Human Resource Management And Culture

Published Date: 02 Nov 2017

Chapter 1

Introduction

The global anarchy has witnessed the growing importance of Human Resource Management (HRM) in both business and public life. The stormy business climate brought in the wake of liberalization, globalization, changing technologies, development in knowledge and advances in information technology is offering managers a complex and challenging situation (Singh, 2009). So researchers are looking into Human Resource Management (HRM) practices on a comparative basis comes across a major question. This question has to do with the extent at which societal culture influences the way firms manage their personnel and the way HRM practices are developed and implemented within firms across various countries in the world. Globalization has shifted the attention of both researchers and practitioners to the way that organizational practices, and especially HRM, are differentiated across various countries as per their cultural context. In the literature one can find several comparative HRM studies concluding, in their majority, that national culture is a conclusive factor in shaping HRM (Heijltjes et al., 1996; Sparrow et al., 1994). In studying about Multi National Companies (MNCs) in 12 countries, Sparrow et al. (1994) found differences in the HRM practices that are perceived to be a source of competitive advantage across the countries.

Of all the factors affecting HRM perhaps none is more effective than the national culture and the most popular model for comparison at the level of national culture is that of Hofstede (1980, 1991), which has been the base of numerous research studies in the area of management in general. Hofstede (1980, 1991) argued that American management theories represent their own cultural environment. So, it can be said d that American management cannot be detached from American culture. In the meantime, Laurent (1986:92) viewed that every culture has developed through its own history, some specific and unique insight into the managing of organization and their human resources. Every culture has also developed specific and unique blind spots in the art of managing and organizing (Singh, 2009). Aycan et al (2000) described that due to the increasing demands of the globalized and liberalized business environment, both researchers and practitioners have started paying more consideration to the study of culture as an explanatory variable. The researchers have also come to realize that the credulous adaptation of HRM practices and techniques developed in the context of Western cultural values may not be effective in other socio-cultural environments. By using Hofstede’s framework of national culture, the objective of research is to examine the impact of national culture on HRM practice by applying the Hofstede’s (1980) cultural dimensions.

1.1 Background of the study:

In the new global economy, HRM has become a vital issue for the effectiveness of organizations. This shift to globalization emphasized the necessity for businesses to fully utilize their human resources engaging suitable practices and strategies (Schuler and Jackson, 2005). The presence of supportive cultural factors is essential for the efficiency and success of the HRM result. It seems obvious that the ways western organizations cope with HRM practices are different from the ways Middle Eastern organizations with their different cultural and institutional situations cope with these issues (Westerduin, 2010). Because Arabic countries have different values and attitudes than the developed countries, which may determine and shape specific managerial approaches in human resource as cited by cultural research perspective. As Mendonca and Kanungo (1996) determined that one of most important cultural dimensions, which is different in western and eastern cultures and is exclusively important in shaping their HRM strategies, is the assumption about human resource capability. This restlessness to adopt western HRM tools could results lack of suitable practice in the Arabian context (Binjabi, 2011).

Saudi Arabia is the most traditional country in the Arab world; it is the largest member of the six Gulf Co-operation Council states and has the largest known oil reserves in the world estimated at around 25% of the proved reserves (Albugamy, 2010). So it is a major player in the stability of the regional and global economy. Saudi Arabia during the era of King Abdullah since 2005 has also introduced numerous laws and policies such as privatization and foreign investment laws to stimulate competition. To achieve these development goals, Saudi Arabia has a major investment in HRM in order to raise its average skill level (Mellahi, 2007). Developing the HRM system in a very conservative tribal society, there would be as a natural result numerous Saudi cultural impacts on the HRM system (Albugamy, 2010). The present research resides on HRM practices in the context of Saudi Arabia.

1.2 Rationale behind choice of setting:

Saudi Arabia is chosen as the setting for this study since it is a typical example of a developing economy in Arab world with the most conventional and historic cultural environment. According to U.S.-Saudi Arabian Business Council (2008-09), the construction sector in Saudi Arabia is the largest and fastest growing market in the Gulf region. This sector is the most developed, organized, and diverse also in terms of Human Resource Management (HRM) practices in the country. Ongoing construction projects in the Gulf are valued at $1.9 trillion, and one-quarter of the developments are located in Saudi Arabia. The sector has both foreign and local organizations that bring out the different HRM practices employed by various organizations.

1.3 Identification of the Problem:

It is attempted through this research to create a better description of the effect of culture on HRM practices in Saudi Arabia as we know culturally Arab countries are completely different from other countries. At this moment there is some literature available on the research subject, but not much research on this subject conducted until this moment in the context of Arab countries which present an overview of the current status and trends of HRM in Middle East. It could emerge that the knowledge of HRM in Arab culture that these organizations use at this moment is outdated, or that these organization should be aware of the direction in which the differences between HRM in Western countries and HRM in Middle Eastern countries are evolving. Also, there are problems in the image that people in the Western world have of the Arab world. Negative images in the media of the Middle East prevent these people of obtaining a correct view of all aspects of the Arab culture and values. The current research is an attempt to contribute in order to find out the truth. Also by the help of this research compatibility of HRM practices chosen and implemented by organizations would be checked with the respect of the Arab world (in particular, in the Saudi context with a focus on the construction sector).

1.4 Aim and Objectives:

The aim of this study is to examine the effect of Saudi Arabian national culture on the Human Resource Management (HRM) practices within the organizations and how the cultural elements play a key role in that issue. To this end, HRM practices are viewed in terms of Reduction of status distinctions, Employment security, Performance appraisal and Selective hiring whereas National culture is viewed in terms of Power distance, Uncertainty avoidance, Individualism/Collectivism and Feminity/ Masculinity. On the basis of the stated research aim, the following objectives are formulated:

O1:- To investigate the relationship between the national culture and HRM practices.

O2: To identify the effect of the cultural attributes on HRM practices.

