This chapter will show the state of the elaboration of the theme, critically assessing findings that were already provided by recognised academicians and institutions. The business environment might be considered as the primary condition that a company must take into account while developing its human resource strategy (Brunot, no date). The differences between China and the UK within this scope are a significant theme to explore and discuss critically. Nevertheless, it seems that the scholarly dimension has not paid substantial attention to such a specific topic from the mentioned perspective.
China and the UK Business Environments
The business environment of the UK may be considered significant given its economic, social and political indicators (Bank of England, 2019). The country is rightly perceived as the most prominent international business centre. It should be claimed that it is among the ten most developed countries – in terms of GDP, it produces more than 2% of the global total (Bank of England, 2019). This country is one of the major world exporter and importer of goods and services. The largest number of transactions in the global financial market is still in London, accounting for about 40% of the worldwide currency turnover. The city is also a leader in the trade of international bonds.
In the UK, there are the headquarters of about 70% of transnational corporations. The country has a plethora of audit firms, as well as law companies’ offices. It is defined as the leading insurance market (Bank of England, 2019). Moreover, the government pays special attention to creating a positive business reputation in the UK. It creates a favourable business environment that fosters business development and attracts international companies to the country. The main slogan of the government is that the UK is open for business. The primary tasks proclaimed in the country’s economic development strategy are the elimination of barriers and restrictions for business development and stimulation of investments. Hence, the above indicators confirm that the UK has a great business environment, which must be taken into account while analysing HR practices in this country.
In current conditions, China’s economy continues to grow very rapidly and has a significant impact on the global market due to increasing exports. The Chinese government plays an important role in the marketplace, developing small and medium enterprises. They account for half of GDP and more than 70% of new jobs created (The American Chamber of Commerce, 2019). The authorities decided to reorient the country’s economy from resource-intensive enterprises to small businesses. This modernisation will be completed by 2050 and will help bring the country to the leaders in terms of economic development.
The primary provider of small business development ideas in China is the National Development and Reform Commission. It initiates the necessary government decisions and collects information and statistics on the work of small businesses. Based on the activities of this commission, decisions are made to encourage certain types of small businesses in China. This kind of entrepreneurship is the country’s scientific engine, since they offer the most significant number of innovative products and technical inventions (The American Chamber of Commerce, 2019). Then, small technology firms are developing rapidly; most of them were created within the framework of the related parks and business incubators, in which the state has invested substantial funds.
One of China’s main problems remains corruption (Lin, et al., 2016), which has a negative impact on both the country’s financial system as a whole and business development. Another challenge for both Chinese and foreign entrepreneurs operating in the market of China is the lack of protection of intellectual property rights. To summarise, the sources provide an exhaustive evaluation of the countries’ business environments (Brander, Cui, and Vertinski, 2017). However, reliable scholarly investigations give no direct comparison between these environments, which is essential for determining cultural differences. At this point, it seems reasonable to turn to the general characteristics of HR practices in the UK and China.
Human Resources
The UK human resources management is focused on the needs of a company in an appropriate organisation of personnel. These needs are determined on the basis of the analysis of existing and planned jobs. This includes the function of staff planning, in particular, plans for a coherent and comprehensive accomplishment of goals with determined employees’ roles (Wood and de Menezes, 2008). Personnel management is based more on the requirements of employees, as well as on a healthy working environment. Responsibility for the implementation of a more active human resources management policy lies on line managers – heads of structural divisions (Holden, 2006). It means that work with staff at all levels is integrated into a whole system that is able to implement the related policies effectively.
When managing human resources, there is a reorientation of the system of work with personnel as a whole to individual work. Consequently, there is a shift from collectivist values that prevail in management to the individualistic ones (Wood and de Menezes, 2008). According to the best British practices, efficient HRM leads to the expected effect if the following conditions are met. The top management of the company and line managers implement a strategy for managing HR in their operational activities, working closely with functional managers (Holden, 2006). Then, the practice of the effective distribution of duties and delegation of authority to subordinates should be applied. Finally, the firm should have technical and structural flexibility, possessing various systems of labour organisation – such as autonomous working groups and design collectives.
