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Negotiations in the joint ventures - Менеджмент (теория управления и организации)
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When human civilization was in the necessent stage, people were used to consume
natural resources surrounding them. With demographic changes and development of
human society, human need grown and to meet this growing need trade became a
prominent mean. Initially, people used to do trading among groups and in unstructured
ways. Later, with distinction among groups and geographical boundaries commercial
procedures evolved to satisfy growing human need. The people associated with these,
became business people and gradually their organization evolved as companies.
Previously these companies were confined among their own regional and national
boundaries. But growing competition among themselves, they were forced to expand
their businesses in other countries – they become international.
These international companies entered host countries, in many ways and most recently
Joint Venture became very popular because of its many benefits. In Joint Venture, two or
more companies with complementarily in operation and thinking come together to satisfy
their business needs and in most of the cases international joint ventures faces a lot of
human resource constraints because of different cultural and social backgrounds of their
parents.
We are now in the service economy and day by day importance of people is becoming
more prominent in managing business operation and these are particularly more critical in
operating an international Joint Ventures. In an International Joint Venture the following
picture is prominent:
Human resource Management is about managing human relations in individual and group
level and human relation in the interrelationship among people as they work together to
achieve organizational goal and attain satisfaction in terms of achieving their objectives.
It integrates knowledge from the disciplines of psychology, sociology, and anthropology.
Psychology, the study of why people behave in certain ways, facilitates understanding of
learning, thinking, and developmental processes.
Sociology is an inquiry into how people behave in-groups and focuses on the impact that
groups have on their behavior. By examining symbols and articrafts, anthropology
studies culture of the past and are concerned with discovering how past occurrences
influence their behavior. Human relations' draws on knowledge of the behavior science,
unify this information, and apply it to the study of human interrelationships.
While assessing the Human Resource Management principles in international companies,
cultural issues are considered with care, as they are the most crucial to the companies'
image and define its identity.
Culture is acquired the knowledge that people use to interpret experience and to generate
social behavior. This knowledge forms values, creates attitudes and influences behavior.
Culture has following characteristics:
? Learned: Culture is not inherited or biologically based. It is acquired by learning and
experience
? Shared: People as members of a group, organization, or society share culture: it is
not specific to single individuals.
? Transgenerational: Because culture is shared and passed along from generation to
generation, it is cumulative, relatively stable and somewhat permanent. Old habits are
hard to break, and people tend to maintain its own heritage in spite of continuously
changing world
? Symbolic: Culture is based on the human capacity to symbolize or to use one thing to
represent another
? Patterned: Culture has structure and is integrated. A change in one part will bring
changes in another
? Adaptive: Culture is based on the human capacity to change or adapt, as opposed to
the more genetically driven adaptive process of animals. Culture is passed along from
generation to generation, but one should not assume that culture is static and immune
to change. Far from being the case, culture is constantly changing – it adapts itself to
new sources of knowledge.
Importance of culture
Today's managers operate in a world, where culture changes than any other period in
human history. To survive and develop managers need new skills to cope with these
changes in their life styles.
Every manager should consider the constraints imposed by the cultural context, because
it is impossible to coordinate the actions of people without a deep understanding of their
values, belief and expressions.
There are many ways of examining cultural differences and their importance on
management. Culture can affect managerial attitudes, managerial ideology, and even
business government relations.
There are four major dimensions of culture:
? Power distance: is the extent to which less powerful members of institutions or
organization accept that power is distributed unequally. A greater power distance
indicates an accepted hierarchy in organizational relationship, a smaller power
distance relates to greater participation in decision-making, and greater equality in the
organization.
? Uncertainty avoidance: is the extent to which people feel threatened by ambiguous
situations, and have created belief and institution that try to avoid these. People with
high uncertainty avoidance try to limit conflict and risk taking.
? Individualism – Collectivism: This dimension relates to whether participants are
concerned about their own needs, goals and achievements or whether the social group
norms and benefit take precedence. Individualism is the tendency of people to look
after themselves and their immediate families. The collectivism is the tendency of
people to belong to groups or collectives and to look after each other in exchange for
loyalty.
? Masculinity – Femininity: there is basic dichotomy between the rational
achievement orientation and the emotional affiliation orientation. Masculinity is
defined as a situation in which the dominant factors in society are success and money.
