RSS icon

Top Stories

Turn a Blind Eye to the World (At Your Own Risk)

October 1, 1997
Related Topics: Managing International Operations, Featured Article
Reprints
Be honest here. It’s no easy task to globalize our thinking. And, globalizing business—and its HR policies and practices—is even more difficult. And yet, we proceed with the notion that American HR practices often are ahead of the curve, a model for the rest of the world. What’s more, we often push our own HR policy agenda on others, assuming that ours is the best.

But is this perception true? Or, are we myopic? Do ethnocentrism, cultural naiveté and just plain provincial thinking cloud our vision? What would we find if we turned the lens on ourselves? How do American practices appear? And what surfaces when we look at others’ practices? We sought out HR leaders from around the world who work for non-U.S. companies, are not American, or are otherwise in a position to provide insight. What did we find that will benefit HR professionals as they venture into other countries? Read on.

HR policies reflect the culture and society they’re part of.
Make no mistake. When we turn the viewfinder in our own direction, we see an array of workplace practices that have strengths—and weaknesses—when transplanted into the global workplace. Multi-faceted and diverse, many U.S. HR practices are respected in various parts of the world; others are viewed as impractical and unnecessary. However, no matter how exemplary and well-considered, no matter how positive, policies rarely can be replicated without first filtering them through a culturally sensitive lens, caution global HR practitioners.

"American HR policies are as advanced as any in the world, but I never personally had the belief that they were any better than other countries," says Joanne Jenkins, senior human resources manager for Nissho Iwai American Corp., a Japanese trading company. "It’s just that policies are different and fit the culture of the people. Our American laws, our value system, guide and dictate the direction of our practices."

Compensation strategies: When clarity and structure translate well to another culture.
U.S. multinational Philip Morris Companies Inc. reaped the advantages of highly regarded American compensation practices when it implemented them in Europe. Rob Walsh can tell you the advantages are many. As director of compensation and benefits at Zurich, Switzerland-based Kraft Jacobs Suchard—what many consider a classic Swiss company that was acquired in 1990 by giant Philip Morris—Walsh joined in 1991 to help bridge cultures. His first activities at Kraft are an example of translating respected U.S. policies to another culture.

Walsh’s initial objectives were to assess the company’s current vague compensation practices and put an American imprint on them. He was to change the pay philosophy and strategy, bring compensation policies in line with the U.S. parent’s practices, and communicate these ideas to the current employees effectively so they would accept the changes. Before Philip Morris acquired the organization, there were no salary ranges, position descriptions, or strict compensation policies.

Walsh first put together a deck of communication materials which included how particular positions are evaluated, how salary ranges are set, how the specific position fits within these ranges (i.e., the "grade"), and the benefits that go with the grade.

Why might this U.S. trademark be beneficial to the company? Before this process, every salary was negotiated. Moreover, all 230 people had incentive levels of 50% of their base salaries and no benefits. However, because the previous plan was so simplistic, it could be manipulated easily by line managers, so the incentive pay could range from zero to 100% of one’s salary. Walsh reconstructed salary ranges and also reevaluated jobs to implement a tiered-incentive structure (the lower the salary, the smaller the incentive.)

A common U.S. perception of American firms is that they desire to employ—and empower—people who have the ability to take risks. In reality, as others see it, this isn't always the case.

Aware that these changes had to be communicated in a clear and sensible manner so employees would react favorably, he helped install several programs over the first two-year period. The programs protected income levels while also introducing benefits plans and perquisites—such as automobiles and medical plans—as appropriate. He accomplished this while phasing in the more graduated incentive system.

The new incentive system was linked with a communications process. Each individual was shown what they received previously; what the new salary, job title and grade would be; the incentive target; and the benefits plan. Walsh communicated it consistently throughout the management team.

"This was news to 230 senior managers, who didn’t know this information previously," explains Walsh. "Yet, this type of information is perceived as an essential part of doing business in an American firm," he says. In a typical American HR climate, you find greater openness and ability to share information and communication of policies than in classic European businesses in which HR isn’t seen as such a strong function. "[The policy information falls into] a big, black hole," says Walsh. "Nobody knows. In some businesses, they don’t even have the policies."

In other words, from Walsh’s European perspective, the advantages for the Swiss managers are obvious. The structured compensation policy—and American-style free access to information about the policy—allows each of the managers to fulfill their roles more effectively. They can see the larger picture and predict more accurately how business will unfold.

