Cross Culture Management - Case Study Example

Running head: CROSS CULTURE MANAGEMENT Cross Culture Management s Cross Culture Management In today's business environment a company's success lies on the company's understanding of its self. Companies or organization all have traits and ways of doing things. Organizations all have set goals and visions that are desired. The goals and visions of an organization are developed in the strategic planning process. In the manner in which the organizations goals will be carried out depends on the company's culture. Organizational culture is the behavior style within a company. The manner in which employees act, talk, dress, and express themselves are all aspects of an organization's culture. Organizations all differ in their culture. There are no too organizations with the exact culture. Culture and Organization Cultural forms function as the linking mechanism by which networks of understanding develop among employees. The cultural forms shown in the table on pages 293-94 act as a medium for communicating ideologies, values, and norms. Cultural forms enable leaders to transmit messages about desirable culture to influence thinking and ways of behaving. Cultural forms also address the emotional aspects of organizations that are commonly referred to as cohesion or camaraderie. Organizational scholars Janice Beyer and Harrison Trice elaborate on this point: Cultural forms not only aid sense making through the meanings they convey; they also aid the sense making process through the emotional reassurances they provide that help people persist in their coping efforts. Forms provide a concrete anchoring point, even if the meaning they carry are vague and only imperfectly transmitted....Also many cultural forms involve the expression of emotion and, by this venting of emotions, help people to cope with stress.( http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch16.html) Cultural Diversity in Organizations Organizational diversity is the mixture of different individuals. Differences such as race, age, gender, religion, and ethnics. Diversity is very important in the attractiveness of an organization. Diverse organizations appeal to a broader customer base. Diversity allows organizations to be more creative. Technology is increasing at a rapid pace. The world's technology is set to double in the next seven years. An organization must be technology advanced to be able to keep a competitive advantage over its competition. Many times when upgrades are made in a company employee training is necessary. Communication in an organization is very important for its success. Managers must be able to communicate with their subordinates quickly and effectively. Communication channels need to be a too ways lane. Employee feedback allows management to measure their own success. Employees should feel free to constructively comment and offer creative ideas to managers. Communication can take place in person, over the phone, or electronically. An organization's culture is a very complex and sensitive issue. Companies must develop a culture that appeals both to its employees and customers. The culture of an organization is a resemblance of its personality. Employee and managers will be working together on a daily bases and must get along. Human resource management is somewhat different in the global environment that in the domestic environment. Several factors contribute to this. One factor is the differences in worldwide labor markets. Each country has a different min of workers, labor costs, and companies. Companies can choose the mix of human resources that is best for them. Another factor is differences in worker mobility. Various obstacles make it difficult or impossible to move workers form one country to another. These include physical, economic, legal, and cultural barriers. Still another factor is managerial practices. Different business subcultures choose to manage their resources, including people, in different ways. The more countries in which a company operates, the greater the problem of conflicting managerial practices. Yet another factor is the difference between national and global orientations. Companies aspire toward global approaches. However, getting workers to set aside their national approaches is challenging. A final factor is control. Managing diverse people in faraway places is more difficult than managing employees at home. Cross Cultural Management in China (GM & JV) Nowadays China becomes one of the hottest market places all over the world. From the viewpoint of the investors, China seems to be the most potential market with the huge market and attractive economic situation. The apparent result is the increase in number of foreign investments put into China. Gentran Machinery (GM) is one of the foreign investors of China. It has a joint venture (JV) in Hangzhou. Although GM has been quite successful in its operations showing an average annual growth of 12 percent in sales volume, net profits and its stock value during the past 20 years, it is noted that the joint venture in China is struggling along and is already way behind schedule. In order to address the possible problems in the JV and find solutions, some issues are to be discussed. Global assignment of managers has been a traditional method of operating international companies. The importance of transferring knowledge, upskilling remote or local managers and instilling best practice throughout a multinational organization has long been recognized as a source of competitive advantage for those firms able to expand successfully. The failure of rate of global assignments, and indeed international expansion, has throughout history been nothing less than fantastic. Although it is obvious that the expatriate managers don't know the local labor markets and local education system, have the communication, culture, and language problems, they are familiar with the corporate culture, have advanced management skills, and also have stronger informal linkages with decision makers in the parent company. A lot of companies send their local employees to foreign subsidiaries. In the GM case, it is indicated that there isn't a modern management system in the JV and the JV managers are at only the Chinese traditional stage of management development and they haven't effective and efficiency management knowledge and skills. As a result, it is impossible to reduce the number of expatriate managers. Contrarily, the