Academic journal article Business: Theory and Practice

Human Resource Crises in Chinese enterprises/Zmogiskuju Istekliu Krize Kinijos Imonese

Academic journal article Business: Theory and Practice

Human Resource Crises in Chinese enterprises/Zmogiskuju Istekliu Krize Kinijos Imonese

Article excerpt

1. Introduction

As a result of the reforms in the Chinese economic system, the Chinese economy has changed from a formerly centrally controlled, highly planned system to an open, market driven system. China's "open policy", introduced in the early 1980s, has been pushing Chinese companies into global competition. Especially since China's entry into the WTO in 2001, Chinese companies have been facing increasingly fierce competition in all fields. China, a market with huge potential and challenges, offers every company equal opportunities, as well as equal risks. An organisational crisis is one such risk that every enterprise in China has to deal with.

Organisational crises are a p ervasive threat to organisational performance and sustainability (Hutchins and Wang 2008). The impact of organisational crises on the individual and organisational performance is being increasingly recognised (Wang et al. 2009). Therefore, Chinese companies provide good samples for studying crisis management at the organisational level.

From 2008 to 2009, empirical research on crisis management was conducted in 156 Chinese companies located in 14 provinces, 57 cities and various industries through interviews with middle and top-level managers. The primary results of the analysis indicated that human resource crises are the third most common crises among Chinese organisations, which follow economic and reputational crises.

Crisis theorists and literature treating crises seem to focus on the management itself, but ignore the core element of the crisis--the human resource. Even when discussing a HR crisis, the human resource itself is ignored. Thus, the aim of this paper is to explore HR crises in Chinese organisations. The research questions are as follows: 1) How did the crisis happen? 2) How did the company handle the crisis? 3) What result came from the crisis?

To achieve this aim, a further analysis of the interview results was conducted. The analysis is based on a complete study of all cases related to human resource crises; both the qualitative analysis and document review techniques are employed in this paper. The layout of the paper is as follows: First, a theoretical review will be presented, which will be followed by an introduction to the methodology. Subsequently, an analysis of the cases related to HR will be given, and finally, conclusions and suggestions will be offered.

2. Theoretical Background

Since the theoretical background is the foundation for research, the theory related to HR research crisis will be presented first in this paper.

2.1. Crisis and human resource crisis

Organisational crises have become more complex, far-reaching and prevalent in modern times (Hutchins 2008). Organisational crises are a pervasive threat to organisational performance and sustainability (Hutchins and Wang 2008). The impact of organisational crises on the individual as well as organisational performance is being increasingly recognised (Wang et al. 2009). According to Mitroff (2005) , a human resources crisis is one of the seven types of crises.

A human resources crisis happens when an organisation experiences the loss of key executives, and other personnel; a rise in absenteeism or in vandalism and accidents; workplace violence; lack of succession plans; corruption; and labour strikes, unrest, and a shortage of staff (Mitroff 2005). Sher's (2006) comments that human resources crisis includes the lack of a competent person and a key person leaving.

2.2. The cause and impact of crisis

The triggers for crises vary. Boin et al. (2008) found that crises are triggered by natural forces or by the deliberate acts of 'others' inside or outside the society. Coombs (2006) sorted crises into three categories according to their triggers. The first type includes attacks on organisations that can harm the reputation and financial stability, and include product tampering, workplace violence, terrorism, computer hacking and rumours. …

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