The Transferability of Japanese HRM Practices to Thailand

Introduction

Unlike the traditional perspective of assessing Human Resource Management (HRM), the practice has over the years evolved from being a mere mechanism that facilitates the working force in an organization with reliable and effective manpower and code of ethics to a mechanism that is crucial for the productivity of an organization. Many human resource scholars and analysts have argued that the human resource department in any organization has become fundamental, especially in the coordination and relations in the international market (Research in International Management, 2010, para.2).

There are five basic functional areas of HRM. These areas are staffing, administration of reward systems, development of the employee (through training), maintenance of personnel and related aspects, and the relations between the employees and the employer (Braton & Gold, 2002, pp.14-15). It is important to note that these functions tend to vary from one place to the other. These variations influence the productivity of companies that have overseas relations or organizations (multinationals).

Some countries have adopted specific practices in HRM that have proven to be reliable and efficient in local and international markets. This essay looks into some of the developments that Thailand has made in shifting from its old traditional management systems to adopting new systems that its Asian counterpart, Japan, has been running for a long time. It will also look into the reason that has made Japan an icon in HRM and compare its system to that of Thailand. This transferability concept has been necessary in making Thailand’s economy sustainable.

The Concept of HRM Transferability

The necessity of understanding the concept of transferability and its consequent challenges is important because MNCs need to be able to utilize the HRM capabilities worldwide in order to gain a competitive advantage against other companies in the international market. The first and most prominent concept is to understand the local practices within a given country in order to balance out between calculative and collaborative structures in HRM (Gooderham & Nordhaug, 2003, p.170).

Transfer of ideas in human resource managerial skills that a certain organization upholds is not just a concept of copying without much thought. Many factors come into play when these ideas are being transferred. One has to conceptualize the culture of the country, its economic status, political and social statuses, taking even into consideration the country’s history record. More often than not, a reconnaissance study will benefit this move in order to have a fill into the exact reason why a certain organization embraces a certain system of managing its resources (Bratton & Gold 2002, p. 23).

For example, after World War 2, Japan was wallowing in a state of economic depressions and on seeing that the fundamental foundational pillars of their countries’ economies had been destroyed many skeptics predicted that it would take longer than usual for their economies to stabilize again. As the Hiroshima bombing swept away most of what seemed to make up Japan, the “Human capitalistic Theory” challenged the view of these skeptics, citing rapid economic recovery for Japan, due to its code of work ethics. Its traditional assets, which included technology and human working hours, boosted their competitiveness with other countries.

The human capital in such countries as Japan gave the difference between them and their competitors. Such concepts can be dubbed yet; it presents a problem in other countries as they are termed as the “black box” of economic states, where assigning values to human capital is quite difficult (Gooderham & Nordhaug, 2003, p.173).

According to Susaeta (2008, p.7), there are five basic phases involved in transfer of policies and practices within the human resource department. First is configuration – where the host country has to look into the institutional values and ethics of the other country in which it has to transfer. A theoretical theory approach to this states that ‘most of the decisions here are affected/determined by the host country’. A critical analysis to the differences in business culture is conceptualized in this stage.

Secondly, Susaeta adds that, we have the transfer of the decision process. The board will have to sit down and take a vote to whether they are willing to make the move; taking into consideration the outcome of the research done in stage one. The decision can be arbitrary. The country of origin is still dominant in this process, and will make most of the decisions and analysis. The interests of the stakeholders and the managers mainly affect the outcome of this stage and without their consent; the transfer to the other country does not take place.

The next stage involves the negotiation process. In this process, both parties, host and country of destination, have a major stake at this. In the process, the role of the subsidiary is defined. This is actually the most sensitive process, since both parties have to look into pointers such as the degree to which the host company or organization will integrate wit the country of destination. The manner in which the host will enter into the market is also discussed and analysed. The two will also have to know the size expected from the subsidiary in terms of workforce and stake holding. Again, the company’s dependency on the local inputs will also need to be negotiated.

After the host organization is through with all this, and it has been successful, it goes into the implementation phase. The company adheres to the national system of business while the company merges with the destined country’s economy. The institutional profile and factors, such as company vision and mission statements, are installed and implemented. Institutional pressure towards stability of the subsidiary group is watched closely in order to make necessary amendments, if there need be. This is done mainly for stability of the organization in the market.

Finally, internalization is done. Workers’ satisfaction with regulations and policies are considered. The general manner of handling communication practices between employer and employee is done in this stage. Technology in the HRM is introduced in this stage in order to enable and improve facilitation in this department.

Japan’s extent to which it has achieved transfer of HR policies and practices to Thailand

As has been discussed earlier, Japan had a different work ethics compared to its counterparts in Asia and this, in regard to HRM, had an impact on the possibility of Japanese companies starting out extensions of mother companies in Thailand. Many human resource factors were accepted differently in Thailand as were practiced in Japan. Factors like, the attitude of the Thai workers towards life-time employment, the system of structure from senior heads to the juniors, the system used in decision making, quality circles, and house unions were put into consideration in the survey of the extent to which complete transfer of human resource policies and practices was possible (Onishi, 2006, para.1).

This was analysed through 560 managers who worked in Thailand for Japanese organizations. The results showed that most of the practices that were put under survey were transferable. Nevertheless, Onishi adds that some of the managers felt like some of these practices, like quality circles, were not acceptable in a positive manner in Thailand. In such situations as these, implementation of these practices would be compromised or limited. As regards to leadership structure (seniority), the notion was accepted that performance in the work area was to be rated by the amount of achievement an employee would show.

