Human Resource Costs in China and the USA

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Table of Contents

Introduction
The Importance of HRM within Chinese and American Companies
Workforce Availability and Company Policies
Wage Differences of Blue and White-Collar Employees
Insurance Provision and Corresponding Requirements
Incentivizing Development: Employee Training Programs in China and the US
Conclusion
References

Introduction

Sustaining Human Resources (HR) is an essential part of any organization’s development, necessitating the implementation of suitable approaches and expenses. As the enterprise grows, additional strategies and benefits for the human resources workforce are required, presenting the corporation with several complications regarding blue-collar and white-collar wages, insurance utilization, and training possibilities. Human resources management (HRM) has been shown to develop uniquely depending on the country of origin and the societal traits (Graham, 2001). Thus, given the contrasting economic situation, each corporation establishes particular HRM costs according to the surrounding context.

Of significant interest are the discrepancies between expenses on human resources in the People’s Republic of China and the United States of America. While both the countries are highly developed, possessing various economically lucrative industries and enterprises, the payments required to sustain a skilled professional team can drastically differ. Scholars are especially concerned with the compensation attributes connected to the hiring companies’ resources and the state of the labor market in these countries (Schmitz, 2019).

Furthermore, it is imperative to consider the cultural contrasts that affect the employee management costs, for example, interest in elevated performance or personal convictions towards the workplace (Egri & Ralston, 2004). This paper investigates the primary differences between the expenses attributed to the HR departments in the enterprises of China and The US, analyzing the HRM policies, wage differences, insurance issues, and training possibilities.

The Importance of HRM within Chinese and American Companies

The significance of utilizing HRM practices for achieving higher performance rates and workplace satisfaction is a vital topic of numerous scientific studies. Organizations that implement additional strategies that benefit their employees are often regarded as more favorable by potential candidates, who seek certain salary levels and development options (Egri & Ralston, 2004). It is indisputable that a person’s wage should correspond to the basic necessities, for example, the cost of food and living in the working area (Dobija, 1998).

Additionally, the company must consider the profits of the human capital, namely costs of hiring, health benefits, further training and education, re-evaluation, and possible termination of the employment contract (Dobija, 1998). All of these elements appear to be the primary considerations included in employee payments. However, as the expenses related to fundamental needs and human capital begin to differ, so do the costs of workforce management.

Organizations often utilize diverse strategies in order to alleviate the negative effects of HR expenses and maximize the possibility of practical outcomes. A core difference between HRM practices implemented by Chinese and American corporations lies in the companies’ primary focus, as Chinese corporations rely heavily on cost reduction techniques when devising their HR approach (Su & Wright, 2012). Given the short history of most firms in China, their priorities encompass the subjects of further development and company growth, emphasizing the essential HR functions over the employee involvement benefits (Su & Wright, 2012).

To successfully compete with mature and developed organizations, such aspects as recruitment and selection are significantly more funded in Chinese corporations than in American ones. For example, firms tend to spend a notable amount of funds on tests and evaluations for their future workers, ensuring that they fit the company’s requirements (Liang et al., 2012). Overall, such aims as attaining suitable staff and advancing business expansion through cost-diminishing operations are prevalent within organizations in the Republic of China.

Enterprises in the United States enforce another HRM tool, which concerns the operational and compensational attributes of the jobs offered. Although a substantial workforce shortage compels the employers to constantly improve their approaches to hiring, their techniques envelop the characteristics of the job offered and additional benefits that could satisfy potential candidates (Greer, 2003). The necessity to work with limited personnel resources demands careful job design strategies to be implemented, as well as proposing sustainable payment rates. A considerable part of a business’ monetary supplies is often used on endeavors that allow devising employee positions in accordance with the firm’s needs and accessible resources (Greer, 2003).

As a result, utilized techniques are connected with the processes of finding a qualified person for the job created and constructing the workplace environment necessary to ensure their long-term interest in the occupation. Altogether, in comparison with Chinese enterprises, American corporations are also highly invested in recruiting skillful employees but are devoting their monetary funds to the activities related to job design and personnel satisfaction.

Workforce Availability and Company Policies

The leading distinction between the features incorporated into HR expenditures by Chinese and American enterprises seems to be the price of labor in these countries. Companies in the United States are presented with significantly decreased employment possibilities due to the lowered population numbers. On the contrary, the Republic of China is one of the largest suppliers of workforce given its vast population, which offers employers more potential options, as well as allows them to lower the initial wages (Liang et al., 2012).

Furthermore, as the cost of living in the USA continues to rise, the companies tend to increase their employees’ payments in order to account for these changes. The cost of living in China, on the other hand, remains cheaper, with average expenses for rent and food being lower (Numbeo, n.d.). Thus, the extended workforce availability and decreased livelihood financial requirements in China account for diminished salaries.

