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Human Resource Management in China Analytical Essay

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Updated: Dec 26th, 2019


In the normal operations of a given firm, there are several factors that affect the HR strategies that the management will adopt (Tookey, 2004). These factors can originate within the internal mechanisms of a given organization.

Consequently, external factors can influence the HR strategies of a given firm. Examples of external factors that can affect the HR strategies of firms within a given nation include:

  1. Politics
  2. The economy
  3. Social and cultural factors

This paper will focus on the impacts of politics, economy, social, and cultural factors have on the recruitment, selection, and induction processes in Chinese firms. China has been chosen the preferred nation of study due to the rapid economic advancement that the nation has been experiencing for the last several decades.

Due to this fact, domestic and multinational corporations that are situated within the nation have adjusted their HRM strategies and policies to meet up with the changes in the social, political, economic, and cultural environments within the nation (Thompson, 2008).

Challenges Facing Human Resource Management in China

China has been experiencing a rapid economic growth in the since the 1960s. This trend has played a significant role in enhancing foreign direct investment in the nation (Gee, 2003).

As a result, the political, legal, economic, and cultural environments have changed due to the arrival of foreign based firms, expatriates, and the advancement of the locals with regards to education and expertise. These changes have made managing the human resource of various firms within China to be a tedious task.

However, as Yao (2006) asserted, a well managed organization will result in the attainment of the goals and objectives that it has set. In this respect therefore, firms across China have been adjusting and modifying their HR strategies to keep up with the trends and changes that are being experienced in their field of operation.

This will ensure that these firms have an effective recruitment, selection, and induction process that will enable them to have an effective workforce capable of attaining their set goals and objectives.

According to the study conducted by (Melvin, 2007), the rate at which Chinese firms have been modifying their HRM strategies is higher than the rate at which these firms modify their production technology, research and development strategies, or profitability levels.

Organizations in China are thus facing several challenges in the process of their operations. Firstly, organizations in China face the problem of cross cultural adaptation. Most of the organizations that were included in the study by Nakiye (2005) were multinational corporations that were based in China.

From the results of this study, it was evident that the HR department found it difficult to develop effective strategies that enhance their recruitment, selection, and induction processes.

Another problem that affects the HRM in China is the presence of different values among employees. Irrespective of the backgrounds, it is a common phenomenon to have employees within a given organization who have different values as compared to each other.

In some instances, the employees might have values that differ from the core values of the organization that they are working for (Pucik, 2007).

In this respect therefore, the HR department has to come up with effective inductive measures that put in place the needs and requirements of all its employees to ensure that the set values, goals, and objectives are beneficial for all the employees and the firm as well (Sussman, 2007).

The management styles of Chinese firms also affect the HR strategies that have been put in place. Initially, Chinese organizations adopted a centralized organization structure where most of the recruitment, selection, and inductive policies and decisions were concentrated at the managerial level.

This structure was not effective as it barred communication across managerial levels and excluded employees from the lower levels of management to participate in the process of decision making especially in the process of developing job descriptions.

Due to its inefficiencies, Chinese firms experienced high rates of employee turnover. In the process, they spent a lot of money in the recruitment process.

Since the 1990s however, most Chinese firms have adopted a decentralized form of organization structure that has otherwise enhanced the recruitment, selection, and inductive processes. This structure enhances communication and participation from all the employees and liaising among departments.

It also fosters teamwork and enhances the presence of a strong organization culture that plays a significant role in achieving the set goals and objectives of a given organization by ensuring that a firm has the right employees for specific roles and purposes within the organization.


Recruitment is an essential process in the running and management of an organization. After a firm has finished designing the job description of a vacant position, recruitment is the next process that the firm has to undertake to select qualified candidates to fill this post.

Chinese firms utilize various recruitment techniques to ensure that they acquire the most qualified candidates to fill the vacant positions that might be present in an organization (McLean, 2003).

The political stability of a given nation plays a critical role in determining the HR strategies that will be put in place to ensure that a firm operates in an effective and efficient manner (Boblitz, 2006). During the last century, China experienced several changes in its political system. Shi (2010) described these changes as:

  1. Soviet traditional (1949-79)
  2. Reform and departure (1979-1990)
  3. Deepening and Mixture (1990-present)

During the soviet traditional era, most of the corporations in China were owned by the state. Due to this fact, the authority to recruit employees was vested in the government under labour bureaus and planning agencies (Latta, 1998).

Therefore, it is these agencies that determined the policies, rules, and regulations that were used to run and manage organizations within the nation.

Through these agencies, it was the government that determined when it will recruit employees, how many individuals will be selected in a recruitment exercise, the mode of recruitment, the salaries to be paid, and the procedures that should be taken in an event of firing an individual from an organization (Shi, 2010).

