Assimilation of Cultural Diversity on the Functional Competence of Global Managers - Essay Example

Impact of Assimilation of Cultural Diversity on the Functional Competence of Global Managers Managers now function in different cultures and different geographical regions and cater to the needs of different ethnicities. Many have climbed the new bandwagon of cultural diversity. Do the assimilation of cultural diversity positively influence the global mangers performance as the captains of industry in the globalized context of today Or is it a new fad, which has caught imagination of academia, which has only a short life The present study tests the claims of cultural diversity as a tool apt to enhance the functional competence of the global managers. Any hypothesis has to be tested against the empirical evidence. The theoretical foundation in contemporary literature is unequivocally in favor of the salutary influence of cultural diversity. This position has been put to the test in the present study by comparing against a number of case studies. The study only endorsed prevailing scholarly position by the remarkable success stories of the case studies. So the present study concludes that training in cultural diversity can be incorporated in the development of global managerial skills. Introduction The face of workforce in the globalized setting is divergent. This can be area for conflict or an opportunity for growth. "Society today is a global ambiance where national cultures inevitably mingle together. The world of technological innovation, multinational organizations, international trade, and diplomatic conflict resolution creates a necessity for nations to come into contact with each other, to learn, work, and create together, as well as to exchange ideas and resources (human resources included). Organizations function because of people gathered together around a common goal. However, before an organization is formed, people belong to other settings and perform other roles that precede their organizational roles. Various disciplines differentiate culture based on numerous criteria born by the different scientific worldviews they hold." (Dimitrov 2005, p. 22) One definition of culture states that, "Culture is the collective programming of the mind which distinguishes the members of one group or category of people from another" (Hofstede, 1997, p. 5). Adler (1997) defined culture as the "complex whole that includes knowledge, beliefs, art, law, morals, customs, capabilities and habits acquired by a man as a member of society" (p.14). This makes it a challenge for the global manager to motivate their employees from different cultural back rounds. Basically, ever since Psychology became an independent branch of enquiry, motivation came under the microscope of scientists and can be viewed as "the willingness to exert high levels of effort to reach goals, conditioned by the efforts' ability to satisfy individual needs." (Dimitrov 2005, p.38). However, the study of motivation in the cultural context is new, early theories form a good beginning. "People are by nature ethnocentric and believe that the way things are done in their culture is the best way" (Mendenhall, Punnett, & Ricks, 1995). Therefore this literature review focuses on the theory of motivation concerning the two topics cross-cultural differences and leadership from an international perspective. Purpose and Scope of the study General perception of the academia in the available literature across the world is in favour of the advantage of assimilation of cultural diversity as tool for the global managers. In order to ascertain the veracity of this position after identifying the key theoretical foundation establishing the efficacy of cultural diversity, an investigation was undertaken of five cases to find out whether cultural diversity really helped them to progress or some other factors were behind their success. The companies examined were IBM, McDonald, IKEA and Reebok. UAE, though not a company, as a unique case of cultural diversity was also studied. In all the case studies the advanatage of cultural diversity for the leadership and motivational efficiency of the enterprise were established. Cultural Diversity and its Application in Management Situations A bird's eye of view of the current perception on cultural diversity and its role in leadership is essential to study its success in real time practice. Some scholars suggest that the present concern of cultural diversity is only a passing phase of globalisation and is prelude to cultural homogeneity. This view has been vehemently challenged in the international management in general and in the management of knowledge (Adler, 2002). It is argued that cultural context is a vital knowledge management ingredient. "Cultural diversity was expressed in the societal repression of certain behaviours and the acceptance of others (Adler, 1997). Thus, since behaviour is elicited by motives, motivation could also be accepted or rejected by society. So culture is a motivating trigger in all human beings. Though change is the only unchanging thing in the world, the capacity of the human mind to cope up with change is somewhat limited. However, the be-all or end-all of all enterprise in the context of cultural diversity is the capacity to adapt to change. Trompenaars' Seven Dimensions of Culture Model is an oft-heard business parlance in today's academic and business milieu .His work Riding the Waves of Culture delineates the practical relationships in international management when they work with culturally diverse workers and clientele. His work gives importance to processing knowledge in a cultural context .His recent book, 'Did the Pedestrian die' identifies two types of thinking, universalistic and particularistic. The universalist thinks in terms of general but particularist takes into consideration the exceptional. In the corporate context, this cultural difference in approach creates difficulties for a manager. A manager should know how to combine approaches of a universalist and a particularist. Even before globalisation was thought of, the amazing variety of cultural expressions found in the world have been subject of study by social psychologists. Attitudes of people are based on a limited number of stable values, which they hold on to. Kluckhohn and Strodtbeck's (1961) Values Orientation theory suggested that all human societies should tackle a limited number of problems. However, different cultures have different priorities in tackling these