Introduction and Thesis Statement
There are about 63,000 international organizations that dominate the world trade today (Budwar, 2005). The success of these organizations lies in their Human Resource Management (HRM) strategies, policies and practices. In the light of globalization, HRM is crucial for Multi-National Companies (MNCs) for it can act as an instrument for the harmonization and control of global operations.
Through various studies, it has been found out that internal problems may occur in organizations when management tries implementing global strategies that are not compatible with the local offices’ cultural and institutional framework (Transfer of HRM Practices in MNCs, 2011).
In employment relations, though the focus is on the regulation of jobs, must also consider economic and social influences of capital and labour and the relationship between employers, workers, organizations and the state to which an MNC is operating on.
It is important that comparative employment relations have a background and information of different national contexts and insights from disciplines such as history, sociology, politics, law, economics, accounting and elements of management studies. (eds Bamber, Russel & Wailes, 2010).
The international operations of MNCs would differ from country to country thus the HRM team is crucial in the success of tactical implementations of the company. A thorough understanding of a local office’s cultural background is essential in the operation of strategies and policies.
This paper aims to present the differences between French and Japanese employment systems in terms of functions, beliefs and culture.
The diversity of national offices lies not only on its cultural orientation but may also be attributed by its socio-economic and political backgrounds with the emphasis on educational systems. Government actions, policies and legislations on employment systems are based and influenced by the country’s political ideology and culture.
French Employment System
The current French employment system is characterized by limitations of the French economy and its political standing in Europe. France’s HRM practices resulted from regulations of the European Union, European demography, globalization of prominent organizations and sociological disturbances.
France’s membership in the European Union has become a huge factor in its HRMs’ practices which come together with those of other member states of the EU thus French HR managers struggle to adjust French organizations to their environment by relying on strategies and policies parallel to those applied in other countries under the EU.
The French demographic and political environment gives importance to baby boomers and the second by the relationship between the state and the social partners. In terms of population, birth rate in France remains higher than neighbouring countries such as Germany, the United Kingdom, Italy and Spain thus age structure is shaped by its youth.
In comparison, 19.4% of the French population in 2006 was under the age of twenty when the European average was at 17.8% (Česynienė, 2008). Analyzing the nation’s population with a prominent number of young people and a low number of baby boomers (those between fifty-four and sixty-five), organizations in France have a high tendency to be infused by young blood.
In terms of migration, in 2008, Eurostat claimed that net migration to France was lower compared with that of the UK: minus 1407,000 persons in 1998 and 90879,000 persons in 2004 (ÄŚesynienÄ—, 2008). It is also worth considering the influences brought about by the French national state in its employment relations. HR managers in France are affected by government methods and activities.
Examples are the July and October French government decision on declining to back the new convention on unemployment benefits and the law on the 35-hour workweek. French labour laws are comprehensive and detailed in nature. These decisions by the government were abhorred by employers’ organizations and labour unions thus employee strikes occurred which disrupt the operations of organizations.
In order to resolve issues with regards to the 35-hour workweek, the HRM departments of organizations improved and developed policies of working hours, new methods and processes were negotiated and implemented between employers and employees which took over measurements and financial tools to maximize choices and regulate costs.
French human resource managers give importance to four practices which are distinctive to the French context namely career management, recruitment, training and compensation.
In France, the human resource department of organizations plays a crucial role in supporting employee development in order to keep employees’ loyalty within the company. The core responsibility of the HR department is with line managers and top management though the general trend of employee responsibility for his or her own career still persist.
A new psychological contract exists in the French employment system where organizations no longer offer long-term employment and employees are responsible for developing their own employability but at the same time employees require the help of organizations to achieve their career goals.
In career management, HR managers pay great attention to employees who have the status of “cadre”. These are the high potential employees who posses qualitative flexibility, making up the central core of the organization according to the model of flexible firm (Gjerding, 1999).
As globalization becomes prominent, the use of technology has played an important role in the recruitment of new employees. In France, the internet has been a widely used tool in organizations’ recruitment processes.
When employers look for employees, advertisements are posted on generalist and institutional websites which stream the recruitment market out, though most common screening process still remains the traditional one on one employment interview. The recruitment process in France still adopts the average three interviews before the final hiring decision is made.
The manager who decides to recruit an applicant will be responsible for the new employee’s performance. French employers use graphology in analyzing the handwritings of applicants thus as a rule, advertisements require handwritten cover letters with printed resumes from applicants. Problems arise with the low predictive validity of graphology which HR managers have to face.
