The main institutional differences between Australia and China that could impact on Alibaba’s design of their pay systems, benefits and compensation for employees working inside China and those in Australia?
The institutional difference in terms of the current HR practices that are place in the various enterprises native to the Chinese market and the Australian market respectively is huge. With regard to any MNC that has a formidable globalized image across the world, the manner in which the HR practices are maintained across operations in different host country has been a topic of deliberation for long. In the given case, where the Alibaba Group Holding Limited finds an entry to Australia and other pacific markets, the changes that would be a part of the expansion have been a subject of discussion and review (Abubakar, Chauhan& Kura, 2015).
Post-1978, china even though remains a communist state but has adopted itself into a more inclusive, and export-led economy. The socialist elements to the economy have been amalgamated with certain elements of the globalization that ensures that China has a competitive edge. This has led to cheaper production costs to goods and commodities thereby making the Chinese MNEs competitive (Crowley-Henry &Heaslip, 2014). On the other hand, Australia has remained a majorly capitalistic economy throughout history. The idea of HR practices and strategies that are followed in the country and thus making a large portion of the MNEs dependent on a strict framework (Warner, 2013).
The sociocultural value system that both China and Australia bear forms a major part of the institutional differences between the countries with regard to the HR practices and strategies. As far as the cultural value system of China is concerned, most approaches adopt a long term orientation and view of things, including businesses and management (Dartey-Baah, 2013). This particular factor isn’t very strong in case of Australia and other western economies as they tend to take bigger risks as compared to China.
With regard to the home-country management practices, china follows a paternalistic management model although with the globalization, it has certainly mellowed to a more market driven stance. The privately owned enterprises such as Alibaba, the management factor has been more or less uniform as per the global standards. As with regard to the MNEs in Australia, the management practiced are way smoother and distributed as compared to their Chinese counterparts (Dickmann, Brewster & Sparrow, 2016).
The demographic factor plays a pivotal role as the demographics of the home country and the host country for Alibaba are very different for each other. China, with its huge population, the labor costs are definitely less as compared to Australia (García-Lillo, Úbeda-García& Marco-Lajara, 2016). This could be one of the reasons behind the institutional difference in the approach to the HR practices that are followed in China and Australia respectively.
Analysis of the differences in pay arrangement, benefit and compensation of workers of Alibaba both in China (home-country) and in Australia (host-country)
Since, Alibaba group holding limited is a fairly new entrant to the Australian market, it is still a little early to understand the exact approach that the company would be adopting in relation to the various elements on the HR practices including aspects such as employee management, compensation and benefits etc. As per the existing norms in the various Asian MNCs operating in the ANZ region, the pay and performance management has seen a great degree of uniformity among themselves (González-Loureiro, Dabic&Puig, 2014). Most of the Asian owned MNCs have compensation policies that pay its employees in the first and second quartile whereas majority of the Australian owned MNCs tend to compensate the employees at the median for the respective industry (Theregister.co.uk, 2017).
To put things into perspective, the various institutional differences between Australia and China would come in stark contrast with each other if an attempt is made to understand Alibaba’s overall business strategies and it making its presence felt in the ANZ region (Weber, Festing& Dowling, 2013). As per various reliable sources, Alibaba Group would be taking a keen interest in establishing itself as a conduit for providing digitized platforms such as cloud etc. for small businesses local to Australia, which in turn would find themselves on a more globalizedfront (McDonnell et al., 2011). This approach on the part of the company clear suggests that the workforce that the company would be dealing with in Australia would be significantly lower in size as compared to the workforce it has for its operations in the home country (Mazur, 2015).
The various institutional differences can be enumerated by basing them on five spheres of institutional factors that include industrial relations, vocational training and education, corporate governance, inter-firm relation and employee relation and co-ordination (Hall &Soskice, ):
This sphere involves the bargain and negotiation over the pay and wages of the labor force. The wage, working conditions and benefit to the workers is dependent on the bargaining skills of the labor force as well as the existing norms in the industry.
Given this very fact, it can be said that the arrangements of the pay and benefits structure for the employees in Alibaba’s operation in Australia would be somewhat better than that in China
Often is the case that the business firm faces significant difficulties when it comes to acquiring the required talent pool in a given region of operation. Hence when it comes to selecting the workforce with the proper skill set and competency, Australia provides a better option as compared to China due to the diverse nature of the skills and competitiveness. Thus, the chances are, Alibaba in Australia would be willing to shell out more to invest in the available talent pool than in case of China.
