Cultural issues in management - Essay Example

? Cultural briefing For Human Resource Department of Microsoft Corporation in China In the contemporary changing dynamics of global business, the role of human resource management has become highly challenging. HR strategy has become a critical component that facilitates development of unique high performing team of human capital that provides organizations with significant leverage in the market. Sirgy et al (2004) assert that globalization has emerged as a major force that has redefined business compulsions. They have described globalization in terms of flow of goods, services, capital, technology and people across national borders. Consequently, interdependency of resources has become important factor that has necessitated business expansion. Thus, global perspectives of businesses emphasize innovative HR practices that can respond to the transforming dynamics of globalization, changing technology, diversity, new environmental compulsions etc. The companies, therefore, face myriad challenges in HR management when they expand across borders. Their flexible approach and perspectives to change become high point that helps them to overcome the obstacles. The briefing would describe HR challenges of Microsoft’s expansion to China are critical paradigms that need to be discussed to find appropriate solutions and succeed. Company profile Microsoft Corporation is a leading international computer technology company that was founded by Bill Gates and Paul Allen in 1975. It has leadership position in developing, producing, supporting and licensing a broad range of software products predominantly for computers. Microsoft Windows operating systems as well as the Microsoft Office suite of productivity software are two of its most popular products. Its products have achieved near-ubiquity in the market for personal computers. In recent times, it has diversified its business portfolio to include MSN Internet portal, MSNBC cable television network, as well as the Microsoft Encarta, which is essentially a multimedia encyclopedia. It has also entered into home entertainment with products like Xbox (Microsoft, 2001). Its recent expansion into China had faced major roadblocks which were addressed with high sense of urgency through innovative HR strategies. Key issues in International HRM In the contemporary environment of competitive business, expanding business must understand the changing socio-cultural background of the country, where one needs to establish the business interests. Social scientists assert that national cultures are vital elements that determine the negotiator’s assumptions and help evolve business strategy based on behavioral pattern (Cohen, 2004; Rubin & Sander, 1991). China has a culturally distinct economy. The socio-cultural value systems are vastly different and business practices are very sensitive to behavioural pattern and intrinsically linked to their socio-cultural value system. Dowling et al (1999) argue that Chinese socio-political and cultural environment is complex, especially as Chinese nationalism remains key obstacle for foreign firms and poses serious challenge to their IHRM. Many scholars strongly support use of local talent and resources as important part of joint ventures that promote local economy as people prefer to deal with local professionals rather than expatriate managers (Schuler, 2001; Poole, 1999). This is a highly pertinent issue for foreign firms as they tend to spend huge amount on training and cross-cultural adjustments. There is lot of conflict if the expatriate manager tries to impose his/her own values on the local people. Chinese culture promotes ‘guanxi’, a shared language and a shared culture, where Chinese employees prefer to interact with people who are well versed in their language and culture (Dunning & Kim, 2007; Chen & Starosta, 1998). Thus, IHRM has huge responsibility vis-a-vis managing its human resources and optimizing performances when their business has to be conducted with Chinese, within or outside China. The need to understand the Chinese culture becomes intrinsic part of IHRM when negotiation with their Chinese counterpart is required or becomes necessary. Microsoft’s HR strategies were highly creative which were able to exploit human competencies. It promoted a facilitating organization culture that emphasized cross-cultural understanding, trust-building and mutual respect. It was an important initiative that was designed to improve performance and served as strategic performance management tool that motivates workforce for optimal performance (Bloisi, 2006). Moreover, De Wit & Mayer (2005) claim that HR leadership initiatives and organizational culture that exploits human capital to improve its productivity are main elements of competitive advantage. It facilitates integration of diverse ideologies, values and beliefs of workforce coming from different backgrounds and promotes shared goals. The core competencies of firms comprise of skills and tangible and intangible resources which are unique to the workforce and, therefore, provide firms with distinct advantages. Effective HR leadership is able to exploit the cultural competencies of the diverse workforce and help align it with the organizational goals and objectives. Preparing cross cultural teams Effective teamwork is vital ingredient of efficient delivery of organizational goals and