Therefore, rudimentary techniques were applied in the process of job description, job advertisement, and interviews. These techniques reduced the output, efficiency, and employee productivity.

Under this regime, the managers of specific enterprises were merely figureheads whose main work was to implement the rules and policies that have been developed by the government.

These practices were abolished after the Third Preliminary Session of the 11th Central Committee was passed in 1978 (Shi, 2010). The enactment of this law was the first step towards the privatization of state owned corporations.

This move paved way for the adoption and implementation of effective personnel management practices that were being practiced by Western States (McNally, 2002).

To be precise, firms that were established as a result of foreign direct investment and the firms that were fully privatized were the pioneers of modern HRM practices in China (McNally, 2002). Thus, traditional firms in China learned from these corporations and adopted their strategies to enhance their operations.

It is during this era that many firms in China started to use the newspaper as the most effective way of advertising jobs (Porter, 2010). Despite its effectiveness, this method has several disadvantages. First, the presence of many employers led to a delay in the publication of advertisements.

For instance, an advert could be published four weeks after it was set hence reducing the effectiveness of firms due to lack of employees.

Consequently, firms started to recruit graduates from universities and individuals from other firms who were highly experienced. This move ensures that firms had the most skilled and qualified individuals as part of their personnel.

The economic development that was experienced in China during the late 1980s and early 1990s had a significant impact on the recruitment process. The recruitment practices that were applied during this era were relatively similar as compared to the ones that were applied in the reform and departure era.

Thus, firms still utilized avenues such as recruitment of graduates and individuals with experience from other firms, posting job advertisement on newspapers and other forms of print media, organizing work fairs, and recruiting individuals who were still in the universities and colleges (Goddal, 2006).

Furthermore, Chinese firms incorporated the concept of online recruitment. This concept has played a critical role in increasing the competition for jobs in China since individuals from all around the world are applying for jobs in China (Goddal, 2006).

Firms in China advocate for the online recruitment system since it is cost effective, quick, has a wider outreach as compared to other forms of media, has high chances of response, capable of exploring specific employment niches and most importantly, the give a firm a modern outlook.

Given its nature therefore, the ‘three system’ impacted on the macro and micro levels of the economy. For instance, it played a critical role in attracting foreign direct investment in China (World Bank, 2013).


After the abolition of the centralised organization structure in Chinese firms, managers were given the power to develop and implement management strategies and policies that would enable their organizations to achieve their set goals and objectives.

This move therefore enhanced competition at a domestic and international level within China. This was an effective strategy of enhancing the selection process.

Initially, the selection process was inefficient and corrupt since it was conducted by government agencies that had no special interests in the operations of state owned agencies. However, once the decentralization mechanism was put in place, firms were given the right to hire and select their own employees.

Thus, after a series of tests and interviews, it was common for Chinese firms to have a special committee that comprised of members of the HR department and various managers and representatives to ensure that the most qualified individuals are selected.

This process ensured that the workforce of a firm was highly skilled and competent.

However, the selection process was enhanced during the 1990s as a result of the economic growth that China was experiencing.

At the same time, the government influence on the selection process was replaced by the free-labour market. During this era, the ‘three system’ was also launched (Shi, 2010). The aim of this system was to enhance the following segments of employment:

  1. Labour and personnel systems
  2. Wage and welfare system
  3. Social insurance system

Therefore, firms had the power to select individuals based on their credibility, skill, and expertise. This ensured that firms in China employed the right personnel for the right job, hence increasing their overall performance and efficiency levels (Reynolds, 1997).

Thus, to ensure that the correct individuals are selected for specific jobs within a firm, the following strategies are used in China:

  1. Interviews
  2. Psychological tests
  3. Assessment tests

These candidate assessment tools are essential since they are used to screen the applicants to determine whether they are consistent with the profile that an employer is looking for.

Consequently, these strategies have proven to be essential since they reveal whether the values of the applicants are in line with the organizational culture of a given firm (Broadhaust, 2012).

Through these tools, an employer is capable of determining the qualification of a candidate, his/her strengths and weaknesses, his/her present behaviour, and the overall outcome that the employer might expect from the candidate (Broadhaust, 2012).

However, it has emerged that these practices have their strengths and weaknesses thus many firms in China utilize these tools collectively as tools for assessing a candidate, making the final decision as to hire him/her or not and most importantly, to negotiate with the candidate with regards to the terms of the job at hand.

Social and cultural factors also affect the HRM strategies that will be implemented in a given state. The social and cultural factors affect the values, norms, and beliefs of a given individual or a group of individuals (Irmer, 2007).

In the Traditional Soviet era, the selection processes in Chinese firms were run in accordance with the culture and beliefs that were put in place by the state. During this time, a high percentage of the employees were natives of the state.

