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Reflection Paper on HR & IR
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BUS430 Team 3
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Instructor:
Date:
Students:
Rajiv Krishnan Kozhikode
February 25, 2013
Michihiro Kawano Shaoyang Jian
Cindy Wong Tian Luo
Sisi Li
I. Introduction:
This paper looks at the problems occurring today in human resource management
practices (HRM) and employment relationships in industrial relations (IR). Our team will
introduce two articles to support the difficulties in comparing human resource
management practices across countries, and another two articles to support and criticize
the cross-national differences in wage setting. Lastly, we will apply our findings to
analyze the tobacco industry in both Japan and the United States.
II. Analysis of “Comparative Research in Human Resource Management: A
Review and an Example”
Summary
In the article, Brewster et al’ argue that there are a number of issues that need to be taken
into account when conducting a comparative research. These points are conceptual issues
and methodological concerns. One of the conceptual issues talks about a tendency among
researchers to assume that one management theory model is better than others. In
addition, there is a tendency to replicate research that was tailored for a specific country
to another. As a result of these tendencies, research fails to recognize that knowledge,
language, concepts, values, and the culture of societies are important factors in
understanding people’s behaviors within an organization. Because of these issues, HRM
theory has remained highly ethnocentric and tends to focus on being prescriptive rather
than descriptive. Another conceptual issue that comes up is when researchers have a set
of assumptions when conducting research. These assumptions can lead to an outcome
that focuses predominantly on the result and overlooks other important aspects that may
have been significant.
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In regards to methodological issues, Brewster et al. argue that there are three dominant
approaches that have been used frequently in cross-national research: the case study, the
eclectic summary, and the survey. Brewster et al. argue that one of the main problems in
international surveys of HRM is obtaining a representative sample. It is important that the
sample frame represents the actual population surveyed. Another important issue is
correctly translating the questionnaire into different languages. Literal translations will
not be sufficient as they may mislead the respondents. The Cranfield Network on
European HRM survey was formed primarily to find out whether certain human resource
management practices were becoming increasingly “Europeanized” as time goes on. In
addition to their primary objective, another reason the Network was formed was to see
how far personnel policies had shifted in Europe towards ‘strategic human resource
management’ (Brewster et al., 1996).
“The Impact of Bundles of Strategic Human Resource Management Practices on the
Performance of European Firms” written by Paul Gooderham, Emma Parry and
Kristen Ringdal
This article examines how human resource management practices affect organizational
performance. Gooderham et al. argue that there are three main types of theories on HRM
and performance: universalistic, contingency, and configurational (2008).
Universalistic theories assume that there is a linear relationship between the performance
of the organization and HRM practices. These theories hypothesize that financial
performance is the key indicator for measuring the success of an organization. The
contingency perspective believes that HRM practices and performance will change based
on different external and internal influences. When looking at internal factors, researchers
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should include a variety of internal factors such as firm size, level of unionization, and
generic firm strategy. Inclusive of these should be cost leadership (competing on the basis
of price) and differentiation (competing on the basis of quality), as well as the external
market conditions.
HRM practices must be true to the organization’s strategy to have a positive impact on
the performance of the company. The configurational view argues that an effective blend
of HRM practices (also called HRM bundles) must be implemented by HRM on
performance. In addition, the authors state that there are two other HRM practices:
calculative HRM practices, which focus towards the efficient use of human resources,
and collaborative practices, which encourage employee and employer goal setting
(Gooderham et al., 2008). The results of the research show that the three most important
calculative HRM bundles are profit sharing, group bonuses, and share options. The
results also indicate that the calculative HRM bundles have a positive impact on firm
performance than collaborative HRM bundles. In terms of the contingency approach, all
of the variables have significant effects on firm performance. In regards to firm strategy,
firms that adopt cost leadership fall behind in performance, while firms that adopt
differentiation strategy have higher performance (Gooderham et al., 2008).