Organizational policies and initiatives introduced by the hiring institutions present an additional factor in HR costs. According to recent labor market statistics, the enlarged availability of potential employees in China has only occurred during the last decade, meaning that various enterprises are forced to adapt to novel challenges (Hau‐siu Chow, 2004). The necessity to support multiple workers simultaneously substantially impacts the cost-related strategies implemented, prompting the utilization of techniques aimed at decreasing the amounts of HR expenses. Lowered wages are a significant part of such initiatives, as they greatly lessen the profits lost and can benefit the company in the long term.

Alternatively, in the United States, a highly contrasting situation can be observed as organizations battle the consequences of a tightened labor market. American employers confronted a drastic shortage of workforce at the beginning of the 21st century, which continues to affect the US economy (Greer, 2003). The combination of demographic trends and economic characteristics of the country creates an unsuitable environment for hiring businesses and individuals in search of work, compelling corporations to heighten suggested salaries (Greer, 2003). However, not all enterprises are willing to increase their HR expenses, as some organizations invent additional programs that might potentially alleviate the loss of profit. Altogether, while Chinese firms seem to be at a surplus of obtainable employees, most American corporations struggle to reduce their salary-related HR costs.

Wage Differences of Blue and White-Collar Employees

The professional level of future work and the type of assignments they are qualified to complete are crucial elements manifested in HR charges and individual payments. The distinction between blue and white-collar personnel is highly evident in both China and the US, however, the particularities of this distinction are incredibly different. According to numerous studies, the wage contrasts between manual laborers and office employees observed in the USA primarily hinge on such attributes as salary levels, as blue-collar workers gain significantly lower payment figures (Zhou & Wodtke, 2019).

An average member of white-collar personnel is reported to be up to 80% more capable of securing a much higher profit than an employee involved in physical labor (Zhou & Wodtke, 2019). In addition, numerous additional benefits are available for non-manual staff, for instance, a company-provided insurance coverage (Liu & Trefler, 2019). In general, a qualified clerical professional is more likely to attain economic success when compared to a working-class person.

A strikingly different situation is present in the Chinese Republic, where manual workers appear to be more advantaged. Although a considerable difference in earnings manifests in several statistics, the amount of monthly capital provided largely depends on the hiring company and its potential resources (Hau‐siu Chow, 2004). While smaller organizations tend to develop a pattern of lowered salaries for blue-collar employees, considerably-sized enterprises propose payment levels that are significantly closer to the desired degrees.

Many manual laborers in China are more interested in working for a large-scale corporation not only due to its recognizance but also because of a potential increase in earnings and development opportunities (Schmitz, 2019). Even though the latter option remains obtainable to a small number of blue-collar personnel, numerous companies become more interested in allocating their economic resources to the working class (Schmitz, 2019). Thus, Chinese manual staff is presented with a larger scope of monetary and advancement opportunities than their American counterparts.

As for the white-collar employees’ salary differences in the two countries, the most notable distinction becomes evident within a thorough investigation of professional improvement practices distributed by the company. While personnel tasked with office-related assignments may obtain a high-income level in both nations, the primary disparity arises between supplementary benefits offered. The results of research by Warner (2020) state that Chinese corporations are significantly more interested in the enhancement of their employees’ proficiencies, offering them multiple opportunities for professional growth and lucrative compensations.

A person working for a Chinese firm and remarkably invested in developing their productivity is considerably more likely to gain additional promotions and benefits in comparison with American white-collar workers. Although similar performance appraisal profits are present within the USA HRM strategies as well, their potential yields will still be decreased when contrasted with Chinese personnel in a corresponding position (Egri & Ralston, 2004). Therefore, in terms of secured supplementary bonuses, the American office staff is greatly disadvantaged.

Insurance Provision and Corresponding Requirements

A credible business institution is demanded to offer its employees various labor compensations apart from potential monetary benefits. Inclusion of insurance coverage in the work agreement is a necessity for some individuals in search of a suitable position, and it might also be a requirement presented by law enforcement officials. For example, Chinese employers are required to include both monthly salary and welfare bonuses into the wage packages, securing the distribution of medical insurance services, retirement programs, and housing funds (Ding et al., 1997). The social security system in the Republic of China is highly developed, prompting the companies to grant their employees availability of health and life safety measures.

In addition to health care expenses, every organization is compelled to acquire protection from work-related injuries and potential accidents, as well as provide the personnel with retirement profits (Schmitz, 2019). Such an advanced insurance coverage system allows the staff to fulfill their duties comfortably, additionally guarding the corporation from incident-connected complications.

As for the United States, a different approach to insurance reimbursement is utilized by American companies. Although the enterprises are also demanded to secure the attainability of pension and health care benefits, the insurance system established in the country might produce some difficulties in the field of medical coverage. Given the absence of state-provided health protection and the domineering influence of private insurance firms, the employer is tasked with a challenging decision regarding the health care packages to be offered to the personnel (Papanicolas et al., 2018).

Although the United states’ law does not force the enterprises to supply each member of their working team with individual health care services, subsequent fines and taxations are reported to be extremely strenuous to repay (Freedman, 2020). Furthermore, as medical coverage is financially burdensome when using personal funds, the staff are extremely invested in gaining an option for healthcare services reimbursement from their organization (Freedman, 2020). The demand for accessible insurance and the need to comply with government taxation laws results in the companies paying significant sums for insurance services.

