The future of Human Resource Management The implications of Hofestede Cultural Dimensions model for Libyan Private Companies.

The future of Human Resource Management

The implications of Hofestede Cultural Dimensions model for Libyan Private Companies.

 

 

Tarek M. Haroona,* , Abdurahman Kalema Kiweewab,1

a HR Consultant & Trainer, Aqsat Company, Tripoli, Libya

b Senior Researcher, Galactic Bridge Research and Technology Center, Bandar Sri Damansara, 52200,  Kuala lumpur, Malaysia 

 

Abstract

Human Resources Management (HRM) does not operate separately from the environment and the rest of the activities in the enterprise. Today (HRM) is facing some factors propelled the field in some completely new directions. Globalization is one of factors calling for change in HRM, due to globalization many companies are now operating in more than one country. These companies are confronted with new questions, including how to develop coherent culture to work in a diverse cultural environment. Thus, the aim of this study is to: (a) Examine some factors impacting HRM practices (b) Highlight the cultural differences between employees for a number of Libyan private companies and their impact on the design of the practices. Hofstede’s Cultural Dimensions model which presents a mapping of national cultures is used to examine cultural implications on Libyan Companies. The data was collected and analysed, using the national culture and organizational values model questionnaire on 121 employees. The analysis of results demonstrated that most of employees in the investigated companies have low power distance, emphasis on individualism positively, high Uncertainty avoidance as well as low masculinity.This study addressed that HRM practices in different companies can be influenced by cultural dimensions.

 

Keywords: Future of human resource management, Globalization, Culture dimensions

 

1. Introduction

    Today the environment faced by HRM is evolving because the field is experiencing numerous pressures for change. Shifts in the economy, globalization, domestic diversity and technology have created new demands for organizations, and propelled the field in some completely new directions.

 

    In particular, technology, talent management and globalization have grown into primary drivers of change in the 21st century. Technology typically refers to the use of information technology to store and disseminate HR data (Gueutal & Stone, 2005). On the other hand Talent management is a fairly vague term, but one of the simplest definitions is that, it is the anticipation of HRM needs for the organization, and the development of a plan to meet those needs (e.g., Cappelli, 2008; Dries, 2013). Other HR researchers maintain that changes in the field are being triggered by a rise in globalization (Dianna & Diana, 2015). Globalization symbolizes the structural making of the world characterized by the free flow of technology and human resources across national boundaries presenting an ever changing and competitive business environment (Prasanna, K. 2014). Today, in Libya, with the evolution of the economy, organizations are increasingly concerned with how to attract and retain the talent, skilled workers. They are also concerned with the identification of new efficient ways of capitalizing on the cultural potential still in the hands of employees, in order to obtain a dominant competitive position.

 

    In general practices and acts of HRM may not differ between the organizations in Libya because of the labor law. This law governs the employee's relationship with the company, however as a result of economic growth, and the launch of several economic projects in the last decade, some changes are coming up. This is forcing companies to attract talent in the world to stay in the competition, which has led to increased interest in the element of culture and its potential impact on the reengineering of the activities and practices of human resource Management

 

    In this study a survey was conducted in four companies within the private sector and the impact of the culture of the staff in the design of policies and procedures for human resources management was explored. Findings are presented in this paper.

 

2. Factors Driving Change

    There are many changes occurring rapidly that affect HRM in a wide range of issues, the rapidly transforming business landscape means that there are currently many HRM challenges which will continue to evolve for years to come, the following quick view over the most important factors will make challenges for the future of HRM:

   

2.1 Change from a manufacturing to a service or knowledge economy

 

    One of the challenges influencing the future of HRM processes is the change from a manufacturing to a service or knowledge economy. This new economy is characterized by decline in manufacturing and a growth in service or knowledge as the core of the economic base (Dianna & Diana, 2015). A service economy can be defined as a system based on buying and selling of services or providing something for others (Oxford Dictionary, 2014a). A knowledge economy is referred to as the use of information or knowledge to generate tangible and intangible value (Business Dictionary, 2014a).