“A Comparative Analysis of Trends in Contingent Employment Practice in Europe
Over a Decade” written by Olga Tregaskis and Chris Brewster
Brewster et al. also introduce some fundamental considerations in comparison to different
nations’ human resource management features. However, out of all of those factors
mentioned in the article, there are still some other relevant and innovative ideas that can
be used in human resource management today. Specifically, Tregaskis and Brewster’s
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article mentions the concept of “Contingent employment” which will supplement the
HRM process ideology of the original paper.
Contingent employment is a type of human resource management method that is
established based on the use of part-time, temporary, or fixed term contracts. With these
types of employment setups, corporations are less pressured to consider qualified
employees during the hiring progress. The contractual labour force also allows employers
to be able to find potential long-term staff through a trial work period.
In Tregaskis and Brewster’s article, the authors point out that much of the research
primarily focuses on the “static similarities and differences” which only supports the
analysis partially. In fact, the trend of such an examination requires a more integrated
perception based on professional experience. This current view should also include
contingent employment as part of the human resource management research.
Furthermore, Tregaskis and Brester use Germany and Sweden as an example to
emphasize the importance of contingent employment based on the HRM factor. Sweden
has a stronger tendency towards this type of employment arrangement. Specifically,
employers will take college students to work for firms periodically. This will let the
companies benefit from industry-specific skills, fresh workforce energy, and deep
competencies from the short-term workers. Germany, on the other hand, prefers to keep a
united workforce. Therefore, German firms will intentionally reinforce their internal
training programs and retain the workforce in an economically viable way - creating a
collective working atmosphere. As a result, Sweden has a highly skilled national
workforce while Germany has a “high-quality” type of industry focus.
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Tregaskis’s real life example compares Germany and Sweden cross-cultural human
resource management practices clearly indicate that when they are examined together, the
contingency should be considered a significant component. This point should not be
dismissed compared with the situation a decade ago.
By linking this ideology with Canadian human resource standards, this method is not an
unknown hiring practice anymore. In fact, contingent employment has already been
applied in Canada for years following the international trend. Retail stores, accounting
firms, the banking industry, and many other types of businesses have shown their
growing preference of this trend.
III. Analysis of “Wage-Setting Institutions and Pay Inequality in Advanced
Industrial Societies”
Summary
Michael Wallersten’s article mainly explores the determinants that can be used to explain
the degree of pay inequality in advanced industrial countries (1999). The testing
determinants include wage-setting level, centralization, concentration of union and share
of the labor, government coalition, the size of government, international openness, and
the supply of highly educated worker. The main finding of Wallerstein’s research is that
centralization has a positive relationship with pay inequality which means the more
centralized the wage is set, the less dispersed the pay is (Wallersten, 1999). This major
finding provides valuable insights for the relationships between determinants that include
wage-setting level, concentration of union and share of the labor, and pay inequality. For
example, a national level wage-setting by nature is more centralized than an industrial
level wage-setting; a company with single union is more centralized than companies with
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multiple unions. Wallerstein also finds out that government coalition, the size of
government, international openness and the supply of highly educated worker have little
impact on the level of pay inequality (1999).
Pay Dispersion and Workforce Performance: Moderating Effects of Incentives and
Interdependence” by Jason Shaw, Nina Gupta and Jone Delery
Wallerstein’s paper did not provide information about what the level of pay inequality
means to organizations. There is a gap that may prevent managers from utilizing
Wallerstein’s findings and insights when they design their companies’ pay system and
handle relationships with unions. Thus, the article by Shaw et al. will fill in the gap, and
also propose real life situation guidelines for managers. Shaw et al. mainly explores how
the level of pay inequality affects workforce performance on an organizational level
(2002). As shown in their research, pay dispersion within the organization may lead to a
higher workforce performance levels (2002). However, pay dispersion will discourage
cooperation and goal orientation among employees, which create problems for the
company in the long run (2002). Therefore, the authors recommend organizations to set
their wage systems at a decentralized level when the nature of the job is independent as
well as involves individual incentives. On the other hand, organizations should set their
wage systems at a centralized level in the absence of individual incentives and when
work is interdependent.