This sphere allows the business firm to gain access to the various sources of funds that it can find in given region. In case of China and Australia, both the countries show very different trends and features when it comes to the availability of funds as well as the means by which they can be secured.
Therefore, it is easier to assume that the pay benefits and compensation for the work force in Australia would be better than that in china as it provides better options for funding and investing the business.
This fourth sphere can be held responsible for several gaps in relation to the arrangement of the pay and wage benefits between the work force in China and Australia. Inter-firm relation involves the business having a functional relationship with other business entities that could be suppliers, clients, ancillaries etc. to Alibaba.
Due to a stronger inter-firm relation and close association with other entities, Alibaba in Australia would need to be leaning towards offering a more lucrative wage arrangement to the work force as compared to in China.
When it comes to the operations of the various international business enterprises, the standards for the degree of coordination varies from region to region owning to a lot of factors. The skill set of the workers in general and the nature of the economy’s production setting can also be attributed to the same. The general trend being, in countries like Australia where the degree of coordination and relationship among the working individuals is higher, the wages and pay benefits are better. As a result, Alibaba in Australia is speculated to be offering more for these skill sets in China so as to level the playing field.
Moreover the double digit growth that the company has shown in the last financial year of 2015-16, it is likely that the company could be more open to going a notch above its usual pay benefits and compensation criteria (Thomas &Lazarova, 2013). This way, Alibaba would be able to garner the best talent pool available in the host country and due to the limited nature of requisite workforce as well as the integrated operation approach adopted for the ANZ region; it will be in the interest of the company to offer better compensation and other benefits to the workers in Australia (Pudelko, Reiche& Carr, 2015).
References
Abubakar, R.A., Chauhan, A. and Kura, K.M., 2015. Relationship Between Human Resource Management Practices And Employee’s Turnover Intention Among Registered Nurses In Nigerian Public Hospitals: The Mediating Role Of Organisational Trust. SainsHumanika, 5(2).
Bartram, T. and Dowling, P.J., 2013. An international perspective on human resource management and performance in the health care sector: toward a research agenda.
Björkman, I. and Welch, D., 2015. Framing the field of international human resource management research. The International Journal of Human Resource Management, 26(2), pp.136-150.
Crowley-Henry, M. and Heaslip, G., 2014.Short-term international assignments.Military perspectives and implications for international human resource management. European Management Journal, 32(5), pp.752-760.
Dartey-Baah, K., 2013. The Cultural Approach to the Management of the International Human Resource: An Analysis of Hofstede’s Cultural Dimensions. International Journal of Business Administration, 4(2), p.39.
Dickmann, M., Brewster, C. and Sparrow, P. eds., 2016. International Human Resource Management: Contemporary HR Issues in Europe. Routledge.
García-Lillo, F., Úbeda-García, M. and Marco-Lajara, B., 2016. The intellectual structure of human resource management research: A bibliometric study of the International Journal of Human Resource Management, 2000–2012. The International Journal of Human Resource Management, pp.1-30.
González-Loureiro, M., Dabic, M. and Puig, F., 2014. Global organizations and supply chain: new research avenues in the international human resource management. International Journal of Physical Distribution & Logistics Management, 44(8/9), pp.689-712.
Mazur, B., 2015. Sustainable human resource management.The attempt of holistic approach. Ekonomia i Zarz?dzanie, 7(2).
McDonnell, A., Russell, H., Sablok, G., Burgess, J., Stanton, P., Bartram, T., Boyle, B. and Manning, K., 2011.A profile of human resource management in multinational enterprises operating in Australia.University of South Australia, University of Newcastle, Victoria University, La Trobe University and Curtin University
Pudelko, M., Reiche, B.S. and Carr, C., 2015.Recent developments and emerging challenges in international human resource management.
Thomas, D.C. and Lazarova, M.B., 2013. Essentials of international human resource management: Managing people globally. SAGE Publications.
Theregister.co.uk. 2017.Alibaba’s lights are on in Australia, but hardly anyone is home. [online] Available at: https://www.theregister.co.uk/2016/11/27/alibabas_lights_are_on_in_australia_but_hardly_anyone_is_home/ [Accessed 18 Apr. 2017].
Warner, M., 2013.Comparing human resource management in China and Vietnam: An overview.Human Systems Management, 32(4), pp.217-229.
Weber, W., Festing, M. and Dowling, P.J. eds., 2013. Management and International Review: Cross-Cultural and Comparative International Human Resource Management. Springer Science & Business Media.
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