Converging Human Resource Management practices: global trends

Assistant Professor Elaine Farndale

In analysing the results of three sets of surveys conducted over a ten year period (1999-2009) from nine countries,  a team of researchers from the International Human Resource Management (HRM) Project at Penn State University in the US are seeking to find out whether HR practices are following the trend of modern western societies as things getting smaller and more alike.

Although the academic globalisation literature says ‘yes’ to such a question, and the comparative capitalism literature contends differences will remain, Project Coordinator, Assistant Professor Elaine Farndale shared a third perspective as a guest of the Centre for Work, Organisation and Wellbeing on the 4 March, on the probability of HR practices converging.

Attendees at Assistant Professor Elaine Farndale's seminar, 4 March 2014.
Attendees at Assistant Professor Elaine Farndale’s seminar, 4 March 2014.

With co-authors Erik Poutsma, Paul Lightart and Chris Brewster, the study has developed four hypotheses founded from three academic theories. Firstly, from the macro-globalisation perspective, it considers whether the firms and multinational enterprises (MNEs) surveyed followed what other firms/ competitors were doing – be it in a domestic application or between nation-states, and whether HR practices were becoming more alike in any one particular organisational field. Secondly, the team asked after the prevalence of the MNE perspective, and specifically, whether  multinationals held any influence over the HR practices of domestic firms (who tend to be embedded in and therefore restricted more so, by the local social environments in which they operate). Thirdly, Elaine shared details of the systemic influence of markets on HR practices through the lens of two economic perspectives: Liberal Market Economies (LMEs), which include sample countries like Australia and the UK and of whom possess characteristics like performance-based pay structures and shareholder accountability, and the Coordinated Market Economies (CMEs) of Austria, Belgium, Denmark, Finland, Germany, the Netherlands and Sweden, who advocate the societal benefit of its activities and labour market regulation. What then did the team find?

Every four years, the Cranfield Network on International Human Resource Management (CRANET) surveys ask the HR managers of private sector organisations with less than 100 employees about the  likelihood of their use of 15 pre-determined HR practices. The overarching categories of the survey include Wage Setting Flexibility, Financial Participation, Contingent Employment and Communication Practices.

Revealing that only four of the 15 HR practices assessed by CRANET showed evidence of convergence, Elaine noted of their first hypothesis that despite a globalisation perspective, no trend of convergence emerged.  Likewise, the team proposed at this early stage of the analysis that the same can be said for any trend between the HR practices of MNEs and local firms. Thirdly, and although the data did show the convergence of HR practices between the 1999 and 2004 period, it was counteracted the same amount of divergences. This market economy perspective consequently did not reveal synergies between the HR practices of LMEs and CMEs.

By integrating the data through the lens of the three theories – globalisation, MNEs and market economies – however, the team did concluded that no trend of convergence existed in the use of HR practices between MNEs and domestic firms in CMEs, nor between MNEs and domestic firms operating in LMEs. Assistant Professor Farndale was also quick to clarify that ‘HR practices’ are different to the experience of the application of those practices in the workplace by employees – which would need to be the focus of an entirely different study!

In summing up, Elaine noted the importance of researchers articulating the academic perspective or theory through which they might convey the findings  of such convergence hypotheses. The team additionally raise new questions about the sufficiency of the small volume of practices considered by the CRANET data in determining convergence, and whether HRM in fact adapts to its operating environment at both a market economy and/ or national level.

Contact the Centre for a copy of Assistant Professor Farndale’s PowerPoint presentation from this seminar: [email protected].