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Human Resource Management: Historically, a Misleading Term for People Management in China
“The People’s Republic of China…a colossal exercise in ‘mass mobilization’ or ‘people-management’ on a scale hitherto not undertaken. The way the Chinese went about it colours the description of how human resources are managed in the People’s Republic.” – Warner (2001)
Human resource management, or HRM, is “the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance, and separation of human resources” (Gilmore and Shonhiwa 1996). HRM includes “all the activities that contribute to successfully attracting, developing, motivating, and maintaining a high-performing workforce that results in organizational success” (Sims 2002).
The claim has been made that referring to people management in China as HRM is misleading. Considering accepted HRM practices within the context of the introductory definitions offered for the term, this assertion was certainly true at one time but, in more recent times, Chinese organisations have moved toward implementing modern HRM practices. This essay explores the basis for the original claim by presenting an historical perspective on the management of human resources in China then briefly describes how and why the approach to managing human resources in that country has modernised in recent years. Finally, findings will be discussed and conclusions drawn.
China’s post-World War II experience with personnel management dates back to the establishment of the People’s Republic in 1949 (Cooke 2004; Warner 2001). As in most countries, human resource practices in private and state organisations in China have been affected by political, economic, legal, and socio-cultural factors (Cooke 2004). Chinese human resource practices were significantly influenced by communist economic management (Warner 1995, cited in Warner 2001) and were largely modelled after the Soviet personnel management approach (Hare 1983, cited in Dowling and Zhu 1994). Personnel management was essentially a “bureaucratic device” set up to run “large state-owned enterprises” (Warner 2001). From 1949 to the end of the Cultural Revolution approximately thirty years later, China’s personnel management was centralised under the country’s planned economy (Cooke 2004).
Under China’s communist economic system, personnel management reflected two important features. Firstly, in terms of governance, organisational personnel policies and practices were under the strict control of the state, which set the number of employees and recruitment sources and set pay scales for different worker categories. The role of organisational managers was restricted to conducting administrative activities and implementing policies through the application of strict, state-dictated policy guidelines. (Child 1994; Cooke 2003, cited in Cooke 2004; Hsu 1991, cited in Dowling and Zhu 1994; Warner 2001) Managers had little discretion in hiring, firing, and setting wages (Von Glinow and Teagarden 1988; White 1983, cited in Dowling and Zhu 1994). Enterprise personnel activities were limited to allocating jobs, filing personnel records, and administering welfare benefits (Cooke 2004). Secondly, in terms of personnel policy, employees beginning their employment were assured of lifelong job security. Wages were low for the most part, but were supplemented by numerous welfare provisions such as housing, pensions, health care, and schooling for children. (Cooke 2000; Warner 1996, cited in Cooke 2004) Job security and welfare provisions, which produced organisational dependency, were known, collectively, as the “iron rice bowl” (Child 1994, cited in Warner 2001; Francis 1996, cited in Warner 2001; Lu and Perry 1997, cited in Warner 2001; Takura 1992, cited in Bruton et al. 2000; Walder 1986, cited in Warner 2001; Warner 1995, cited in Bruton et al. 2000 and Warner 2001). Bruton and colleagues (2000) assert that “China’s long isolation and command economy virtually eliminated the HR function until recently”.
Recalling the earlier point that human resource practices are influenced by political, economic, legal, and socio-cultural factors, as China has changed its political and economic systems over the past quarter century, the country has also changed its approach to managing people. Cooke (2004) claims that “HRM in China is as new as its market economy with its traditional personnel administrative system undergoing a period of profound change”. Warner (1998, cited in Cooke 2004) writes that studies on HRM in China reveal that the country’s personnel practices are in transition. Since the end of the Cultural Revolution, personnel management has been, according to Warner (2000), “slowly transformed into HRM of a sort”, with lifelong job security being replaced by labour contracts, with organisational welfare systems increasingly being funded by employee contributions, and with egalitarian rewards being replaced by wages based on performance. Cooke (2004) confirms Warner’s claim, referring to the transformation as the “three systems” reforms. A study by Ding and Warner (1999, cited Cooke 2004) revealed that the role of China’s personnel managers has dramatically changed; they are now involved in decision-making on a variety of HRM issues including recruitment, selection, training, promotion, dismissal, rewards, and discipline. Allocating labour, formerly a centralised activity, is now the responsibility of enterprise forecasting and planning functions (Dowling and Zhu 1994). Importantly, Chinese managers seem to have embraced HRM, increasingly expressing interest in applying modern human resource and motivational approaches that emphasise individual, group, and enterprise productivity.
If, as Sims’ definition presented in the introduction to this essay states, HRM consists of all activities contributing to attracting, developing, motivating, and maintaining a workforce that produces organisational success, then the claim that Chinese people management constitutes HRM could have been considered to be a misleading statement in past years. The implication of Sims’ definition is that organisations, not external entities such as the state, perform the activities necessary to attract, develop, motivate, and maintain their workforces to achieve successful organisational outcomes. The results of a review of selected literature revealed that China’s approach to managing people during the three decades beginning in 1949 offered little if any latitude to organisations for conducting commonly-accepted HRM activities; the country limited individual organisations to performing routine administrative functions such as allocating jobs according to strict policy guidelines dictated centrally by the state, filing personnel records, and administering welfare benefits. Lifelong job security, enterprise welfare systems, and egalitarian reward systems further restricted the latitude of organisations in making human resource decisions. Chinese organisations, as Bruton and colleagues commented, really had no human resource functions.
