure refer to Western and Eastern culture.



Example 1. Expenditures Made on Social Relations

In Western culture social relations are built in small groups, whereas in the Eastern culture these relations make a complex and mutually interlinked network of human interactions (see Figure No. 3). The consequences are of different kind. When you ask the question, “What do you do for living?” a typical Westerner answers, “I’m an engineer” or “I’m a construction worker,” simply identifying him– or herself with a profession, while a typical Japanese identifies him– or herself with a company answering e.g. “I work for Toyota.” Sometimes, the Westerners may extend their identification over a department saying “I work in a production department” or “I’m employed in a marketing department,” but still giving no specific name of the company, while the Easterner would say, “I work in a production department in Toyota.” As a result, in Western companies nobody tends to be surprised that even similar departments compete with each other and that in Eastern companies people tend to avoid conflict. From the MNC’s point of view, this causes a lot of dilemmas: How do you build loyalty among employees and toward the company? What HRM programs and methods are the most effective at the local level? How do you calculate their efficiency? How do you compare the results between particular subsidiaries if different HRM programs and methods were used?

Figure No. 3. Social Relations in the West and in the East

Design: Liu Young.

Example 2. Expenditures Made on Employee Integration

The phenomenon described before is also visible in employee behavior during various company integration events: Westerners stay in their own groups divided into in–groups and out–groups, whereas Easterners seek more comprehensive integration (see Figure No. 4). Again, the MNC needs to decide what kind of integrating activities might be the most effective at the local level and whether the efficiency of these activities is comparable at the corporate level. On the one hand, what may be effective in one culture (local subsidiary) may be ineffective in another. On the other hand, even when the same HRM

Western culture Eastern culture


28 Marzena Stor

activities are undertaken in two foreign subsidiaries, their efficiency may be different. In one subsidiary, it may take much more time to get people integrated. It may demand many more HRM programs and expenditures. In another, it may require minimal managerial and financial efforts. For MNCs the dilemmas stay the same: What comparable HRM efficiency and effectiveness measures should be used at each of the company’s organizational levels?

Figure No. 4. Employee Integration at Company Social Events in the West and in the East

Design: Liu Young.

Example 3. Expenditures Made on Training and Development

On average, in the West when people want to solve a problem or give an opinion they go straight to the point, whereas in the East they go roundabout (see Figure Nos. 5 and 6). Of course, there are some exceptional situations (e.g. very specific interpersonal relations, fear of losing something when acting openly and immediately), but as we talk about averages, this is what the societies usually expect from their citizens. When in handling a problem the Westerner takes a roundabout way we usually explain this kind of behavior as the result of a certain psychological inadherence, lack of organizational or managerial skills, poor expert knowledge, or exceptional situational factors. If the Easterner behaved as a typical Westerner, he or she would probably be evaluated by the environment in the same way—incompatible psychological profile and poor skills or knowledge. To teach employees how to solve problems effectively and how to express own opinions companies implement various training and development programs. However, a training program that was very efficient and effective in one subsidiary may be completely inefficient and ineffective in another. Thus, it may need local adaptation or even full reconstruction. And here comes another example of the MNC’s dilemmas: How do you measure effectiveness and efficiency of training and development pro




grams? How do you compare results between local subsidiaries when different effects are expected by them and different expenditures are made?

Figure No. 5. Handling Problems in the West and in the East

Design: Liu Young.

Figure No. 6. Giving Opinions in the West and in the East

Design: Liu Young.

Example 4. Expenditures Made on Staffing

Taking all previous examples into consideration together, a MNC may hesitate as to how to conduct staffing procedures in local subsidiaries—should there be the same staffing policy corporationwide or different policies in local subsidiaries. It is rather impossible to transfer HRM practices, and particularly staffing ones, from one country to another. A preferable qualification profile of a manager in Western culture usually requires somewhat different traits, skills, abilities, and knowledge than in Eastern culture (see Figure No. 7). Even though the enumerated characteristics are the same, their understanding and demanded intensity may stay distinctive. Hofstede’s power distance makes a good instance here, and not only in the sense of its various cultural interpretations and preferable intensity, but different social and managerial implications as well. In Western cul




30 Marzena Stor

ture, hierarchy in organizations means an inequality of roles established for convenience, where privileges and status symbols are frowned upon, whereas in Eastern culture hierarchy reflects the existential inequality between higher–ups and lower–downs and privileges and status symbols for managers are both expected and popular [see Hofstede and Hofstede, 2005]. This results in distinguishing managerial features in these two cultures as well as different methods, techniques, instruments, and measures used in the staffing process. Hence, a MNC needs to differentiate its assessment center practices and adjust them to local conditions. As a consequence, this brings new comparistic dilemmas: How do you measure and compare the effectiveness and efficiency of different staffing activities in local subsidiaries? How do you calculate their contributions to corporationwide results?