An additional factor to consider in this discussion is the current trend of employing older age individuals in order to account for labor market shortages. Various corporations began to hire more mature personnel, as this strategy might potentially benefit the firm and save recruitment and training expenses, as well as overcome the instances of absenteeism. According to Brooke (2003), maintaining a team of qualified older workers is not as expensive as some employers claim.

Due to the elevated financial demands for training and recruitment, sustaining a young, skillful workforce is more burdensome than covering the charges for absenteeism and work injuries. Therefore, multiple corporations decide to implement more flexible employment options, including older and retired people, in their recruitment plans (Brooke, 2003). However, this approach necessitates the inclusion of additional insurance coverage packages, as mature workers tend to require extra health care benefits and pension compensations.

The aforementioned technique is not commonly used by Chinese corporations, as there is less demand for additional workforce insurance provision options. The availability of state-funded institutions and services significantly reduces the enterprises’ expenses (Papanicolas et al., 2018). Most companies do not accentuate the different requirements needed for the older or part-time employees, alternatively, reallocate their resources to other areas requiring further development, namely improving personnel’s professional qualities.

Incentivizing Development: Employee Training Programs in China and the US

Various corporations often implement extra resources aimed at enhancing personnel’s current capabilities and uncovering their potential. Providing the staff with a possibility to increase their output and learn new techniques and methods relevant to their position can tremendously elevate their expertise, offering the company a highly skilled employee. Instead of initiating a new hiring process that usually requires a large number of additional expenses, it is more effortless to develop the proficiencies of an already present worker (Greer, 2003). This statement is largely supported by the enterprises of the Chinese Republic, as multiple employers incentivize their personnel to participate in such activities.

Nevertheless, it is imperative to highlight the differences between development benefits obtained in various regions of China. While some companies offer multiple growth possibilities and invest sufficient funds into this endeavor, some large-scale Chinese corporations implement a drastically distinct strategy based on constant changes in team members. Given the supply of labor, it might be more profitable to find and hire a more proficient worker than seek additional strategies of improvement for a present one (Hau‐siu Chow, 2004).

This tendency is especially evident in the regions of Hong Kong, where the firms generally ignore the long-term enhancement option, refusing the provision of training and increase in Competence (Hau‐siu Chow, 2004). The prevalence of salary-cutting initiatives impacts educational availability, and as a result, the latter becomes viewed as an unnecessary expense. Overall, the Hong Kong regions in the Republic of China employ a remarkably contrasting approach, attempting to save economic resources.

In contrast with Chinese company leaders, American executives direct less attention to improving their personnel’s abilities. Even though the numbers of educational courses available might vary based on the individual’s occupation, most enterprises in the USA are more interested in organizational development and company growth. While research highlights the need to address the issue of employee training, suggesting that innovations are necessary for the expansion of the business and individuals’ well-being, most corporations are yet reluctant to instill these measures (Dobja, 1998; Kambayashi & Kato, 2017).

In addition, it is necessary to note that insurance coverage occupies a large part of an American firm’s HR costs, as Chinese health care is significantly cheaper and is provided by the government (Papanicolas et al., 2018). Thus, as fewer employees necessitate the inclusion of insurance packages into their contracts, the corporation can reallocate its resources elsewhere.

Conclusion

To conclude, the leading differences between HR costs for the Chinese and American corporations, namely company policies, labor availability, class-based wage differences, insurance provision, and training programs, were discussed in detail in this paper. It is evident that there are significant discrepancies between the two countries’ approaches to handling their personnel-related expenses, from paid wages to additional educational options. According to scholarly evidence presented, the primary distinction arises between labor supplies, as Chinese firms are more well-endowed than American ones.

The cheapness of the workforce available allows employers to lower the salaries and reimbursement options offered, which is not possible for the United States’ enterprises. Contrastingly, the latter are forced to provide higher payments to the potential candidates, as well as resolve diverse issues linked to the labor shortage. Moreover, it is reported that American blue-collar workers are at a significant disadvantage in comparison with their Chinese counterparts. The fundamental distinction between white-collar employees in these nations is related to the contrasts between possible salary levels, which are potentially higher for work-invested individuals. Therefore, while American organizations might offer enhanced wages, Chinese enterprises require additional efforts from their staff.

The subject of essential benefits supplied by the companies was an imperative consideration within this discussion. Given the accessibility of state-funded services and healthcare institutions, firms in the Republic of China tend to spend fewer resources on establishing proper insurance coverage for their employees. In the United States, however, a contrasting situation is observed, where the private healthcare sector puts extra monetary pressure on the organizations.

Finally, a substantial amount of educational practices offered is another expense sustained by Chinese corporations, which highly value the professional development of their workers. Alternatively, US enterprises are rather reluctant to implement such strategies, redirecting their attention towards different goals. Overall, although the general dimensions requiring sufficient funds remain the same, as the surrounding context and corporate policies begin to differ, the expenses start to vary accordingly.

References

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