Professor Fang Lee Cooke at Monash Business School, University of Monash and Senior Economist Nikolai Rogovsky at the International Labour Organization recently edited and published a comprehensive publication that seeks to better understand the relationships between megatrends that affect HRM policies and the respective implications for the BRICS countries.

BRIC by BRIC: Building human-centred HRM approaches in developing economies by CoBS Editor Michelle Diaz, with Tom Gamble and Fang Lee Cooke.

The contemplation of the future of work in our modern age is pertinent for a number of reasons, from the increasing role of work in our lives, to the rapid evolution of technology, and the long-standing ethical issues around employment worldwide. Particularly in the emerging economies, wherein the transition into development increases the likelihood of poor labour standards that favour pragmatism and profit.

In this light, a better understanding of the megatrends that affect human resource management (HRM) policies would provide policy makers with the ability to make more informed decisions and allow for a proactive approach.

To achieve an understanding of the existing mega trends surrounding HRM, Prof. Fang Lee Cooke at Monash Business School and Senior Researcher Nikolai Rogovsky at the ILO looked at firms operating in the BRICS – Brazil, Russia, India, China and South Africa – with a particular focus on private and foreign multinational enterprises (MNEs) having a growing influence on the economies of these countries.

In analysing the different trends within each BRICS country, the researchers attempt to outline the key challenges and good practices across several industries to reveal megatrends – and as such, identify areas to address to ensure that a human-centred approach to HR and employment relations becomes the norm.

Brazil: The risks and opportunities presented by Globalization

Like all nations affected by the reach of globalization, there exists both challenges and opportunities alike. But in developing nations like Brazil, these are amplified. Indeed, despite the transition of the Brazilian economy into one of trade liberalisation, it remains largely inwardly-focused with trade volumes below the norm for a country of its size.

The firm-level data analysed by the researchers confirms this by revealing that exporting firms in Brazil pay higher salaries and hire more employees while import-competing sectors face stronger competition from abroad. In essence, these two realities illustrate the opportunities on one hand for local citizens to earn more via employment in exporting firms. And, on the other hand, how the opening of the economy to international competition can destroy local job opportunities and drive wages down.

Moreover, Brazil faces the lack of abundant cheap labour that hinders its capabilities in the rudimentary, labour-intensive sectors of the economic chain. This issue may be amended by focusing on the exportation of refined and differentiated products. However, this necessitates the expertise of skilled hands, the precision of advanced machinery, and the quality of superior qualities.

To improve the situation, the researchers investigated how government policies and business strategies might improve the integration and development of the required skilled labour. Precise and purposeful labour market strategies could produce positive results for both employers and workers. But evidence for specific labour policies to encourage exportation in emerging markets remain scant, and the empirical evidence for their usefulness remains inconclusive. Overall, however, these policies seem to affect smaller firms the most.

In reviewing successful Brazilian firms that have internationalized well, Cooke and Rogovsky found that HR policies that emphasise the development of their employees to achieve competitiveness reigned supreme. These featured training programs that allow employees to continuously improve their skills and firms with cultural sensitivity training and policies. Such programs facilitate knowledge transfer and give rise to quality management – which in turn results in overall improvement for the firm.

While formal education and fostering human capital within firms hold significance, they represent merely a segment of the bigger picture. Successful internationalisation requires not only technological advancement and adequate resources but also enhancements in productivity. That is to say that a comprehensive understanding of skills development and HR practices requires the consideration of other complementary policies in place.

The Russian Federation: Megatrends on HRM and the ILO’s human-centred agenda

The Russian business ecosystem is distinct with its diverse business landscape, characterised by great variety within industries, form of ownership, access to resources and funding, among other things. Such diversity coupled with technological advancement and the country’s political and social environment resulted in an “investing in people” approach within firms. Essentially, these firms embraced digitization and ICTs to streamline HRM processes, from identifying talent to adjusting their business models to adapt to demographic, environmental, and the country’s growing economic isolation challenges.

Fang Lee Cooke and Nikolai Rogovsky conclude that while digitalization and ICTs have opened up immense opportunities to improve competitiveness and promote growth in Russia, the particulars of the country present hurdles. For example, Russian firms are behind in addressing concerns like climate change. Moreover, demographic issues coupled with anti-globalization sentiments have led to unfavourable outcomes and suboptimal decisions. In addition, the strong influence of the Russian State on employment policies remains an important consideration.

Indeed, there exist two types of firms within the Federation: some in alignment with the ILO standards of a human-centred approach and others more in line with the Russian state, which can either support or resist development. For example, human-centred firms that leverage technology do so using software products designed by Russian engineers or international companies like SAP and Oracle Applications. Likewise, the international firms operating in the federation employ similar software.

More generally, leading Russian companies have started transitioning from individualised improvements to more comprehensive and structural HRM systems, leveraging digitalization and ICTs for improved efficiency and people management. Such companies stand as role models for mainstream enterprises and arise as “centres of knowledge” for the propagation of the best HRM practices within the Russian Federation.

Key Challenges for Management Policies & Practices: The Indian Experience

The Indian experience is markedly distinct due to the country’s perceived potential to harvest the benefit of globalisation, owing to its favourable demographic transition. However, the economy was slow to undergo the necessary structural changes, with a vast chunk of employment still found in agriculture. Indeed, the service sector, a strong driver of economic growth, accounts for a mere 26.8% of overall employment.

As it stands, the employment growth rate is behind economic growth. All in all, the country is in a paradoxical situation whereby the number of educated unemployed workers continues to increase even when many workers still lack the necessary skills and academic qualifications required by employers. Moreover, the continued disruption caused by the increasing prevalence of technology has created the need to quickly upskill and re-skill workers.

