Is the world getting flatter?

Source: Exec Digital Canada

Date :13/02/2008 05:06:54

Convergence suggests that ‘one way fits all’ when it comes to managing HR policy. Does that mean multinational companies are at risk of losing national cultural values when managing their businesses?

When Howard Stringer was appointed CEO and Chair at Sony, the Japanese electronics company, in 2005, the first non-Japanese boss of the firm, Welsh-born and a non-Japanese speaker, for many it was a symbol of how far Japan’s business attitudes had shifted. When SANYO appointed Tomoyo Nonaka as CEO and chair of the company, also in 2005, the first woman to head a Japanese corporation, there was a similar sense of shock.

Some have seen these and other examples as a lurch of Japan’s business model towards a more Anglo-Saxon approach and Anglo-Saxon practices, encouraging belief about convergence; convergence in corporate governance, convergence in corporate structure and convergence in HR practices. This debate of course does not focus just on convergence between Japan and the Anglo-Saxon model, but convergence across the world. It is a debate that suffers from a large degree of speculation and fuzziness but the interest is enduring, particularly in HR terms, because it promises to answer whether there really is one best way in HR practice.

US individualism

The basic question of HR is: which HR practices bring success? Research into high performance work practices has tended to support a `one best way’ approach, with a certain number of practices – for example, selective recruitment, performance-related pay, 360 degree evaluation, grievance procedure – identified as common across companies and which if implemented effectively will produce positive financial outcomes. Convergence suggests that as this knowledge of HR practices is diffused and the technologies of HR are spread across the world, then similarities of practice will be the result, regardless of national culture. The globalization of markets and global communications is accelerating this trend.

For many, this is going too far. On the face of it, national cultural values still seem to strongly influence HR practices. For example, in the US, our individualism supports ideas of self-sufficiency, individual achievement and recognition and single status working. In China, Confucian values support deference to age, a strong work ethic and collective endeavour. So does divergence rule?

A third way is possible, arguing that certain practices are pervasive across the world but that the national culture influences them and makes a distinctive practice. Japan’s companies are thought to have edged closer to the US model while still retaining their distinctive characteristics, so forming a hybrid model.

A study carried out by Judge Business School, University of Cambridge, in the UK looked at the HR practices within 30 multinational organizations (MNCs), including IBM, Oracle, Siemens, BT, EDF, IKEA, Procter & Gamble, Samsung, SANYO, TCL and Matsushita. It examined how HR practices were organized in international contexts, finding that while national culture differences are not insignificant, their importance is less than one might imagine, and it is in organizational cultures where the major influence on HR practice lies.

Click here to read the full article on multinational hr policy