International HRM - PowerPoint Presentation Example

?Introduction: The following report focuses on the cultural and al challenges a US multinational firm may encounter when opening a subsidiary in the UK. To study the cultural issues, the report makes extensive use of Hofstede’s cultural dimensions whilst focusing on HR practices with regards to institutional or organisational issues. It is however advised that both these aspects are intertwined, and will be studied in relation to each other, as organisational culture is profoundly shaped by national culture. Culture and the Organisation: Most authors agree with the traditional assumption that corporate or organisational cultures are predominantly influenced by the national cultures where the organisations operate (Mullins, 2003; Robbins, 2003; Hofstede, 1997; Hofstede & Hofstede, 2005). Other studies suggest that there are certain aspects to business organisations like technology, structure and other common practices that transcend culture and form a commonality between how businesses operate across cultures (Kerr et al, 1973 & Hickson et al, 1979 cited in Mullins, 1999). In Hofstede’s words, “effective multinationals have created practices that bridge the national value differences” (1997). This suggests that uniformity in organisational structure may in fact help the organisation create its own culture regardless of national culture differences. These common practices are what help international managers operate effectively beyond their own cultures. Identifying Cultural Differences and Prejudices: “One’s own culture provides the ‘lens’ through which we view the world; the ‘logic’ by which we order it; and the ‘grammar’ by which it makes sense” (Avruch and Black, 1991) Hofstede (1994, 1997), argues that ethnocentrism, the behaviour where one considers their own culture to be superior over others, has no place in a world that is getting smaller due to globalisation. The same applies to management, as Evans et al (1989) suggest that managerial styles designed in one culture may not easily translate to another because of the differences in traditions and values of the management and workforce. Globalisation has increased pressure upon firms to invest across cultures to maintain their competitive advantage and to be open for new opportunities. This calls for international managers to be prepared for the challenges they may face as they venture into unknown cultures. Understanding people requires understanding their background, as their background has provided them with their culture and would help one predict their present and future behaviour (Hofstede, 1991 cited in Tulder & Zwart, 2006; Scullion and Linehan, 2005). This calls for an understanding of historical origins of culture in terms of religious beliefs, values and norms (Hofstede and Bond, 1988). In most cases cultural traits can be identified through culture-specific literature, for example, the Holy Bible, which has historic significance in the evolution of both American and British cultures. Both cultures, argues Cleary (1991), are derived from belief in Biblical texts, which suggest an absolute truth outside of oneself, and as a consequence, one evaluates issues in terms of absolutes and fixed goals. So both Brits and Americans, or westerners in the general sense, according to Trompenaars (1993), tend to be goal oriented and tend to rely on legal contracts during business negotiations. Also, as multicultural nations, both offer a weak culture (Robbins, 2003), which is flexible to change. People in both cultures also tend to be more short-term oriented in their association with organisations. Evans et al (1989) suggest that in the west in general, “workers ‘sell’ their time to the company for wages and do not owe any allegiance to the company in their own time” (pg130). The Five Cultural Dimensions: Hofstede’s five dimensions of cultural values can be now applied to both cultures to better understand the challenges of cross-cultural management, and to derive suggestions for the International Manager to overcome these challenges. The figures for each index in this discussion have been taken from http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/. Power Distance refers to the amount of inequality that exists in a particular group. This inequality is normally endorsed by the less powerful members of a given group as much as it is by the more powerful ones. This phenomenon varies between cultures, making some societies rank higher in the power distance index and some lower. Both the US and the UK fall into the low power distance group, 40 and 35 respectively on the cultural scale, and hence there is not a huge gap between management and staff (or between parents and children at the family level) (Hofstede and Bond, 1988; Buruma, 1995; Cleary, 1991; Mullins, 2003). Subordinates are expected to be involved in decision making and even though hierarchy exists, it is purely to distinguish roles rather than persons. From earlier discussions, this could be because of Biblical teachings which suggest that all humans are created equal. Individualism and Collectivism refer to the extent to which individuals are integrated into groups. Individualistic societies present loose ties between people and one is responsible for oneself and their immediate family. Collectivism refers to societies where people, often from birth, are integrated into strong, cohesive family groups, and are protected by these groups, which often involve extended families, in exchange for unquestioning loyalty (Hofstede, 1994, 1997). The United States and Britain have been given scores of 91 and 89 respectively on the cultural scale indicating both cultures as very individualistic where personal gain takes precedence over collective gain. Masculinity and Femininity refer to values carried out by societies that range from ‘assertive’ and ‘competitive’ (masculine) to ‘modest’ and ‘caring’ (feminine) in terms of how people operate at different levels of society. Hofstede suggests that this is a distribution of the roles between the sexes and that in masculine countries the women are more assertive and competitive but not as much as the men, whereas in feminine countries women and men carry similar values of modesty and caring, and that feminine countries are more likely to focus on relationships, solidarity and compromise than do masculine ones (1994). The US scores 62 in this category whilst Britain has 66, suggesting both cultures are slightly more on the masculine side, but balanced well with a good level of femininity. Uncertainty Avoidance