Impact of human resources management practices with respect to global oil and gas industry
ABSTRACT
This research study is undertaken to assess the impact of human resources management practices with respect to global oil and gas industry. This research study will render key insights in relation to human resources practices so that they can be deployed as a strategic tool for deriving higher levels of organizational performance and boost limited empirical knowledge that is present in this context.
INTRODUCTION
We all live in a highly complex dynamic knowledge economy. In this era, it is extremely important to adopt human resources practices for deriving sustainable competitive advantage over others in the market place. Various research studies have undertaken to explore the impact of human resources practices on business performance. There is a positive correlation between human resources management practices and organizational performance. As per the viewpoint of Narimisa and Basri, human resources management function is of strategic importance for various business organizations. Various large organizations across the globe have realized the importance of human resources management practices and thereby they are making themselves ready to capitalize on the advantages rendered by this particular function. Various human resources management practitioners are striving hard to meet the challenges of new values of knowledge workers. All this calls for a new paradigm of people’s management that calls for huge investment in human capital and novel deployment of human resources management practices for luring and retaining human capital in order to ensure organizational sustainability.
Owing to higher levels of globalization of business and trading by various multinational organizations, there is an increased level of interest with respect to human resources management policies and their cultural relativism. Numerous researchers have rendered impetus on relationship between culture and human resources management practices. This is a concept that comprises of traditions, norms, beliefs, attitudes and behavior that have a direct bearing on human resources management practices. As per the viewpoint of Laurent (1986) human resources management practices in any region are a reflection of national culture of that particular economy.
Majority of research studies shed light on recruitment and selection mechanism that have been deployed in oil and gas industry. But there is very limited number of research studies that have been undertaken in relation to Middle East economies. It is an evident fact that western economies and Middle East economies are very different from each other. It is a general fact that the concept of human resources management was born in USA, developed in Europe and implemented in Japan but there is a fourth paradigm as well which states that it is ignored, undeveloped and not researched in Middle East countries. In this research study, efforts have been made to examine the impact of Saudi culture on recruitment and selection process in oil and gas industry. The research study will also examine whether the culture positively pr negatively affects organizational performance and productivity in the Oil & Gas sector.
Literature review:
As per the viewpoint of Barney (1991), the concept of human resources management has emerged out as one of the critical parameters in relation to deriving sustainable competitive advantage. It is evident that it is extremely difficult to find and nurture talent and it is event more difficult to retain the same. The basic purpose of human resources management function is to accomplish optimization of resources, organizational effectiveness and attain continual improvement. Organizational management invests time and other critical resources with respect to developing and nurturing human capital in the form of motivation, interpersonal skills, knowledge, skills, abilities, attitude and all this makes it extremely difficult for competition to imitate. As per the viewpoint of Pfeffer (1998), it is only human resources that can ensure firm’s sustained performance in this competitive economy. With respect to today’s knowledge economy, human resources management has been considered as a strategic tool which is quintessential for ensuring organizational profitability and sustainability. This has paved way for new role of today’s human resources manager as strategic partners in formulating and implementing overall comprehensive organizational strategy. Various organizations are actively pursuing and nurturing human resources management practices and systems so that they are in a position to leverage on advantages that this business function has to offer.
Previous research studies have also demonstrated that various important human resources management practices include workforce planning, job assessment, learning and development, recruitment and selection, remuneration and reward mechanism, performance appraisal, career management, human resource information systems, quality of work life, work life balance, personnel diversity and associate attitude surveys.
As per the viewpoint of Becker and Huselid (1998), in recent years, the focus of research with respect to human resources management function has shifted from study and relationship of individual human resources management practices on business performance to overall human resources management systems and its overall influence on organizational performance. Various researchers and academicians have an altogether different viewpoint in relation to this parameter. Some of the researchers are of the viewpoint that system view of human resources management function is more appropriate whereas some other researchers put forth that combining numerous dimensions of human resources management function carves out unnecessary reliability problems. Also, comprehensive assessment of individual human resources management practices highlights important predictors of business performance.
As per the viewpoint of Dreher and Dougherty, (2005), financial and non financial metrics can be deployed to measure organizational performance. Various financial measures comprise of profit, sales volume and market share. On the other hand non financial measures comprise of productivity, quality, efficiency and attitudinal and behavioral measures such as commitment, intention to quit and satisfaction.
There are divergent views in relation to measuring organizational performance on the basis of financial and non financial measures. As per the viewpoint of Hoskisson et al (2000), there are certain complexities in relation to measuring organizational performance on the basis of financial parameters in emerging economies. It has been argued that absence of market based financial reporting, insufficient regulatory mechanism and enforcement about financial planning, absence of transparency in financial reporting and provision of dubious financial information are significant issues that emerging economies have to confront.