1.5 Significance of the study:

Current study will make a considerable contribution to the academic research in the field of organizational HRM. To be more specific, it will assess the role of cultural determinants in the Saudi Arabian context. It will lead to the better explanation of HRM lessons in an international environment. On practical basis, the findings that will be drawn from the current study could serve as a guide in transferring HRM policies within the construction sector of Middle East. It also offers insights into what type of HRM practices are more likely to positively influence the organizational performance. It will also add value by suggesting the need for modified HRM practices to fit the Saudi Arabian as well as the international context and also learning lessons.

Chapter 2

Literature Review

2.1 Human Resource Management (HRM) and Culture:

International business environments are rapidly varying and "the cause of yesterday’s success may be the cause of tomorrow’s failure". Every region has a specific culture which is due to similarities in vales, beliefs, religion and language. This could result in a cultural challenge for international management caused due to changing cultural features of different countries Managing people from diverse cultures requires knowledge of their different value systems, conducts and customs the in which they perceive goals and strive to achieve them. These differences could lead to specific problems in local or international companies in which strategic policies are drafted by the management of the parent company without considering the specific local or regional culture of the people.

Researchers and practitioners argued that human resource management practices as a source of sustainable competitive advantages (Ramlall et al., 2012). From the perspective of institutional theory (Scott et al., 2003; Westney, 2005) it is suggested that HR practices are affected by differences in national culture and that HR practices will be largely dependent on managers’ abilities to understand and balance different cultural values and practices (Wang et al., 2008). According to Alcazar et al. (2008), the theories on HRM have focused on universalistic perspectives for number of years. Researchers have put great efforts in finding a single human resources theory that is applicable worldwide but it is found that universalistic theory was non‐existent (Westerduin, 2010).

So research (Sonja and Phillips, 2004) assumes that managers in today’s multicultural global business community often encounter cultural differences, which can hinder with management practices in organizations. Leat and El-kot, (2007) have emphasized the effect of national culture, a concept that includes traditions, values, beliefs, attitudes and behavior which influence HRM practices. Laurent (1986) proposed that HRM methods in any country are a reflection of the

national culture of that country (Albugamy, 2010). Triandis (1972) and Schein (1992) defined culture in terms of "shared ways of thinking, feeling, and reacting; shared socially constructed environments and commonly experienced events including the history, language, and religion of their members" (Pellegrini & Scandura, 2006). National culture is also defined as the ideas, set of beliefs and norms followed by the people of a certain country; the country’s history, religion and traditions make up for the national culture (Majeed et al., 2010).

In comparing cultures of different countries, cross-cultural researchers have focused their attentions on an examination of a set of cultural value dimensions developed by Hofstede. These dimensions are based on a large sample of employees from 40 countries from the large multinational IBM, whom he studied from 1960’s, 70’s and 80’s. According to Gannon & Newman, (2002), after investigation; he is regarded as the authority in culture differences and how culture differences influence management strategies. He said: "in global economic integration of the world, the strategies of all companies in the world are focused on how to meet the largest market to most customers by products and services; while the study of different cultures and values, is the key to success of such strategies" (Jing, 2010). Leading value systems of different countries can be ordered along Hofstede’s set of cultural dimensions (Hofstede, 1980; Hofstede & Bond, 1988). People’s Dominant value systems have been crystallized in the institutions these people have built together: their family structures, religious organizations, educational structures, work organizations, law and regulations, literature, and buildings. All these reflect common beliefs that derive from the mutual culture (Hofstede, 1983).

2.2 Variables of the study

For the purpose of this study the study variables have been grouped into two categories, namely cultural variables that include sub variables as defined by Hofstede, 2001, and organization variables that include HR practices as defined by Gong et al., 2009.

2.3 A) Cultural variables:

The first category of variables includes the societal culture as defined by Hofstede (2001).

2.3.1 Power Distance:

Power distance is the degree to which individuals agree that power should be dispersed unequally in the society (Hofstede, 2001). Hofstede’s Power Distance Index tells how much one country’s less powerful people accept and respect the unequal power distributed. The inequality of the society is followed by people’s earlier different life experiences such as value and norms (Jing, 2010). High power distance cultures tend to view inequality as normal or natural. In such cultures, lower-status people are addressed by their first names, while for higher-status people different prefixes are added before their first names (Pellegrini and Scandura, 2006). In low power distance cultures lower-status people are more likely to believe that they should have voice in decision processes (Alves et al., 2006), and will be less motivated if this is withdrawn. Power distance has significant implication for management styles and practices (Emmerik et al., 2008). In low power distance cultures there is a preference for leadership styles that promote flexibility, innovation, job mobility, and general skills, rather than the specialized skills that are preferred in high power distance cultures (Dickson et al., 2003).

Power distance plays a role in employees’ willingness to accept supervisory direction, and on their emphasis on gaining support from those in positions of authority. People in high power distance cultures accept more guidance from superiors, and this extra attention makes high-status employees more enthusiastic about work. In lower power distance cultures wage differentials between men and women are smaller (Hofstede, 2001).

2.3.2 Uncertainty Avoidance:

Hofstede (2001) defines uncertainty avoidance denotes to the extent to which individuals feel threatened by and try to avoid vague and uncertain situations. Uncertainty about the future is a basic fact of human life, extreme uncertainty creates unbearable anxiety, and human society has created ways to avoid the uncertainty, for example by the mean of technology, which helps us defend ourselves against uncertainty caused by nature and laws, which help us against the actions of others, religions, which help us accept the uncertainties we cannot protect ourselves against.

Different societies have different ways to adapt to uncertainty, how tolerant for the uncertain anxiety a single society has is talking about the Uncertainty Avoidance Index. The high

Uncertainty Avoidance society has more worries about the future and anything uncertain, and therefore more ways to defend against those anxieties; and the low Uncertainty Avoidance society has fewer fears about the uncertainties, and therefore such society doesn't care so much about the rules (Jing, 2010). Dikson claims that in societies high on UA, career stability, formal rules and the development of expertise tend to be valued, whereas in low UA cultures, more flexibility in roles and jobs, an emphasis on general rather than specialized skills and more job mobility is more typical. In the work environment, uncertainty avoidance may lead individuals to try to avoid ambiguous situations and look for precise alternatives. Within such a cultural context, there will be many established formal rules or informal norms controlling the rights and duties of employees (Chang et al., 2007).