About 75 to 80 percent of employers in France result to graphology in screening and placing applicants in a job. The increasing usage of the internet in recruiting may result to the diminish of graphology as a screening tool unless organizations specifically ask for handwÂriting samples.
Training practices in France are influenced by French labour laws. According to the French labour law, organizations with ten employees or more must financially contribute 1.5 percent of the wage bill for training and for organizations with less than ten employees, contribution is 0.15 percent of the wage bill but on average, organizations spend 3 percent of the wage bill which is more than the legal minimum required.
Organizational trainings are deemed important in France; for an average sized firm, in a span of 1 year 38 percent of the employees participate in training programs while in large organizations over 60 percent of the employees participate. Rates may vary according to the level of qualifications with 10 percent coming from unskilled workers to 60 percent for technicians and executives.
Trainings are important in the French HRM context because they allow organizations to organize programs that cater to the direct needs of employees. According to Goetschy, “With the reduction of working hours, employers are striving to deliver training outside working hours” (Goetschy, 2000).
Compensation systems in France are characterized by individualization with the recognition of competencies constituting to the determinant of French individualization. The challenge for HR managers is the increasing individualization among French employees that threatens the interest and aims of organizations as a whole. Variable salary affects both collective and individual performance.
Collectively, gain sharing is increasing its popularity among firms but among individual employees, bonuses and premiums present as tools for organizations to reward performances of individuals which may win loyalty among employees serving as security margins in cases of financial instabilities in the economy. Security and equity issues arise as the variable part of compensation increases for employees.
Equity becomes a significant issue as individualization is emphasized by the working environment. The challenge among HR managers operating in France is the accomplishment of equity which will further expand the flexibility of compensation plans and may also increase satisfaction among employees regarding the benefits offered by organizations.
Organizations’ readiness to increase employee compensation flexibility does not conform to the importance of the French government’s mandatory employment benefits. HR managers encounter difficulties in connecting designs and executing compensations with the company’s organizational strategies.
In the French setting, HRM is dedicated to the necessity of productivity within both the HR function and the orgaÂnization as a whole. HR managers, professionals and line managers must not overlook the diverse values of employees in order to make an impact, add value, and create a competiÂtive advantage for the organization.
The French educational system plays a significant role in the employment of an individual. HR managers pay close attention to employees with specializations compared to those who study generalized courses. Higher education can offer various routes to qualification in France. An example is in terms of hiring engineers. In this field two types of schools are available for students who want to pursue a career in engineering.
Either that student goes to engineering school (“Grandes Ecoles”), where a system of entrance examinations is adopted and students are screened by number or study in a university science faculty, where all applicants are accepted but students must apply for a selection process through annual examinations.
Both institutions are designed to qualify and train students for their future careers whether they will be working as researchers for the engineering field or engineers and state technocrats. The diversity of status among employees corresponds to the French way of management where training and qualification serve as edge to an individual’s status in the workplace.
Among engineers for example, a fine distinction is made between those students who graduated from engineering schools, who have technical specialties in software, robotic and aeronautics to name a few and those who graduated from university with more academic orientations.”
The logic behind this distinction is based on the strength of the educational frame of reference and leads to separate professional identities, which in turn serve to legitimise hierarchically ordered functions or “territories” within the firm” (Morandat & Nohara 2000).
Japanese Employment System
The current Japanese employment system has been shaped by the economic recessions of the 1990s. The Japanese economy showed signs of recovery in 1999 and the stabilization of Japanese HR practices prevailed but these practices are geared towards a higher level of market-oriented flexibility.
To further understand the Japanese employment system, a discussion of the Japanese traditional and changing HR practices will be discussed.
Traditionally, the Japanese employment system is based on the notion of lifetime employment. The HR department hires employees directly out of college into entry-level positions. In the Japanese set up, firms provide pay rises and promotions to employees almost automatically. Wage system is based on seniority and status.
Seniority in this case is associated to an individual’s length of service to the company rather than job duties or merits. Final decisions are made by top level management although subordinates can influence decisions. HR and in line managers are committed to preserve harmony in the workplace through intricate social rituals of Japanese culture such as gift giving, bowing to superiors and using honorific language to show deferenÂce.
Workers are often rotated through different department to give them a broad perspective of the company’s production and operation.”
Such investments in breadth of skill and overall understanding of the production process are justified by the strong lifetime employment guarantees bonding workers to their companies and allowing the skilled and experienced proÂduction workers to contribute to manageÂment decisions” (ÄŚesynienÄ—, 2008).
Changes in the Japanese economy have affected HR practices in organization based in Japan. These changes may be attributed to the collapse of inter-firm network system of cross shareholding and preferential trading among member corporations of a business group.