 

    Many of the traditional HRM processes were designed during the industrial era, and thus focused largely on manufacturing organizations. However, many of the assumptions underlying those traditional HRM processes may not be effective with the new service or knowledge organizations.

 

     Knowledge organizations tend to design jobs broadly so as to encourage innovation, autonomy, continuous improvement, and participation in decision making. Additionally the competitive demands of today’s market place require a reorientation of strategic HRM emphasis that Concentrates on building human capital and managing knowledge rather than focusing on primarily matching particular job skills to selected strategies ( Mark, L‏., & Cynthia, A.,2003). Given that individuals with unique skills and abilities are essential in knowledge organizations, the new job requirements have created a shortage and increased competition for talented workers in many fields and has resulted in displacement and unemployment of people who do not have the skills needed for knowledge-oriented jobs (e.g., Bell, Berry, Marquardt, & Green, 2013; Karren & Sherman, 2012). These changes imply that nations need to alter their educational systems to meet job demands in new organizations (Gowan,2012).

 

    The goals of knowledge organizations should continue to bring about changes in HRM processes in the future (e.g., Schuler, Jackson, & Jackofsky, Slocum, 1996). HRM will need to shift its emphasis to employee retention, and meeting the varied needs of knowledge workers. Future HRM processes will need to be modified if knowledge organizations are to be successful and research will also be needed to examine the effectiveness of these new practices.

 

    Recently,  Libya has made several proposals and studies for the Ministry of Higher Education to improve the quality of university education outputs, This is done to match to labor market requirements and to keep up with new knowledge and service economy by establishment of specialized institutes of study in graduate professional training that correspond to the labor market in all the knowledge and public services requirements.

 

    2.2 Rise in globalization

 

    A second factor calling for changes in HRM processes is the rise in globalization. Globalization in this context refers to organizations that operate on a global or international scale (Oxford Dictionary, 2014b).

 

Organizations operating in a global environment face new challenges including differences in language, culture of employees, and variations in social, political and legal systems. Multinational corporations (MNCs) are large companies operating in several countries that are confronted with new questions, including how to create consistent HRM practices in different locations, how to develop coherent culture, and how to  prepare managers to work in a diverse cultural environment (Sparrow, 2007).

   

    Research on HRM in the international context has focused on three approaches to understanding the issues that arise in global environments: international, comparative, and cross-cultural HRM (Parry, Stavrou-Costea & Morley, 2011). International approaches focus on HRM strategies, systems, and practices in different socio-cultural context and different geographic territories (Parry et al., 2011). It also outlines the anatomy of MNCs, and considers the unique set of HRM issues that occur in these context (Budhwar & Sparrow, 2002).

   

    Comparative HRM explores the context, systems, and national patterns of HRM in different countries, and discusses the idiosyncrasies of various institutions and economic environment (e.g., Aycan et al., 2000, Isenhour, Stone. & Lien,2012a; Parry et al., 2011). Most of the research on comparative HRM indicated that HRM practices differ across nations, and are aligned with national cultures (Stone & Stone-Romero, 2008). Two examples of that research include a study by (Schuler and Rogovsky,1998) that assessed the relations between Hofstede’s national culture dimensions and the design of HRM practices. Research found: national emphasis on individualism was positively correlated with company use of pay-for-performance pay system. Other research indicated that individualistic nations were more likely to use calculative HR strategies and conversely collective nations were more likely to use collaborative practices.