In this case, HR managers can see where structure and communication—both intrinsic to American HR practices—work well. That isn’t always the case, however.

U.S.-style communication may translate into over-control in some situations.
A common U.S. perception of American firms is that they desire to employ—and empower—people who have the ability to take risks. In reality (at least as others see it), this isn’t always the case. From the European perspective, U.S. companies pull responsibility up to the highest level. In contrast, most European organizations, says Walsh, push responsibility down the organization.

In European operations, there are people with HR accountabilities within different divisions. "We would say, we’ll set an overall policy and push decision making and management of those decisions downward," he says. "In an American company, they say, ‘We’ll write the policy. We’ll also write the procedures. And by the way, you need to complete the documentation and send it to us, and we’ll approve it.’ That tends to lengthen the communication process because you’ve got to go up through the organization to get approval. Europeans would tend to say, ‘That’s the policy. Operate within the policy—and if you do something wrong, then we’ll have your garters.’"

American policies that are different create a situation in which employees are bound by directives. Thus, while U.S. businesses indicate they want risk-takers and people who will be creative, non-Americans perceive HR practices that require senior management approval as a contradiction.

Culturally based, it’s clear that much of the need for senior-level consent is driven by the U.S. legal environment. As such, many of these controls seem unnecessary, even ludicrous, in other societies. Susie Inwood, HR advisor with British Gas E&P for 20 years, has been in a position to review policies and procedures from both sides of the Atlantic—most recently for a Houston-based subsidiary. "They have a huge, comprehensive list of HR policies and procedures. My overriding impression is that they’re incredibly thorough, to the extent of being exhaustive." The employee handbook includes detailed information about disciplinary policy, a drug-free environment, employee acceptance of gratuities, employee reference checks, outside employment, a smoking policy, and more. There’s even a handbook disclaimer. "I suspect that it’s because of the highly legislative atmosphere and the fear of lawsuits," she says.

In the United Kingdom, companies follow similar guidelines when writing their policies. "In the U.K., we’re [currently] following the trend of formulating policy far more prescriptively [than required] because there’s a trend of disgruntled employees bringing lawsuits, whether for defamation of character or unfair dismissal," she says. "Because of that, we’re tending to tighten up the wording of our policies. But we’re still less so than the U.S."

In Japan, the customer is god—not no. 1 or king, but god—always right. So one's jon is to do anything to take care of the customer immediately.

One of the reasons for this may be that government regulations more tightly monitor the employment relationship in the United Kingdom than in the United States. In the United Kingdom, written employment contracts are the norm. They go a long way in alleviating misunderstandings that in the United States are handled by the employer. U.K. policies with tax implications for the company—such as business-expense policies, relocation policies, policies relating to temporary movement from one location to another and expatriate policies—are tightly worded and carefully controlled. But, businesses in the United Kingdom tend to provide policy guidelines that are less like edicts and allow for scope of interpretation.

For example, British Gas is setting up a subsidiary in Northern Ireland that will become a joint venture to take natural gas into the Belfast area. Because it’ll be a small company, HR didn’t burden it with the full scope of British Gas procedures. Furthermore, the company is sensitive to the diversity issues. Inwood and a colleague, using what Inwood calls "common sense and judgment based on general best practices" tailored country-specific HR policies to that small, new company.

"We presented them to the chief executive of the small firm as a fait accomplis without having to get prior approval from anyone else. He simply said, ‘Thank you.’ And that was that."

What do American global managers learn from this assessment? Simply, that stringent regulations within the United States produce a mindset that may impede initiative, creativity and speed. Although mandated provisions may require exasperating clarity and rule-following in aspects of the workplace, they may not be expected outside American borders, and may actually hurt performance in some cases. Take the case of performance appraisals.

Performance appraisals—even exemplary U.S. practices will not work everywhere.
U.S. and European organizations tend to value clear, well-articulated job descriptions as a first step in the process of performance management. HR managers, and the companies they work for, believe these are the best way to operate. However, when these practices are viewed by Asian businesses, they aren’t always highly regarded. Indeed, Japanese firms, for example, may actually frown upon them, and almost never provide written job descriptions.