Many research studies have raised persuasive doubts in relation to causal distance between an HR input and such output based on financial performance. In simple worlds, there are numerous other variables and events (internal and external) that have an effect on organizational performance. As per the viewpoint od Wall et al (2004), self- reported data in itself is related to limited biases.
Various researchers have also studied the effects of human resources management practices with respect to organizational performance. Various recent research studies have reflected the fact that human resources management practices have great influence on overall organizational performance. Various researchers have divergent views in relation to effect of human resources management practices and organizational performance. They are of the view that human resources management practices and performance research have common elements as well as contradictions. In a recent research study conducted by Katou and Bedhwar (2006) in Greece, various influencing factors in relation to human resources management practices comprise of staffing, training and promotion, employee involvement and incentives that have a positive relationship with organizational performance.
In a research study by Sang, it was concluded that workforce planning, teamwork, training and employee security have a positive and decisive influence on non financial and financial dimensions of organizational performance. In a research study that was conducted on Taiwanese high technology firms, Chang and Chen
In a study in Taiwanese high technology firms, Chang and Chen (2002) established that HRM practices ofworkforce planning, training and development, benefits, teamwork, and performance appraisal significantlyaffected productivity. The study also found the negative relationship between human resource planning andemployees’ turnover.
In a study in New Zeeland, Guthrie (2003) validated the impact of HRM practices on employee turnoverand profitability. Lee and Lee (2007) established that workforce planning, teamwork, training and developmentcompensation and incentives, performance appraisal, and employees’ security are important HRM dimensionsthat affect productivity, product quality, and business performance. In a study in Taiwan, Chang and Chen(2002) determined significantly positive relationship of HRM practices with organizational performance. Thestudy also found a negative relationship of workforce planning with employees’ turnover. It is argued that HRpractices enhance employees’ competency and motivation that affect organizational performance (Harel&
Tzafrir, 1996) contended that HRM practices based on quality hiring, development, and retention boosts firms’capability.
This study indicated five Human Resource Management practices namely; performance appraisal,Recruitment and selection, training and development, compensation and reward, and employee relation andexamined the effects of these practices on subjective measures of performance (product quality, productivityefficiency and overall perceived performance compared to industry average).
CHAPTER 2- LITERATURE REVIEW
2.1 Introduction
This chapter comprises four sections. First section defines and describes HRM practices. Second section is definition of culture and Hofstede cultural dimensions,
explanation and score of each cultural dimension in chosen countries. In the third section impacts of cultural dimensions on HRM practices are given, and the last section provides an overview of the literature.
2.2 Definition of HRM
The origin of human resource management can be traced back to 1950‟s in the United States and obtained widely recognition until the beginning of 1980‟s, as well as in UK in mid to late 1980‟s (Beardwell& Holden, 1994). There are several definition, theories, models, typologies and roles In the literature which describe the content and implementation of HRM.
Human Resource Management is designed following a certain process. Human resource management or HRM has been widely defined by researchers as a strategic function that encompasses management of its critical human assets for achieving competitive advantage in a dynamic business environment. Human resource management is the function performed in organizations that facilitates the most effective use of people to achieve organizational and individual objectives (John Ivancevich and Glueck, 1989).
Researchers like Mary Parker Follet, Chester Barnard, Elton Mayo and Douglas McGregor figured out the most significant component of any business, its manpower or human resources‟ that made the difference towards better efficiency for any organization. Armstrong (1992) determines Human resource management as a strategic approach to the management of an organization’s most valued assets – the people working there who collectively and individually contribute to the achievement of its goals. The aim of human resource management is recruiting flexible, capable and committed people, managing and rewarding their performance and developing key competences. The human resource of any organization is the power and talent that is available to drive the objectives of the organization into being achieved. Good human resource management has been linked to higher profitability, productivity and organizational competitiveness, Brewster (1992).
Another definition of HRM is” the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance, and separation of human resources to the end that individual, organizational, and societal objectives are accomplished” (Shonhiwa& Gilmore, 1996, p.16).
Schuler and Jackson (1995) developed the strategic model of HRM. They argued that HR practices need emphasis on making greater investment in human resources, selecting highly skilled individuals, using minimal controls, giving employees more discretion, providing more resources for experimentation, allowing and rewarding occasional failure and appraising performance for the long term implication. Ulrich and Brockbank (2005) discuss that Human Resources must offer value to their organizations as viewed by line managers, employees and investors, and that this value leads to competence advantage. To help organizations keep on competitive, human resource management must refine its role and organizational contributions.