problems. So in a global cultural context the manager would encounter people who do not give the same priority to issues as given in his or her cultural perception of values. Leadership in business is a social construct and has to function in a context. However, gaining perception of the alien and distant cultures is a formidable task. The behaviour of people is the result of the interplay of cultural, historical and socio-political forces over many years. (Mead 2005, p. 251) Based on the insights of research a number of global HR practices have stolen the show. The former ethnocentric image of the manager is now shed in staffing; global manager can come from anywhere. A global mindset and global leadership are paramount today. The present focus in the training aspect of global managers is not to train for job, but cultivate the mind. A number of pivotal studies on cultural aspect of motivation and leadership in international business environment has unearthed the areas of trouble and has given a road map to success. Hofstede (1980) has done pioneering work in this area. For successful leadership performance, Hofstede argues, the manager should understand that it is the culture that gives meaning in a given environment Structuring Human Capital On the Basis of Cultural Diversity: Effects on Motivation, an IBM Case Study It was the entry of Lou Gerstner as the CEO of IBM that launched the company's first stint with cultural diversity. He introduced a diversity task force that would "uncover and understand differences among the groups and find ways to appeal to a broader set of employees and customers"(Thomas, 2004). This brought about a sea change in the structure of human capital of IBM. The number of female executives went up by 370 percent, ethnic minority executive have jumped to 233 and the categories that were looked down upon like the gays, lesbians and bisexual executives' percent rose to whooping 733 percent. These changes resulted in the significant enhancement of bottom-line results. The structural re-organization of IBM was not an accident; it is the result of active leadership support .The Company uses the service of a diversity officer to implement the diversity philosophy. Gerstner's philosophy took into consideration the need for the organization to accommodate people development along with achieving business goals. However, IBM's diversity goals were not philanthropy it was good business. The representational nature of cultural diversity across the board in IBM gave it also an excellent client base. Targeting demographic customer segments did this. As a result IBM developed working relations with the largest women- and minority -owned business in the United States. This was important not only because these business sectors were developing fast but also because of the status of the leaders in the group as the role models in their community. The market development programmes of the company have made a significant appreciation in revenue generation. In 1998 the revenue of the company from small and medium sized business sales was 10 million dollars and in 2003 it is hundreds of million dollars. Another innovation due to the philosophy of cultural diversity is the diversity of the suppliers, which includes businesses owned by physically challenged people. The IBM experiment authenticates the importance of leadership in innovation in business. International organizations have operated for many years in an ethnocentric fashion. The settled conviction had been the way the people in a culture do things is the best and ideal way and the myth has been deeply entrenched in the management practices in the past. "People are by nature ethnocentric and believe that the way things are done in their culture is the best way" (Mendenhall, Punnett, & Ricks, 1995). However, the innovative changes effected in the IBM and the consequent enhancement in the efficiency level and profit margins only shattered this myth and paved the way for other companies to introduce similar changes. Globally Catering to Local Taste: McDonald's HRM Success. McDonald operates in 91 countries around the world. It has become the quintessence winning human resource practice in different cultural settings. The company employs a staggering one million staff for its worldwide operations. Working on the philosophy that values the best practice around the world the 20000 outlets function with clock like precision. The policies for each region are locally chalked out employing the best local talents. However, some times some of the American practices also find their way into the other countries like the employment of university students and flexible working times. The human resource policy is centred on the right attitude to work in the future employee." In a copycat world, the company believes that the best way to stand our from the crowd is to satisfy all the customers, all the time"(Solomon). The company's commitment to staff locally attracts lot of local talent. This provides the company a team of managers who understand local culture and systems of corporate governance. The training centre can give training in 22 languages. The training centres are spread over also globally including the full-fledged one in the mainland China. The company has achieved many blends of human resource success of the Americans and that of the host country. The McDonald success story vindicates theories of Hofstede (1980) for successful exercise of leadership. According to Hofstede it is the culture that gives meaning in a give environment. A successful leader should realize how human beings belong to a group and do not fit in a group. Though Americans are traditionally thought to be individualistic in temperament, the adaptability of Americans to the cultural difference as evidenced by the uncanny knack in operating in a highly structured and hierarchical Chinese and other totally divergent ethnicities show that with training and determination people can get over the ghetto mentality in them. The Chinese society is formed on the values subliminally perpetuated in the people's psyche (Hofested and Bond 1988). The central idea of Confucius emphasizes that people exist in a hierarchy. This basis of social relations is necessary succeed in China. If McDonald not only succeeded in China and elsewhere in the world it is the acceptance of cultural diversity as a reality of globalisation. Success Through Self-managed Training and Cultural Value Assimilation: IKEA Case Study The home furnishing retailer