These differences have tremendous impact upon the nature of performance management and appraisals, and although Americans and Europeans may believe that their practices are the best, it’s important to understand the rationale for another approach. "Part of the reason Japanese don’t have written job descriptions is because they believe they’re limiting," says John Gillespie, executive vice president of the New York City office of Clarke Consulting Group. "In Japan, the customer is god—not No. 1 or King, but god—always right. So one’s job is to do anything to take care of the customer immediately."

Although written performance appraisals are available legally to subordinates in the United States (and may be in front of employees during the face-to-face review), Japanese are amazed by this practice because anything in writing would never be shown to subordinates, according to Gillespie (who lived and worked there for more than 15 years). In the United States, of course, employees want to know exactly what their jobs entail—and that starts with written job descriptions.

Typically, in U.S. human resources practices, the next step in performance management is setting objectives. By contrast, performance reviews and objectives are much more ambiguous in many of the Asian countries—China and Korea—as well as Japan. Specifics of the manner in which an employee executes a job are stated over dinner or while having a beer, but they’re vague. As a matter of fact, the feelings people have surrounding the interaction are as important as the specifics of the conversation. And, because of the lack of specificity, and the reluctance of Asians to be direct and critical, both Asians and Americans must work hard at understanding each other. Individuals from other cultural backgrounds may get the wrong impression, and that could be a costly business error.

For example, while Asians are motivated by allowing the employees to "save face," by not demeaning their behavior, Americans (when on the receiving end of these types of performance reviews), get the incorrect notion that they’re doing fine work simply because they’re not being criticized. Obviously, in the United States, if you’re not doing a good job, your boss tells you. These communication differences can be quite confusing.

"The Japanese approach might work quite well in Japan because Japanese pay a lot of attention to creating a good feeling about a subordinate and manager working together," says Gillespie. "Information exchange [that would provide more direct feedback about the performance] frequently happens offsite in the evening over drinks or during a break. But, this creates frustration when dealing with people who are accustomed to specific information. Of course, in the United States you have to have it written for legal reasons."

Regardless of the reason behind communication that’s clear and precise, these customs are tied to deeply held cultural beliefs. Does style matter? Of course, especially when it translates into HR practices—in this case, performance appraisals—which have far-reaching effects. Think about the frustration people encounter on the job when they anticipate one series of events and another set unfolds. From an American perspective, when moving across cultures—whether it’s French-American, Japanese-Chinese, even British-American—it’s important that activities and expectations are in writing. Not only do Americans and Europeans tend to practice this concept to varying degrees, but they believe these practices should be global because many people are communicating in a second language. However, before they’re judged as superior, they must be culturally adapted to appeal to other societies whose members would see these practices as unnecessary and even foolish.

Hiring and training customs: Long- and short-term perspectives dictate HR policies.
Sometimes policies are so culture-bound that they reflect fundamental beliefs that are difficult to change. Hiring and training policies are such examples. They’re approached differently around the world, and U.S. practitioners should learn from customs practiced abroad.

"My biggest impression of the differences in HR practice is hiring objectives and training methods," says Yanmei Zhang. A Chinese-born, American-educated HR manager who works in Bejing, China for Sony PEK, Zhang is fluent multiculturally and typifies a new breed of global manager. In the United States, the concept of lifetime employment isn’t a common thing, but for companies like Sony (and many other Asian firms), it is. "We also hire people for their potential, for long-term development," she says. "But, in the United States, people hire you for what you can do now. So even in job descriptions in an ad, you can say what kind of experience, education and other requirements you want because you expect people to come to work tomorrow and start right off to do what they promise to be able to do."

Sony, however, hires people once a year, in April, when students graduate from college. The new hires are looking for lifetime employment. And, Sony evaluates whether or not the can- didates are trainable, have potential and will develop in five or ten years to do what the company needs. With regard to pay, new hires in this class start at the same grade. People grow through the ranks, with seniority being an important factor.

Although hiring practices may be reflective of differences between long-held beliefs about employee loyalty and jobs-for-life, career development is an area in which Americans might take some lessons from the Asians. Says Zhang, "People move through at least three different jobs at Sony and through several different divisions. In this way, they have the opportunity to know the full scope of the company and for the company to see how they perform in different positions."

No one has to spell out the advantages for both the employee and employer alike when the employee has the opportunity to work in several different capacities in the company. The individual then understands from many different perspectives what the business is all about. Furthermore, this is reflective of the longer-term commitment to the employee’s tenure in the organization and the likelihood they will be with the company long enough so everyone reaps the benefits.