Nankervis (2008) Based on Australian HRM practices divided the development of HRM into four stages. Stage one from 1900 to 1940 was about welfare and administration. Supervisors, line managers, and early specialists performed Personnel management practices. In stage two, from 1940 to mid-1970 HRM extended to comprise staffing, training, welfare and administration. This stage was the beginning of professional approach to personnel management. From the mid-1970s to late 1990 was stage three which saw the transition from HRM to SHRM. Stage four, refers to the 21st century or HRM in the new millennium.
Brewster (1993) developed a European model of HRM and it consists of the following factors, European Union, legislation, national culture, managing diversity, patterns of ownership, communication, trade union involvement, and consultation influence in HRM. The European model showed an internal interaction between business strategy, HR strategies, and HR practice and an external interaction with national culture, legislation, education, power systems and trade unions. It places HR strategies as integrated with the external environment but also with the organizational strategy. The main purpose of this model is to illustrate external factors to the organization as a part of the HRM model. Organizational studies which should take the national context into account utilize this model to gain a better understanding of the particular situations of, and differences between, countries in their HRM practices.
Harris (1996) claimed that the increasing internationalization and globalization of business has made the concept of culture and its impact on HRM practices. Jackson and Werner (2009) mentioned that HRM is an essential function in the success of any organization. External factors such as country cultures, economy and socio-political environment influence the way a company manages its human resource.
2.3 Definition of Culture
In conducting research involving culture a first challenge is arriving at an understanding of what culture is. Edward Tylor an English anthropologist in 19th-century proposed a classic definition of culture, he defined culture as a “complex whole which includes knowledge, belief, art, morals, laws, custom, and any other capabilities and habits acquired by man as a member of society” (Tylor, 2000).
For several reasons the concept of culture has gained its strength and popularity. According to Tayeb (1994), these strengths are related to (1) the fact that, if not in absolute terms, cultural values and attitudes are different in degree at least in some cases from one country to another, (2) the fact that under similar circumstances different cultural groups behave differently because of the differences in their underlying attitudes and values, and (3) the important that culture plays role in shaping work organizations and other social institutions.
Hall (1976) stated that values, norms and beliefs which are the components of culture dictate the way people think, behave, solve problems, make decisions and even organize their political, economic and transportation systems.
Kroeber and Kluckhohn (1951, P.157) offered one of the most comprehensive and generally accepted definitions:
Culture is a product; is historical; includes ideas, patterns, and value; is selective, is learned; is based upon symbols; and is an abstraction from behavior and the products of behavior.”
Culture refers to a visible dimension (behavior) and an invisible dimension (values, assumptions, and beliefs).
According to the Triandis (1995) culture is as an individual‟s characteristic way of perceiving the man-made section of one‟s environment. It involves the perception of values, norms, rules, roles, and which is influenced by various levels of culture like gender, race, language, religion, place of residence, and occupation, and it impacts on interpersonal behavior.
Doherty and Groeschl (2000, p.14) stated that culture is very difficult to define: Culture consists of many factors of which some are explicit and others are implicit. Most often these factors are explained by terms like norms, values, behavior and basic assumptions.
According to Aryee (2004) it is important for managers to understand cultures and base HRM design and management styles on the national culture. Managers also have their own understanding of culture which shapes their thinking.
Berrell and Wright (1999) maintained that will be lots of misunderstanding in doing business without understanding different cultures and people will interpret different cultural behavior in the wrong way.
Hofstede displayed that there are cultural differences between nations and that they can affect differences in HRM perceptions and practices. According to his study national culture have significant impact on the attitudes and values related to employees or workers. Hofstede (1980) suggested four generic cultural dimensions, largely independent of each other:
1) Large vs. small Power Distance,
2) Individualism vs. Collectivism
3) Strong versus Weak Uncertainty Avoidance
4) Masculinity vs. Femininity
Hofstede develops these dimensions to be virtually independent and, hypothetically, exclusive of one another. He maintained the importance of cultural context on human resource management practices and perceptions. Hofstede states that root of cultural patterns are in the value system of significant grouping of the population and that they stabilize over long periods in history. Hofstede and Aycan (1999), indicated that cultural dimensions impact the way of doing business especially on human resource management practices since this involves dealing with human capital who have been socialized in that environment.
For describing differences among nations Hofstede‟s cultural dimensions framework has been accepted as important and reasonable (Triandis, 1995).
According to Jackson 2009) and Smith (2003), Hofstede‟s work is a foundation for describing cultural differences.
Although Hofstede‟s work has been highly criticized on a several points and by a number of researchers (Iribarne, 1991, Sondergaard, 1994, Tayeb, 1994, McSweeney, 2000 and Gerhart, Fang, 2005), the popularity and usefulness of the categories developed by him indicates that this theory is still popular and it is utilized by researchers in a variety of fields. The most important critic now facing Hofstede is not only for the limited number of dimensions, which fail to capture the richness of national environments but also because his dimensions essentially are statistical constructs based on clusters of responses without in-depth understanding of the underlying processes.
