Comparison of the United States and Chinese Reward system Term Paper

Comparison of the United States and Chinese Reward system (compensation) - Term Paper Example The other objective is to maintain equity and fairness in compensation for similar jobs. It achieves flexibility in the system to accommodate organizational changes as and when these take place. Above all it makes the system cost-effective. Different organizations have different reward management systems based on various cultures. For example the reward system in China and United States are different due to different cultural backgrounds. Whereas the Chinese system is more collective as a result of socialism and ancient traditions, the American system is more individualistic as a result of capitalism. These cultural differences have impacted greatly on the reward systems in the United States and China. This paper compares the reward system in China and the reward system in the United States. Whereas the reward system in United States are performance based reward system, in China they are not performance based. China transformed from a socialist economy to a capitalist, a more market led, open economy which has attracted a pool of foreign investors in the huge Chinese market. Before the foreign invested companies in China introduced new reward systems, the systems in china were based on seniority, collectivistic beliefs, political position and political loyalty (Warner 2001). China thus does not reward performance and therefore leading to low motivation and productivity. Retaining employees in China is a very important issue. This is the most important goal of HR department in China because there a huge shortage of skilled employees in the country (Lewis, 2003). To understand the reward system in China it is important to understand the previous system from 1990 an how the reward system has evolved over years, before going to the current reward system in China. In 1949, Mao seized control of China and introduced a new employment system which was Soviet based and which was known as ( jiu san tie) ‘three old irons’. Mao had found the other