A framework for HRM analysis

OHT 17.1
The Three Tiers in the
Asia Pacific Region
• The Top Tier – Led predominantly by Japan, it includes
Australia, Hong Kong, New Zealand, Singapore and
South Korea. The non Anglo-Saxon countries are
generally known as the 'Asian tigers' and are made up of
'newly industrialised economies' (NIEs).
• The Second Tier – Second generation of 'tigers', made
up of Malaysia, the PRC and Thailand. At present in a
'sandwich trap' of cheap labour competition from below
and exclusion from higher value-added markets above.
• The Third Tier – Burma, India, Indonesia, the Philippines
and Vietnam are a diverse range of economies
characterised by the availability and abundance of cheap
and unskilled labour.
Human Resource Management, 4th Edition
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Key differences between
the traditional system and the emerging
system of labour reforms within China
OHT 17.2
System Characteristic
Wage system
Union role
Factory party-role
Work organisation
Status Quo
Iron rice-bowl
Job security
Job Assignment
Grade based
Economic cadres
Labour market
Labour contracts
Job choice
Performance based
Professional Managers
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OHT 17.3
Chinese culture
based on Confucian ideologies
Respect for age, family and hierarchy.
Sense of duty and order.
Orientation towards groups.
The preservation of 'face'.
The importance of relationships.
Human Resource Management, 4th Edition
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Four Phases of
Development under Mao Zedong (1)
OHT 17.4
Phase 1: 1953–56 Central Planning
• Mao Zedong came to power in 1949.
• He advocated that China should move to a economy based upon
socialist ownership. The Five-Year Plan was launched in 1953.
• This included moves towards centralised planning and control.
Phase 2: 1957–61 Decentralisation & the Great Leap Forward
• The Soviet influenced system was not in sympathy with a Chinese
culture in which collectivism was a central feature.
• The 'Great Leap Forward' saw control of many industries pass from
central to provincial governments.
• However, a great emphasis was placed upon allegiance to the
Communist Party and Factory Directors had to report to party
• The system of bonus payments was reduced.
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Four Phases of
Development under Mao Zedong (2)
OHT 17.5
Phase 3: 1962–65 The Period of Readjustment
• The 1959–61 period saw a drop in agricultural output followed by a
• This was partly caused by an overemphasis on expanding the
manufacturing sector during the Great Leap Forward.
• The period of readjustment saw moves back towards more
centralised planning, but factory directors were given more control
over day-to-day production issues.
Phase 4: 1966–76 The Cultural Revolution
• Politics and ideology were predominant. Emphasis upon allegiance to
the Party.
• Factories moved away from hierarchical control to factory
revolutionary committees.
• The role of the State was central throughout.
Human Resource Management, 4th Edition
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OHT 17.6
The Japanese Three
Pillars and other elements of HRM
The Three Pillars:
• Nenko – seniority system
• Lifetime employment
• Enterprise unionism
Other elements:
Employer participation (Ringi system)
Embedded training
Mentoring Sempai–Kohai (Senior–Junior) relationship
Core–periphery workforce
Human Resource Management, 4th Edition
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OHT 17.7
Historical development
of Japanese HRM
Measures to discourage mobility of skilled workers and encourage retention
Changing the hiring from an indirect to a direct system.
Establishing welfare benefits in the company:
– Paid job-related injury & illness benefits; congratulatory money for marriage &
Introducing the seniority wage system:
– Promotion depended on length of service. Thus a move to another company meant
their wage level went down.
– Also dependent on age, education and until recently gender.
Establishing an education and training system within the enterprise:
– With the development of an internal labour market training and development became
– Firm-specific skills were emphasised as well as all round skills so employees could be
transferred between jobs.
– Unlike Western countries employees are not hired to do a certain job.
– This underscores the concept of ‘promotion through job rotation’.
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OHT 17.8
Establishment of
enterprise unionism
After the Second World War workers wanted to safeguard their rights amid
the collapse of the industrial structure and wholesale inflation.
For the first time blue collar and white collar workers cooperated controlling
production for the sake of their own living standards.