It is important to gain some insights into cultural differences since there is relationship between cultural values and HRM practices.
Most of the research was conducted on a basis of country by country and Hofstede gave each country a score for each dimension on a scale of one being the lowest and hundred being the highest.
Large versus Small Power Distance
According to this dimension, the way which nations treat inequality is different. This inequality can be related with wealth, prestige and power. Employees in large power distance societies believe that their supervisors are right even at the time they are wrong. Inequality is less tolerated in the low power distance societies. The advantages related to the position are not easily accepted. In these cultures superiors are more accessible, differences between the sexes with respect to status is less pronounced and see fewer differences between reporting relationships. Power distance in organizations occurs when employees are differentiated from their bosses with respect to status, promotions, salaries and benefits. Similarly lower power distance is decentralized and power is distributed equally.
In the present study, France and Belgium fell above the mean on power distance with the score 68 and 65, conversely, Germany and United Kingdom scored below the mean with the score 35 for both. In small power distance countries like Germany and United Kingdom there is flatter organization pyramids, less power centralization, and smaller proportion of supervisory personnel, smaller wage differentials and high qualification of lower strata comparing with the situation in a large power distance countries such as Belgium and France.
Individualism versus Collectivism
Refers to the extent that individuals focus on individual wants and needs versus the needs of the group. According to this dimension in individualistic cultures people are supposed to look after only themselves, the ties between individuals are very loose and Work is important and employees don‟t expect the company to care of them, whereas in collectivistic cultures people belong to groups that are supposed to look after them in exchange for loyalty and Relationships are important, the ties between individuals are very tight and employees expect the company to care of them. Individualistic societies tend to emphasize personal achievement whereas collectivist cultures highlight group-based achievement. The collectivists rely on other members in group chronically, they have weaker upwards mobility and underestimate their contributions they can make for companies, in contrast, the individualists try their best to do better and better, and finally become the best, they have strong upwards mobility; at the same time and overestimate the importance of their work in group work.
Erez (2000) indicated that in individualistic cultures the selection procedure of new employees is based on their personal records, whereas in collectivistic cultures an important criterion for selecting new employees is recommendations by family members, who already work for the company.
National differences in Individualism are calculated using Individualism Index (IDV) (Hofstede, 1991, p. 53). Hofstede claims that modern management policies and practices tend to emanate from more individualistic societies and that they therefore possess limited applicability in collectivistic and developing countries. It is claimed that countries become more individualistic as they become more economically advanced. In this study all the four countries (France, Belgium, Germany and UK) scored high in this dimension
Strong versus Weak Uncertainty Avoidance
Uncertainty avoidance is the degree to which the members of society are rule-oriented and feel threatened by ambiguity and is regarded with how society members deal with the future risk possibilities. In weak Uncertainty Avoidance societies people will tend to accept each day as it comes, they will take risks easily, and will not work as hard. In societies with high uncertainty avoidance, people try to be structured, and behave what they are expected and want to know that will happen In the future. In such countries rule-making and bureaucracy would be a common feature of working life. The goal of these countries is to control everything in order to eliminate or avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does not readily accept change and is very risk adverse.
Organizational change in high uncertainty avoidance countries is likely to receive strong resistance from employees, which makes the implementation of change difficult to administer.
Belgium had a score of 94, France had a score of 85, Germany had a score 65 and the world average was 64. The United Kingdom low ranking with score 35 indicates a society that has fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts, and beliefs.
Masculinity versus Femininity
This dimension represents the extent to which stereotypical male values like personal recognition, high earnings and a challenging career take precedence over „feminine‟ preferences for employee well-being and satisfaction, good personal relations, nurturing and sharing.
In societies with femininity tendencies, both women and men share some sets of values related to humility, life quality, cooperation between people and helping others, in these societies are paid attention to a person who is treated with injustice, cooperation and security is valuable for employees, work is of less orientation and progress is defined based on human interactions. While in masculine societies, the focus is on hardship in ideas and materiality and competition. In these societies progress, income and being famous is of importance for employees. Work is the orientation of life and is defined with the professional situation and wealth. In feminine countries women have the same modest, caring values as the men, but in the masculine countries they are somewhat competitive and assertive, but not as much as the men.
Lower job stress, promotion by merit, good relationship with the boss, belief in group decisions, and preference for smaller companies, characterize Low masculine countries. High masculine countries are characterized by higher job stress, belief in individual decisions, challenge and recognition in jobs and preference for large corporations.
Bjerke and Al-Meer (1993) stated that feminine societies place a great deal of emphasis on friendly relationships among people and concern for others, which serve to lower the stress levels.
Germany and United Kingdom masculinity score is 66, compared to Belgium‟s ranking of 54, France 43 and a world average of 50.