2.3.3 Individualism/Collectivism:

Hofstede (2001) defines individualism against its opposite, collectivism, as the degree to which the society encourages and rewards collective action (Pellegrini & Scandura, 2006). The culture inclined to be individualistic is more focused on one’s own desires and values, and serves their own interests by relying on individual exertion; the relations between people are regarded less important than oneself. On the other hand, compared with individualism, the culture inclined to be collective is more focused on a combination of strong social organizations, which is divided into "inside the group" and "outside the group". People cared for by members inside the group, and pay back by their loyalty and they can sacrifice their own likings for the group (Jing, 2010). In collectivist societies, supervisors rely on loyalty of staff, reliability and harmonized group relationship with others while people in individualism culture people enjoy personal particulars and successes in order to define themselves (Triandis, 1994).

Idris, (2007) mentioned in his research that because of the country’s collective nature, relationships usually trump business connections. The concept that an employee’s primary responsibility is their family and friends impacts business. Employment practices such as recruitment and promotions are sometimes influenced by the desire to provide to family and friends versus struggling for the best-qualified employee in all circumstances (Cassell & Blake, 2011). In more individualistic societies HR practices tend to differentiate between employees based on their individual performance. At the same time, employees from collectivistic countries prefer reward systems that are non-competitive in nature (Chiang and Birtch, 2005). Employees from more individualistic cultures tend to be more driven by improving themselves and their

own positions in life (Probst et al., 1999) whereas employees from more collectivistic countries tend to be more motivated by the success of the group as a whole. More individualistic cultures will tend to emphasize HR practices that stress individual rewards management more than in collectivistic cultures.

2.3.4 Masculinity/Femininity:

Hofstede (2001) refers to masculinity/femininity, as the distribution of roles between the genders. It is also referred to as assertiveness, which emphases on competition, success, aggressive social relationships, and limited emotional involvement with others (Pellegrini & Scandura, 2006). Hofstede (1998) stated that in high masculine societies, men are supposed to be firm, and materialistic; woman are supposed to be more modest, affectionate, and concerned with the quality of life. A man has the obligation to earn money for his family; he should work hard to be successful in society, the harder he works, the more respect he gets from his family and society. Therefore, competition in a masculinity society is very fierce and people pay attention to the work performance very much, they believe life is for work.

In high femininity society, both man and woman are supposed to be concerned with the quality of life. A woman has the obligation to take care of the house work so that her husband can go out and earn money without any worries (Jing, 2010). Research showed that the distribution of gender roles has major implications for HR practices and for career strategies as well as career opportunities of women. Hofstede (2001) described that masculine/feminine cultures create different leader hero types. The heroic manager in masculine cultures is decisive and aggressive. In feminine cultures, the ‘‘hero’’ is less visible, seeks consensus, and intuitive rather than tough and decisive. At work, in more feminine societies more weight is attached to subjective, intuition-oriented conditions such as care and relationships (Alves et al., 2006). At the same time, in more masculine societies people ascribe greater value on monetary rewards, while in turn more feminine societies place greater importance on non-financial rewards (Chiang and Birtch, 2005).

2.4 Saudi Arabian culture in Hofstede cultural perspective:

Cultural Studies in Saudi Arabia have specified that it is fairly homogenous, like most Middle Eastern nations (Idrees, 2007). Analyzing Saudi cultural orientations based upon a typology developed by Geert Hofstede show that on the above mentioned cultural dimensions Saudi Arabia presents a unique culture.

Saudi Arabia’s power distance ranking of 80 is revealing of a high level of inequality of power and wealth within the society. Idris (2007) indicated the high power distance in Saudi Arabia is evident in the Saudis strong preference for managerial positions as they belief that labor jobs are disgraceful and it is considered by many to be a cause of embarrassment. Bhuian (1998) described that Saudi managers make decisions autocratically and paternalistically (Cassell & Blake, 2011).

Saudi Arabia’s uncertainty avoidance ranking of 68 shows low level of tolerance for uncertainty in society. It suggests that new projects will be carefully analyzed to assure that whatever risk they represent is thoroughly understood. There is a conception that Saudis prefer government interference in business practices. Bhuian, 1998 mentioned that within organizations, managers are not tolerant of deviation of the inflexible company rules (Cassell & Blake, 2011).

Saudi Arabia’s individualism ranking of 38 infers into a Collectivist society and is revealed in a close long-term commitment to the member "group", that being a family or extended relationships. Alanazi and Rodrigues (2003) described the Saudi culture as collectivistic with strict devotion to the teachings of Islam, which governs the social behavior and provides a strong cultural fabric that covers the whole nation. Basically, business is affected by the collective thinking of Saudis, which dictates that relationships trump business communications (Idris, 2007).

Saudi Arabia scores 52 on the dimension of masculinity/femininity represents more feministic culture. So, Saudi people maintain good mutual relationships. Saudi Arabia’s ranking also impacts hiring and firing practices. Research revealed that terminations for poor performance seldom happen because desire for relationships results in long life employment (Idris, 2007). Historically, the society has been characterized as valuing behavior displaying kindness and selflessness; deference to those above in the hierarchy of the family; freedom from reliance on others and mastery over one's sentiments (Cassell & Blake, 2011).

2.5 B) Organizational Variables:

The second category of variables includes the HRM practices that reflect cultural dimensions in which they were developed. HR practices that are likely to be sensitive to cultural influences are followings (Gong et al., 2009);

2.5.1 Employment security:

Employment security can be characterized as maintenance-oriented HRM because they defend employees’ well-being. In literature, it refers to protection against unfair dismissals. In an ILO (2001), Dasgupta by giving a reference to a previous ILO report from 1995 defines it as "employment security means that workers have protection against arbitrary and short notice dismissal from employment, as well as having long-term contracts of employment" (Dasgupta, 2001). In an era of downsizing and rightsizing, employment security can confer yet another advantage, in that it boosts people to take a longer-term perspective on their jobs and organizational performance. Employment security policies will also lead to more cautious hiring, because the firm knows it cannot just let people go quickly if it has overestimated its labor demand. Slenderer staffing can actually make the work force more productive, with less people doing extra work. Additionally, it builds trust between supervisors and subordinates, which leads to better spirit in the company (Pfeffer, 1998).