Therefore, their norms, values, and beliefs were predominantly based on religion and culture (Shi, 2010). However, this practice proved not to be efficient since it reduced the performance of employees based on cultural and religious barriers.

In contemporary China, social norms and culture have played a critical role in determining the selection strategies that managers apply. For instance, most firms apply the Guanxi concept in their selection processes. Guanxi is a Chinese word meaning respect (Zhou, 2006).

In China, most managers try to build strong working relationships with their employees as a strategy to enhance their productivity. Through this technique, managers have been successful in enhancing communication, values, and beliefs among their employees.

This concept has thus been influential in developing a conducive working environment hence enabling firms and employees to achieve their goals and career objectives (Pinder, 2012). Through this strategy, employees in Chinese firms have learned to work together as a team irrespective of their gender, age, or religion.


In traditional China, employees were working under stringent rules and regulations. As Hodgetts (2003) asserts, employees during this regime worked under an iron bowl where they were guaranteed their jobs until they retired.

Despite the assurance of their job security, the compensation of employees under during this era was very low as compared to western states. However, the employees enjoyed benefits such as housing, meal, commuting, education, and health allowances (Shi, 2010).

Given these conditions, individuals rarely changed their jobs or moved from one career to another, a concept that Klein (2011) referred to as ‘a bird in the cage.’

The economic changes that were experienced in China had a lot of impact on the induction process as compared to the recruitment and selection processes. However, it is during the 1990s that most of the Chinese firms adopted modern HRM strategies.

The reform and departure era played a significant role in the development of the Chinese economy. Grebe (2005) regarded this period as the basis of the modern Chinese economy.

During the late 1980s and early 1990s however, firms in China required reforms to be put in place to ensure that the policies, rules, and regulations that will be implemented will be sustainable in the long run. Managers and employees needed to be assured about the sustainability of the adopted policies and structures.

Consequently, reformations needed to be put in place to ensure that the traditional practices from the traditional soviet era have been totally eliminated.

To realize this goal, the Labour Law was implemented in 1993. The aim of this law was to enhance a market-based labour relationship between corporations and their employees (Mendenhall, 2007). As a result, it became mandatory for employees to sign employment contracts with their staff.

This law therefore played a critical role in the induction process of employees since the contracts contained information such as the length of the contract, salaries/wages to be paid, the benefits to be earned, terms of services, and liability in an event of breach of contract (Oddou, 2011).

This strategy eliminated the control that the state had over the employment of workers in China. It also enhanced job security among employees and guaranteed increased performance from the viewpoint of employers (Moorhead, 2008).

The adoption of the ‘three system’ to enhance the operation of Chinese firms during the early 1990s had positive impacts on the inductive process in the nation. The adoption of the ‘three system’ led to the elimination of the egalitarian compensation structure.

This move saved firms a lot of money that was paid to employees who were not actively involved in the day-to-day operations of the firm. Instead, a more rewarding payment scheme was put in place.

Characterised with incentives such as bonuses and overtime pay, this strategy has been influential in enhancing the performance of employees in Chinese firms.

Unlike the wage system that was in place during the Traditional Soviet era, the new payment scheme was also an effective inductive system that improved the compensation of employees to ensure that matched with the cost of living.

Thus, the wage rate of employees varies from one region to the next depending on the cost of living.

Finally, social and cultural values negatively affected the management strategies in traditional China. The management gave strict orders to the employees at lower levels who were reluctant to work in accordance with them.

In this end, this system developed an organizational culture that is based on ignorance, lack of respect, and lack of the desire to succeed (Goddal, 2008). Individualism was a norm in these organizations since the employees never saw the importance of working together as a team to achieve the set goals and objectives.

This era was also characterized by high levels of discrimination with regards to gender (Goddal, 2008). It was a traditional belief that women should not be educated. This belief denied many females the chance to work. The workforce in many organizations comprised of men.

However, the enactment of the labour laws and the ‘three system’, enabled managers to come up with effective inductive strategies that would overcome the setback that Chinese firms were experiencing with regards to their culture and beliefs.

First, most firms adopted a decentralized form of governance where power was distributed across all levels of management. This greatly enhanced communication and teamwork spirit hence boosting the overall performance of an organization.


Over the last century, China has experienced a lot of changes in its social, political and economic environments. These changes have played a critical role in transforming the HRM strategies that the firms within the nation have developed and implemented to ensure that they realize their set goals and objectives.

Thus, the firms have transformed their operations from utilizing traditional HRM strategies that were being practiced during the Traditional Soviet era to adopting and implementing modern HRM strategies that are common in Western States.

This move has greatly increased the effectiveness and efficiency of these organizations hence enabling them to achieve their goals and objectives.


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