The way large organizations have started to move into countries in opposite parts of the world is overwhelming. Large organizations like Wal-Mart, McDonald’s, and Starbucks have started operations in Asia, more specifically China. There are many benefits of such expansion. Expansion into China would mean a whole new market for these large organizations. They would have a lot of opportunities to grow. The market in China is large considering its population; hence the market has a lot of potentials. Large multinationals like McDonald’s, Starbucks, and Wal-Mart are trying to make the most out of this.
However, expanding into a new market may bring with it several challenges. This paper will start by discussing a few implications for organizations expanding into new markets and the most frequent problems that are faced by people in the Human Resource department when such a step is taken. Next, this paper will outline how Wal-Mart, Starbucks, and McDonald’s motivate their employees to work efficiently. Besides this, the topic of training unskilled workers will be discussed followed by the concept of cross-cultural training. Lastly, these issues will be compared against each other and a conclusion will be formed.
Implications for HRM by starting a business in China
Several implications come with moving into a completely new market. Such a move brings along with it several opportunities and threats at the same time. For instance, China has a very large population. If companies like McDonald’s, Wal-Mart, and Starbucks manage to create a position in such a high potential market, the results can be great. At the same time, one major challenge that they will face is the difference in the market culturally, politically, socially, and in many other ways. Once these challenges can be overcome, these will benefit a lot.
To do this, these companies will have to change their human resource management strategy. These implications will be discussed in detail in the coming paragraphs. However, before that, we need to understand the problems associated with this move.
Most frequent problems that happen in the HR department
There are several problems that Wal-Mart, McDonald’s, and Starbucks would face when entering a completely new market like China. The first major problem has to deal with change in the demographics and the society. Till now, these western companies have been operating in completely different markets with different demographics and societies. In China, the demographics and the structure of the society are completely different than those in the United States of America or any other markets where they are present. People are tightly knit together and hence this affects the human resource management strategy. There is a striking difference between the cultures of the two markets. Chinese have a collectivistic culture while Americans have an individualistic culture. This greatly affects human resource practices because, in these companies, it is normal for people to work independently without considering others. However, in China, when working with others in the organization, the employees have a lot of expectations. This will have to be kept in mind when starting up a business in China.
Besides this, when operations will start in China, the American managers will have to deal with people from completely different nationalities, family and cultural backgrounds. Hence, they are different in several ways. The managers will have to understand their way of living and adapt to it because otherwise, the employees working in these organizations will be uncomfortable at work and hence would not perform up to the standards.
Other than this, different factors motivate people from different backgrounds. It has been noted that Americans tend to get motivated more by money while Chinese get motivated by other factors like appreciation and other nonmonetary benefits. This will have to be kept in mind and the managers will have to understand that different benefits will need to be given to employees in this country.
In addition to this, the government in China has different legislations as compared to other countries. These legislations might clash with the norms of companies like Wal-Mart, Starbucks, and McDonald’s. Therefore before any kind of trouble is caused, these companies have to make sure that they abide by all the rules and regulations set by the government in that country. However, one issue that is often raised is having to let go of the company culture if an organization is following the rules and regulations set by the government. Wal-Mart has had issues because of this. For instance, Wal-Mart is known to not allow its workers to unionize. This allows them to get away with underpaying the employees. Since these employees are not a part of any union, they do not have strong bargaining power against the employer and hence have to accept whatever is being offered. When they tried implementing this in China, the result was not too good. The All-China Federation of Trade Unions (ACFTU) launched a public relations campaign against Wal-Mart because of this and this got Wal-Mart a lot of criticism. When it tried to continue its practice of paying their Chinese employees ‘rock bottom’ wages, the people did not settle with it (Goldstien, C., 2003). Starbucks has also had its share of problems because of trying to make sure that its employees are non-unionized (Organic Consumers, 2009).