So, employment security creates a climate of confidence among employees which promotes their commitment on the company’s workforce. It requires a certain degree of reciprocity: firstly, a company must signal a clear message that jobs are secure; then, employees trusting that this is true themselves to expend extra effort for the company; finally, a company that have learnt that employment security contributes to its performance, invests again in job security as Kraimera et al. (2005) used psychological contract and social cognition theories to explore the role of full-time employees' perceived job security in explaining their reactions to the use of temporary workers by using a sample of 149 full-time employees who worked with temporaries. Results

demonstrated that employees' perceived employment security negatively related to their perceptions that temporaries pose a threat to their jobs (Vlachos, 2009).

2.5.2 Reduction of Status Distinctions:

The basic principle of high-performance management systems is that organizations perform at a higher level when they are able to tap the ideas, abilities, skills, and struggle of all of their people. One way in which they do this is by organizing people in work teams. But neither individuals nor teams will feel contented or stimulated to contribute their minds as well as their physical energy to the organization if it has sent signals that they are not both valuable and esteemed. In order to make all organizational members feel important and devoted to improve organization, high-commitment management systems should attempt to reduce the status distinctions. This is accomplished in two ways: symbolically, through the use of language and labels, physical space, and dress, and practically, in the reduction of the organization's degree of wage disparity.

Status differences are reduced and a sense of common fate established by limiting the difference in compensation between senior management and other employees. The reduction of status differences inspires open communication, essential in an organization in which learning and adaptation are encouraged. Status differences are reduced and a sense of common fate developed by limiting the difference in compensation between higher management and employees (Pfeffer, 1998). Conclusively reduced status distinctions include dress, language, office arrangements, wage differences and behaviors (Ahmad & Schroeder, 2003). It is correct that it encourages open communication, necessary for learning and adaptation but Reducing status differences by reducing wage inequality may limit individual’s performance (Pfeffer, 1998).

2.5.3 Selective hiring:

Selective hiring is aimed at developing an organizations talent pool. Organizations serious about gaining profits through people will expand the effort needed to ensure that they recruit the right people in the first place. This requires numerous things. First, the organization needs to have a large applicant pool from which to select. For example, in 1993, Southwest Airlines received about 98,000 job applications, interviewed 16,000 people, and hired 2,700. In 1994, applications increased to more than 125,000 for 4,000 hires. Some organizations see processing this many job

inquiries as an unnecessary expense. Southwest sees it as the first step toward success (Pfeffer, 1998). Second, the organization needs to be clear about what are the most demanding skills needed in its applicant pool. At Southwest Airlines, applicants for flight attendant positions are evaluated on the basis of initiative, judgment and adaptability (Pfeffer, 1998). Third, abilities hired need to be carefully considered and trustworthy with the particular job requirements. Hiring the "best and the brightest" may not make sense in all circumstances (Pfeffer, 1998).

Huselid (1995) examined HRM practices of high performance companies and found that attracting and selecting the right employees increase the employee productivity and contribute in reducing turnover. Cho et al. (2005) examined pre-employment tests as a key component of selective hiring and found that when employed, these tests can select employees that stay with a company longer. Passing pre-employment tests may give an applicant a stronger sense of belonging to the company if employed. Cardon and Stevens (2004) pointed out that for small companies recruiting is problematic. This can be due to several reasons such as limited financial resources and jobs with unclear boundaries responsibilities, which decreases their potential to hire qualified candidates. Therefore Selective hiring is positively related to firm growth (Vlachos, 2009).

2.5.4 Performance appraisal:

Performance appraisal motivates employees to produce (Gong et al., 2009). Alo (1999) defines performance appraisal as a process involving deliberate stock taking of the success, which an individual or organization has achieved in performing allotted tasks or meeting set goals over a period of time. It therefore shows that performance appraisal practices should be deliberate and not by chance. Atiomo (2000) agrees with Fajana (1997) that performance appraisal is a system which provides organizations with a means of identifying not only what people’s performance levels are but which areas those levels need to be improved if maximum use is to be made of human resource (Obisi, 2011).

Banjoko (1982) clarifies that in many organizations, performance appraisal is conducted solely in terms of its evaluative feature so overlooking its use for facilitating development and improvement in employees through training, counseling, and response of appraisal information. It would be irrational for organizations to stress more on training without considering

performance appraisal as Rao (1990) explained it is the outcome of performance appraisal that would reveal training needs. There should be a change-over on the part of organizations to start paying special consideration to their performance appraisal practices. This is revealing that one of the major issues in performance appraisal is communication. If one’s performance is not communicated to him or her, there would be no way the person’s performance would develop in the succeeding future, which would definitely conquest the purpose of performance appraisal (Obisi, 2011). According to Stephan and Dorfman (1989) outcomes of effective performance appraisal are improvement in the accuracy of employee performance (Ishaq et al., 2009).

After reviewing the existing literature, the researcher found that HRM practices get affected by external and internal factors and directly or indirectly affect othk2er variables such as employee’s attitude, employee employer relations, employee productivity etc. and ultimately contribute to overall corporate performance. Among them culture has crucial importance in organizations preferences in developing appropriate structure for HR practices affectivity. Hrm practices could be affected not only in a positive way but also in negative manner. On the basis of the literature reviewed a research gap is found that there are limited studies in that specific area in the Middle East. It is well known that the Western personnel context and also culture are totally different from that of the Arab countries in general and Saudi Arabia in particular. A reference to what was mentioned by Weir (2003) in this context would highlight the importance of such a research; he argued that HRM was born in U.S.A, developed in Europe and implemented in Japan; However, he added a fourth paradigm: it is ignored, unresearched, undeveloped in the Arab Middle East countries (Albugamy, 2010). So this research is a contribution to fill this knowledge gap by examining the effect of the Saudi culture on selected HRM practices.

