Convergence, divergence and cross-vergence of HRM systems in a globalised economy

Introduction

With the rise in globalisation, human resource managers are faced with decisions on the theoretical approach to managing human resources. As Festing (2012) observes, human resources management is a strategic function whose design and implementation has the capacity for yielding a competitive advantage for the business organisation. It is at the centre of controlling operation costs by maximising on productivity while also promoting agility by motivating employees and exploiting their intelligence to boost overall organisational intelligence to enhance competitiveness in the increasingly competitive globalised world. Human resource management is more complex at the international stage where national cultures and laws may make it necessary to modify operational approaches to promote productivity (Khan, 2011). The choices to be made are on whether to use approaches such as convergence, divergence or a hybrid system. The convergence theory focuses on establishing best practices applicable across the board while the divergence theory focuses on establishing management systems that conform to the specific circumstances of each country. The choice on which of the approaches to HRM is determined by the goals as well as the circumstances of the organisation.

Convergence

The convergence theory in HRM can also be referred to as the Universalist theory which is founded on the belief that certain best practices can yield excellent fruits if applied across organisations in different countries. This theory was most dominant in the 1950s and 1960s in the developed world (Europe and USA) with the thinking being that universal application of good management practices was an important factor in making societies to be more alike across national boundaries (Khan, 2011). Proponents of this theory advanced it in relation to an imminent acceleration in globalisation where it was believed that as people continued to interact with each other more frequently across national and cultural divide, there would emerge a global culture based on certain best practices in business management and HRM. Even though this theoretical approach has been faulted for failing to recognise enduring cultural differences, its proponents have sought to narrow down its application to business practices while holding that managers across the world are more likely to have similar viewpoints and attitudes (Aydinli, 2010). This justifies the convergence of management approaches. In other words, it is natural that management practices will converge around certain established best practices.

According to Rowley (1998), the development of best practices is an evolution process where different practices are in place and results of each dimension is weighed before the most effective ones are picked. The free flow of information across national boundaries is among the factors that are expected to lead to the generation of best practices across different countries as experiments with different systems are weighed against their outcomes and decisions made regarding their suitability (Yongsun, Chow and Vance, 2011). This is the approach that informs this Universalist view. The convergence theory has the same approach as the best-practice approach in HRM which is contrasted against the best-fit approach (Armstrong, 2011). The former advocates for the application of best practices that have been established in managing human resources as a way of guaranteeing good results while the latter focuses on generating approaches that best complement the organisational strategies and their external circumstances. Despite the opposition to the Universalist approach, observations are that it has contributed to the development of certain best practices in HRM across the world.

One of the dominant trends in HRM practices that can be categorised as being consistent with the convergence theory is the spread in the use of information technology in HRM (Armstrong, 2011). Practices such as recruitment are increasingly making use of information technology allowing organisations to procure talent internationally. Another trend has been the use of scientific means of interviewing and selecting staff. The practice of companies using scientifically designed aptitude tests to determine the IQ and personality of their prospective employees has been very high and was started in the USA before spreading to Europe and to the rest of the world (Warner, 2013). This investment in recruitment is crucial for organisations which view employees as their most important sources of competitive advantage. The application of the Universalist view can also be observed in the approach to employee motivation applied across the world where dominant theories tend to be embraced across the world. For instance, reward schemes that recognise individual contribution are being adopted across the world; even in countries that are known to be strongly collectivist. China has been one of the latest beneficiaries of the convergence approaches as multinationals applying their best practice in HRM have been able to inspire a change in operation approaches among Chinese firms (Zheng, 2013). This made it possible for the local firms to take measures to encourage productivity to the level that the labour productivity in China as a whole has been on a rapid rise. This has made it easy for unit cost of operations in China to be low despite the rising wage levels in the country.