Another technique that these companies have tried is outsourcing their Human Resource functions to other organizations in China or any other market they are catering to because these external local companies understand the country’s culture better. According to a survey conducted by Buck Consultants in 2000, since 1996, the percentage of businesses that are outsourcing their human resource functions has increased by 23 percent. These tasks include recruitment, selection, and training, etc. However, this raises several problems for the organization. It is often argued that this approach hinders strategic human resource management. The planning function of the Human Resource Department cannot be outsourced because planning is one of the four core management functions therefore outsourcing means handing over one-fourth of the management’s core functions to an external company. Besides this, only the management knows and understands the organization enough to plan how it will carry out such an important procedure. In addition to this, in this planning function, the organization will decide whether or not to outsource the rest of the human resource tasks to an external company therefore the human resource department must make this decision itself. If this function is outsourced, there is a chance that it will lose control and the outsourcer may plan the recruitment process against the values and culture of the organization. Performance appraisal which is another function of the Human Resource Department should also not be outsourced. This is because this function involves monitoring the employee performance and comparing this with benchmarks and goals set by the organization. An external figure cannot come into the organization and decide whether or not the performance of an organization is satisfactory or not because he will not know what the organization is looking for in that particular employee. Maintaining the employees cannot be outsourced because this function involves awarding and compensating the employees according to what is suitable for the organization. An external company cannot set the wage or salary rate that will be most suitable for the organization because it does not know what rate would be profitable for the organization. Secondly, an external figure will not be around the employees long enough to fully understand their behavior and motivational factors. Supporting and assisting employees can also not be outsourced because this function involves solving the issues of the employees. These issues are usually from within the organization and can be a result of other departments or parts of the organization. An external group or individual will not know the company policies and issues and will not be aware of how to suitably solve a particular issue. These reasons are enough to conclude that it is not always a good idea to outsource human resource functions to external parties because it may cause problems for the organization.
Another major problem has to deal with performance management systems. The performance management system must be such that is accepted by everyone in the organization. The common problems that are associated with performance management are many. The first and foremost problem of performance appraisal systems and processes is that not everybody is clear on the usage of the processes, especially if the same performance appraisal system is used for people from different backgrounds. They might understand the purpose, but the technicalities such as ratings, scaling, measurements, and calculations might not be comprehended by all. This causes the results to be inaccurate at times. Therefore, there is initially a dire need for widespread training and knowledge sessions within the authoritative management to learn how to operate their processes before they can be put into place (Nykodym, 1996). Second, and probably the most problem that arises when using the performance appraisal systems is the problem of ineffective communication. In this case, where communication is already very weak, the miscommunication is deliberate when the feedback or the evaluation of an employee is negative. Positive feedback is very easy to give, but discomfort arises when negative feedback and criticism need to be provided. Although, there is a way of giving constructive feedback in positive light management and authorities instead choose to either ignore it to avoid an awkward situation or present it in a way very ambiguous, vague, and unclear manner. Due to this, the employees do not find out their weaknesses and the areas they need to work hard in and improve upon, causing the entire organization to suffer. In some cases, where this miscommunication is not deliberate, what happens is that the management and authorities are aware of the results and understand it within their heads perfectly, but fail to translate what they know for the employees to learn. McDonald suffered from performance appraisal-related problems greatly and this allows us to learn from it. The system that is in use within an organization must be accepted not just by the authorities but also by the employees. The reason for this is simple; if an employee does not accept the particular performance appraisal system, he/she may not believe in the feedback that is received or the subsequent demotions or promotions followed by the evaluations.
How are employees motivated?
Motivation is normally defined as a force that drives a person towards a goal. It is said that if a person does not perform well in one cycle and sees the hard work is appreciated, he is motivated to work hard next to get the same appreciation as others. We also need to consider the flip side in this case; not being appreciated or being negatively evaluated can de-motivate a person further down and cause him to not work for the organization and not be as committed to it as others because of the embarrassment that is caused to him.
In the world of business, motivation is to drive the employee towards enhanced productivity by exploiting the abilities to the maximum potential, by improving the job performance. It becomes self-explanatory that it is the job of the manager to monitor and control the human resource available by motivating the employee and instilling in them a positive attitude towards the tasks assigned to them. This helps in accomplishing the tasks that would not be fulfilled otherwise (Nohria, Groysberg, Lee; 2008). Therefore, a manager must understand different theories and various techniques of motivation.
