The effects of the Chinese culture on human resource management

 

THE CHINESE CULTURAL CONTEXT

The People’s Republic of China has evolved in excess of the earlier period of 20 years and is constantly varying. So are the nation’s cultural values. According to Fan (2000), economic reforms and opening doors to the western world have not only changed the social landscape, but also reshaped the value system. Among the primary factors that induced the change is the country’s culture. Culture is important and striking to enlighten the dissimilarities in organization performance or management system. It affects a nation’s culture at different levels and is affected by the culture (Fan, 2000: 7). This chapter will provide a discussion of the effects of the Chinese culture on human resource management, particularly in the aspect of performance appraisal. The cultural system is influential in all aspects of Chinese social lives including business management. Essentially, it is the unique Confucianism, family-ism, and group orientation philosophy of life and mode of thinking that has made the Chinese cultural system distinctive and powerful. Effective cross-cultural management strategies in China should be based on the implications of the actual cultural mechanisms, not on the temporary cultural fashions that run skin-deep and are likely to generate cultural disorientation.

 

3.1 CHINA’S MARKET REFORM

China's market reform is setting the stage for significant changes in management practices. The responsibility for labor allocation is being shifted from a centralized planning authority to forecasting and planning departments within enterprises. Production and reward systems are changing, with less emphasis on egalitarianism and a stronger emphasis on efficiency and performance (Shenkar & Chow, 1989). Meindl, Hunt and Lee (1987, cited in Cyr & Frost, 1991) note that managers in China are already showing an increasing interest in using human resource techniques and motivational systems which emphasize productivity at the individual, group, and enterprise level. Current best practices in HRM can make significant contributions to the process of change undertaken by Chinese enterprises.

 

3.2 OVERIEW OF CHINESE CULTURE

The author thinks that to comprehend the concept of culture at first is vital. Ying Fan (2000) has listed several definitions of culture. The author summarises them as the follows: Herskovits (1955) defined culture from environment view, whereas Hoebel (1960) stressed culture as learned behaviour. Downs (1971) thinks culture is a mental map that is concerned the relationship between circumstance and other people. Yet Hofstede (1984) notes that culture is a series of mind programming that contain distinctive characteristics. According to Ying Fan (ibid), the following themes of culture literature have been studied such as values, beliefs, behaviours, customs and attitudes, and so on.

 

Chinese culture is very complicated because it contained many elements. Ying Fan (ibid) notes that three elements have been included i.e. traditional values, communist values, and western ideas. However, in this dissertation, the author mainly focuses on the Chinese traditional values. In China, there are many important cultures (see appendix 1). Among these cultures, according to Martinsons M. G. and Martinsons A. B. (1996: 19), Confucianism is the overriding one. As Hempel (2001) suggests, there are several important cultures that influence the practice of performance appraisal such as face/ mianzi (protecting, giving, gaining and losing), fatalism and Confucianism. Besides these cultural elements, the author proposes that loyalty to supervisor, Guanxi (personal connection), conformity/ group orientation, keqi are also critical that affect the practice of performance appraisal in China. These cultures will be given in detail in the follows:

 

The Chinese vocabulary, face, according to Internet source (URL 9 and URL 10), includes two related concepts mianzi and lian. Mianzi means social perceptions of a person’s prestige, whereas lian refers the social confidence in a person’ moral character. If a person loss his lian and it means he may lose a trust of his social networks around, however, if he loses his mianzi, it means that he loses his authority. For example, if the incident that someone steals money from his workmate was revealed, the thief then will feel loss of his lian but not mianzi. Nonetheless, if someone does not respect his manager and keep interrupting when manager is trying to speak, then a loss of manager’s mianzi occurred. In Chinese society, face is so important to people, as a result, Chinese people will try to avoid causing other people to lose their mianzi by agreeing with their opinion in front of others or public such as in the meeting in order to avoid conflict. Thus it also influence performance appraisal.

 

Moreover, the term Guanxi, or personal connection or relation, is often adopted in eastern business world. According to Arias (1998: 145), Guanxi refers to a kind of social network and business connections, which is essential for doing business in context of China. Yet as Chen (in Wood, Whiteley and Zhang, 2001: 263) thinks that, Guanxi can be defined as friendship with implication of continual exchange of favors. Arias (1998: 147) points out that, since in 1949 Chinese government adopted Russian’s planning model, Guanxi becomes the only way to get things done in this highly bureaucratic system. Guanxi have impact on performance of employees within organisations.

 

Zhong yong, which appears in Confucius’ “Doctrine of the Mean”, is used as a synonym the way of harmony in China, intends to illustrate the appropriate way to gain good virtue, according to the website (URL 11).