The main driving force for convergence is the need for excellence and superior economic output. This drives managers to settle for management approaches that have been proven to be effective in the past as it also helps in minimising risk (Wai et al., 2012). The other driver of convergence is cultural ethnocentricism among managers who may believe that their home practices are best and superior. This leads them to the conclusion that it is only their systems that can work best. The other driving factor could be the growth of international organisations such as regional and international labour organisations which push organisations towards a common approach to remuneration and provision of good working conditions. The standards pushed for are often similar albeit with some variations which are likely to disappear with time leading to complete convergence in such HRM practices (Caligiuri, Lepak and Bonache, 2010). The main advantage of this approach to HRM is that it creates room for the improvement of management practices across national boundaries. However, it can have negative results is there is a conflict between culture and the management practices embraced unlike the divergent approach that recognises differences in culture. 

Divergence

Divergence theory emphasises the need to adopt different management approaches depending on the circumstances and the goals of the organisation. It can be explained using two theories: the cultural theory and the institutional theory (Rowley and Benson, 2002). The two theories also represent the driving factors behind this theory. The divergence theorists in HRM practice hold that there is no ideal approach to management for all circumstances and it is therefore important to embrace agility and modify systems to suit different circumstances in order to yield the desired results (Aydinli, 2010). This is consistent with the contingency theory of management. In its pure form, it is not common among organisations globally. However, rationale for its application is evaluated as below.

Proponents of the divergence theory hold that even though the level of human interactions across cultures has been on the rise, cultural differences have continued to be significantly different. As a matter of fact, many of the less dominant cultures have been radicalised in order to fight what societies in the developing world see as an attempt to erode their cultural values in favour of entrenching a Western-dominated global culture (Suda, 2007). There is a direct connection between cultural values and the ideal HRM practices and this makes it necessary to evaluate the national cultures and how they are likely to affect organisational HRM systems. For instance, the choice of management style is dependent on factors such as the level of power distance in the society while the approach to reward systems is strongly influenced by whether a national culture is individualist or collectivist. Hofstede provides dimensions of national cultures where are divided into 5 elements namely power distance, masculinity index, individualism/collectivism, uncertainty avoidance, and long term orientation (Hofstede, 2013). This brings to the fore the question of culture distance and its influence on HRM practices. The culture gap is the difference between cultures in different countries and it plays a role in determining whether it would be necessary to modify management practices to suit a new culture. Where the culture distance is low, the modification may not be necessary.

To understand the influence of culture on HRM practices, a comparison is made between the UK and the Chinese culture as shown below: 

Source: Hofstede, 2013

The difference in power distance is high with the index for China being higher than UK. This implies that in China, hierarchical structures and authoritative leadership approaches can be applied with relative effectiveness. It also implies that employees may not need to be empowered much in decision making as they would be comfortable with receiving explicit directions from their seniors (Pudelko, 2005). There is also a high cultural gap on the individuality index element. The Chinese national culture is heavily collectivist while that of the UK is heavily individualist. This cultural dimension is very relevant to determining how work is organised and how employees are rewarded. In the individualised cultures, reward systems are expected to be based on the individual and based on teams for the collectivist state (Pudelko, 2005). The demonstration on the cultural differences between the UK and China as demonstrated above can be used to understand the viewpoints of the divergence theorists who opine that it may be counterproductive to transfer HRM practices across countries just because they have been known to work in a different cultural setting.

Despite the need to respect cultures, analysts warn against overreliance on the traditional cultural elements of a country as a pointer for what cultural perspectives are held (Festing, 2012). Culture is dynamic and in many cases, ideas that would ordinarily not be allowed become more acceptable with time. A good example of cultural dynamism can be observed in the emergence of an urban culture in many developing countries such as China. The youthful population in most urban centres around the world tend to conform to certain trends around the world that make revaluation of cultural values necessary on a regular basis (Zheng, 2013). Research indicates that even in societies that have been found to be heavily collectivist in nature in the past, there has been a growing trend towards individualist viewpoints as the culture of materialism spreads around the world (Zheng, 2013). This argument is however countered on the basis that cultures can be resilient and semblances of similarity ought not to be used as an indicator that divergence is no longer a necessity in international HRM.