2.5 Impacts of Cultural Dimensions on HRM Practices
Based on differing in laws, policies and cultures HRM practices may not generalize among different nations. And cultural differences may impacts on how HR roles are implemented across borders.
In recent studies in the field of comparative HRM culture has generated more interest because of the belief that culture is at the base of people‟s behavior. In this section some researches of how HRM preferences influenced by cultural factors are given.
Many studies have demonstrated that the effectiveness of HRM practices depends on how well these methods are suitable with the culture in which they are implemented, including Hong Kong (Ngo, Turban, Lau, &Lui, 1998), China (Warner, 1998), Singapore (Barnard & Rodgers, 2000, Korea (Bae& Lawler, 1998), Oman (Aycan, Al-Hamadi, Davis, & Budhwar2001 and, Kenya (Nyambegera, Sparrow, & Daniels, 2000). In addition, several studies have compared HRM systems across different cultural contexts such as the US, Japan and Germany (Pudelko, 2006), the US, Canada and the Philippines (Galang, 2004), Australia, Indonesia, Malaysia and Hong Kong (Mamman, Sulaiman, &Fadel, 1996), the UK and China (Easterby- Smith et al., 1995), East Asia (Zhu, Warner, & Rowley, 2007), Turkey, Germany and Spain (Özçelik&Aydinli, 2006), China, Japan and South Korea (Rowley, Benson, &Warner, 2004), China and the Netherlands (Verburg, Drenth, Koopman, Muijen, & Wang, 1999), China and Taiwan (Warner & Zhu, 2002), and the UK and India (Budhwar&Khatri, 2001; Budhwar& Sparrow, 2002b).
ZeynepAycan, JurgenDeller, RabindraKanungo, Anwar Kurshid, Manuel Mendonca, Kaicheng Yu and Gunter Stahl (2000) stated that there are three different stages where in the cultural dimensions effect the human resource management practices. At the first stage organizations internal work culture is seen as a way that shares managerial assumptions and beliefs which relate to tasks and employees. At the second stage task driven assumptions are driven by the organizational characteristics such as industry, availability of resources, ownership status and market competition. Finally at the third stage employee related assumptions are driven by socio cultural characteristics.
Wright, Szeto&Cheng (2002), found that In general high power-distance societies prefer one-way over participative delivery of training and education courses in which the instructor is perceived to possess adequate authority. In these societies, organizations tend to employ senior managers rather than external trainers as instructors in order to ensure a high level of credibility and trust.
Reichel, Mayrhofer, &Chudzikowski (2009), showed that cultural value like high uncertainty avoidance drive managers to pursue systematic, internal and long-term orientations in personnel development. They stated that collectivist societies concentrate on seniority-based promotion decisions whereas Individualistic cultures are considered to place a stronger focus on discussing employees‟ potential for future promotion based on task performance. Schuler and Rogovsky (1998) demonstrated that uncertainty-avoidance cultures place a stronger focus on individual performance-based pay. They stated that in low power-distance cultures employee share options and stock ownership plans are more widespread. Whereas high uncertainty-avoidance cultures prefer seniority- and skill-based reward systems given their inherent predictability.
Björkman& Lu (1999) indicated that in collectivist societies it is so difficult for candidates who recruited externally to enter the strong social networks within the organization and cope with resistance following their appointment, especially in cases where an internal candidate has been supported.
Koopman, Drenth, Verburg, van Muijen, and Wang (1999) sampled Chinese and Dutch industrial companies and found various differences in HRM perceptions among the two nations in the areas of performance appraisal, training, hiring and compensation practices. For instance, Dutch companies were more likely than Chinese industries to have formal procedures for compensation and hiring. Companies of China showed a greater tendency to base pay on both company and personal performance than did Dutch companies.
Aycan, Sinha and Kanungo (1999) compared HRM perceptions of both managers and workers in Indian and Canadian organizations and observed the impact of cultural contexts on these perceptions. . They found several important differences in opinions between the two nations. Canadians indicated that they felt more self-control and autonomy, or decision making ability and work without direct supervisions, than their Indian employee counterparts. Indians showed more forward thinking when planning goals and actions. They figured out significant correlations between these differences in perceptions and differences in cultural dimensions, including uncertainty avoidance, power distance and paternalism. Indians scored higher on these traits than did Canadians.
Agyeman (2010) showed that cultural dimensions had a role in the development and structuring of training and development programs.
Mathur, Neelankavil and Zhang (2000) compared HRM practices in the United States with three Asian nations: India, China and the Philippines. They discovered important differences among Indian, Chinese, Filipino, and American managers‟ perceived importance of characteristics such as self-confidence, communication skills, educational achievement, past experience, planning/ decision-making and leadership ability. They concluded that these differences in HRM practices root in variations of Hofstede‟s cultural dimensions like collectivism/ individualism found between the four countries.