Figure No. 7. The Boss in the West and in the East

Design: Liu Young.

The examples presented in this section refer to particular subfunctions of HRM and discussed efficiency and effectiveness dilemmas within their range, sometimes outlining the reasoning interconnections among these subfunctions. However, these examples show only some minor problems that MNCs encounter in their business practice. From the economic point of view, a much bigger problem lies in measuring the effectiveness and efficiency of the whole of the HRM function composed of many varied subfunctions.

Final Conclusions

One of the fundamental problems that MNCs have to face is coping with the differences they experience between home and host country. Success is often determined by the quality of social relations developed with local employees, business partners, professional associations, local officials, and even the government in the destination country. These relations are built into different interpersonal situations, both formal and infor




mal. Not surprisingly, research shows clearly that culture, as one such difference, influences the practices of management. A lot of management concepts, techniques, and systems developed and taught in business schools are based on cultural beliefs, values, and assumptions about how managers should behave. They work well in the countries in which they were developed. However, these concepts, techniques, and systems may not work as intended in other cultures. If they are transferred to another country and used improperly, they can compound managers’ problems. Cultural differences, if not understood, can also pose significant barriers to the implementation and success of a business venture. In this context, MNCs have to undertake efforts to find the best measures for HRM efficiency and effectiveness as HRM is expected to help managers manage the companies and reach intended organizational goals. Comparing fundamental determinants for HRM efficiency and effectiveness, as in this paper, may help MNCs in determining a general framework for the evaluation of HRM effectiveness and efficiency at different organizational levels, i.e. the results achieved at the local or regional level versus corporationwide level. All this may result in HRM strategies of higher quality—as a product of higher quality strategy formulation and realization.

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Kontynentalne ramy efektywności i skuteczności ZZL w przedsiębiorstwach międzynarodowych – perspektywa europejska, amerykańska, azjatycka

i afrykańska

StreszczenieGłównym celem artykułu jest przedstawienie ogólnego zarysu podstawowych uwarunkowań, jakie należy brać pod uwagę w pomiarze skuteczności i efektywności zarządzania zasobami ludzkimi (ZZL) w przedsiębiorstwach międzynarodowych (KMN). Uwarunkowania te omówione są z ekonomicznego punktu widzenia i w ramach czterech kontynentalnych modeli ZZL: europejskiego, amerykańskiego, azjatyckiego i afrykańskiego.



W artykule zwraca się uwagę na różnice, jakie pojawiają się w zakresie zarówno definiowania skuteczności i efektywności, jak też wykorzystywanych mierników (dyscyplinaryzacja i kontekstualizacja). Artykuł podzielony jest na sześć części. Po krótkim wprowadzeniu, autorka omawia teoretyczne koncepcje skuteczności, efektywności i skuteczności ZZL w ramach ekonomii jako dyscypliny naukowej. Następnie opisuje wybrane cechy kontynentalnych modeli ZZL determinujących pomiar skuteczności i efektywności. Kolejna część artykułu poświęcona jest przykładowym dylematom komparystycznym, jakim przedsiębiorstwa międzynarodowe muszą stawiać czoło w swojej działalności. Ostatnia część artykułu to podsumowanie i wnioski.

Marzena Stor – Doctor Habil. in the Economic Sciences in the area of management studies, Master of Applied Linguistics, and Master of English Philology. Studies in both Poland and the United States. Currently Professor Extraordinarius and Head of the Department of Human Resource Management of the Faculty of Management, Computer Science, and Finance of the Wrocław University of Economics. Author of approximately eighty scientific publications, participant and head of over twenty research projects, including international ones. Participant in many foreign scientific conferences in the field of International Human Resource Management. Scientific interests include the international and intercultural aspects of human resource management, transnational corporations, interpersonal communication in business, personnel strategies, and international team management. Lectures in both Polish and English.


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