Shibata (2008, para.1), explains how the consciousness of many Thai employees towards sub-division of jobs, together with the lack of managers in Thailand who were familiar with the practices and policies used in Japan, have caused a significant backward trend in the rate at which work practices have been adopted in Thailand industries from their motherland.

As Japanese investors came to southeastern Asia, Sadoi (2004, p.168), the main reason why they decided to go for a lifetime employment (Shushin Koya) was because of the Thai peoples’ level of education, which was quite low. Most of them being subsistent farmers earlier, they did not possess the academic skill that would be required for them to multi- task. Not only so, but most of them could not change to the Japanese culture due to the language barrier. The Japanese would therefore have to modify their training systems to suit the natives, after which they would employ them after training them in specific fields.

Sadoi writes of a survey that noticed that the Thai do not have rotational shifts in their Japanese companies, and this as explained earlier was due to the specialization that most workers underwent in their training period. This was termed as on-job training (OJT), which drew more attention on specialization more than generalization. The advantage of this kind of an arrangement is the guarantee that the employees will not be laid off from work unless there is some unusual occurrences, which are very rare.

This is because the companies recruit and train their employees to fully specialize and then they are fully integrated into the company (Gupta, 2008, p6). The lifetime employment policy is, however, changing especially with young workforce from colleges that do not want to commit themselves fully in working in one industry. This has prompted the need to shift to other policies concerning HRM management of the personnel (Griffiths, 2004, p.20).

Among the other Asian countries that Japan has taken an interest in, companies in Thailand that are owned by the Japanese have taken a system of structure that embraces a “work sharing” policy. A simple explanation of this policy as Felker (1999, p. 69) puts it, is through the study of how Asian countries assemble semi-conductor devices. The scientific and sensitive initial stage that involves chemical treatment is usually done in Japan. Labor-intensive stages of this assembly process have often been done in countries such as Thailand.

Japan’s transfer of human resource policies to Thailand, therefore, has been fundamental for Japanese companies to realize maximum gains in the markets. Japan’s population growth, which is not high and its lack of land and raw materials as resources, has made it think through some of these measures. It, therefore, has been necessary to gain ties with other countries that would enhance its ability to maximize on the manufacturing industry. The vehicle manufacturing industry in Japan also does this. “Agreed specialization” is used to determine which firm will do what kind of specialized work. Work sharing is an ethic transposed directly from the Japanese to the other Asian state.

A hierarchical system of corporate governance is used to run major Japanese companies in Thailand. Vertical integration is a system whereby internal transactions replace the common market mechanisms that were once present. The Japanese argue that this unifies the making of decisions in order to achieve corporate unity which in turn drives the company towards a certain common purpose. In other words, major management decisions in terms of technological advancement in their overseas firms are made by the management at the top.

Extended networks of productions have been introduced in the management of overseas companies in order to decentralized operations. Multi layered management systems have given rise to chief regional centers as in Thailand and Malaysia. The aim in doing this is that the company can hasten the time frame that it can use in making decisions from the top downwards.

Out of every 20 member countries which are harboring Japanese companies, one is made as the center in order for this to be achieved. In the long run, decentralization has made the companies experience faster growth rates and more efficiency in running business.

Most Japanese workers are able to change jobs within their workplaces because their salaries are the same. This is not possible in the US where variations exist in workers’ salaries for different jobs of the same level. Japanese companies have recently adopted a compensation scheme which places weight on a worker’s performance and job duties. However, age continues to be the major factor in wage determination.

The third policy that is used in the Japanese system as regards HRM in the recruitment of employees is related to the use of work unions. Over the last couple of years, this trend has been rampant in Japan and they have in turn transferred the same to countries like Thailand. This has resulted from the need to develop new and better HRM policies in recruiting and contracting of employees.

The use of unions in the employment can be traced back in the early 1920s. This was due to industrial expansion with heavy manufacturing, as the one explained earlier on electronic manufacture. There was the need to unionize so that the workers could be able to bargain better pays and better working conditions (Hart and Seiichi, 1999, p.36; Gupta, 2008, p.7).

The big companies from Japan have to do the same in other countries where they venture in. For the sake of maintaining good relations with the Thai people and government, Japanese corporations have continued to source their workforce, as it is the norm at home. Again, as the trend is developing on a global scale it would only be fair for these corporations to use the unionized strategy to outsource and employ their personnel.

Hart and Seiichi (1999, p.37) continue to argue that the overall effect of this HRM strategy, as adopted by Thailand from Japan, is to give the workers a voice and a bargaining power, so that they cannot be exploited by large multinational companies. Trade unionism is more important as the social partners have more influence, and when mixed with legal regulations means that there is a stronger tradition of employee involvement

Conclusion

HRM has been on a continuously evolving cycle globally. In Japan, it has been transferred to other countries to help in the running of organizations that originate from Japan and others in the host countries. The concept of transferability is systematic in nature and it involves configuration, transfer of decision, negotiation, implementation, and internalization. After the process is complete, there can be the expected transfer of HRM strategies to be adopted by the MNC(s), and in the process, they are transferred to the host country.

This has been the case in Japan transferring its HRM strategies to Thailand, so that Thailand can change and adopt more advanced and beneficial to the management of the personnel in that country. Some of the strategies that Japan has transferred regarding personnel management are those concerned with employment. They are lifetime employment policy, seniority policy, and union based policies, all of which are aimed at managing the personnel in a better way than it used to be. These policies are not just used in Japan, but they have come to spread all over the globe. The reason for this spread is due to transferability of such policies through multinational corporations.

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