Managing in a global society - Essay Example

?Managing in a global society Introduction Increased competition and globalization in recent years have challenged many organizations to look for newlocations, new markets, and new ways of doing business. This has opened up many opportunities for the organizations in terms of business models, diversified workforce, and provided economies of scale besides throwing up the challenge of dealing with people belonging to different cultures and nationalities. While numerous organizations have ventured into this sphere for going overseas, challenges in terms of understanding and analyzing human behaviour that is influenced by the national culture have been surfacing ever since the trend began. This aspect of management has received much attention and efforts to understand human behaviour, which has subsequently helped management specialists to understand the reasons for the challenges faced by multinational organizations. Extensive research work and evidences in the areas of human resource policies and practices with respect to approaches used in managing people are attributed to various determinants of cross-national similarities and variations. Identification of cultural diversity has opened up new avenues and challenges for business and provided wider space for management researchers and psychologists to understand human behaviour in relation to business and management. An aim to set up subsidiaries of UK-based organization in multinational locations would require an understanding of cultural aspects impacting human behaviour as well as leadership competencies and behaviour. Cascio (2006; p.630) refers to culture as “characteristic way of doing things and behaving that people in a given country or region have evolved over time. It helps people to make sense of their part of the world and provides them with an identity.” Dowling et al (2008) have explained international HRM from three perspectives that include cross-cultural management and human behaviour, different HRM systems in various countries, and impact of HRM on multinational companies. Based on this concept, various dimensions of international HRM have been explored using theories proposed by Hofstede (1980), Trompenaars and Turner (1993) and House et al (2004). These theories have been applied in this study to understand impact of culture on business and management in different cultural contexts and managerial functions. Hofstede (1980) refers to culture as a collective mental programming of a group of people belonging to one region, which is difficult to change; in such settings specific culture becomes institutionalized in their family and educational structures, religious organisations, government, law, literature and even scientific theories. This is highly apparent among people belonging to one nation, in the form of national culture, which manifests itself even in organisations. Hofstede’s and Trompenaars’s dimensions explain how cultural differences impact management and leadership styles in different regions of the world; in addition, these analyses help in understanding why certain HRM practices and policies have differing impacts on employees of one multinational company operating from different regions of the world. House et al. (2004) have extensively studied cultural variations and their impact on societal functioning and leadership based on study conducted on 62 nations, resulting in development of additional dimensions. This project emphasizes the need for effective international and cross-cultural communication, collaboration, and cooperation for effective practice of management and also betterment of human condition in order to thrive in the globalizing world markets and cultures. Hofstede’s work related to culture reveals that financial and management aspects related to an organization and nation are largely influenced by social values. Secondly, this study also revealed that corporate culture of an organization is largely influenced by its founders’ national culture. (Rowley & Lewis, 1996). Hofstede’s (1980) project arrived at specific dimensions with respect to the national culture among different countries such as power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, long/short term orientations. However, the project arrived at six mutually independent dimensions of organisational cultures such as process-oriented versus result-oriented, job-oriented versus employee oriented, professional versus parochial, open systems versus closed systems, tight versus loose control, pragmatic versus normative. Studies conducted by Trompenaars’ (1993) on grounds similar to that of Hofstede have revealed that business and management are impacted by national culture in six different ways, namely, universalism-particularism, individualism-communitarianism, time orientation, neutral versus affective, specific versus diffusive, achievement versus ascription and relationship to nature (Ahlstrom & Bruton, 2009). In another large-scale study conducted by House et al (2004), called the GLOBE project, they arrived at nine dimensions that include future orientation, gender equality, assertiveness, humane orientation, in-group collectivism, institutional collectivism, performance orientation, power distance and uncertainty avoidance. Understanding HRM through each of these dimensions is an extensive activity, however, all the three propositions have overlapping dimensions, and have been commonly explained through impact of these dimensions on management, leadership, HRM policies and practices, innovation and growth and globalization perspectives. Yet, application of these findings to individual countries provides sufficient understanding of factors that could impact organization’s culture, leadership and its management. Taking lessons from these theories, it is