Human resource management and its contextual environment in a changing economy : current and future trends in Indonesia

Indonesia is the world's fourth largest democratic entity and fifth most populous country. The country holds an important geo-strategic position both in the Asia-Pacific region and globally, even given its current economic problems. The management of enterprises in Indonesia is central to the growth of the economy and the contribution of the human resource management (HRM) function is crucial in the development of enterprises in Indonesia. Standing in contrast to the growing literature on HRM in other countries in the AsiaPacific, little research has been conducted on the way in which the human resources function in Indonesian enterprises is managed. This thesis is an attempt to ameliorate the dearth of research on Indonesian employee management by critically examining the current practices and trends of HRM in Indonesia. The thesis first examines the historical dimension of the social, political and economic contextual environment within which HRM has been developing. Then, parallel to this, an exploration of the evolution of HRM has been outlined. The design of this research is exploratory in nature using inductive processes. The empirical investigation was conducted by cross-analysing quantitative and qualitative data from multiple case studies. The survey data was obtained from a questionnaire of 247 respondents from enterprises. The case studies focused on a state owned enterprise and a private industrial conglomerate. Data was collected through interviews and direct observation for a number of months. Use of the data triangulation method enabled the qualitative data to add depth and detail to complement the broad patterns of the quantitative survey data. This research focused on the investigation of HR. activities such as recruitment, training and development, performance management and compensation within the wider function of HRM. The findings of this thesis provide evidence of the adoption of some contemporary features of HRM as practised in advanced Western countries. However, these features exist within the dominant approach of the more traditional personnel practices prevalent in Indonesian enterprises. Thus, it indicates that HRM in Indonesia is currently in a stage of transition. An examination of future trends indicated that while progress in HRM is largely contingent on its contextual environment, it is likely that the human resources function itself is a critical factor that shapes the future configurations of HRM in Indonesia. In light of the findings in this research, a range of implications are discussed which are pertinent to national government policy development, including policy for the educational system, further reform for state-owned enterprises, HRM issues in regional economic cooperation, as well as implications for management education, and future practice of HRM in Indonesia. The thesis concludes with some suggestions for future research.