The breakdown of such led to the sacrifice of safety nets of supporting long-term growth strategy of firms and their ability to protect employees from downside market risks. Another factor for the change is deregulation of the Japanese markets making markets accessible to competitors both foreign and local. The aging Japanese population also give implications for the changing corporate HR practices.
HR managers are burdened with lifelong employment system as well as the seniority system because they cost higher money paid out for less productive workers. Japanese firms are slowly shifting in weighting employees’ abilities and performance over length of stay and age in pay raises and salary decisions.
Japan’s transitions to being a service economy and its socio-cultural and socio-economic changes have contributed to the shift in employment strategies of Japanese firms.
Manufacturing companies in Japan are still competitive but their contributions to the Japanese domestic employment scene and income is slowly decreasing in favour of the emerging sales and service sectors which are considered the next great engine of jobs and wealth. Employment practices in these new sectors are completely different from those of the traditional manufacturing firms.
The workforce for these firms are usually younger, more mobile, less committed to work and to the firm (Debroux 2004). They are characterized by individualization which are less team-based thus individual performances are easily evaluated. In this new set up, HR managers give more attention to occupational skills over firm-specific skills. An employee with a broad job experience is paid more.
Pay raise and benefits are given out in terms of performances rather than company loyalty. As globalization persist in the world economy, the Japanese employment system is gradually adopting the liberal mindset of the west, with gender issues shifting from a traditionally Japanese male-dominated corporate world to that where women are seen as equals.
In the past Japanese women were limited to low skilled work such as tea serving office ladies or contract workers on the assembly line. In the present Japanese working environment, professional young women are leading high level office positions which once were exclusive to their male counterparts.
“Such opportunities have been increasing steadily over the past few years and the Equal Opportunity Law, pasÂsed in 1985, which “requested” employers to make efforts not to discriminate, has been recently revised to make discriminaÂtion illegal” (ÄŚesynienÄ—, 2008).
Changes in the employment relations practices of Japanese HRMs can be attributed to national factors such as national institutions (government rules and regulations, educational system, unions and employers’ associations), labour market, national culture and business and economy.
The new HRM system has revaluated previous prevailing sacred aspects of Japanese employment relations such as life time employment, seniority bases system and enterprise based unions (Adhikari 2005). The Japanese government has been protecting workers from changing socio-economic situations through the formation and enhancement of labour policies (Araki, 2002).
It alerts institutions on probable economic threats to warrant employment opportunities, avoid unemployment and assist reemployment so workers can use their maximum abilities (Labor Situations in Japan and Analysis, 2005). The government’s involvement in the regulation of employment relations is evident in the laws circulated and occasionally revised in accordance to the needs of the Japanese employment scenario.
Examples of the government’s role are when the Japanese bubble economy collapsed and during the 19997 financial crisis where the government ratified a series of comprehensive employment policies in response to the crisis (Elbo). The operations of human resource departments of organizations based in Japan rely heavily on the government’s policies and labour laws.
Among the many activities of the Japanese government which affected strategies of different companies’ human resource divisions are the amendment of the Worker Dispatching Law in 1999 which deregulated the labour market. The government also revise laws periodically to regulate employment security to protect workers’ labour rights.
There are also laws created to protect the aging and handicapped workforce and promote occupational abilities. The Equal Employment Opportunity Law and the Labour Standards Laws were promulgated to eradicate gender and wage discrimination in the workforce. The latter was revised in 1986 to reduce the working hours in Japan from 48 to 40 hours.
One of the most significant contributions of the Japanese government to the labour force is the creation of the White Papers which serves as a guide for organizations because the literatures gives out information on the trends of the labour economy, situations in the labour force and other related policies.
“As of 2003, the Japanese government has taken measures in order to respond to current labour situations such as the provision of subsidies to companies and corporations that employ people aged 30 or older and below 60 who are forced to leave their work as a result of the disposal of non-performing loans; and establishing corporations to provide services that contribute to the local area and establishing support measures for the creation of places of employment for people aged 30 and above and below 65” (Adhikari, 2005).
The Japanese educational system is characterised by higher education as mass education with a comparative homogeneity of academic programs.
Japanese universities provide general and broad curriculum rather than specialization of professional and scientific courses thus the labour force is not differentiated but Japanese education is characterized by a hierarchy of establishments which works as a filter for ranking students based on their potentials.
“The way that graduates from different universities are distributed in the labour market depends on a matching mechanism between the rank of each university in this hierarchy and the reputation of each firm, rather than on individual signalling (academic speciality, particular expertise etc.)” (Morandat and Nohara 2000).