It's obvious that although U.S. Hr policies are exemplary and progressive in many respects, they're also only part of a global kaleidoscope.

And what is it like in China? Not surprisingly, quite different from the United States. HR practices are in their infancy. Because China is a controlled environment, HR is practiced in an entirely different way. For example, Zhang can’t practice human resources in China yet because her company still has the status of being a representative office. She must use the Foreign Enterprise Service Corporation Organization (FESCO), which is a governmental agency that handles most of the hiring and other HR procedures for employees of foreign companies. FESCO operates in a fashion similar to a U.S. temp agency until the foreign company upgrades its status to the appropriate rank at which it may handle its own HR issues.

Even more interesting, Zhang says that the Chinese are so accustomed to working in a highly controlled environment, that when asked how they would define their job functions, they’ll respond by saying they’ll do whatever the manager needs. You can hardly find a job description with that wording in the United States. Simply extrapolate from that, and you see that although the United States might begin to supply some models of HR practices to the Chinese in the coming years, certainly Americans will want to pay attention to Chinese policies. And when offering services and interacting with the Chinese, U.S. HR practitioners will want to be culturally adept.

We have a lot to learn from each other.
So where does that leave us when we look inward from abroad? Our long history with workplace issues and labor has had its affect in making HR issues important components of the American scene. Around the globe, HR professionals believe that the United States takes its human resources issues very seriously. Indeed, although American HR professionals continue to strive toward greater input on strategic business issues, much of the world concurs that HR is seen as a core function in the United States (albeit a "soft" one). Americans are quite deft at putting the HR agenda in the mainstream of the company. Non-U.S. human resources practitioners see Americans as intent and interested in doing the best they can when it comes to their workforces, whether it’s dealing with issues relating to compensation, communication, or hiring and promotion.

However, when it comes to respecting the HR function as an integral business partner, as a focal point that directly assists the company’s revenue, Japanese firms usually exhibit tremendous respect—even honor—to human resources in a way that is unique and exemplary. HR is extremely important. Stories are told again and again of Japanese CEOs who say, ‘We make products, but our real goal is to develop people.’ Consequently, the top person in human resources is often the second or third most powerful officer in the company, and key personnel rotate through HR as part of their career plans. This is in stark contrast to the United States, where human resources is acknowledged as an important function, but the professionals who practice it continue to scramble for a seat at the decision-making table and still battle the image of being part of a soft function.

Clearly, U.S. HR professionals have valuable lessons to learn from non-U.S. firms, such as those in Japan. Certainly the United Kingdom, Germany and Northern Europe have their share of progressive work/family and vacation benefits from which we can draw. Furthermore, European and Asian organizations have more experience with expatriates and cross-cultural adaptation. Those from Europe tend to be a bit more sophisticated as they enter another country, and managers also may have tighter financial constraints and less flexibility to negotiate allowances in expatriate packages (something that would be a relief for their American counterparts). Americans, however, are quite willing to acknowledge that they need help to modify their old behaviors and create new ones that will be more effective in a multicultural world, and increasingly embrace educational opportunities to do so.

When it comes to employee input, global HR managers around the world can learn from each other. It’s not only U.S. firms, for instance, that seek information from, and share it with, their employees. For example, National Australia Bank Ltd. runs a comprehensive, worldwide employee survey with 14 categories and more than 100 questions. This survey is used annually to assess staff attitudes. "Once you survey your employees, you’re on the lamb that you better do something with the results. We’ve had to put targets into our plans of what we want to reach," says Thomas Gorrian, vice president of human resources. Work organization and efficiency, supervisory practices, training and career development, quality of work/life, job security and job satisfaction are just a few of the areas the survey studies. Moreover, London- and The Netherlands-based Shell Internationale conducts an exhaustive survey of its 17,000 expatriates on a huge range of issues.

It’s obvious that although U.S. HR policies are exemplary and progressive in many respects, they’re also only part of a global kaleidoscope. Our strong human resources practices and high regard for employees translates into a lot to share, and much to teach. However, as we look through the global lens, we can’t help but see the move toward a blending of cultures. In the end, you’ll want to look at cultures and various HR practices for their strengths and shared attributes, and look at them for lessons to learn.

Global Workforce, October 1996, Vol. 1, No. 1, pp. 18-23.

Recent Articles by Charlene Marmer Solomon

Comments powered by Disqus

Hr Jobs

Loading
View All Job Listings