2.6 HR Management Practices in Saudi Arabia:

HR professionals in Saudi Arabia view HR as a core strategy for improving organizational performance (Ramlall et al., 2012). Pillai et al., (1999) clarified management practices in the Islamic world (of which Saudi Arabia is a major part) as influenced by tribal traditions where the manager is likely to act as a father figure. This means favoring the continuity of the family concept over enhanced organizational effectiveness and competitiveness. Their study showed

that this reliance on the father-figure relationship means that leaders and managers in the Middle East face difficulties convincing the employees to be part of the solution to management problems. According to Yavas (1997), a prevailing organizational structure in which the manager makes all the decisions repels positive change. According to Bhuian et al., (2001) Saudis need to be guided and told what to do and actually prefer government involvements in business practices (Idris, 2007). Beer et al., (1985) stated, Since, Saudi Arabia's collective culture values group work, the pay-for-performance system that identifies individuals is destabilized when management tries to moderate it by writing comforting statements on the appraisal forms to compensate for low salary increases for poor performers. The prevailing culture is in favor of life employment, so managers are restrained from purging poor performers and substituting them with high performers. Unless the difference in compensation of the high performers and low performers is great, companies risk discouraging the high performers whereas motivating the low performers to remain unproductive (Idris, 2007).

Chapter 3

Theoretical framework and hypothesis development

3.1 Norms regarding HR practices

Culture is thought to have a strong effect on processes within organizations that contribute to choices among different HRM practices (Aumann and Ostroff, 2006). That is, organizations usually have strong norms about how employees should be managed that will be shaped by cultural influences and essentially culture is the process of transmitting these values and norms (Aumann and Ostroff, 2006).

The norms likely to be linked with selective HR practices used in this research are;

NORMS REGARDING HR PRACTICES

HR PRACTICES

Reduction of status distinctions Empowerment (refers to H2)

Employment security Stability and Security (refers to H3)

Performance appraisal Rewarding and Individual Performance (refers to H4)

Selective hiring Gender equality (refers to H5)

Source: (Gong et al., 2009)

3.2 Conceptual Model:

The following conceptual model of this study is Adapted from Aumann and Ostroff, (2006) and Gong et al., (2009).

Power distance

HR practices

Reduction of status distinctions

Employment security

Performance appraisal

Selective hiring

Uncertainty

Avoidance

Individualism/

Collectivism

Feminity/

Masculinity

On the base of conceptual model and after review the related literature following hypothesis are developed:

H1: There is a significant relationship between national culture and HRM practices. (Objective 1)

H2: Low power distance cultures will have a significant impact on HR practices that increase empowerment more than in high power distance cultures. (Objective 2)

H3: High uncertainty avoidance cultures will have a significant impact on HR practices that promote stability and security, more than HR practices in low uncertainty avoidance cultures. (Objective 2)

H4: More individualistic cultures will tend to emphasize HR practices that stress individual rewards management more than in collectivistic cultures. (Objective 2)

H5: More feminine cultures will tend to emphasize HR practices that stress gender equality more than in masculine. (Objective 2)

Chapter4

Methodology

This section highlights the research procedures which will be followed for conducting the study.

4.1 Research method:

In order to examine the model, research questions, and hypotheses proposed in this study, a quantitative survey will be conducted. A survey is a suitable tool for measuring attitudes or characteristics of a large population (Babbie, 2001). Survey research also has been used frequently in cross cultural research. As this study will seek to measure the impact of culture on HRM practices therefore, a survey research method will be appropriate for examining the variables in the proposed study in a most economical way. It will be an online questionnaire survey.

4.2 Research strategy:

A quantitative research with a deductive strategy will be used to examine the employee’s cultural values and its influence on HRM practices as the quantitative research seeks to explain what percentage of people do one thing or another while the qualitative researcher pays much greater attention to individual cases and the human understandings that feature in those cases. The deductive strategy helps in formulating a possible explanation, a theoretical argument for the existence of the behavior or the social phenomenon under consideration. Quantitative is also more efficient, and able to test hypotheses while qualitative methods produce information only on the particular cases studied, and any more general conclusions are only hypotheses (Hunter & Leahey, 2008).

4.3 Population and Sample:

Population of the study will be all employees from Saudi Arabian construction sector. A sample size comprising of 2 famous leading construction companies currently functional at Saudi Arabia will be selected which are:

Saudi Aramco (www.saudiaramco.com)

Sabic (www.sabic.com)

The companies have been selected by using convenience sampling technique. Forty potential respondents from each company will be selected again on the basis of convenience sample in order to have a representative sample.

4.4 Research Instrument:

The scales and items used in the instrument will be selected after a review of the literature and grounded in the theoretical base of the study. Relevant information will be collected from the respondents with the help of a structured and close ended questionnaire as according to Opie (2005) a questionnaire is the most widely used procedure for obtaining information. It is relatively economical, respondents in distant locations can be reached, the questions are standardized, anonymity can be assured, and questions can be written for a specific purpose (Mthembu, 2009). Cronbach’s alpha reliability coefficient will be used for finding the reliability of questionnaire.

4.5 Data collection procedure:

As this study mainly focuses on quantitative research, data collection through a survey method by using a close ended questionnaire is entirely appropriate. For this purpose, two sources of data will be used, namely, the primary sources and secondary sources. For secondary source, available literature related to the study and organizational HRM strategies will be extensively and systematically reviewed. The primary data will be collected from the employees of the two Saudi Arabian construction companies which are mentioned in sample. The online survey will be launched among both the senior and junior staff and an interval of three to four weeks will be allowed for them to personally complete the instrument online. Personal contacts will be used in the companies to approach the right people to get as much as useful data for research validity. 40 questionnaires were sent to each company but received 30 questionnaires from Sabic and 35 from Saudi Aramco. It was a very good response rate. People were also followed up with phone calls etc.