In contrary, femininity is the term used to describe a situation in which the dominant
values in society are caring for others and the quality of life.
Human resource Management in International Joint Ventures
While assessing HUMAN RESOURCE MANAGEMENT principles of overseas
companies, we could consider the company culture in three aspects:
Bureaucratic culture, technical culture and managerial culture
Normally human resource management has the following dimensions – and each of them
has to be considered on those three cultural aspects. The dimensions are:
1. Organization structure
2. Job Design
3. Delegating decision making authority
4. Control and assessment of performance
5. External competition
6. Internal Equity
7. Intensive components
8. Benefits and rewards
9. Job security
10. Career development
Table 1. Managing Human resource in different culture
In the Bureaucratic In the Technical In the Managerial
Culture Culture Culture
Structuring the Establish rational and Develop, organize and Keep organization
Organization detailed organization chart obtain consensus or structure minimal and
to be communicated interrelationships adaptive to changes
throughout the organization among functions
Designing jobs Formalize and standardize Formalize Be flexible and
job descriptions. Put relationships as formalize
emphasis tasks to be accountabilities. Put accountabilities.
performed emphasis on processes Put emphasis on end
to be adapted results to be
accomplished
Delegating Extremely limited Decision-making must High degree of
Decision delegation and freedom be mostly controlled delegation and
making are required freedom is
Authority supported
Controlling and Need for a heavy system Effective cost Sophisticated
Assessing administrative checks and accounting system control system
Performance balances to measure how is required to measure is required to
tasks are performed. efficiency. Emphasis measure end
Emphasis is on compliance is on qualitative results.
With standards and norms criteria Emphasis is on
quantitative
criteria
External Usually minimal Moderate High
competitiveness
Intensive None Limited High
components
Internal equity Must be absolute and Limited. Must reflect Fair. Must reflect
normative. Must integrate balance of power job value and
seniority and diplomas among functions performance
Benefits Highly formalized and Formalized and Informal and
Common throughout personalized personalized
the organization
Providing job Must be absolute Fair Minimal
security
Career Strict and objective Develop bridges Reward high
Development rules and procedures between functions to performers through
must be established for improve organizational rapid promotions
promotions and integration
career developments
A joint venture involves two or more legally distinct organization, each of which shares
in the decision making process of the jointly owned entity. Joint venture is considered
international when one of partner in headquartered outside the venture's country of
operation or the joint venture has significant level of operation in more than one country.
Human resource management in Joint Venture encounters many problems because the
presence of two parties – two cultures simultaneously. Since different cultures exist in the
partnership, an understanding of the impact of culture on managing is critical to the study
of joint venture management. If international managers do not know something about the
culture of the local country they deal with, the results can be quite disastrous.
Motivation also contributes to the success of International human resource management.
Abraham Maslow proposed five levels of human needs. The essence of this theory is the
satisfaction of human needs, which occur in hierarchical order ranging from the lowest
level of survival to selfactualization at the top of the hierarchy. Before people are
motivated to attain higher level needs, their lower-level needs must be fulfilled.
While considering the motivation level of employees of the joint venture, the human
resource manager has to take into account the following issues:
? Current living standards
? Cultural characteristics of the country
? Relationship among people in group and individual level
? Sentiment and emotional aspect of the people
? Language
And redefine the elements of hierarchy of needs to meet the country's environment.
In most of the cases we follow reactive attitude in addressing a problem. And sometimes
it is also different to perceive the problem well before it occurs, hence human resource
manager has to follow a flexible procedure continuously identifying and developing the
system to upkeep the organizational tempo. Very recently, a lot of Western investors
invested in Asian countries and some of them are facing problems in keeping up the
organizational tempo and balancing cultural gap and meeting the needs of both local
employees and headquarter.
To become successful in any organization communication process is also very important.
The process does not consider only the verbal aspect of the communication; it covers the
tone of the communication also, which depress the local language of the organization as a
whole. All human relations depend on the ability of the human resource manager how
he/she communicates while being seen or being behind the veil. Sometimes language
barrier and hesitation of people and lack of competence in expression creates a lot of
problem. Hence a clear collaborative and caring culture is necessary to any international
ventures to be successful.