 

Keqi, which the author believes that it is an important cultural element that affects on performance appraisal, contain many means. As an Internet source (URL 12) indicates, Keqi means considerate, good mannered, modesty and humbleness and generally speaking brag and arrogant are regarded as an impolite behaviour. The same as mianzi, keqi also reflects that Chinese people dislike expressing their thought, emotions and feelings directly in public, and they also try to avoid putting themselves forward that causes unwelcome manner. Keqi as an important culture frequently affects performance appraisal within organisation.

 

Finally, conformity/ group orientation also affect performance appraisal of HRM practices in China. Conformity/ group orientation is much more similar with Zhong yong. It suggests that it is essential to maintain a harmonious human relation.

 

3.3 CHARACTERISTICS OF CHNESE MANAGEMENT

As can be known that, there are four key features of Chinese management that are distinctive from Western management and are persistent in most of the Chinese organizations: human-centeredness, family-centeredness, centralization of power, and small size. Chinese management is perceived as a human-centered management style, emphasizing human relationship (Warrington and McCall 1983; Menkhoff 1993). People are the centre of concern, and great attention is paid to issues of emotion and trust. Any management decisions have to take emotion into consideration. “For Chinese, the business relationship is always subsumed under the moralistic notion of friendship, loyalty, and trustworthiness” (Sheng 1979).

 

Highly associated with concern for feelings and respect of relationships is the concept of “face” (Redding and Ng 1982). “Face” is used as a mechanism for inculcating a strong sense of group responsibility and serves as a mediating force in social relationships. The Chinese have been characterized as being very particular in dealing with others. The so-called “Five Relations” - sovereign-minister, parent-child, husband-wife, elder-younger brothers, and friends - represent the acceptable patterns of interpersonal relationships. There are five corresponding virtues: loyalty, filial piety, faithfulness, care, and sincerity.

 

Furthermore, family is important in any culture; however, it is extremely important so in Chinese culture. “Chinese have learned relationships with others almost exclusively from the family experience” (Hsu, 1984). Being the primary agent of socialization for Chinese culture, the family has exerted the most significant influence on the individual’s value system and role expectations. These personality features form the basis of cooperation and interaction with others. “Relation among family members provided the human basis for the moral virtues of the Chinese” (Nakamura 1964, 268); a Confucian saying advises, “Those who love their parents, dare not show rudeness to others” (quoted from Lin 1935, 179). Many Chinese organizations are family-run businesses; family relationships are inevitably brought into organizations, and organizations are run like a family. For example, the Chinese consider filial piety to be the first and the ultimate of all virtues. Thus parental authority has a strong impact on Chinese management. In an organization, the boss-employee relationship follows the model of filial piety found in the parent-child relationship. Obligation plays an important role in the Chinese way of management. The workers feel obligated to be loyal and to obey the boss(es), and the boss(es) feel obligated to be concerned with the workers’ welfare. However, there is still a distinct power hierarchy within the organization.

 

Similarly, the power structure in Chinese organizations is usually characterized by two distinct levels: the power core controlled by the boss or a small number of people, usually family members; and the second level formed by the employees, who are either relatives, friends, or outsiders. There is no ranking among the workers. Obligation is what bonds the two hierarchies together. With these characteristics, the power struggle occurs at both a vertical level and a horizontal level. A vertical-level power struggle goes on between the old and young generations; a horizontal power struggle is carried out among the shareholders. The proprietor rarely delegates authority or management functions; even sons are permitted little participation in the decision-making process. Conflicts are usually avoided due to "face consciousness" and a desire to maintain social harmony. The centralization of power is maintained both because of nepotism, which maintains ownership and control within a family group, and because of the Chinese ethic of respect toward and compliance with the father-figure (Lau 1974).

 

Another unique characteristic of Chinese organizations that has a significant impact on Chinese management is the size of the organization. Most of the Chinese organizations started with small capital, and a small number of people. The size of the Chinese organization is usually kept small. A small enterprise is easy to control and manage - it allows for closer interpersonal relationships, a shorter decision-making chain, and faster decision-making. Since the organization is small, the manager is able to stay involved in everything. Instead of growing the organization itself, expansion is achieved by financially coordinating a set of small businesses.

 

3.4 HUMAN RESOURCE MANAGEMENT (HRM) IN CHINA

Previously, the enterprise was motivated by centrally administrative command rather than the pursuit of its own economic benefit (Chao, 1992). Managers would aim to meet production quotas under the state plan with little attention given to the product's quality, distribution or sales (Holton, 1985). It made little difference to the chief executives if the enterprise made profits or losses, because the position they held would not change. With a planned economy, losses made by an enterprise were due in large part to three factors.