evident that the leadership and management style followed in the United Kingdom setup may not be equally effective at other locations. This necessitates a modification in human resources practices, policies and management style. Through his study, Martinsons (2001) clarified that managers’ decision making style is strongly influenced by their national culture. Based on Hofstede’s dimensions, the USA and UK are categorized as low power-distance relationship, unlike Japan which is high on power-distance. This indicates that the participative leadership followed in the UK setup may not be equally effective in Japan. Introduction of individualistic motivational schemes or practices in countries such as Japan may not be successful due to their communitarian cultures; on the other hand, these practices will work very well in the US. Managers from the parent organization working with multinational teams consisting of individuals from highly neutral and highly affective cultures, like that of Japan, will have to be very careful while dealing with each other to avoid any misunderstandings and misinterpretations of expressionless dealing due to their nature. Considering the dimension of uncertainty avoidance, Japan has strong uncertainty avoidance and masculine culture contrary to the USA and UK. So, the CEO has to consider issues such as appointing female managers in Japan; in the USA, this factor does not matter. Secondly, Japanese give more importance to performance unlike in the USA where importance is on quality of life. The US and UK cultures give importance to service-driven attitudes whereas the Japanese attitude is ambition-driven. Implication of this dimension would be on interrelationship between managers from different locations and their cohesiveness when managers from UK are expatriated to other locations in the initial stages (House et al, 2004). When implementing HR practices, it is important to assess the situation and ensure appropriate integration and differentiation as per the culture. For example, individualistic nations such as the USA and UK can formulate individualistic rewards and recognition programmes, whereas Japanese would prefer collectivistic or team-based programmes. Individualistic and Collectivist cultures prefer individual goals and rewards and team goals and rewards, respectively. Performance management policies and practices need to be different for USA and Japan. For example, the USA prefers participative approach in performance management because of their horizontal culture, but Japan would prefer more authoritative form owing to their vertical culture. Even performance feedback process would be different at different levels, both in the USA and Japan. In Japan, it would be disrespectful it disrespectful to question one’s supervisor’s decision. Self-appraisals are highly preferred in Western than in Eastern cultures (Cascio, 2006). Based on Trompenaars’s (1993) theory, a two-way performance feedback would suit individualistic cultures such as the US and the UK, collectivist nations such as Japan would treat it as an unacceptable behaviour and prefer indirect methods such as communication through intermediary source to deliver feedback. A high level of sensitivity has to be applied to the process of performance management and feedback by understanding local customs and appropriately using the methods suitable, and this is a challenge for the parent company as it would involve many modifications and adjustments from their end for implementation of these processes. From a corporate point, the corporate principles and core programme should be reflected in human resource management practices throughout the company but with adaptations depending on local culture and institutions. In conclusion, management and leadership styles are greatly influenced by national and societal cultures. For multinational organizations to succeed, it is important that the management is well informed of these differences; further HRM practices with respect to motivation, performance management and leadership should be modified to suit the local cultures. In the present situation, it is necessary to acquire a thorough understanding of national cultures and societal practices would be required for any organization to set up subsidiaries at multinational locations. This will help in formulating human resource policies and practices that are aligned with similarities and variations of national and organisational cultures in order to achieve effective management. All the managers involved in setting up operations at new locations should be trained on these aspects of intercultural differences. The local management staff at subsidiaries also should be trained and coached on these aspects in order to avoid misinterpretation of practices and behaviours of managers from the parent company. References Ahlstrom, D and Bruton, G.D. 2009. International management: Strategy and culture in the Emerging world. Ohio, U.S.A: Cengage Learning. Cascio F, W. 2006. Managing human resources: productivity, quality of work life, profits. 7th ed. New York: TataMcGraw-Hill. Hofstede, G. 1980. Culture’s Consequences: International differences in work related values. London: Sage. House et al. 2004. Culture, leadership, and organisations: the GLOBE study of 62 societies. California: Sage. Martinsons, M.G. 2001. Comparing the decision styles of American, Japanese, and Chinese business leaders. Best Paper Proceedings of Academy of Management Meetings, Washington, DC. Available from, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292& (Accessed March 15, 2011). Rowley, C and Lewis. M. 1996. Greater China at the crossroads? Convergence, culture and competitiveness. In Greater China: Political economy, inward investment and business culture. London: Frank Cass and Company Ltd. Read More