Brewster and Larsen (1992) observed differences in the HRM practices across ten European nations: France, Denmark, Italy, Germany, the Netherlands, Norway, Spain, Switzerland, Sweden, and the United Kingdom. The companies sampled represented several business and public sectors such as agriculture, chemical, health, manufacturing, and engineering.
They measured the extent to which HRM responsibilities were placed on line managers as contrasted to HR specialists (devolvement) and the degree to which these companies considered HRM as part of business strategy (integration). Countries which demonstrated higher levels of devolvement more closely matched one another‟s cultural dimensions than countries with lower devolvement levels.
Brewster and Larsen (1993) observed differences in the HRM practices across ten European nations: France, Denmark, Italy, Germany, the Netherlands, Norway, Spain, Switzerland, Sweden, and the United Kingdom. The companies sampled represented several business and public sectors such as agriculture, chemical, health, manufacturing, and engineering.
They measured the extent to which HRM responsibilities were placed on line managers as contrasted to HR specialists (devolvement) and the degree to which these companies considered HRM as part of business strategy (integration). Countries which demonstrated higher levels of devolvement more closely matched one another‟s cultural dimensions than countries with lower devolvement levels. Netherlands and Denmark were shown to have high devolvement and low integration. These two countries share common scores on Hofstede‟s cultural dimensions of small power distance, high individualism, and low masculinity. Switzerland and Sweden show similar small power distance and high individualism scores. Brewster and Larsen discovered that these two countries both have high levels of both devolvement and integration. Countries with low devolvement did not fit each other‟s cultural dimension scores. Countries with low devolvement and high integration included Spain and France, which are culturally similar to one another. Germany was closer to Italy with higher uncertainty avoidance but more closely matched Great Britain with lower power distance. According to these findings different combinations of cultural dimensions may impact on HRM practices in varied ways. (Baron, McFarland, Ryan, & Page, 1999) Found that members of high uncertainty avoidance tend to use more types of selection tests, use them more extensively, conduct more interviews and monitor their processes in more detail, thus suggesting a greater intent to collect objective data for decision making.
Kovach (1995) showed that the selection strategy and recruitment differs across cultures. For instance, collectivist cultures seem to prefer the use of internal labor markets in order to promote loyalty to the firm.
Snape, Thompson, Yan, & Redman (1998) indicated that members of high power-distance cultures tolerate autocratic assessment styles that do not require them to openly express their perspectives in the appraisal review whereas low power-distance cultures appear to use more participative and egalitarian forms of performance appraisal.
Fischer (2008) mentioned that cultural values and norms influenced on both the design and implementation of HRM practices. He stated that cultural dimensions such as power distance and individualism versus collectivism impacts on key HRM practices like recruitment, appraisal, compensation, and promotion.
Aycan (2005) indicated that in individualistic societies job descriptions are prepared for individual worker in contrast in collectivistic societies the unit of analysis in job descriptions is the work group rather than the individual employee, good interpersonal relationships with co-workers and teamwork are expected. Barber (1998) mentioned that the culture impacts on various aspects of the recruitment process, so only those recruitment practices and methods that fit the culture are likely to be effective.
Khatri and Budhwar (2001) demonstrated that high power distant and collectivistic countries tend to place greater importance on recruitment criteria, like socio-political connections and ascribed status than on “hard criteria” such as knowledge, skills and abilities.
Rousseau, Tinsley (1997) mentioned that in collectivistic cultures Employee selection is person-centered, focuses on the fit of the recruit with the rest of the company on the other hand, employers in individualistic cultures are more likely to select applicants on the basis of whether they have the necessary skills and task abilities to choose measures on the basis of their validity in assessing these attributes.
Spence, Petrick (2000) indicated that highly structured, bureaucratic interview, which is the most popular and essential selection instrument, is less likely in collectivistic and more likely in individualistic cultures.
Ryan( 1999) argue that in large Power Distance cultures educational qualifications are more important in hiring, possibly because of the emphasis those countries place on status.
Stohl (1993) concluded that Uncertainty Avoidance influences organizations to use more structured selection practices. Dipboye, Johnson (2008) found that Countries high in femininity have more overlap in the social roles of women and men and value to a greater extent quality of life, relationships, caring for the weak, and modesty .The objective of selection procedures in feminine cultures is to hire individuals who have positive relationships with others.
Spence, Petrick (2000) mentioned that in masculine cultures there is a greater use of highly structured interviews with uniform guidelines, the same questions asked of each candidate and little personal interaction.