 

First, prices were fixed by the state rather than being adjusted by the market. A second factor was the role of government-policy. For example, the enterprise producing contraceptives would not make any profit because all its products were supplied free to the society to implement the government's family-planning policy. Another factor was poor management. Not only was the enterprise unable to influence fixed prices or government policy, the chief executive was not responsible for losses caused by poor management. It was quite common for the chief executive of an enterprise incurring heavy losses to be transferred to another enterprise in order to save face. This practice was referred to as an “iron position” (in Chinese, “iron” here means “fixed”), which means the leaders or managers would keep their positions regardless of their performance. The "iron position" was one of the three well-known “iron practices” in China resulting from the centrally planned economy and egalitarianism. The other two “iron practices” is the “iron rice bowl” which has been referred to earlier, and “iron wages” which will be discussed later.

 

Motivation was assumed to be influenced by political and ideological work and spiritual encouragement, while meaningful tangible rewards were greatly limited (Martinko and Yan, 1990). Although economic reform did bring the bonus system into enterprises in 1978, it soon became another form of egalitarianism because everybody in the group would get the same amount regardless of individual performance. In addition, as Nelson and Reeder (1985) have noted, it was difficult to motivate a workforce in China because the enterprise had no right to fire its employees and there was no link between pay and performance, do Rosario (1988, cited in Von Glinow and Teagarden, 1990) noted that “state-owned workers remain the least motivated and least competitive of Chinese workers” (ibid: 84). In large part this was a result of the failure to link performance and rewards.

 

3.5 PERFORMANCE APPRAISAL IN CHINA

Performance appraisal has been gradually developed and more and more widely used in enterprises. Although this varies greatly between enterprises, the main principles are fairly clear, that China is to break the “iron rice bowl” and uphold the principle advocated by the government, namely “to each according to his work” (Laaksonen, 1988). However, this principle is difficult to put into practice because of a number of obstacles.

 

The first obstacle is the traditional rigid wage system: state-owned enterprises still cannot offer better bonuses than non-state enterprises to reward good performance. A second obstacle is the enduring influence of the “iron rice bowl”. While cash incentives are theoretically possible, in reality they are egalitarian-based rather than equity-based (Von Glinow & Teagarden, 1988). A third obstacle is the Chinese concept of “face” or the avoidance of conflict or confrontation (Von Glinow & Teagarden, 1990; Holton, 1990). Tan (1987, cited in Von Glinow & Teagarden, 1990) notes that, “as unpleasant confrontation upsets relationship, Chinese avoid passing harsh judgment or criticism. Thus the Western open performance appraisal system seldom reflects the real situation. Extreme evaluation is avoided and central tendency becomes a convenient means for the evaluator to overcome the judgment problem (p.88).”

 

Moreover, Holton (1990) also points out that in China, “criticism of performance on the job must be handled in a very delicate way, with criticism disguised as suggestions for improvement, for example” (ibid: 125). In Western organizations, the purposes of performance appraisal are generally twofold: evaluation and development (Schuler, et al. 1992). The aim of the former is to establish the relative worth of each individual's contribution and encourage good performance. The latter aims to improve communication between managers and employees, and to assist employees develop their skills and improve their performance. A market economy has made it possible for China’s enterprises to work towards these aims as they have autonomy to link performance with compensation and to conduct other HRM activities which are closely related to performance appraisal, such as job analysis, selection, remuneration and training.

 

However, performance appraisal has not established its position in China's enterprises. In many cases it has not been conducted on a systematic basis, which has not only reduced the accuracy and significance of performance appraisal, but has also caused a slow-down in the reform of compensation systems. For example, as Chew (1990) has noted that the Ministry of Personnel is ambivalent about a performance bonus. Although under the 1985 reform the bonus was intended to reward the deserving, with the amount varying according to merit, in practice it has been paid at a uniform rate to virtually all employees. The Ministry is aware that a true performance bonus strengthens the link between work and pay. However, until the present difficulty of assessing performance accurately can be solved, it is wise to defer the implementation of a performance bonus  (ibid: 781).”

 

Some of the key terms, which construct the concept of the appraisal, might be interpreted and valued differently due to cultural differences. Evidence has been provided which supports the assumption that culture is an important factor influencing the understanding and interpretation of the appraisal process, its development, implementation, and other appraisal related aspects. (Groeschl, 2003)

 

Groeschl (2003), in his study stated that practitioners executing unvarying HR measures transversely their internationally operating organisations could concentrate on organizational objectives and policies while being enthusiastic to fiddle with actual customs to the local context. Simultaneously, the progressively more culturally varied workforces oblige managers to be responsive of and receptive to human resources holding diverse cultural value and belief systems which might lead them to approach HR tools such as the appraisal process in a different way. Practitioners require focusing on what it is preordained to achieve and be open to pursuing different courses to get there, depending upon cultural circumstances. Constant preparation in cultural understanding and appraisal expertise for all employees is of immense significance for organisations to effectively put into practice HR tools such as the appraisal process within their all the time more culturally varied workforces.