giant IKEA is known in some circles as the McDonald's of furnishing. Operating in a niche area of business it has carved out for itself a name in the international business. The company operates in 27 countries in three continents and employs a work force of 30,000 from diverse ethnicities. The company has integrated values of cultural diversity while recording impressive profits. The success of the company is attributed to the combination self-managed learning and to the free reign given to local initiative. The values of the company are acquired through encounter programmes called "cultural" week in which the executive assimilates the values of the of company. All country managers are expected to run the show according to local conditions and settings. The words of Lars Gejrot, the human-resources manager, epitomize the motivating factor for the company's success: "Customers can be better served according to local needs, and local conditions are important for employees"(Management Development Review). The three pivotal departments of the company situated in three different countries and tenaciously followed policy of multiethnic staffing in them speaks volumes for the company's commitment to cultural diversity. It's HRM centre is based in Switzerland, retailing foundation is situated in Holland and management headquarters in Denmark. Interestingly the company also eschews the use of the term employees and substitutes it with the coinage co-workers. The IKEA success story is an assertion of the validity of Fons Trompenaars' (2001) findings on the way in which different cultures handle knowledge. He identifies how knowledge is handled by different cultures. In an individualistic society, knowledge is handled as a private property while communities where there is greater importance to society, knowledge is shared. The power of shared knowledge is the strength of some cultures. In some cultures, there is importance for interiority so changes in the organization are matter of change in the mind of the individual. The conclusion drawn in his book, '21Leaders for the 21st Century' is the declaration that the only real competence an effective leader needs is the ability to integrate opposites. In IKEA they have achieved this daunting task. Consultative Type of Leadership in a Multi-ethnic Milieu: A UAE Success Story The case study on the leadership practices of United Arab Emirates, because of the authentic nature of multi-ethnicity there, might offer us a penetrating vision of the ideal leadership that would click in international context. According to 1995 reports of census 75 percentage of UAE population are people from other countries. The Arab population is only 12 percentages. 61 percentage is Asians. 2 percentage is from other countries. In fact UAE is the best example of cultural diversity, co-existing and managing business and other enterprises efficiently. It is one of the main hubs of International business activity in Asia. Because the Arabs own the majority of the businesses, tribalistic values and beliefs influence their business plans. In keeping with Islamic tradition most common leadership style is consultative. This has been established by studies earlier (Al-Jafary and Hollingsworth, 1983). This deeply entrenched tradition of consultative approach to business management is indeed time consuming by European standards. Still UAE is considered a place where business is managed with fair degree of success. Business leaders experience and age is of great consequence in UAE. The Leap of Reebok from a 12 Million -a-year Shoe Company to a 3 Billion-Power House: Triumph of Cultural Diversity It is the diversity perspectives that turned Reebok into a giant that it is today. The CEO of the company Paul Fireman approached the company's restructuring from the insight of the building of ace sports team across the globe. The building of the athletic team or sports team that reaches on top is not that something that happens by chance. Only a foolish team manager would field five centres on the basketball court. There is no easier way to lose the game. Just as diversity is the strength in the basketball court in business diversity can be an asset. Accordingly Reebok sought to innovate with diversity at every level. Reebok wanted people who have different stories to tell. This means manager should have room to listen to different stories. The philosophy of Fireman was not to groom recruits after a predetermined fashion. If the recruit becomes like everybody else in the team what way it will enrich the company. According to him it is the difference of others that enrich, expand and give the competitive edge for Reebok. So the restructuring of Reebok encompassing cultural diversity did the miracle for the company making it the biggest name in sports shoes, sports wear etc. . Conclusion The current thinking on cultural diversity and its role in leadership and motivation has been put to the test in the performance of the five successful ventures that we considered. The examples that we have considered are well known names in the global corporate world. We are indeed in the early phase of globalization and as the process continues even small companies may have to play international roles. Awareness of cultural diversity is no small asset and it has to be integrated in the training of global managers for surviving successfully and meaningfully in the order of leadership that is going to be routine practice in the near future. When globalization will become so many vogues in the future, perhaps we would have acquired enough awareness about the difference in culture so as to make our response more or less automatic. However, now that we have not reached that level of sensitivity to cultural diversity, it remains for us to inculcate habits of sensitivity to the subtle nuances of cultural difference so that mangers may be effective in their functions as the captains of industry and commerce. ========= Works cited Adler, Nancy J. International Dimensions of Organizational Behaviour. Third Edition, Cincinnati, OH, South-Western, 2002. Al-Jafary,A. and Hollingworth(1983) "An exploratory study of managerial practices in the Arabian Gulf region", Journal of International Business Studies, Fall, pp.143-52 Dimitrov D., 2005, "The International Journal of Diversity in Organisations, Communities & Nations", "Cultural Differences in Motivation for Organizational Learning and Training", Volume 5, Number 4. Hofested, G. 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