Culture related challenges of foreign companies' HR practices in China basing on the System Dynamics Conceptual Model

Abstract

The purpose of the paper is to explore the influence of the culture-related aspects on the choice of HR practices integration and adaptation of the foreign companies, that operate in China, and also the dynamics of these aspects during the foreign company HR practices implementation process and, and finally, what HR practices are culturally compatible in China nowadays. Design/methodology/approach – We conducted literature research on ethnography and ethnopsychology of China from managerial point of view, and built a literature-based model in System Dynamics exploring the process of integration of HR practices. Findings – We found most influential cultural dimensions in the Chinese corporate culture today and revealed and extrapolated on what are the HR practices, most influenced by change and start to be closer to the Western practices. We found, that these are training, motivation and career planning (answerable to individualization and new emerging values), partly influenced are selection, retention; compensation is also added by competitive schemes, however indirect compensation in the form of housing, healthcare and pension care insurance plans remain unchanged and very important. Furthermore, understanding of the process of implementing HR practices in a partnership, gives a company, which is exposed to the questions and challenges of HR strategy planning in a global context, ability to apply heuristic methods aiming to find a feasible solution during the integration process. Heuristics becomes possible thanks to the model simulations by combining different values of the variables, influencing the process and considering the outcomes. Contributions: From theoretical point of view, the results can contribute to the organizational change management theory and corporate culture theory through comprehensive visualization and combination of the cultural issues and policies of implementation of HR practices from the existing research, that might advance to generate the theoretical insights of the existing knowledge base on integration and implementation HR practices and organizational change management. The practical contribution is that , the model ( the software can be downloaded from www.vensim.com website for free) can be used by the expatriate managers, HQ managers in HRM strategic planning, that can permit identify how cultural assumptions and problems will influence business behaviour to make tactical and strategic decisions in integration/adaptation of the practices.