Chapter 5

Data analysis and result discussions

5.1 Reliability Analysis

Table 1. reliability Statistics

Cronbach's Alpha

N of Items

.763

30

Before applying statistical tools, testing of reliability for all items used in questionnaire is very much important, therefore in the present study, Cronbach Alpha reliability test is conducted for all measures. It is commonly used as a measure of the internal consistency or reliability of psychometric test score for a sample of examinees. Reliabilities are checked and they all fall between (0.76) and (0.86), which is satisfactory value because the satisfactory value is required to be more than 0.6 for the scale to be reliable (Malhotra,2002). As shown in table 1 the overall Cronbach alpha for the thirty items used in this study is (0.763) .This indicates the reliability of scales is reasonable and acceptable in most social science research situations.

5.2 Demographic Analysis

Table 2. Demographic characteristics of the respondent

Variable

Frequency

Percent %

Marital status

Unmarried

Married

Total

32

33

65

49.2

50.8

100.0

Gender

Male

Female

Total

53

12

65

81.5

18.5

100.0

Employment tenure

Less than 1yr

1yr to 3yrs

3yrs to 5yrs

More than 5yrs

Total

9

10

16

30

65

13.8

15.4

24.6

46.2

100.0

Qualification

Bachelors

Masters

M.Phil/MS

Doctoral

Total

16

43

4

2

65

24.6

66.2

6.2

3.1

100.0

Age

20 to 30

30 to 40

40 to 50

50 and above

Total

31

27

4

3

65

47.7

41.5

6.2

4.6

100.0

As shown in table 2, 81.5% of the respondents were male and (18.5%) were female. (As in Saudi Arabia it is difficult find women in large). Majority of the respondent (66%) possess Master’s degree, (24%) possess Bachelor’s degree, (6.2%) possess M.phil/MS and (3.1%) PhD’s. This is an indicator that the respondents are composed of highly educated people who should know more about human resource management and it is impact on their organization. (46.2%) of the respondents has more than 5 years’ experience this is an indication that the respondent actually spent enough time in the service. (24.6%) have 3 to 5 years’ experience. (15.4%) with 1 year to 3 years’ experience and (13.8%) with less than 1 year experience. (50.8%) respondents were married and (49.2%) were unmarried. Mostly (47.7%) respondents were lie between age limit of 20 to 30, (41.5%) between 30 to 40, (4.6%) between 40 to 50 and (4.6%) were belong to above 50 years.

5.3 Descriptive Statistics

Table 3. Descriptive Statistics

N

Minimum

Maximum

Mean

Std. Deviation

Culture

65

2.00

5.00

3.7250

.63303

HRM

65

2.000

5.000

3.64176

.762282

Power distance

65

1.25

5.00

3.6500

.74057

Uncertainty avoidance

65

1.50

5.00

3.7308

.83187

Masculinity/femininity

65

2.00

5.00

3.8192

.78996

Collectivism/individualism

65

2.00

5.00

3.6231

.83165

selective hiring

65

2.00

5.00

3.8500

.76903

Reduction of Status Differences

65

1.50

5.00

3.6385

.99415

Employee Security

65

1.50

5.00

3.3154

.86295

Performance appraisal

65

1.75

5.00

3.6500

.81441

Valid N (listwise)

65

Table 3 contains information that is useful in understanding the descriptive qualities of the data. The number of cases in database is recorded under the column labeled "N". Information about the range of variables is contained in the Minimum and Maximum columns. Variability can be assessed by examining the values in the std. Deviation column as the standard deviation measures the amount of variability in the distribution of a variable. It describes the standard amount variables differ from the mean. In the above table descriptive statistics are shown for eleven variables. This output shows, for each of the eleven variables, the number (N) of participants with no missing data on that variable. The Valid N (list wise) is the number (65) who has no missing data on any variable. The table also shows the Minimum and Maximum score that any participants had on that variable. For example, in first variable culture no one circled a 1, but one or more persons circled a 2 for the culture variable, and at least one person circled 5. This item is, therefore, really a constant and not a variable; it will not be useful in statistical analyses. The results show that culture has a mean of 3.72 with the SD of 0.633. In second variable HRM, again no one circled 1, but one or more persons circled 2 and at least one person circled. The results show that HRM has a mean of 3.64 with the standard deviation of 0.762.

5.4 Hypothesis Testing

Regression analyses have done for testing the hypothesis of this research and the test of these hypotheses leads to accomplish the objectives of this study.

5.4.1 H1: There is a significant relationship between national culture and HRM practices.

Before running the regression analysis for hypothesis H1, The assumptions of regression analysis were undertaken in which normality of the residuals, muticlonierity and autocorrelation was checked.

Table 4.1 Tests of Normality

Kolmogorov-Smirnov

Shapiro-Wilk

Statistic

Df

Sig.

Statistic

df

Sig.

Unstandardized Residual

.074

65

.200*

.957

65

.026

Here two tests for normality are run. For dataset small than 2000 elements, we use the Shapiro-Wilk test, otherwise, the Kolmogorov-Smirnov test is used. In our case, since we have only 65 elements, the Shapiro-Wilk test is used. If the test is NOT significant, then the data are normal, so any value above .05 indicates normality. The p-value is 0.026. We can reject the alternative hypothesis and conclude that the data comes from a normal distribution. It means normality does exist. This is shown in graphical form by running a QQ plot in the figure below which graphically shows the normality of the data.

For testing hypothesis H1 linear regressik2on is run, the mean value for the HRM is 3.64 and for culture is 3.72. The total number of cases for both the variables having no missing cases is 65.

Table 4.2 Descriptive Statistics

Mean

Std. Deviation

N

HRM

3.64176

.762282

65

culture

3.7250

.63303

65

Table 4.3 Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1

.509a

.259

.247

.661372

1.884

The Durbin Watson value for the model having HRM as dependent and culture as independent variable is 1.884 which is between 1.8 and 2.2, so we can say autocorrelation exist but can be ignored.