As competition among companies grew companies became more concerned about loyalty
of the stakeholders. This loyalty gets translated in terms of protection of patents,
technology etc. Employees are the users of information and different facilities of the
company and human resource manager has to ensure a culture of self-reliance and a
feeling as if the company is her/his family. Thus this issue also the important aspect of
human resource management in multinational joint ventures.
The most important dimension of human resource management is managing cultural
differences. When an organizational entity enters into a new country, it gets exposed to a
new culture, new setup, new people etc. The human resource manager must balance the
things, has to be the charge agent while considering the following things:
? Cosmopolitanism
? Intellectual communication
? Cultural sensitivity
? Effective intercultural performance
? Concept of cultural management
? Concept of changing international business
? Cultural synergy
? Work culture
These, combined with intellectuality, make the manager truly global.
Each of individuals is faced with the problem of integration into unfamiliar culture. They
must learn the accepted cultural behavior in a unique organizational environment that will
ensure their entry, acceptance, and effectiveness in that setting. Whether one is a recruit
in the organization, transferred within the company domestically or internationally, or an
employee of a subsidiary owned by a larger entity, each must learn to cope with a unique
subculture.
Culture gives people a sense of who they are, of belonging, of how they should behave,
and of what they should be doing. Culture has a great effect on HRM. If managers are to
be effective leaders, they need not only to understand the influence of culture upon
organization, but also utilize that culture to improve performance and productivity.
Organization creates culture. The organizational culture is a set of coping skills, adaptive
strategies used by members in and out of the system. The organization's culture has a
powerful impact on the worker's or member's morale and productivity. It even influences
the organization's image of itself which, in turn, is communicated to its public. The
different cultures of managers in Joint ventures represented by differences in languages,
interactions, perceptions and mentalities leads to problems in communication, working
together, problems solving and team sense. The tendency of people within a certain
culture to perceive the others as belonging to a single class or category is different to that
in the other cultures, which is called stereotype. Stereotypes can affect the actions,
coordinations, and corporation of people from different cultures. Values within a culture
are the basic convictions that people have regarding what is right or wrong, good or bad,
important or unimportant. They help direct the person's behavior. And differences in
cultural values often result in varying management practices.
Different cultures will affect differently the thinking and doing of people, therefore, they
could be the source of conflicts in HRM operation of joint ventures, between managers
having different cultural backgrounds.
The figure in the next page illustrates many aspects of organizational culture. There are
aspects of an organization's culture that are formal, explicit, and overt, just as there are
dimensions that are informal, implicit and covert. In attempting to achieve its goals and
missions, the organizational culture is further influenced by leadership practices, norms
and standards, rules and regulations, attitudes and principles, ethics and values, polices
and practices, structures and technologies, products and services, roles and relationships.
In summary, the following factors affect Human Resource management in international
joint venture:
1. Organization structure
2. Communication process and language
3. Responsibility and authority structure
4. Employee participation and loyalty of the employees
5. Job design
6. Compensation and reward system
7. Training and development
8. Fair competition among employee and
9. Organizational culture
10. Level of team maturity
11. Flexibility and strictness
12. Cultural differences
So for human resource manager the following steps are very important and these has to
be fulfilled to ensure smooth and efficient operation of the joint venture
? Establish people's participate
? Give emphasis more on employees' interest and their welfare
? Give emphasis on career development
? Understand more about the joint venture and its operation
? Align benefits and reward system in the line with country's or well as company's
interest
? Development of good training system
? Establish harmonious relationships with labor union
? Build relationship with regulators
By undertaking these activity at the JV level;, the HR manager would be able to create a
suitable and sustainable environment for the company to be successful while satisfy the
needs all the stakeholders and establishing fit with its external and internal environment.
Reference:
1. Amacom – "Managing HR in small and mid sized companies" – American
management Association – New York 1987
2. Hamis Philip R. – Moran Robert T. – "Managing cultural differences" – Gulf
publishing company Houston – Texas,1991
3. Hirsch Georges, Swierzcek Fredric W. "Multicultural perspectives on European and
Asian Management" – EAP 20th Anniversary.
4. Jenks V.O – " Human relations in organization" – Harper and Row, New York.
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