They demanded:
– Removal of the old grades and status
– Job security
– Reform of management organisation
– The setting up of participation systems
– Recognition of the unions
– To conduct labour agreements
– Democratisation of management
– Expansion of workers' rights
The best way to cooperate between the two groups of workers to gain and
maintain these initiatives was at the enterprise level.
Human Resource Management, 4th Edition
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Why employers
encouraged enterprise unions
OHT 17.9
• Employers saw the advantages of promoting enterprise unionism and
they ensured that:
– Labour relations were conducted vertically, thus weakening the horizontal
solidarity of the workers.
– The emphasis was on cooperation in the workplace in the desire for
consensus and the removal of workers who propagated radical ideas and
were aggressive toward management.
– The rights of management were encouraged by setting up a new
employer–labour relations system in each company.
• This also had the effect of creating a Unitarist style of organisation.
• However, the path of industrial relations was not always smooth and
up to the 1960s there were often disputes, sometimes of a violent
• Cooperative industrial relations, identified with Japanese
management style, only began in the 1960s. Thus the ‘traditional
model’ is really quite a recent phenomenon.
Human Resource Management, 4th Edition
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Changes in HRM
patterns in large Japanese firms
OHT 17.10
Internal labour markets
Hierarchical pyramid-type
Lifetime employment
Job segmentation
In-house on-the-job training
Internal human network
Manual skill oriented
Firm specific skill
Systematic job rotation
Manufacturing factory model
Mass production oriented
Long-range evaluation of human
resource management
Money value of work for employees
Bureaucratic control
Enlargement of internal labour
markets (related firms)
Flat-type organisation
Variety of contracts
Flexible job categories
Emphasis on out-of-house interaction
External human network
Conceptual skill oriented
Firm specific culture
Failure of internal career development
Flexible unit model
Value added oriented
Short range evaluation of human
resource performance
Non-pecuniary value of work for
Partnership relations
Human Resource Management, 4th Edition
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OHT 17.11
New trends in
Japanese HRM patterns
Changes facing Japanese organisations:
• Increasing number of:
– Middle aged and older workers
– Highly educated workers
– Female workers
• Continuous changes in technology
• Growth in service economy
• Global development of the division of labour.
Traditional internal labour markets of large Japanese corporations are at a turning point:
• Long-term trend of wage differentials by personal characteristics & positions in
• Some characteristics unique to Japanese companies may be disappearing
• The hierarchical structure of companies will hardly exist any more.
• Formerly bureaucratic organisations have become more flexible units:
– Project teams
– Related companies
– Subsidiary companies
– Sub-contracting companies
– Compensation system will move to cope with new HRM system.
Human Resource Management, 4th Edition
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OHT 17.12
Japanese population
and labour force problems
• An older labour force
• Fewer young people entering the labour
• Strain on the pensions system
• Strain on wages system as remuneration
rises with age
• Shortage of senior positions
Human Resource Management, 4th Edition
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Japanese population
and labour force some solutions
OHT 17.13
Raised pensionable age from 55 years. In 1985 raised to 60 years with 65 years in
Modification of Seniority wage system. Many companies have set an age where wages
start decreasing or at least increasing at a rate less than average.
Revision of retirement benefits, e.g. reducing the proportion of salary making up the
lump sum.
Not enough senior positions for those now in their 40s and 50s.
Many companies are beginning to emphasise factors other than age and service, e.g.
Resignation from a position at a certain age.
Increased employment of women especially in the 25–29 age group. Main reason:
expansion of services such as banking, retailing and insurance.
A decline in the birth rate from 1.8 to 1.5 per Japanese woman since 1980.
Women's rising level of education and drive for equal opportunities and take up
Backed by Equal Opportunities legislation 1985. Companies are required to provide
equal opportunities in recruitment, employment, work assignments and promotion.
The law forbids sexual discrimination in training and education, welfare benefits,
retirement age, resignations and dismissals.
Backed by provisions of child care leave, and childbirth leave and re-hiring.
Human Resource Management, 4th Edition
© Pearson Education Limited 2004