As China has opened it doors to the rest of the world in recent years, its personnel management approaches have changed dramatically as suggested by Cooke and Warner. China has made significant progress in decentralising personnel management control to its enterprises, has begun to adopt modern HRM approaches, and is permitting organisations to reform human resource systems through means such as replacing lifelong job security with labour contracts, increasing contributory funding of enterprise welfare systems, and replacing egalitarian rewards with performance-based wages.
In conclusion, the claim that referring to China’s approach to people management as HRM is misleading is only true with respect to the country’s past; today, China is embracing modern HRM practices.
References
- Bruton, G. D., Ahlstrom, D., Chan, E. S. (2000) ‘Foreign firms in China: Facing human resources challenges in a transitional economy’, SAM Advanced Management Journal 65:4.
- Child, J. (1994) Management in China in the Age of Reform, Cambridge: Cambridge University Press. Cited in Cooke (2004) and Warner (2001).
- Cooke, F. L. (2000) ‘Manpower restructuring in the state-owned railway industry of China: The role of the state in human resource strategy’, International Journal of Human Resource Management 11:5. Cited in Cooke (2004).
- Cooke, F. L. (2003) ‘Equal opportunity? Women’s managerial careers in government organisations in China’, International Journal of Human Resource Management 11:5. Cited in Cooke (2004).
- Cooke, Fang Lee (2004) ‘HRM in China’, in Pawan S. Budhwar (2004) Managing Human Resources in Asia-Pacific, New York: Routledge.
- Ding, D., and Warner, M. (1999) ‘Re-inventing China’s industrial relations at enterprise-level: An empirical field-study in four major cities’, Industrial Relations Journal 30:3. Cited in Cooke (2004).
- Dowling, Peter J., and Zhu, Cherrie Jiuhua (1994) ‘The impact of the economic system upon human resource management practices in China’, Human Resource Planning 17:4.
- Francis, C. B. (1996) ‘Reproduction of danwei institutional features in the context of China’s market economy: The case of Haidian District high-technology sector’, China Quarterly 147. Cited in Warner (2001).
- Gilmore, Harold L., and Shonhiwa, Shepherd O. (1996) ‘Development of human resources: A portfolio strategy’, SAM Advanced Management Journal 61:1.
- Hare, P. (1983) ‘China’s system of industrial economic planning’, in S. Feuchtwang and A. Hussain, eds. (1983), The Chinese Economic Reforms, London: Croom Helm. Cited in Dowling and Zhu (1994).
- Hsu, R. C. (1991) Economic Theories in China, 1979-1988, Cambridge: Cambridge University Press. Cited in Dowling and Zhu (1994).
- Lu, X., and Perry E. J. (1997) Danwei: The Changing Chinese Workplace in Historical and Comparative Perspective, London: M.E. Sharpe. Cited in Warner (2001).
- Sims, Ronald (2002) Organizational Success through Effective Human Resources Management, Westport, Connecticut: Quorum Books.
- Takura, T. (1992) ‘Japan Information Service Industry Association expands international agenda’, Japan 21st 37:3. Cited in Bruton, et al. (2000).
- Von Glinow, M. A., and Teagarden, M. B. (1988) ‘The transfer of human resource management technology in Sino-U.S. cooperative ventures: Problems and solutions’, Human Resource Management 27:2. Cited in Dowling and Zhu (1994).
- Walder, A.G. (1986) Communist Neo-Traditionalism: Work and Authority in Chinese Industry, Berkeley, CA: University of California Press. Cited in Warner (2001).
- Warner, M. (1996) ‘Human resources in the People’s Republic of China: The ‘three systems reforms’, Human Resource Management Journal 6:2. Cited in Cooke (2004).
- Warner, M. (1998) ‘China’s HRM in transition: Towards relative convergence?’, in C. Rowley, ed. (1998) Human Resource Management in the Asia Pacific Region: Convergence Questioned, London: Frank Cass. Cited in Cooke (2004).
- Warner, Malcolm (1995) The Management of Human Resources in Chinese Industry, New York: St. Martin’s Press. Cited in Bruton et al. (2000) and Warner (2001).
- Warner, Malcolm (2000) Changing Workplace Relations in the Chinese Economy, Basingstoke, England: Macmillan.
- Warner, Malcolm (2001) ‘Human resource management in the People’s Republic of China’, in Pawan S. Budhwar and Yaw A. Debrah (2001) Human Resource Management in Developing Countries, London: Routledge.
- White, G. (1983) ‘Urban employment and labor allocation policies’, in S. Feuchtwang and A. Hussain, eds. (1983) The Chinese Economic Reforms, London: Croom Helm. Cited in Dowling and Zhu (1994).
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