“Welfare Effects of Local versus Central Wage Bargaining” by Marcus Dittrich
Wallerstein’s article only discusses that earnings are more equal in the centralized wagesettings. However, it does not examine the social welfare of employees in centralized and
decentralized wage-settings. Employees may not be happy about paying equally because
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some will think they work much harder than other colleagues. Social welfare is crucial
for the employers’ knowledge because the employees’ welfare can influence work
performances.
Another additional article written by Marcus Dittrich answers the concern listed above.
Dittrich further examines the social welfare performance in the centralized and
decentralized wage-settings based on a dual labor market. According to Reich, Gordon,
and Edwards, a dual market is divided into two sectors based on whether it is a primary
job or secondary job (1973). The author states that primary jobs are high-paid, stable with
job ladders existing whereas secondary jobs are low-paid and occupied by women,
minority, and youth, and have no job ladders, high turnover and (Reich, Gordon, &
Edwards, 1973). Dittrich defines the dual labor market model as where “wage rate in the
primary section is either the result of decentralized bargaining at the firm level or of
centralized bargaining at the sector level” (Dittrich, p.1, 2008). After an extensive
empirical research, Dittrich concludes that there is a positive relationship between social
welfare and centralized bargaining system (Dittrich, 2010). This indicates that welfare is
higher if the union maximizes the total wage-bill in centralized bargaining power. As a
result, centralized wage-setting is definitely popular in current business environment.
IV. Factbook Implication
Based on thorough analysis of the journal articles, some critical points can be
implemented into our Factbook. For this, we will consider the insurance industry in Japan
and USA and determine which practices the human resources and industrial relations
points apply to in their work environment.
For example, by considering the fact that Japanese workers tend to be more collective at
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work, applying a single union to each firm will help the company to centralize its labour
force. The firms can apply collective policies such as deduct pay inequality via the team
but centralize incentives based on teamwork result to help employees to work as a group
to achieve goals. On the other hand, since American workers in general prefer individual
work ethics; by applying a proportional pay dispersion policy to stimulate competition
within the industry, it will courage employees to explore their potentials through the
performance contest. Additionally, management can also implement the concept of
contingent employment into their hiring process. By applying this practice, insurance
companies not only receive the direct benefits of hiring potential candidates to reinforce
the firm’s market competing ability, but also reduces the costs out of hiring a formal
employee through complex recruitment progress.
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References
Brewster, C., Tregaskis, O., Hegewisch, A., & Mayne, L. (1996). Comparative research
in human resource management: a review and an example. International Journal
Of Human Resource Management, 7(3), 585-604. Retrieved from
http://www.ebscohost.com.
Dittrich, M. (2010). Welfare Effects of Local versus Central Wage Bargaining. Labour:
Review of Labour Economics & Industrial Relations. 24(1), 26-34. doi:
10.1111/j.1467-9914.2010.00469.x
Dittrich, M. (2008). Union Wage Setting in a Dual Labour Market: The Rold of
Centralisation. International Economic Journal, 22(4), 461-470. doi:
10.1080/10168730801497536
Gooderham, P., Parry, E., & Ringdal, K. (2008). The Impact of Bundles of Strategic
Human Resource Management Practices on the Performance of European firms.
International Journal Of Human Resource Management, 19(11), 2041-2056.
doi:10.1080/09585190802404296
Reich, M., Gordon, D., and Edwards, R. (1973). Dual Labor Markets: A Theory of Labor
Market Segmentation. American Economic Review, 63(2), 359-365. Retrieved
from http://ebscohost.com.
Shaw, J., Gupta, N. and Delery, J. (2002). Pay Dispersion and Workforce Performance:
Moderating Effects of Incentives and Interdependence. Strategic Management
Journal, 23(6), 491-512. Retrieved from http://journals1.scholarsportal.info/.
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Tregaskis, O. and Brewster, C. (2006). A Comparative Analysis of Trends in Contingent
Employment Practice in Europe Over a Decade. Journal of International Business
Studies, 47, 111-126. Retrieved from http://www.proquest.com/en-US/.
Wallerstein, M. (1999). Wage-Setting Institutions and Pay Inequality in Advanced
Industrial Societies. American Journal of Political Science, 42(3), 649-680.
Retrieved from http://www.jstor.org.
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