   

    Finally, cross-cultural HRM examines the degree to which individuals’ cultural values influence the acceptance and effectiveness of HRM practices (Aycan et al., 2000; Gelfand, Erez, & Aycan, 2007; Isenhour, Stone, & Lien, 2012b; Stone, Stone-Romeo, & Lukaszewski, 2007). Most of the theories in HRM and organizational Behavior (OB) were developed in western nations and assume that the cultural values of individuals in organizations are homogeneous (Gelfand et al., 2007). However, it is clear that employees’ cultural values differ in U.S. and global contexts, and organizations need to align their HRM processes with these cultural values’ (e.g., Gelfand et al., 2007; Stone & Stone-Romero, 2008). As a result, pay-for-performance systems may motivate employees who are individualistic, but group-based or profit-sharing systems may be more effective with those who value collectivism (e.g., Joshi & Martocchio, 2008; Miller, Hom, &Gomes-Mejia, 2001).

  

    The Libyan oil industry is a perfect showcase of the impact of globalization and changes in economic, political and cultural integration on the modern business environment. The impact of human behavior on HRM processes for multinational companies operating in the oil sector in Libya invisible. In particular, the management of individual employees, cultural differences represents a substantial challenge for management at every level of the organization. however, it is not clear to what extent cultural differences like those that surround employees in Libyan and MNC’s companies operating in the Libyan oil industry, impact their HRM practices. Some examines individual cultural differences using Hofstede‟s (2005) four dimensional model to understand the impact of different cultures to individuals on the operations and activities of the organizations.

 

    2.3 Growing domestic diversity

 

    Apart from change in the economy and globalization, organizations are also faced with major shifts in the composition of the population.  In particular, It is expected that the population will be older and more ethnically diverse by 2060 (U.S. Bureau of Census, 2014), The work values of multiple generations expected to be different and organizations will need to develop HRM practices that are aligned with the primary goals and values of multiple generations of employees (Cennamo & Gardner, 2008; Twenge, Campbell, Hoffman, & Lance, 2010).

   

    Along with the aging workforce come many new challenges for HRM, for instance, given the shortage of skilled workers there is a growing concern about the retention of skilled baby boomers. Another challenge facing organizations is that they will be staffed by members of multiple generations, and members of generations differ in terms of work values, attitudes, and behaviors (Cennamo & Gardner, 2008; Twenge, et al., 2010). For example, recent research indicated that baby boomers (born 1946 to 1964), generation X (born 1965 to 1981) and generation Y (born 1982 to 1999) different in terms of intrinsic & extrinsic rewards, leisure time, work family balance and steady employment. Given these differences in values, organizations are faced with the complex challenge of aligning reward and compensation systems with the values of multiple generations. In particular, they might identify the reward preferences of individuals, and develop cafeteria reward systems that provide employees with a total sum for their overall compensation, thus allowing them to select different rewards and benefits (e.g., one person might select vacation time in lieu of pay, whereas others might select pay instead of time off from work; Stone-Romero, Stone, & Salas, 2003). Thus, HR will have to adapt their incentives, benefits policies, and retention strategies for workers that are not just driven by financial compensation. It is not enough simply to recruit able staff. Companies have to make sure that their people are committed, productive, and do not leave after a short period, incurring substantial turnover costs and wasting all previous training invested in them (SHRM, 2014).Thus organizations are likely to modify their future HRM practices to meet the needs of employees with diverse values.

 

    2.4 Emerging use of technology

 

    Over the past 30 years, one of the major drivers of change in HRM has been the increased use of information technology (hereinafter referred to as technology) to collect, store, and utilize data for decision-making (e.g., Gelfand & Stone, 2005; Strohmeier, 2007; Strohmeier & Kabst, 2009). Technology, especially the world wide web, has transformed key HRM processes in organizations ( e.g., e-recruiting, e-selection, e-training), and modified the nature of jobs and the relationships between individuals and organizations (Kiesler, Siegel, & McGuire, 1984). Research on the use of technology to facilitate HRM processes indicated that it typically enhances efficiency, and decreases costs associated with HRM transactions (e.g., Dulebohn & Johnson, 2013; Dulebhn & Marler, 2005; Strohmeier, 2007). And new communication technology, such as email, mobile phones and web and videoconferencing has not only facilitated closer contact with clients in distant lands, it has allowed multinational companies to form cross-border teams, where colleagues can communicate with each other constantly(SHRM, 2014). However, some researchers argued that there is no clear evidence that help HRM meet its primary goals of attracting, motivating, and retaining talented employees (see Stone et al., 2015, for a detailed discussion of influence of technology and the future of HRM).      