Maintaining and motivating an effective workforce is another very important function for companies like Wal-Mart, Starbucks, and Mcdonalds (Fisher, C.D). This involves making sure that the employee’s needs are fulfilled in every way possible. Under this function, the human resource departments of these organizations ensure that workforce is satisfied in every way possible by compensating them for their work and motivating them for additional effectiveness. Compensation refers to monetary or nonmonetary rewards that are promised to be given to the employees in exchange for their service (Henderson, R.I.). Besides the regular wages and salaries, the management of these organizations also decides when it is time to use various motivational strategies as it will have to ensure that their employees are satisfied with their jobs. The first step is finding out what motivates their employees. Since motivation is merely a state of mind, different people get motivated by various things. However, certain fixed factors motivate a person by nature. These factors include money, prosperity, popularity, success, higher knowledge, and happiness. A successful manager would target employees in groups depending upon the factor that influences them.
After this, they will be rewarded with monetary or nonmonetary rewards accordingly. Nonmonetary rewards include free health care, education for children, job enrichment, appreciation, etc. When provided with incentives, the behavior or attitude of the employee towards the task changes, and he becomes more involved and devoted to it. To receive the reward that is set for him, he tends to give top priority to the work assigned and finish it as soon as possible. Not using measures for the employees have several consequences for the employees. In cases where there is a pay reduction for bad performance, employees get extremely agitated and consider it as a harsh move by the management to reduce pay for slightly weakened performance. Some, who are stuck and need a definite source of income, might strive harder the next time but the motivation might not be found in the person and the efforts might just be a result of obligation. Also, those who are not under financial pressure might just quit or resign because many individuals take a pay reduction as an insult. This again has happened several times within these organizations which have caused the employees to be very de-motivated and hence very inefficient in these countries.
Dealing with unskilled workers
The unskilled people must be dealt with properly. These organizations have various ways of doing this. To make sure that the employees are skilled in at least whatever they need to be according to their job descriptions, training is given to the employees. This is usually on-the-job training. A mentor is sometimes used to help the new employee understand the practices of the organization. This helps the new employee to mesh into the organization very quickly. These employees also end up learning a lot from the mentor and hence most become fully capable of handling their job descriptions themselves.
However, we must understand that no matter how much the company wants or tries, there comes a time when it loses its employees (Daft, R.L). They could either be made redundant or fired. This is done for a variety of reasons as well. If a new technology is introduced which has reduced the need for labor, the workforce will have to be made redundant. The people and their skills do not matter to the organization because these are not needed. Other than this, an employee would have to be fired if there is a breach of a contract.
This function involves keeping a check of which employees are no longer needed and follow an ethical process of making them redundant and arranging some other kind of job if possible. Also, if it is observed in a performance appraisal that an employee is not up to the mark and his work is not improving. It is then the function of the human resource department to fire him and carry out the whole recruitment process to hire another employee to fill this place. This is how these companies deal with the training and development of their unskilled employees.
Cross-cultural training: a local, a non-local, or someone in between?
In my opinion, training must be given by a local. The reason why I believe this is important is that there are many reasons why a local will be able to influence the local employees better. First of all, the employees will be able to relate to the local trainer and hence would be more willing to learn from them. Another factor that makes the idea of having a local trainer better is the fact that ego comes in when someone different from you is trying to teach you his ways. Therefore I believe that a local should be used to deliver cross-cultural training. However, there must be nonlocal, local and someone in between when the training procedure is being planned. This will ensure that a local trainer with whom the employees are comfortable is used and at the same time, this trainer will be able to train the employees according to the needs and wants of the organization.
Throughout the paper, we have been facing several problems faced by multinational organizations like McDonald, Starbucks, and Wal-Mart as they move to newer markets like China. We have also examined a few solutions for these problems. Next, we moved on and touched on the motivation aspect of human resources and lastly, we touched on portraying unskilled employees. Expanding into new markets is critical and vital for an organization of such a size because otherwise they will be letting go of several other opportunities. The managers must understand the complications properly and then only it can adopt a human resource management strategy that is the best for the organization and the context it is operating in.
Starbucks launched a vigorous anti-union campaign. Surveillance cameras were installed in the lunchroom and at the entrances to the plant. Union supporters have been suspended without pay for such petty offenses as swearing. They have had unsubstantiated safety complaints filed against them and have been denied promotions. Maintenance workers who quit have not been replaced so that the original 22 are now down to 18.
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