Limitations of Western Human Resource Management techniques in Emerging Economies

Limitations of Western Human Resource Management techniques in Emerging Economies

Standard HRM techniques in Western world does not yield the same level of result in emerging economies like India. For example, motivation factors in US do not have a universal appeal in India. People are motivated to certain extent by financial benefits such as higher salary or a bigger bonus etc. However such tools have limited effects on motivation after a certain level in India. Similarly, job hopping for a higher salary or for a better position is considerably lower in India than in US. The examples of such differences are numerous. As a manager, it is very important to know the exact motivating factors to get the best out of the employees.

I have been studying some of the possible reasons for such differences and here are some of the possible reasons I could think of:

Ÿ India & US are at different stages of industrial and economic development;

India is seeing the free market economy in 1990's while US always had a free market economy. India is now opening its business to free market competition, while US companies always had foreign competition.

Ÿ Different political-Economic framework.

India had a long history of Economic austerity preached by the political system. The socialist political system discouraged free markets for nearly 40 years; Its only after 1991, India has embraced free market.

Ÿ Unique value systems, cultural features, and institutions

Religion in India preaches for a simple life and to seek inner peace. For a long time, Indian religious leaders have preached people to lead a simple life, place a high importance on family values This has been ingrained into Indian culture. Unlike Protestant Christianity which seeks material wealth & possession, Indian culture preaches to have "only the necessary" and discourages accumulation of excessive wealth. Even the current religious institutions actively encourage family values.

Ÿ Intra-Organizational Homogeneity.

Indian Organizations have a very high level of homogeneity (Compared to US). Often, majority of the employees in an office are from that city, have a common language, share similar values and have a common culture.

Ÿ Cultural background often forces individual to seen a different solution to common problem (when compared to US)

i.e., When an American & an Indian worker are faced with the same problem, the cultural background of the individual forces them to choose a different solution. This along with workplace homogeneity in India produces an entirely different solution than the one developed by an American.

Ÿ Different choices and levels of employment relationships and the nature and content of the relationship between the organization and the employee.

In US, employees sees his/her career as a series of opportunities to be exploited by working with different organizations. There is very little bonding between the company and the employee. While in India, people tend to think of their current job as a career in the same company where one can advance by hard work and years of experience. Indian firms also tend to value employee loyalty and his/her tenure at the firm more than the skills of a new comer.

Ÿ Variations in spread, adaptation and use of technology.

US and India differ in the rate of adaptation and use of new technology. In US new technology is readily adapted and used widely, while in India, new technology is always treated with skepticism and caution. (e.g. : True Broad band Internet access is still yet to arrive in India)

Ÿ Differences in the institutional framework and the reality of practice/implementation of rules and regulation.

Business & Government Institutions in India have a similar charter, but the actual implementation or practice varies a lot. Public sector or state owned business institutions have a different outlook towards the issues. In Emerging Countries like India and China, relationships matter more than procedural correctness or fairness. For many from the Western countries find this practice appalling and complain bitterly about it. But for people living there, its a way of life.

Closing Thoughts

Modern HRM techniques was primarily invented in the west to handle Human Resource Issues faced by the Western countries. One must note that human behavior is very much affected by culture. In the era of Globalization, when companies go abroad, they must localize their HRM policies to suit the local culture. Just like local adaptation of products, Local adaptation applies to HR issues also.

At the same time global companies face a dilemma of treating treating employees in different countries differently because it can border on discrimination. Care must be exercised to avoid being seen as discriminatory and yet localizing the HRM policies.