Japanese education systems are characterized by the continuum of further studies from one university level to another. According to survey about three quarters of Japanese students in the scientific or engineering field spend four years in higher education thus their qualification levels represent as reference points for the whole engineer category (Morandat and Nohara 2000).
In Japan, an individual’s time spent in higher education weighs equally with seniority in an organization. The management of all university qualifications when the individual first enters a firm is homogeneous and compatible with competitive career advancement. Hierarchy in the Japanese employment system reveals itself gradually in a graduate’s career as compared to the immediate effect of the French hierarchy.
Argument
Challenges of MNCs arise when they first open a branch office in another country. The need to understand the national socio-economic and cultural environment of the country as well as government employment policies and educational systems is essential in the success of the HRM department’s implementation of practices and strategies (Labour Situation in Japan and Analysis, 2005).
In light of globalization, the differences between the east and west are evident in this study where the French and Japanese employment systems were discussed in previous pages. Comparing and contrasting the two systems, diversity between the two shows in how employees and government policies are addressed.
In France, the employment system is characterized by the limitations the European Union has brought about to the country in compliance to France’s agreement as a member state of the EU while for the Japanese employment system; it is characterized by the abundance of government interventions following the collapse and breakdown of the bubble economy (Arkai, 2002).
The French population is composed of a majority of people in their 20s with a scarce amount of baby boomers aged fifty-four to sixty-five, in contrast Japanese workforce has more aged population compared to younger ones thus traditional practices such as lifetime employment and seniority based incentives occur.
French employees are characterized by their strong individualization where individuals are understood to be responsible for their own career growths.
Their employability relies on their work experience in a given company and they are perceived to stay in a company for a limited amount of time thus French employees often change jobs from one company to another in order to further enhance their experiences and skills which make them desirable for hiring by other companies.
Employment evaluation for pay raises and bonuses, in this context is based on individual performance and operational activities. French HRM strategies include the provision of trainings for employees’ personal and organizational skills development. For the Japanese employees on the other hand, lifetime employment is practiced with fresh university graduates being hired by a company.
Once a graduate accepts the job offer, his career will be based on his loyalty to the company. Compensation adjustments such as salary bumps and incentives are usually based on the length of an employee’s service in the company. HRM strategy on this context is the rotation of one employee to other departments to fully understand the organization’s operational and production activities.
Through this strategy employees develop a sense of belongingness to the company through the knowledge and information he has acquired. Current studies show that the Japanese employment system is slowly shifting towards individualization where employees are evaluated through their performances and abilities rather than the previous system of seniority based.
The new generation of Japanese professionals tend to be similar to their French counterparts who tend to transfer form one company to another to gain experience and further hone their skills in their chosen fields. Government involvement in the implementation of labour policies play a crucial role in HR managers’ strategic planning in running organizations at the national level.
Both French and Japanese offices rely on government reforms in the direction of how they will run the company.
For instance, the 35-hour work week of the French would mean that trainings would be adjusted to be conducted after office hours while for the Japanese women professionals rose with the gender equality policies implemented by the Japanese government as well as the adjustment of the 48-hour work week reduced to a 40-hour work week.
Lastly educational systems of both France and Japan differ in their orientation. French institutions give more emphasis in an individual’s specialization thus hierarchy exists in an individual’s thorough specialization in a given field where he is given a high status once he enters a firm. In the Japanese context, education provided is broad and generalized but hierarchy exists in educational institutions.
Also education in Japan is seen as a continuum where specialized trainings after graduating in higher education may constitute an equivalent in the length of stay in a company.
For example if an engineering student graduates from a university with broad knowledge of engineering and he continues to pursue further studies for a certain amount of time when he enters a firm he will have a higher position compared to those who specialized in engineering during their university days.
Conclusion
Human resource management is crucial in the successful operations of firms whether they are functioning in a national or international level. Multi-national Companies, in their venture towards expansion in new countries need to have properly planned strategies and policies in accordance to the subsidiaries’ local culture, political ideology and socio-economic status.
In this paper, French and Japanese employment systems were discussed with regards to the conditions of employment systems. Aside from cultural backgrounds, government systems, socio-economic climates, labour unions and educational orientation play significant roles in employees’ attitude towards work, company loyalty and career goals.
Through globalization trends in employment systems national employment systems are slowly becoming alike an example is the Japanese system adapting to western practices. This can be associated with the gradual individualization of new employees and the shift of employers and HR managers in evaluating employees in terms of performance and operational abilities rather than loyalty to the company.
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