(Aycan, 2005) proposed that systematic and participative human resource planning in the large Power Distance cultures may not exist or is rare, short-term oriented and conducted with high flexibility, due to the centralization of the human resource planning decision-making process: HR plans may frequently change to accommodate the requests of executives in high level. On the other hand, human resource planning in low Power Distance cultures is conducted with the involvement and input of all line mangers and is a long-term, rational and systematic approach to human resource and career planning.
According to Chen (1995), both the uncertainty avoidance and power distance dimension influenced formalization and centralization in South Korean companies. South Korea‟s high power distance score is reflected in the centralized structure of several South Korean companies. Hampden-Turner‟s (1997) maintained that organizations and environmental culture are related to each other and cultural dimensions influences on the design and implementation of HRM policies and practices.
According to the Tayeb (2005) while the „what‟ aspects of HRM may be universal across cultures, the „how‟ question that determines the specific configuration and design of a particular instrument and the extent to which a desired outcome is reached will be culture-specific.
Easterby-Smith (1995) claimed that compensation systems differ considerably between collectivist and individualist cultures. , collectivist cultures tend to use group-based reward allocation and reveal lower overall pay dispersion while pay-for-performance schemes are very common in individualist cultures.
Lowe and Von Glinow (1998) discovered that in collectivist societies there are a relatively greater use of workplace child-care practices, flexible benefit plans, maternity leave programs and career break schemes, while these practices to be less important in masculine cultures.
Based on Verburg (1999) all HRM policies and practices are influenced by cultural dimensions and need to be taken into account when developing effective HRM. He stated that HRM can help to instill culture through training, selection, socialization and several forms of employee involvement to win minds and hearts and ensure shared beliefs and values.
Defining Oil and Gas Industry Workforce Needs
Brawn and Brains. The preferred profile for oil and gas industry workers has changed as access to natural resource supplies has become more technologically complex and specialized. Companies seek workers with expertise in a range of geological specialties and technologies (such as remotely operated vehicles in subsea facilities). In addition, the breadth of required skills stretches beyond engineering to include business acumen, project management, risk management, analytical and forecasting abilities, and proficiency in communicating, negotiating, and problem solving.
At the same time, the industry business model focuses on meeting customer commitments and implementing the company’s strategic plan—which means that project success depends on efficient execution according to internal and external stakeholder expectations.
For example, employees need strong communication skills to document a project in accurate reports that are essential to quality control, and managers must apply analytical skills to forecast financial and market trends and to strategize company investments.
Recommendations for Increasing Workforce Supply
Roundtable participants proposed the following recommendations to improve workforce development and provide a continuous pipeline of qualified employees to the oil and gas industry:
- Broaden high school students’ exposure to the industry. Participants suggested taking steps to attract young people to the industry at an earlier age and to transform their perception of the industry as dirty or polluting. Programs from kindergarten through high school must build necessary aptitudes in science, technology, engineering, and math (STEM) and familiarize students with career opportunities. Field trips, career days, and summer programs can offer hands-on experiences and open up the world of oil and gas to talented young people as they are beginning to plan their college and career trajectories.
- Increase outreach to women. No industry today can create sufficient workforce supply while ignoring outreach to girls and women. Industry leaders suggested debunking preconceived notions about the oil and gas industry as a key strategy for attracting more women. Many women may not realize that the industry provides a wide range of career opportunities that do not require extended periods of isolating work offshore, and many positions offer the chance to travel around the world.
Develop skills through mentoring. On-the-job mentoring is a critical strategy for helping oil and gas employees acquire additional industry-specific technical skills as well as soft skills such as business acumen, communication, supervision, and leadership. For example, during the first five years with a company, new hires may have up to three different work assignments, which gives them ample opportunity to gain diverse skills, learn the company culture and processes, and also discover the types of work they prefer. Aside from helping employees to develop leadership and new skills, providing mentoring or career coaching periodically throughout an employee’s career helps improve employee retention.
- Provide incentives to boost retention. As the oil and gas industry struggles to attract new employees, roundtable participants noted that care must be taken to retain current talent. One important aspect of retention is a career development plan—a mechanismfor employees to map their career paths within their organization. Supervisors can help employees identify positions for which they are qualified or could be qualified with additional training and experience. Together, managers and employees can identify three- to five-year milestone achievements that are necessary to obtain a desired position.
Roundtable participants mentioned other retention incentives such as company stock options, cash bonuses, or tuition assistance that may entice certain talented employees to stay with the company. Other overall factors that make a company a desirable employer include attractive benefit packages, work-life balance policies, employee recognition programs, involvement in the local community, and a clear commitment to the environment.
Developing Talent in New and Remote Locations
In some worldwide locations, oil and gas companies may be required to prioritize hiring local workers. Hiring locally may be more cost-effective. Even in the United States, as companies move into new locations for energy extraction, local communities prefer that their residents benefit from the majority of the new jobs created. But these preferences challenge the industry’s recruitment, especially if the skill set of the local workforce does not match the companies’ immediate needs.
