Week 9 - HRM in the 'Global North' - Insights from US & Japanese MNCs Flashcards
Looking back to week 1 - what is comparative HRM?
How similarities and differences evolve over time
- can be similarities and differences between different contexts e.g. countries and organisations
What are the three key areas of HRM in Japan and North America?
State regulation
Corporate governance and finance
Vocational education and training
The Japanese HRM system is an…
…enterprise based economy
Explain what state regulation is like in Japan
Supporting worker representation:
- individual and collective rights at enterprise level
- employer responsible for employee welfare
Explain what corporate governance and finance is like in Japan
Stakeholder driven and long-term focus:
- hence, emphasis on long-term employment
- ownership is separated from control
- long-term strategy = risk averse
Explain what vocational education and training are like in Japan
Enterprise based:
- recruitment of graduates and skill-building reflect focus on functional flexibility
- tend to favour hiring graduates - can train them across tasks (no narrow focus)
What type of employment system does Japan have?
A welfare corporatist system
- traditionally structured around enterprise - employers/organisations provide the welfare
- regulated through state, employers and employees
What are the key pillars of Japan’s employment system?
1) Lifetime employment
2) Seniority-based pay and promotion (not on performance)
- focused on years of service and age
- bureaucratic organisation
3) Enterprise unionism
- like trade unions
- represent employees: pay, rewards, sick leave, etc
- but structured around the company/enterprise
- more consultative and less bargaining power (not like traditional EU TUs)
HOWEVER: there are differences between large companies and small & medium-sized firms…
What were the drivers of change surrounding Japan?
1990s & 2000s: periods of recession and low rates of economic growth resulted in pressures on the labour market
- to reduce employment protection (i.e. cut labour costs, making it easier to hire and fire)
Changing global economic scene
- emerging economies: BRICs
What were the results of the recession and the emergence of the BRIC economies, in Japan?
- reductions in graduate recruitment
- offshoring
- atypical (any type of employment which is not permanent/full time) work contracts and arrangements: e.g. zero-hours, fixed term, part-time
- three workforce categories:
(a) core (long-term benefits)
(b) contractor group of specialists (mid-term benefits)
(c) peripheral group (simple, routine tasks & short-term benefits) - only core group of workers still enjoy the same employment rights and benefits as before
Explain what the crumbling of the three pillars has meant in Japan
- shift from stakeholder to shareholder capitalism resulting in a marked shift in several organisational practices, towards a more individualistic focus:
- strategies have short-term focus: more risk taking
- the decline of enterprise unionism: decline of enterprise rights ascribed to Japanese TUs
- the decline of seniority based pay and promotion: more focus on skills/ability of workers
- a retreat from lifetime employment: due to internal/external competitive pressures, now only given to core workers
What do the changes in Japan mean for their HRM practices?
- greater emphasis on individual skills and performance: yet more needs to be done in terms of skills
- shift from enterprise to vocational training
- e.g. economic literacy, off the job training for specific skills (technology etc), on the job training for small and medium companies
- evaluation on merit & competence
- recruitment of mid-career managers from competitors (poaching/head hunting now occurs and they will become core workers)
- outsourcing trends
- short-term employment relationships but more needs to be done in terms of procedural justice (e.g. hiring, promotion, termination, etc)
- more needs to be done to make system fair
Explain what state regulation is like in the US
weak statutory regulation of employment
- no employment law
- no statutory annual leave: negotiated on a one to one basis, along with sick leave, maternity, etc
Explain what corporate governance and finance is like in the US
arm’s length and contractual: separating ownership from control
- risk takers
- short-term
- don’t offer long-term employment guarantees
Explain what vocational education and training is like in the US
aimed at narrow skills related to a particular job
- specific to tasks (stark contrast to functional flexibility)
What are the key features of the US employment system?
1) PLURALISM (the new deal)
- focus on labour
- maximum working hours & minimum wages
- right to join a TU
- NLRB (National Labour Relations Board) to settle disagreements
- state employment policies
- very rigid labour market
- 1930s through to 60s/70s
2) SOPHISTICATED UNITARISM (welfare capitalism)
- employment relations policies of large, usually non-unionised, companies that have developed internal welfare systems for their employees
- development of welfare officers: predecessors of HR officers
about finding common ground and avoiding conflict
3) TRADITIONAL UNITARISM (lower road approaches)
- more rights to the market
- hire & fire logic
- individualism in pay, skills and representation
- development of anti-union policies
- individualised employment relationships
Explain what changes in the US, about taking the ‘low road’ have meant
- withdrawal of commitments to job security
- cut-backs in pension benefits
- increased use of contingent labour (part-time, fixed term contract and temporary agency workers)
What do the changes in the US mean for their HRM practices?
- strong focus on results: having the right skills and desired behaviours will not suffice
- as opposed to process and behaviours (different to traditional Japanese approach)
- performance management used for merit awards & promotion, not really for developmental purposes
- used as a punishment (e.g. no bonus, pay freezes, can’t partake in training)
- low acceptance of, and trust in, PMS by both managers and employees
Is there a convergence towards an Americanisation of HRM?
- shareholder capitalism: both countries focus on this
- anglo-saxon HRM tools now used in both countries
Driven by different forces:
1) Increased international competition in goods, services and capital markets
2) International mergers and takeovers (allow for exchange of practices/reverse diffusion)
3) Internationalisation of investment (more risky financing tools)
HOWEVER:
- national responses will be shaped by their historically developed patterns of institutional regulation
- e.g Japan will never more away from having a base pay for certain sectors
What are the four different types of convergence-divergence?
directional convergence
final convergence
stasis
divergence
Define what directional convergence is
when the trend is in the same direction
- like Japan and the US (e.g. more risky finance)
Define what final convergence is
when the trend is not only similar but toward a common end point
Define what stasis is
when there is no change
Define what divergence is
when the trend is in different directions
Define what majority convergence is
Organisations within a country become more alike
- looking at industry & competitors and what they’re doing
Define what crossvergence is
Conflicting pressures from cultural vs. economic value systems
US (individualistic) v Japan (collectivist) = cultural differences push towards divergence but economic pressures push towards convergence
- therefore some areas see divergence and other areas we see convergence