   

    Despite this a number of other researches maintained that there are a number of limitations associated with using current technologies to manage HRM processes (e.g., Stone et al., 2015; Stone-Romero et al., 2013). Furthermore a number of researches argued that the use of new interactive technologies (social media, virtual simulations or job fairs, chat rooms…etc) should decrease some of the weaknesses associated with current systems (see Dineen & Allen, 2013; Stone et al., 2015; Sullivan, 2014). For example, the use of social media, chat rooms, and high definition cloud computing should enable applicants and employee to engage in an interactive dialogue with recruiters or managers. Similarly, use of virtual reality should provide applicants with opportunities to attend virtual job fairs, give supervisors the ability to mentor subordinates, and offer trainees the chance to participate in virtual training simulations. All of these virtual environments should increase the degree to which technology-based HRM processes are personal, flexible, and interactive and decrease the interpersonal distance between employees and supervisors. Although these arguments seem plausible, research will be needed to examine the effectiveness and acceptance of these new HRM processes.

 

    Currently in Libya and with the rapid growing technology in the world, which is flowing over, companies tend to take advantage of the technology in the practices and policies of human resources and it relies significantly on the technology in the recruitment, selection processes, training, communication between members of the organization and evaluation to measure the performance and efficiency of workers. In addition, technology has enabled organizations using the Internet to hold studies and research and partnerships with international experience in the development and research.

 

Through a simple survey of several organizations it reported that the technology have an effect in human resource management practices in terms of quantity and quality, and has become the IT infrastructure organization is key to the effectiveness and efficiency of operations of human resource management.

 

3. Overview of Literature

We reviewed several factors that could influence the future of HRM in organizations, including changes in the economy, globalization, domestic diversity, and technology. These are only a few of the challenges that will affect the future of the field. Several studies have been conducted exploring relationship between cultural dimensions and HRM practices (Guest, 1987, Hendry & Pettigrew, 1986, Pfeffer, 1995, Ferner, 1997, Ulrich, 1997, Sparrow and Wu 1998, Watson, 2005, Storey, 2001, Khandelar and Sharma, 2005, Stroh and Caligiuri, 2005, Aycan, 2005, Ling and Jaw, 2006, Benedict, 2006). These studies make it clear that culture is an important determinant for shaping HRM practices. Such studies established that if HR practices aligned with cultural dimensions can lead to long-term competitive advantage for the organization. These studies demonstrated that culture is one of the dominating factors that influence HRM practices and also stated that effective international human resource management is positively related to culture. This is due to cultural differences best HRM practices may not always transfer across countries.

 

4. Methodology

The data used in this research is based on conducting Hofstede’s national culture dimensions for four private companies located in Tripoli – Libya in Nov.2016 to Jan.2017, the case study was based on multiple source of data including interviews with some managers, filling survey questionnaire and investigating policies and practices in managing people in selected companies and here the definition of the concepts of the study:

 

    4.1 Hofestede cultural dimension: Hofstede established the following four important differences between national cultures as shown in table(1)

 

 Table (1) Hofsted’s four dimensions

Dimension

	

 

	

Definition

	

 




 Power – distance

 

 

Uncertainty –avoidance

 

 

 

Individualism

 

Masculinity – femininity

 

	

 

	

deals with the way superiors exercise power (between manager & employee)

 

analyze the attitudes of people toward risk , their tolerance to accept a certain degree of risk

 

individual initiative and performance

 

Important criteria

	

 




 

	

 

	

 

	

 

 

    4.2 Cultural Diversity: How different national culture is for individuals in their dimensions, which is measured by the questionnaire used in studying.

