National Differences in HRM: Comparing Cultures and Institutions
Both Mexico and the US are members of NAFTA. Despite the geographical proximity between the two countries, their HRM procedures and structures are quite different. The differences are a result of various factors such as the difference in culture, institutions, and host country effects at play in these countries. This paper aims to compare the HRM structures in the two countries.
Throughout the world, country and regional cultural differences exist. The power index developed by Hofstede proves useful in determining the extent to which individuals with less power in organizations accept unequal power distribution. Mexican labor laws endorse that employers should work under the patron’s orders (or his representative) in all matters related to work. In the US, the power distance culture is very low, and relationships between leaders and followers are characterized by participation and openness (Becton & Feld, 2009, p. 1656). Although little power distance implies empowerment and satisfaction, (Yi Zhang & Thomas M. Begley, 2011) through his study revealed a high power distance culture, empirically promotes strong, effective teams and participation.
The culture in Mexico is a collectivist one where employers prefer working in an environment that is characterized by close social relations. In this culture, loyalty to the group is a dominant virtue. America is, however, characterized by a culture that is individualistic, and employees are self-reliant and display initiative. In organizations operating on an individualistic approach, employees are recognized based on their unique skills instead of giving credit to a group. As a result, individualistic approach motivates creativity among employees. A collectivist approach encourages teamwork but may lead to a lack of motivation among employees.
Mexico is more inclined toward a feminine approach where warm interpersonal relations and the interests of others are valued. This feminine approach collaborates well with the collectivism and high power distance cultures to contribute to teamwork in organizations. The US scores very highly in the masculine approach indicating competition and achievement drive society. The individualist culture justifies this masculine approach where employees take credit for their work and get promotions based on their effort.
The United States has neoliberal employment and economic policy. Some of the features of neoliberalism upheld in the US are low taxation rates, a strong orientation towards the private sector, low levels of government regulation, and adjustment towards labor mobility within and across companies. In the US, primary economic actors have the freedom to make recruitment decisions without interfering. However, this is not the case in Mexico, where the country has highly interventionist legal structures and governmental institutions. In Mexico, statutory regulations significantly control employment. Labor laws derived from the Mexican constitution (1917) and the Mexican federal laws provide guidelines about work. Social security laws and worker housing institute laws provide other statutory regulations for recruitment.
The US has a federal government. Therefore state laws and local laws affect HRM practices of foreign companies (Chris Brewster, Paul Sparrow, Guy Vernon, and Elizabeth Houldsworth, 2011). Individual states set laws governing employment relationships, contracts, and sales transactions. International companies should be aware that they are subject to these parallel systems of laws, which often vary from state to state (Mohammad Khasro Miah, Noor-E-Hasnin, 2016). Mexico, however, is much dependent on its partnership with the US and is, therefore, foreign companies are vulnerable to any changes made on the free trade agreement.