In China, protectionism is one of the main characteristics of organisational behaviour. Scholars define it as a problem that impedes the development of organisations (Guo, Sun and Dai, 2018). Protectionist policies imply that promotion, demotion, remuneration and punishment in Chinese companies are often not based on the actual achievements of employees (Xiao and Cooke, 2020). These are accomplished under the influence of personal relationships between managers and subordinates. There are no representatives of enterprises with special programs for the development of organisational culture (Guan, Y. et al., 2016). Such programs exist only at foreign enterprises that set themselves the goal of instilling the corporate culture of American or European companies into Chinese employees. However, there is one notable exception – Guanxi; this Chinese company demonstrates deviant behaviour in this regard and develops corporate values that are closer to the Western ones (Guo, Sun and Dai, 2018). Its practices successfully implement HR concepts that are not often used by Chinese firms.
Another general characteristic of managing people in Chinese firms is the dominance of accounting and controlling functions among line managers and personnel managers. The primary purpose of the personnel manager is to control the activities of the staff (Xiao and Cooke, 2020). An employee in a traditional Chinese enterprise is perceived as a tool, and not as a subject of operations management, who, for example, is able to innovate.
The management system of Chinese companies underestimates the desire to realise opportunities and satisfy the need for self-actualisation, which is especially significant for young workers. This encourages the most motivated of them to seek employment in foreign companies. It seems apparent that academicians have not been conducting research on the UK HR practices for a long period. Moreover, there has been no recent studies on the comparison between these practices within the British and Chinese scope (Easterby-Smith, Malina and Yuan, 1995; Gamble, 2011).
Reward Management
The UK payment systems used are based on the principles of comprehensive accounting of personal contribution, as well as additional efforts and the level of professional competence. The latter includes the knowledge and skills that employees actually mastered (CIPD, 2019). In the UK, the remuneration model provides for two wage systems: monetary and equity. Both schemes imply the dependence of employee salaries on the total profit of the enterprise (Morrey and Ma, 2019). There is another scheme with fluctuating wages, which varies in proportion to the income of the company. Collective bargaining agreements concluded between British employees and employers contain a norm that obligates employees to pay a share of the company’s profits.
Some companies practice employee equity when employees redeem a part of the company’s shares and receive either part of the profit or income in the form of interest of the shares. This approach motivates personnel of any rank to increase work efficiency, show genuine interest in business processes and create a friendly atmosphere in the team (Martono, Khoiruddin and Wulansari, 2018). Most British firms have a multivariate approach to the reward management system. Thus, the salary structure is specific for different types of workers – starting from sales managers and ending with accountants.
In China, managers are less relevant to performance for determining bonuses. They pay more attention to relations with employees in order to assess intangible remuneration. When deciding on rewards, a company tends to focus on its business needs (Boquen, 2019). There is also a peculiar geographical characteristic of wages in the country. The provinces of China, being the administrative-territorial units but not independent entities, have the right to establish their minimum wage. Then, the state improves the protection of employees’ rights and working environment, creates conditions for employment and decent salaries (Koty, 2019; Mac Síthigh and Siems, 2019). What is more, the government, on the basis of the development of production, increases wages and material well-being of workers. Generally, reward management in the UK and China is well-studied, but, again, there have been no recent investigations on their comparison.
The literature evaluation shows several gaps that are to be addressed in the framework of this project. The absence of up-to-date research on the UK HR policies will be compensated by the ones of Unilever (Unilever, 2019). Then, the comparison between the British and Chinese business environments, HR practices and remuneration systems will be made applying Unilever’s experience in this regard. The below investigation might be considered as a link between the related already conducted ones, which will allow determining the best peculiarities of the mentioned systems in the UK and China.
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