 

   4.3 National culture: is the degree to which the individual obtains in the questionnaire on cultural diversity used in the study, it is divided into 4 dimensions consisting of 24 items through which the characteristics and dimensions of its national culture can be defined, and this dimensions divided into 4 cultural dimensions.

 

  4.4 Cultural diversity questionnaire: We designed the questionnaire by studding the work of Hofestede dimensions, and listed 24 items which describe how individual cultural can be differentiate which we translated and modified paragraphs according to the study requirements and the nature of the sample as in table (2), and been relied on lekert's five-point ladder was based on a correction the results of the study tool,

 

        Table (2 ) shows the terms that measure each dimension of the national culture questionnaire

Dimension

	

 

	

Questionnaire item No.

	

 




 Power – distance

 

Uncertainty –avoidance

 

Individualism/collectivism

 

Masculinity – femininity

 

	

 

	

 2-5-6-7-19-20-22

 

4-9-11-15-23-24

 

1-3-8-10-14-17-21

 

 12-13-16-18

	

 




 

	

 

	

 

	

 

 

 

 For good and accurate search results we selected companies from various sectors and areas of work which have foreign workers from various nationalities. The survey covered a total of 121 employees, the summary of results is shown in table (3)

 

Table (3) Hofsted’s dimensions scores

Company

	

Manpower

	

Power Distance

	

  Individualism/    Collectivisms

	

 Uncertainty avoidance

	

Masculinity

	

 




Crestal/Cathering

	

31

	

24

	

  26

	

25

	

             23

	

 




Aqsat/Services

	

25

	

19

	

  21

	

21

	

             20

	

 




Med Care/Medical Insurance

	

22

	

16

	

  19

	

18

	

             17

	

 




Elmahawer/Construction

	

43

	

33

	

  37

	

35

	

             36

	

 




Total

	

121

	

92

	

103

	

99                  

	

             96

	

 


								

 

 

 

 

4. Conclusion

 

    According to the survey, 76% of total manpower of related companies have low power distance (92 out of 121), then 85% of workforce score high on individualism positively (103 out of 121). In addition, the study results show that 82% of employees have high Uncertainty –avoidance ( 99 out of 121), on other hand  96% of total manpower have masculinity tendencies as shown in figure(1).

 

Figure (1) shows the rating scores for the Hofstead dimension to selected companies in the sample

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    The finding shows that National culture of the Human Resource may play an important role in influencing the habits of the employees in the company. The influence can be reflected in the way they communicate, relate with colleagues, and work in teams. It may then determine how they perform their duties in order to achieve their Key Performance Indicators (KPI).  In addition there are some important similarities and differences in value of the among employees when working the same policies and roles in same company. It may be concluded that although national culture has a significant role in shaping and influencing   HRM practices in different companies, it is definitely not the only factor. All the other elements like rules and regulations, socioeconomic factors which are existing in business environment may have their own influence.

 

    This research investigated the implication of four cultural dimensions from Hofstede’s cultural dimensions model on designing and implementing HRM practices. The study covered four randomly selected Libyan companies from various sectors, from which survey data collected and analyzed. 

 

    Although from the literature we also identify several factors that influence the future of HRM in organizations such as; changes in the economy, globalization, domestic diversity and technology, national culture emerges as another factor that should be explored further. This Study employed Hofstede cultural dimensions on four Libyan private companies, its implications may be applicable to wider scope of business non business players. This article may elicit further discussions about the future of the field and open the door for considering more issues that are likely to shape HRM in the future. Some of these researches may take opposing views about the factors that will drive changes in the field, but we have no doubt that they will all stimulate discussion and future research on the issues.

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* Researcher, +218911620938, E-mail address: t_haroon21@yahoo.com

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