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Sindri Sigurður Jónsson Kt.: 280796-2989 Háskóli Íslands Hugvísindasvið Kínversk Fræði How CCP Shanghai Manages Diversity through Strategic Human Resource Management Ritgerð til B.A.-prófs Sindri Sigurður Jónsson Kt.: 280796-2989 Leiðbeinandi: Geir Sigurðsson Maí 2018 Executive Summary This thesis aims to examine strategic human resource management and how it can be configured to manage diversity in a transnational company. Specifically, CCP’s Shanghai office was taken as an example because it is an Icelandic company with a branch located in China, which has a diverse workforce. In order gain a better understanding of the underlying cultural values of both countries, Iceland and China were compared via Hofstede’s cultural dimensions. Those cultural values serve as a foundation towards interpreting how employees in the Chinese affiliate might perceive HRM activities differently than in the parent enterprise. A four-step process towards managing diversity was formulated by the researcher to serve as a theoretical framework for judging the performance of CCP Shanghai’s strategic HRM activities. An in-depth qualitative interview was subsequently conducted with CCP Shanghai’s HR Director Helen Hu. The information gathered from previous research and the findings of the qualitative interview were compared using the diversity management framework to gauge where CCP Shanghai excels and where they can improve. Overall, CCP Shanghai can be described according to Hofstede’s cultural dimensions as a: collectivist, feminine, and indulgent organization with low power distance, a long-term orientation and low uncertainty avoidance. The company is highly effective in managing diversity through analyzing contextual factors, facilitating learning and development, promoting inclusion and creating an organizational culture. Additionally, CCP Shanghai’s innovative use of communication in their performance appraisal process is commendable. The two factors which could be improved for CCP Shanghai’s diversity management would be creating a reward for local employees as a substitute for not being able to receive company shares, and also fixing the unequal gender distribution within the company. Specifically, more females should be hired into the programming department as there are currently none. This can potentially limit CCP Shanghai’s organizational performance and hurt their corporate image. 2 Acknowledgements I would like to thank Helen Hu and Sophie Froment for their generous help and insight, as well as the entire CCP team for their contribution. Thank you to my parents for proofreading and consistently motivating me. I also extend my gratefulness to Svala Guðmundsdóttir for her constructive advice and lessons regarding human resource management. Last but not least, I thank my instructor Geir Sigurðsson who guided me through this thesis. 3 Table of Contents 1. INTRODUCING CCP ......................................................................................................... 6 2. HUMAN RESOURCE MANAGEMENT AND DIVERSITY ......................................... 7 2.1 EQUAL OPPORTUNITY EMPLOYMENT ................................................................................ 8 2.2 MANAGING DIVERSITY ..................................................................................................... 9 2.2.1 Context .................................................................................................................... 10 2.2.2 Learning & Development ........................................................................................ 10 2.2.3 Inclusion .................................................................................................................. 10 2.2.4 Organizational Culture ........................................................................................... 11 2.2.5 Communication ....................................................................................................... 11 3. COMPARING ICELANDIC & CHINESE CULTURE ................................................ 12 3.1 HOFSTEDE’S CULTURAL DIMENSIONS ............................................................................. 12 3.1.1 Power Distance ....................................................................................................... 13 3.1.2 Individualism vs. Collectivism ................................................................................ 13 3.1.3 Masculinity vs. Femininity ...................................................................................... 14 3.1.4 Uncertainty Avoidance............................................................................................ 15 3.1.5 Long-Term vs. Short-Term Orientation .................................................................. 16 3.1.6 Indulgence vs. Restraint .......................................................................................... 16 3.2 HOLISTIC COMPARISON ................................................................................................... 17 4. HOW CCP SHANGHAI MANAGES DIVERSITY THROUGH HRM ...................... 18 4.1 CONTEXT ........................................................................................................................ 18 4.1.1 The Chinese economy ............................................................................................. 18 4.1.2 China’s social and cultural history......................................................................... 19 4.1.3 Employee Demographics ........................................................................................ 19 4.1.4 Recruitment & Selection ......................................................................................... 20 4.2 LEARNING & DEVELOPMENT .......................................................................................... 21 4.2.1 Training................................................................................................................... 21 4.2.2 Long-Term Orientation ........................................................................................... 21 4.2.3 Low Uncertainty Avoidance .................................................................................... 22 4.3 INCLUSION ...................................................................................................................... 22 4.3.1 Low Power Distance ............................................................................................... 23 4 4.3.2 Collectivism.......................................................................................................... 24 4.4 ORGANIZATIONAL CULTURE ........................................................................................... 23 4.4.1 Femininity ............................................................................................................... 24 4.4.2 Indulgence ............................................................................................................... 24 4.4.3 Compensation ......................................................................................................... 24 4.5 COMMUNICATION............................................................................................................ 26 4.5.1 Performance appraisal ........................................................................................... 26 5. CONCLUSION .................................................................................................................. 28 WORKS CITED..................................................................................................................... 30 List of Figures Figure 1. Diversity Management Flowchart Figure 2. Iceland compared to China per Hofstede’s Cultural Dimensions’ Scores List of Tables Table 1: Standard and additional benefits provided to each employee of CCP. Table 2: Benefits provided to relocated employees of CCP. 5 1. Introducing CCP CCP Games is an Icelandic video game company founded in 1997 by Þórólfur Beck, Reynir Harðarson and Ívar Kristjánsson. The company’s headquarters are in Reykjavík, with offices also located in Shanghai and London. Hilmar Veigar Pétursson has been the CEO of CCP Games since 2004. Over the course of its 20-year history, CCP has produced 7 games, highlighted by their fan-favorite EVE Online. EVE Online is a massively multiplayer online role-playing game (MMORPG) which is set in space and takes place 20,000 years in the future. The game is known for its complexity and open world dynamics, offering a variety of different options in gameplay which includes but is not limited to: exploration, mining, combat, and politics (Garratt, 2007). While CCP is mainly known for EVE Online, they also produce several other games in other genres such as virtual reality and first-person shooters. The CCP office in Shanghai is home to the development team of the game Gunjack. Gunjack is a virtual reality arcade shooter which is set in the EVE Online universe. The objective of the game is to defend a mining operation using a turret (Gunjack, n.d.) Because Gunjack is set in the same EVE Online universe, the development teams in Iceland and Shanghai frequently work together. This creates logistical obstacles as well as the need to manage diversity (Helen Hu, personal communication, 2017). Iceland and China are not only far apart in location, but are also massively different in terms of culture, work habits and environment. CCP are very proud of their diverse personnel as they publicize the following on their website: “We stand united. We are individually diverse
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