To amend the issue, common strategies deployed by companies are re-training existing employees, hiring new permanent staff with the requisite skills, and creating in-house staff development programs to name a few. Indeed, many Indian companies have strategies in place that follow the ILO’s human-centred agenda. But there remains room for improvement – from collection representation to collective bargaining.

Lastly, like every other nation, India has been subject to the negative effects of climate change. Prof. Cooke’s research shows that to retain the confidence of overseas investors, Indian organisations must use sustainable business models along with sound governance practices. For example, in 2013, the Indian Companies Act was amended to mandatorily require large companies to allocate 2% of net profits to CSR activities annually. Even still, coverage for mandatory disclosure needs to be widened.

China: Towards a human-centred business and economic model

The Chinese economy is characterised by its intimate relationship with the State. Indeed, the State exercises a nuanced hand in training and developing human resources and other similar functions via a networked paradigm leveraging AI, data analytics, and other digital technologies. This approach, while nascent, underscores the integration of HRM into municipal governance frameworks, as exemplified by the smart city initiative in Tianjin.

Moreover, the case of Tianjin underscores China’s proactive approach to advancing digital infrastructure. Businesses have taken to leveraging technologies in innovative ways tailored to their operational needs. Simultaneously, they have begun to adopt a mindset attuned to both industrial and environmental ecologies. Such a shift has materialised in supply chain management and the approach to real estate development – both sectors now deploy innovative solutions intelligently.

But while this trend fosters potential for business innovation, it also presents unprecedented challenges for HRM. As leading organisations leverage big data and data analytics to pioneer novel business practices, the implications are profound. The COVID-19 crisis further emphasised the quick transition necessary for the adoption of digital technologies, boosting the expansion of the gig economy and informal employment, and underlining the outdated status of current HRM practices.

The successful firms were pragmatic, flexible, and had a bottom-up approach, underpinned by human-centred policies, including flexible employment and automation aimed at creating higher-skilled jobs and aligning HRM strategies with employee requirements and desires. But these are merely glimpses into the HRM practices of top firms. Whether they truly prioritise human needs remains uncertain. This notable caveat once again underlines the influence of the State.

Despite the success stories, there remain negative practices and challenges in China that include the displacement of semi-skilled workers due to automation, the “996” intense work culture, and the rise of gig work eroding labour protections. These also include excessive working hours in sectors such as R&D and e-commerce and the deployment of psychological tactics and material incentives to encourage overtime. As such, there are unresolved issues in balancing firm performance with employee welfare.

South Africa: HRM in South Africa and the story thus far

South Africa, akin to many emerging markets, has gone through a contraction in its formal employment sector, consequently constricting the scope of HRM. This challenge is compounded by a persistent skills crisis, exacerbated by entrenched racial inequalities in the education system, which have pushed firms to cultivate HR capabilities in-house, rather than outsourcing to the external labour market. This development was somewhat facilitated by low job turnover and unemployment.

Despite the existence of negative issues, there are noteworthy successes among export-oriented companies. For instance, effective HRM has fostered cooperative productive paradigms based on teamwork and joint-problem solving in the motor industry. This pattern is not unique, but is observable across many emerging markets where specialised production pockets thrive. Yet, the broader dissemination of their best practices is hindered by global deregulatory pressures and the resistance of international financial entities to proactive industrial policies.

Other instances of export success are more complex, like the wine industry. Indeed, some of the most successful firms have been associated with poor labour practices further down their production chains, echoing conditions more akin to the eighteenth-century Cape than to contemporary HRM. And while labour standards in the mining sector are better, miners still face job insecurity, wage stagnation, and inadequate housing. Moreover, small firms often disengage from collective bargaining due to its perceived unresponsiveness and the unrealistic demands of trade unions.

Global pressures contribute to the fragmentation of HR practices, resulting in a dichotomy between labour-repressive firms and human-centred firms. This dichotomy is observable in the clothing and textiles industries, where high-value producers sometimes depend on cheap supplies from questionable sources. It is clear that the regulatory system works better for the larger, established firms, and less well for smaller firms and informal workers, which account for a large subset of the economy.

South Africa has struggled to maintain substantial employment amidst global competition and policy limitations. The situation has spurred calls for radical liberation, which has globally often failed to create decent work and instead has exacerbated inequalities. But the existing regulatory system is only partially effective, with no clear path to improvement. However, the pandemic did highlight how the government possesses a broader array of policy tools for more inclusive HRM.

For the HR profession, it is crucial to transcend traditional focus areas like aptitude testing and labour allocation. Historically, industrial relations have predominantly centred on institutions such as large firms, unions, and work organisations, often neglecting HR planning, skills development, human-centred HRM approaches. As such, going forward, a key challenge is cultivating a dialogue amongst HR professionals that values diversity while acknowledging the persistent impact of the national context.

In conclusion, it could be said that HRM practices are hinged on the growing global economic weight of BRICS-member countries. For while HRM practices and regulations matter in developed economies, it is the emerging economies that might soon define the future of work. Moreover, since inequality and human suffering appear to be correlated with economic weakness, it is important to understand and ensure that HRM approaches are human-centred in emerging economies.

Useful links:

• Link up with Prof. Fang Lee Cooke and Nikolai Rogovsky on LinkedIn
• Read a related article: The Future of Green Jobs
• Download the book: Towards a human-centred agenda: human resource management in the BRICS countries in the face of global challenges
• Discover Monash Business School
• Apply for one of the MBA programmes at Monash.

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