refers to a group’s “tolerance for uncertainty and ambiguity: it ultimately refers to man’s search for truth” (Hofstede, 1994 cited in Jackson, 1995, pg153). This dimension explores into how willing a society is to take risks by venturing into the unknown. It explains how culturally prepared a group is to “feel either uncomfortable or comfortable in unstructured situations” (Hofstede, 1994 cited in Jackson, 1995, pg 153). Uncertainty accepting cultures do not limit themselves to their own opinions but are open to change and accepting of views from outside. Religiously, they are more relativist and allow different beliefs to operate simultaneously (Hofstede, 1994). On the uncertainty avoidance index, America scores 46 whilst Britain has 35 suggesting both cultures are substantially open to change, which is evident from the amount of multiculturalism embraced by both societies. Quality of Life Vs Quality of Life is a dimension derived from the masculine and feminine category. It is believed, according to Hofstede (1994), that people in feminine countries stress more on quality of life which is evident from their short-term association with their workplaces as opposed to masculine countries where people stress more on careers and long-term association with their organisation(s) (Robbins, 2003). In terms of long term association, both the US and the UK score low at 29 and 25 respectively, suggesting more of a feminine culture in both societies. Conclusion: The above study clearly identifies both American and British cultures as quite similar in their approaches to life in general, and work and organisations in particular. Commonality in language (with the obvious differences in some spellings and pronunciation) makes communication easy and ‘communication is the effective cement which holds the organization together’ (Morgan, 1998). So the main challenge for the American firm would be to maintain efficiency through its human resources practices in terms of expatriation and repatriation of its American workforce or employing British personnel, especially for key management roles. This also involves compliance with local British laws concerning employment. Expatriation and Repatriation Even though many multi-national companies (MNCs) still prefer employing personnel from their own countries for their overseas operations, recent studies suggest that such companies will benefit by considering employing host country nationals (HCNs) as this would save them considerable costs associated with expatriation procedures. Expatriates are considered, “trustworthy employees sent abroad to represent the interests of the company” (Boyacilliger, 1990 & Nohria and Ghoshal, 1997 cited by Bonache et al, 2001). But the process of training expatriates is time-consuming as they have to be aware of the cultural differences of the host country of operation, as their term in such a country would be for the long haul. The other problem associated with expatriation is the process of repatriation as this process carries its own weight in terms of compensations, re-acclimatisation and further prospects for the returning expatriate. Research suggests that coming ‘home’ is a more difficult and painful process for an employee than going abroad (Adler 1996), and as expatriates are sent abroad for lengthy periods of time, they are ‘out of sight, out of mind’ of the parent company during that time (Allen and Alvarez, 1998 & Hammer et al, 1998 cited in Scullion and Linehan, 2005). In other words not much planning is done for the repatriation of the employee and not much thought is given to his/her future career development (Dowling et al, 2008). Hence the ideal solution for the American company wanting to open a subsidiary in the UK would be to establish a structure that would sustain the original corporate goals of the organisation, and which would allow employment of HCNs and get them trained towards these goals, which in turn would create an international culture within the organisation. Bibliography Adler, N.J. (1996) International Dimensions of Organisational Behaviour, 3rd edn. Kent: Boston Allen, D. And Alvarez, S. (1998) ‘Empowering Expatriates and Organisations to Improve Repatriation Effectiveness’, Human Resource Planning, 21(4): 29-39 Avruch, Kevin and Peter W. Black. “The Culture Question and Conflict Resolution”. Peace and Change 16 (1991): 22-45 Boyacigiller, N. (1990) ‘The Role of Expatriates in the Management of Interdependence, Complexity and Risk in Multinational Corporation’, Journal of International Business Studies, 21(3): 357-81 Buruma. I. (1995). A Japanese Mirror: Heroes and Villains of Japanese Culture. London: Vintage Cleary, T. (1991). The Japanese Art of War: Understanding the Culture of Strategy, Boston: Shambhala Publications Inc. Dowling, P.J., Festing, M., and Engle, SR, A.D. (2008) International Human Resource Management. Thomas Learning: London Evans, P., Pucik, V. And Barsoux, J.-L. (2002) The Global Challenge: International Human Resource Management. McGraw-Hill: Boston Hickson, D., McMillan, C., Azumi, K. And Horvath, D. (1979). ‘Grounds for Comparative Organisation Theory: Quicksands or Hardcore?’ in Lammers, C. And Hickson, D. (eds) Organisations Alike and Unlike, Routledge and Kegan Paul Hofstede, G. & Bond, M. (1988). ‘The Confucius Connection: from Cultural Roots to Economic Growth’, Organizational Dynamics, 16(4): 4-21 Hofstede, G. (1991). Cultures and Organisations: Software of the Mind. McGraw Hill, London Hofstede, G. (1994). The Business if International Business is Culture. International Business Review, 3 (1), 1-14 Hofstede, G. (1997). Cultures and Organisations: Software of the Mind. McGraw Hill, London Hofstede, G. And Hofstede, J.G. (2005). Cultures and Organisations: Software of the Mind. Revised 2nd Edition. McGraw Hill, New York Jackson, T. (1995). Cross-Cultural Management. Butterworth-Heinemann, Oxford Kerr, C., Dunlop, J.T., Harbison, F. And Myers, C.A. (1973). Industrialism and Industrial Man. Penguin, USA Mullins, L.J. (2003). Management and Organisational Behaviour. Pitman Publishing, London Robbins, S.P. (2003). Organisational Behaviour. Prentice Hall, New York Scullion, H. And Linehan, M. (2005). International Human Resource Management. Palgrave-Macmillan, New York Trompenaars, F. (1993). Riding the Waves of Culture. London: Nicholas Brealey Publishing Ltd. Tulder, R.V. and Zwart, A.D. (2006). International Business-Society Management: Linking Corporate Responsibility and Globalisation. Routledge, London Online Resource http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/ Read More