objectives. Multicultural teams become desirable in current environment because they bring together innovative ideas and use collective approach to exploit them for optimal results (Cartwright & Cooper, 1993). The diversity within the team work is intrinsically linked to the performance individuals with the cultural competencies. The members have complementary skills which are exploited by team leaders for achieving common goals. Belbin (2007) has specified roles for team members such that talent of each member can be exploited to achieve common goals. Furthermore, within teamwork, dissemination of information is an important factor that inculcates confidence and encourages cross cultural understanding for building strong relationship and cohesive approach for higher efficiency. Microsoft promoted multicultural team. It highlighted participatory approach and encouraged cross-cultural understanding to develop mutual respect and to build relationship based on trust. This was a very important aspect of teamwork that fostered close bond amongst members who become more inclined towards reaching common goals. When they had entered Chinese market, Chinese government favored domestic industry against foreign firms by promoting the interests of local industries. Chinese encouraged foreign collaboration in domestic technology based companies for transfer of knowledge and technical knowhow. Despite huge threat of piracy, Microsoft went ahead with its partnership and continued to expand its business, because of its strategic importance in the global business. Bill Gates knew about piracy of its products in China but showed his exemplary leadership when he said that ‘as long as they are going to steal it, we want them to steal ours. They will sort of get addicted and then we’ll somehow figure out how to collect’ (Piller, 2006). Microsoft’s success in China was mainly due to their understanding of Chinese culture and people which was exploited by the HR leadership. Negotiation Business negotiations are intrinsic part of corporate strategy which is designed to reduce conflicts and promote mutually satisfying partnership contract vis-a-vis business goals, financial outcome, terms and conditions, scope etc. In international business across national borders, negotiations are sensitive issues due to different value system, socio-cultural perspective, currency, legal paradigms and market conditions. Culture is integral part of negotiation. Hofstede’s five dimensions of culture help to understand and identify areas of conflicts which can be addressed to sort out differences (1984). Indeed, the various facets of culture vis-a-vis power distance, collectivisms and individualism, masculinity/ feminism, uncertainty avoidance, and long and short term orientation are key ingredients that enhance understanding and improve communication. They also help HR leadership to evolve creative input to improve and improvise the performance of diverse workforce and identify local talent. Effective CI practices CI practices are intrinsic part of global business planning which rely on information gathering regarding various aspects of business in countries which are perceived to have huge potential for business expansion (Adidam et al, 2009). CI is broadly described as mechanism of gathering of information about the changing business patterns across the economies with high business potential. It provides the firm with strong database of knowledge that is judiciously exploited to gain competitive advantage. China, being a major developing economy with vast potential, is highly attractive for foreign businesses. But it has also culturally complex environment with very different socio-political and legal framework that needs to be understood within the broader precinct of new opportunities and threats. CI practices, therefore, become important pre-requisite for expansion as they provide critical business related data about countries. They must be carried out ethically with the help of local leader who is proficient in the language and culture of the natives. The analysis and evaluation of data can give critical insight into the opportunities and threats which can be judiciously exploited by the foreign businesses. Recommendations China has huge market with a wealth of opportunities for the West. It is especially very attractive in the current recessive environment because it offers high dividends at low investment. It is for these reasons that Ghauri et al endorse foreign collaboration in China to identify and start business venture (2010). Intensive training on cross cultural understanding and various environmental factors becomes hugely important issue for workers of foreign firm. The high rate of turnover of Chinese managers has evolved as serious concern, especially when the replacement of an expatriate manager with a Chinese manager can significantly impact the organizational stability. The issue of expatriate managers should be considered as vital part of future direction for IHRM. The IHRM must constantly encourage learning environment and promote exchange of employees from two diverse countries so that hands-on experience can boost cross-cultural understanding. IHRM practices must be dynamic for effective negotiation and running of businesses in countries like China which offers huge opportunities. (words: 1530) Reference Adidam, P. et al. 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