Culture and Human Resource Management.doc

CULTURE AND HUMAN RESOURCE MANAGEMENTCULTURE AND HUMAN RESOURCE MANAGEMENT THE MEXICAN OPERATIONS OF A TAIWANESE MNC Nancy L Bush National University Abstract This paper examined the implications of Chinese management style on employees in a wholly owned subsidiary of a Taiwanese MNC located in Tijuana Mexico In these two collective high power distance countries empirical data revealed a limited amount of cultural and perceptual difference between the Chinese managers and the Mexican workers although corporate history and anecdotal information evidence high turnover and employee dissatisfaction Introduction The current study was an exploratory examination that considered the cultural impacts of a Chinese management style from the Republic of China Taiwan ROC on the human resource management of a wholly owned subsidiary in Mexico ROC had been cited as an economic little dragon having moved from a poor Third World country to compete globally with the economic powers of the 21st Century Since the 1980s many of the Taiwanese labor intensive industries had moved operations off shore to less costly Third World countries such as the People s Republic of China PRC and South East Asia to avail themselves of lower cost labor pools Zhu Chen Lindholm 19999 2000 The degree of understanding the mangers brought to such international organizations was limited both by personal experience and application of empirical data Human resource research had generally followed a Western or American model and therefore the research on inter cultural human resource management styles in non Western organizations had been limited This was especially true when both sides of an MNC had non Western or non US based management cultures Such studies included those related to performance management s PM impact on host country employees of MNC subsidiaries Performance management was a strategic human resources process that incorporated performance appraisal communications of corporate strategies and objectives down through the organization training and employee development and compensation assessment Performance management had been demonstrated to have had a significant positive impact on such areas as job satisfaction and therefore retention and turnover rates in Western cultures Lindholm 1999 2000 Pena 2000 Studies Pena 2000 had shown that turnover could be the cause of substantial human resources costs for organizations although not the only cause Even within single culture organizations there had been a tendency to examine a single component of PM rather than the overall impact of the process on employee satisfaction Lindholm 199 2000 Application of the total assessment process in MNCs showed that there were distinct and known concerns in transfer of appraisal and rewards methodologies across cultures Collective and high power distance countries such as Mexico and ROC prized harmony and avoided confrontations up and down hierarchical structures In such cultures appraisal and research into such effects remained minimal Lindholm 1999 2000 The estimated available work force in Mexico in 1997 was in excess of 37 5 million with 27 of the population below the poverty line Unemployment in Tijuana in 1998 was 1 Gobierno del Estato de Baja California 2001 with 61 of the population within working the working age range CIA 1999 Overall turnover rates in Mexico were extremely high and had been of special concern since the 1980s during which time overall retention duration averaged 9 7 months in the maquiladora Employee turnover 1995 Pena 2000 As with many other export processing zones EPZ Mexico s employee base in the maquiladora consisted in large part of relatively poorly paid unskilled labor An inordinately large percentage of this labor pool was comprised of young women who had few options for employment but high levels of family responsibilities Pena 2000 These family obligations may have been contributing factors to the turnover rate especially during the first six months of employment Employee turnover 1995 Labor composition in Mexican maquiladora was 85 line operators whose employee turnover profile remained constant regardless of the conditions under which they worked but which did vary somewhat by industry Highest retention levels for operators was found among the workers in the automobile industry with a median duration with an organization of 24 months The electronics workers were second with 7 9 months textiles at 2 7 months and chemicals at a median duration of less than 2 months Pena 2000 None of the categories is directly related to Toysnfan however the processes involved in the manufacturing at the company come closest to those of the electronics workers Seasonal variations were also found in the duration of employees in organizations Employees entering at the early part of a calendar year showed a median duration of 4 7 months and those entering in the second half of the year had a duration of over 24 months Among the explanations for the difference is the legally mandated reparto de utilidades or yearly bonus that is generally paid during the Christmas season which may have served to keep employees in house longer to insure larger bonus checks in December Pena 2000 Ilya Adler 2001 posited that in many Mexican US and Mexican Canadian firms the largest portion of working hours was spent integrating cultural differences rather than in actual work performance Paraphrasing Nancy Adler she stated that cross cultural teams could be more productive than uni cultural teams if the diverse teams recognized their differences and did not allow one of the cultures to dominate the other Such cultural domination may have been the result of an overwhelmingly disproportional numbers of employees from one of the countries or from a hierarchy such as that resultant from a home office subsidiary dichotomy TABLE 1 Applicable Cultural Contexts MexicoChina Individualism CollectivismCollectiveCollectiveHofstede Power DistanceLargeLarge HallHigh Low ContextHigh ContextHigh Context TrompenaarsIndividualism CollectivismCollectiveCollective adapted from Francesco Hall 1976 Hofstede 1980 Hofstede Trompenaars 1993 One of the cultural factors of concern was the potential application of Hofstede s 1984 power distance dimension to the bi cultural organization The fit between cultures with home office subsidiary was particularly sensitive to the management practice of employee empowerment This practice was directly linked to the power distance preference differences of the diverse cultures In cultures that embody high power distance preferences the concept of empowerment was in an antithetical position to the cultural preference for inequality in authoritarian structure although research has found that there was no significant correlation between empowerment and employee satisfaction in either the US or Mexico Marchese 2001 As a high power distance country Mexican workers expected and were more comfortable when authority figures did not cede power in the decision making or management processes Adler 2000a Lindholm s 1999 2000 research indicated that due to the preference for high power distance in such cultures the potential negative implications of such Western preference for empowerment needed to be considered carefully While the practice of PM assessment would be seen as generally more easily embraced by management than by line operations employees Lindholm 1999 200