Table 4.4 Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Collinearity Statistics

B

Std. Error

Beta

Tolerance

VIF

1

(Constant)

1.359

.493

2.755

.008

culture

.613

.131

.509

4.693

.000

1.000

1.000

Dependent Variable: HRM

In the table4.4 looking at step 1, give us VIF less than 10 for independent variable "cultue", moreover the variable in the model is also highly significant i-e p value is less than .05 and the VIF is less than 10 which signifies that there is no multicloneirty in the data. Having the assumptions of regression being fulfilled signifies that the discussion can be preceded towards explaining the following regression model;

(HRM)= 1.359 + .613 (culture)

Where the p value (.000) for culture shows that HRM is significantly dependent on culture where .613 as a positive value shows that culture is a positive determinant for HRM . As p<.05 so H1 is accepted.

5.4.2 H2: Low power distance cultures will have a significant impact on HR practices that increase empowerment more than in high power distance cultures.

Before running the regression analysis for hypothesis H2, The assumptions of regression analysis were undertaken in which normality of the residuals, muticlonierity and autocorrelation was checked.

Table 5.1 Tests of Normality

Kolmogorov-Smirnova

Shapiro-Wilk

Statistic

Df

Sig.

Statistic

df

Sig.

Unstandardized Residual

.114

65

.035

.952

65

.130

Here data is normal, the test of normality table shows p=.130 means normality does exist. This is shown in graphical form by running a QQ plot in the figure below which graphically shows the normality of the data.

For testing hypothesis H2 linear regression is run, the mean value for the reduction of status differences is 3.63 and for power distance is 3.65. The total number of cases for both the variables having no missing cases is 65.

Table 5.2 Descriptive Statistics

Mean

Std. Deviation

N

Reduction of Status Differences

3.6385

.99415

65

Power distance

3.6500

.74057

65

Table 5.3 Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1

.064a

.004

-.012

.99995

2

The Durbin Watson value for the model having reduction of status differences as dependent and Power distance as independent variable is 2 which is exactly equal to 2 so there is no autocorrelation (if Durbin Watson = 2 then there is no auto correlation).

Table 5.4 Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Collinearity Statistics

B

Std. Error

Beta

Tolerance

VIF

1

(Constant)

3.324

.628

5.289

.000

Power distance

.086

.169

.064

.511

.041

1.000

1.000

Dependent Variable: Reduction of Status Differences

In the table 5.4 looking at step 1, give us VIF less than 10 for independent variable "power distance" which signifies that there is no multicloneirty in the data. Moreover the variable in the model is also highly significant i-e p value is less than .05. Having the assumptions of regression being fulfilled signifies that the discussion can be preceded towards explaining the following regression mode;

(Reduction of Status Differences)= 3.324 + .086 (power distance)

Where the p value (.041) for power distance shows that reduction of status differences is significantly dependent on power distance where .086 as a positive value shows that power distance is a positive determinant for reduction of status differences. As p<.05 so H2 is accepted.

5.4.3 H3: High uncertainty avoidance cultures will have a significant impact on HR practices that promote stability and security, more than HR practices in low uncertainty avoidance cultures.

Before running the regression analysis for hypothesis H3, The assumptions of regression analysis were undertaken in which normality of the residuals, muticlonierity and autocorrelation was checked.

Table 6.1 Tests of Normality

Kolmogorov-Smirnova

Shapiro-Wilk

Statistic

Df

Sig.

Statistic

df

Sig.

Unstandardized Residual

.079

65

.200*

.974

65

.184

Here data is normal, the test of normality table shows p=.184 means normality does exist. This is shown in graphical form by running a QQ plot in the figure below which graphically shows the normality of the data.

Descriptive Statistics

Mean

Std. Deviation

N

Employment security

3.3154

.86295

65

Uncertainty avoidance

3.7308

.83187

65

For testing hypothesis H1 linear regression is run the mean value for the employment security is 3.31 and for Uncertainty avoidance is 3.73. The total number of cases for both the variables having no missing cases is 65.

Table 6.3 Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1

.241a

.058

.043

.84409

1.870

The Durbin Watson value for the model having employee security as dependent and uncertainty avoidance as independent variable is 1.870 which is between1.8 to 2.2, so we can say autocorrelation exist but can be ignored.

Table 6.4 Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Collinearity Statistics

B

Std. Error

Beta

Tolerance

VIF

1

(Constant)

2.382

.485

4.915

.000

Uncertainty avoidance

.250

.127

.241

1.973

.013

1.000

1.000

Dependent Variable: employment security

In the table 6.4 , VIF is less than 10 for "Uncertainty avoidance" which shows there is no multicloneirty in the data moreover the variable in the model is also highly significant i-e p value is less than .05. Having the assumptions of regression being fulfilled signifies that the discussion can be preceded towards regression model;

(Employment security) = 2.382 + .250 (Uncertainty avoidance)

Where the p value (0.013) for uncertainty avoidance shows that employment security is significantly dependent on uncertainty avoidance where .250 as a positive value shows that uncertainty avoidance is a positive determinant for employment security. As p<.05 so H3 is accepted

5.4.4 H4: More individualistic cultures will tend to emphasize HR practices that stress individual rewards management more than in collectivistic cultures.

Before running the regression analysis for hypothesis H4, The assumptions of regression analysis were undertaken in which normality of the residuals, muticlonierity and autocorrelation was checked.

Table 7.1 Tests of Normality

Kolmogorov-Smirnova

Shapiro-Wilk

Statistic

Df

Sig.

Statistic

df

Sig.

Unstandardized Residual

.105

65

.074

.970

65

.114

The p-value is .114. We can reject the alternative hypothesis and conclude that the data comes from a normal distribution. It means normality does exist. This is shown in graphical form by running a QQ plot in the figure below which graphically shows the normality of the data.

For testing hypothesis H4 linear regression is run the mean value for the performance appraisal is 3.65 and for collectivism/individualism is 3.63. The total number of cases for both the variables having no missing cases is 65.

Table 7.2 Descriptive Statistics

Mean

Std. Deviation

N

Performance appraisal

3.6538

.77016

65

Collectivism/individualism

3.6385

.74612

65

Table 7.3 Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1

.229a

.053

.037

.75559

1.80

The Durbin Watson value for the model having performance appraisal as dependent and collectivism/individualism as independent variable is 1.80 which is between1.8 to 2.2, so we can say autocorrelation exist but can be ignored.