The second factor that promotes the use of a divergence approach to HRM is the institutional structure where different subsidiaries are autonomous and at liberty to develop their own systems. Most multinationals around the world embrace this model where each subsidiary has a leeway in determining some of the primary elements in their management practices (Contrepois, 2011). However, this leeway tends to be limited and the organisations tend to be focused on maintaining a certain global image which they emphasise must be maintained across the world. While divergence may enable unique approaches to HRM in different markets, it may be counterproductive to ignore best practices in other markets. In line with this, many multinationals practice a measure of cross-vergence in their international HRM approaches.

Cross-vergence

Cross-vergence is an approach to HRM that combines both the convergence and divergence approaches and is the most common HRM practice in the world (Warner, 2013; Festing, 2012; Wai, 2012). As a matter of fact, it is extremely rare to find a multinational that practices either of the approaches in their pure form. Convergence may be applicable in providing indicators of best practice but can be counterproductive in different cultures. Similarly, divergence is suitable in accommodating different cultures but can be counterproductive when used in isolation. Factoring the best practice approaches is crucial in ensuring that the success stories in other markets can be learned from. For instance, the Japanese traditional management style that incorporated teamwork was very insightful for the Western companies which incorporated it and combined it with their traditionally individualised approaches to yield high levels of productivity (Carr and Pudelko, 2006). However, these best practices must be modified to reflect on the special circumstances of the implementing organisation. In collectivist countries such as China, the traditional work organisation and reward schemes were based on the team model where people workers would be recognised within their teams (Warner, 2013). As organisations sought to raise their levels of productivity; they began to adopt individualised models which were modified to conform to the Chinese realities. This trend can be said to be the same for other developing countries such as Oman and others.

Convergence makes the best of both theoretical approaches and enables an organisation to maintain its uniqueness while also making use of the best HRM practices in the world. Moreover, it promotes agility and flexibility of HRM systems especially when it comes to making the choice on the extent to which either of the two approaches is to be factored in (Armstrong, 2011). In the designing of the cross-vergence approach, the managers are at liberty to determine to what extent they can be Universalist and to what extent they can be divergent. The striking of an optimum balance is crucial in making the organisation competitive and this is what makes HRM a science capable of determining the competitiveness of the organisation. The common trend in regards to approach to HRM is the increased emphasis on the strategic importance of human resources as a potential source of competitive advantage to the organisation. This calls for careful design that makes the best of both approaches.

Conclusion and recommendation

The main approaches to international HRM can be described by divergence and convergence theories. Divergence theories emphasise the need to embrace different approaches to suit the specific circumstances of the organisation and the predominant national culture. The convergence theory on the other hand emphasises the fact that best practices exist that can yield remarkable results when applied across the board. The advantage of applying convergence theories is that it involves application of practices that have been tested and found to be effective hence lowering the risk of failure. However, it may fail when applied in cultures that are significantly different. The divergent approach on the other hand is suitable for accommodating different cultures and is very suitable for enhancing uniqueness of the specific national culture. This makes it easy to use it as a source of competitive strength for the organisation. However, it may involve costly trial and error escapades when used in isolation.

The general trend in the world is that multinationals find it necessary to use the cross-vergence approach which exploits elements of both theories. It draws its foundation from exploiting best practices while seeking to achieve uniqueness by modifying the system to reflect on the specific circumstances of the organisation. This approach has been found to be very useful in the globalised markets where the level of competition is increasingly high and organisations are turning to their human resources for the competitive edge needed to excel. This is the recommended approach to HRM where the organisation needs to skilfully balance between the best practices and accommodation of unique management approaches to come up with a combination that leaves the employees satisfied, motivated and productive. Nevertheless, it is expected that even though full convergence is not likely to be realised, HRM practices will edge towards convergence in the future.

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