Roundtable participants proposed several solutions to recruitment that could address needs in new or remote locations:
- Seek transferable skills from other sectors. People with work experience in construction, defense, automotive, aeronautics, and other large and complex engineering industries are often accustomed to meeting the high standards of work performance that are customary in the oil and gas industry. Individuals from related industries are likely to have many transferable skills. Military veterans also typically have the types of skills the industry seeks, such as teamwork, leadership, the ability to handle high-pressure situations, and a strong work ethic.14 Experienced project managers from other industries may be effectively cross-trained in the technical side of the oil and gas business.
- Develop relationships with local higher education providers. Companies can define the competencies they need in workers and then develop partnerships with community colleges
INNOVATION, TRAINING AND DEVELOPMENT
Literature conceptualizes innovation which is a result of training and development in a variety of ways in the literature, as a process, and outcome of both Damanpour (1991). However, most of the definitions of innovation share the idea that innovation implies the adoption of a new idea or behavior. Literature also distinguishes different types of innovation. The classification most extended and accepted is the one Damanpour (1991) proposes. He distinguishes between technical and administrative innovations. Innovation as result of learning and development helps the company to deal with the turbulence of external environment and, therefore, is one of the key drivers of long-term success in business, particularly in dynamic markets (Baker and Sinkula, 2002). To survive in Schumpeterian environments organizations must be able to cope with increasing complexity and high-speed change (Brown and Eisenhard, 1995). In these contexts, companies with the capacity to innovate will be able to respond to challenges faster and to exploit new products and market opportunities better than non-innovative companies (Brown and Eisenhard, 1995). Most of the broad empirical studies on the relation between innovation and performance provide evidence that this relation is positive (Weerawardenaa, O‟Cass, and Julian, 2006).
However, as Simpson, Siguaw and Enz (2006) point out, innovation is an expensive and risky activity, with positive outcomes on organizational performances but also with negative outcomes, such as increased exposure to market risk, increased costs, employee dissatisfaction or unwarranted changes. In addition, some studies arrive at conflicting conclusions. For instance, Wright and Boswell (2002a), are using a sample of small businesses, find that product innovation does not affect performance in benign environments, but has a positive effect on performance in hostile environments. Focusing on a sample of US business service firms, Mansury and Love (2008) also find that the presence and extent of service innovation have a positive effect on the growth of a firm but no effect on productivity. Finally,
Damanpour et al. (2009) find that adopting a specific type of innovation every year (service, technological process, and administrative) in public service organizations in the UK is detrimental, consistency in adopting the same pattern of types of innovation over the years has no effect, and divergence from the industry norm in adopting types of innovation positively affects performance. These results show that the relationship between innovation and performance is complex and requires more research. In sum, empirical findings are consistent with theory and provide evidence that supports the positive relationship between organizational performance and training and development. However, these conclusions are not conclusive, since their samples and measures for both organizational learning and performance are very different. Therefore, more research would be of interest.
REWARDS AND COMPENSATION
One of the main management strategies of the organizations is to invest in employees. Organizations are seeking to develop, motivate and increase the performance of their employees in a variety of human resources applications. Therefore, the reward management system has been the most considerable practices of the human resource management system. Compensations systems play a critical role in influencing organizational performance. Service industries are especially dependent on humans to deliver high quality services. Therefore, HR practices that aid the hiring and retention of quality employees is of strategic importance. Appropriately designed pay systems motivate performance, help attract and retain employees, and is considered to be a core element of any employer–employee relationship (Bloom and Milkovich, 1996; Wah, 2000). Baum et al. (1997) indicated that in the tourism and hospitality industries direct and indirect compensation is very important to hiring and retaining quality employees. Yang, (2008a) examined the impact of indirect compensation on organizational performance and suggested that it is important to integrate compensation plans with organizational strategy.
Reward management system is a core function of human resource discipline and is a strategic partner with company managements. Besides, it has an important role on employee performance (Yang, 2008a). Fay and Thompson (2001) mentioned that reward management systems have major impact on organizations capability to catch, retain and motivate high potential employees and as a result getting the high levels of performance (Fay and Thompson, 2001). On the other hand, it is crucial to invest in employee development for enhancing the skills and abilities of employees and organization.
Furthermore, social exchange theory shows that employees behave in positive ways when the organizations invest to them (Cropanzano and Mitchell M., 2005). Organizational inducements are the factors for the motivation of the employees and pro socially motivated employees make a great effort to benefit the organization (Kuvaas and Dysvik, 2009a). Reward Management System Tool includes both Financial and Non-Financial Rewards which are also called as Extrinsic and Intrinsic Rewards