Table 7.4 Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Collinearity Statistics

B

Std. Error

Beta

Tolerance

VIF

1

(Constant)

2.793

.470

5.943

.000

collectivism /individualism

.237

.127

.229

1.869

.016

1.000

1.000

In the table 7.4, VIF is less than 10 for "collectivism /individualism" which is indication of no multicloneirty. moreover the variable in the model is also highly significant i.e. p value is less than .05.

Having the assumptions of regression being fulfilled signifies that the discussion can be preceded towards explaining the following regression model;

(Performance appraisal) = 2.793 + .237 (collectivism / individualism)

Where the p value (0.016) individualism / individualism for shows that Performance appraisal is significantly dependent on collectivism / individualism where .237 as a positive value shows that collectivism / individualism is a positive determinant for performance appraisal. As p<.05 so H4 is accepted.

5.4.5 H5: More feminine cultures will tend to emphasize HR practices that stress gender equality more than in masculine.

Before running the regression analysis for hypothesis H5, The assumptions of regression analysis were undertaken in which normality of the residuals, muticlonierity and autocorrelation was checked.

Table 8.1 Tests of Normality

Kolmogorov-Smirnova

Shapiro-Wilk

Statistic

Df

Sig.

Statistic

df

Sig.

Unstandardized Residual

.087

65

.200*

.957

65

.026

The p-value is .026. We can reject the alternative hypothesis and conclude that the data comes from a normal distribution. It means normality does exist. This is shown in graphical form by running a QQ plot in the figure below which graphically shows the normality of the data.

For testing hypothesis H5 linear regression is run the mean value for the selective hiring is 3.85 and for Masculinity/ femininity is 3.81. The total number of cases for both the variables having no missing cases is 65.

Table 8.2 Descriptive Statistics

Mean

Std. Deviation

N

Selective hiring

3.8500

.76903

65

Masculinity/

Femininity

3.8192

.78996

65

Table 8.3 Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1

.283a

.080

.065

.74351

1.953

The Durbin Watson value for the model having Selective hiring as dependent and Masculinity/ femininity as independent variable is 1.953 which is between 1.8 to 2.2, so we can say autocorrelation exist but can be ignored.

Table 8.4 Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Collinearity Statistics

B

Std. Error

Beta

Tolerance

VIF

1

(Constant)

2.799

.459

6.103

.000

Masculinity/ femininity

.275

.118

.283

2.338

.023

1.000

1.000

Dependent Variable: selective hiring

In the table 8.4 is less than 10 for "Masculinity/ femininity" which shows no multicloneirty, moreover the variable in the model is also highly significant i-e p value is less than 0.05. Having the assumptions of regression being fulfilled signifies that the discussion can be preceded towards regression model;

(selective hiring) = 2.799 + .275 (Masculinity/ femininity)

Where the p value (0.023) Masculinity/ femininity for shows that selective hiring is significantly dependent on Masculinity/ femininity where .237 as a positive value shows that Masculinity/ femininity is a positive determinant for selective hiring. As p<.05 so H5 is accepted.

5.5 Comparison between Sabic and Saudi Aramco

Before running the regression analysis for comparing effect of culture on HRM on both companies i.e Sabic and Saudi Aramco, same as above the assumptions of regression analysis were undertaken in which normality of the residuals, muticlonierity and autocorrelation were checked.

Table 9.1 Tests of Normality

Kolmogorov-Smirnova

Shapiro-Wilk

Statistic

df

Sig.

Statistic

df

Sig.

Unstandardized Residual

(Sabic)

.067

30

.200*

.994

30

1.000

Unstandardized Residual

(Saudi Aramco)

.111

35

.200*

.945

35

.078

The p-value is 1 for Sabic and 0.78 for Saudi Aramco. We can reject the alternative hypothesis and conclude that the data comes from a normal distribution. It means normality does exist. This is shown in graphical form by running a QQ plot in the figure below which graphically shows the normality of the data for both companies respectively.

For comparing both companies linear regression is run the mean value for the HRM is 3.61 in Sabic and 3.66 in Saudi Aramco and for culture it is is 3.62 in Sabic and 3.82 in Saudi Aramco. The total number of cases for both the variables having no missing cases is 30 in Sabic and 35 in Saudi Aramco.

Table 9.2 Descriptive Statisticsa

Mean

Std. Deviation

N

HRM

3.61667

.480252

30

culture

3.6271

.48924

30

respondent's company name = Sabic

HRM

3.66327

.946589

35

culture

3.8089

.73106

35

respondent's company name = Saudi Aramco

Table 9.3 Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Durbin-Watson

1(Sabic)

.263a

.069

.036

.471550

1.862

2(Saudi Aramco)

.586a

.343

.324

.778550

2.066

The Durbin Watson value for the 1st model having HRM as dependent and culture as independent variable is 1.862 and for 2nd model is 2.066 which are between 1.8 and 2.2, so we can say autocorrelation exist but can be ignored

Table 9.4 Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Collinearity Statistics

B

Std. Error

Beta

Tolerance

VIF

1

(Constant)

2.680

.655

4.093

.000

culture

.258

.179

.263

1.442

.160

1.000

1.000

2

(Constant)

.773

.708

1.092

.283

culture

.759

.183

.586

4.155

.000

1.000

1.000

In the table 9.4 variable in the model 1 which is for the company Sabic, is not significant i-e p value is higher than .05.

(HRM)= 2.680 + .258 (culture)

Where the p value (.160) for culture shows that HRM is not significantly dependent on culture in saudi company named Sabic and not generalizable.

In model 2 which shows the company Saudi Aramco result is highly significant i.e. p value is lesser than 0.025.

(HRM)= 0.773 + 0.759 (culture)

p value (.000) for culture shows that HRM is significantly dependent on culture in Saudi Aramco and its generalizable

5.6 Summary of Hypotheses Testing

Table 10

Hypothesis

Statistical Test

Result

Acceptation/reje