number of expatriate managers should be increased, because they can input the modern concepts and skills of management, help to build an effective and efficiency management system, and train the Chinese managers so that they are competent for their positions in JV. However, the selection of expatriate managers is important. According to Hutchings (2002, p. 32), giving maximum attention to the performance of expatriate managers can be defined as transferring an employee to a host country operation proficient of achieving the most excellent results for the expatriate, the company as well as the host country in conditions of flexibility and political, business, culture as well as social sensitivity. There are a number of factors which an organization needs to be taken into consideration to predict expatriate success. These factors comprise of technical capability on the job; personality traits; environment variables; as well as family situations. The expatriates ought to exhibit tolerance in the direction of differences in race, creed, culture, customs and values. They should also have high motivations. One more decisive factor is that of Behaviour, being defined as non-judgmental, viewing acceptance for ambiguity and displays of value. Moreover, the expatriate's spouse and family should be analyzed. These include: the spouse's inability to adjust; the employee's inability to adjust; the employee's personal or emotional irresponsibility; and other family problems (Hutchings 2002 p 35). Obviously, Richard Hamel (the controller of JV), who is not the type of manager necessary to facilitate the success and changes needed in the JV because he is not aggressive, innovative, and creative, should certainly be replaced. However, because of the lacks of Chinese managers and the situations discussed above, Hamel should be replaced by another suitable expatriate manager. After successfully selecting the suitable expatriate manager, on-going support is important for them. In the GM case, it is noted that although the physical accommodations are acceptable, the expatriate managers suffer from extreme emotional pressure particularly in the form of loneliness. These managers have only one emotional outlet - work. They cannot speak Chinese and have no alternative forms of entertainment that involve interactions with people. Their lifestyle can best be described as one of 'prison inmate'. This situation indicates that the expatriate managers have not been supported well. The parent company should solve this problem. Firstly, effective training programmers can help the expatriates adjust to living and working conditions in the new host country. Appropriate intercultural training and support can help expatriates cope with a workforce and management colleagues with drastically different cultural inclinations and reduce the stress of being alone in a foreign land. Such training should provide a clear picture of the challenges they are about to face, both in their professional and private life. The training should include general country information on the Chinese culture and tradition in written, verbal or audio / visual form as a helpful orientation for the beginning of living and working in the host country; cross-cultural seminars where the trainees can apply and deepen their knowledge of the Chinese culture and mentality; Chinese language courses to introduce expatriates and their accompanying partners some basic language skills; field trip to obtain the first impression of the country, working and living conditions; meetings with experienced expatriates who can give practical tips or useful suggestions directly related to the job or private life in China. Secondly, medical and psychological assistance and counseling should be provided. Thirdly, the on-going support to spouse and the family is important. The significance of providing information housing, health, and schooling has been recognized. Fourthly, a local contact person with western culture exposure can help expatriates with their first orientation in the new living and working environment. Finally, the good relationship between the expatriate and local employees can also help to improve the living condition. After successfully selecting and supporting the expatriate managers, another important issue for JV is change the traditional management system in JV and how to train the Chinese managers. Traditionally, for a long time the promotion system in Chinese state-owned enterprises has been based on seniority of workers and staff rather than on performance. For example, a cadre can be promoted to senior ranks but cannot be demoted regardless of his capability or performance. This has resulted in an occurrence somewhere there are too a lot of high-ranking officials with too few rank-and-file staff, and there is over-staffing with too few staff in point of fact performing work (Chen 1989). Thus, a new incentive system based on performance should be established for the Chinese managers and works. The 'performance-related pay' is the key factor of the total rewards program - as well as offers employees the chance to share in the achievement of the company which is a direct result of the shared performance of every one of its employees. When excellent performance is acknowledged and rewarded, people are more motivated and work smarter (Bartol, et al, 1998 p 223). Moreover, employees want to work in an environment that is productive, respectful, provides a feeling of inclusiveness, as well as offers welcoming setting (Ramlall, 2004 p 52). The good relationships between managers and employees, as well as between employees provide the belongingness and love in the company. In addition, employees prefer to function in environments that provide a challenge, offer new learning opportunities, significantly contribute to the organization's success, offers opportunities for advancement as well as personal development based on achievement and demonstrated attention in a particular area (Ramlall, 2004 p52). The employee's self-actualization need is fulfilled by open-door policies and "let's try" approaches. Competition should be encouraged. These approaches will largely motivate the employees. The managers of JV should also share as much as information with employees, encourage autonomy and participation. Furthermore, to keep equity, the reward system should be managed by expatriate managers until the Chinese manager change their traditional attitude. Finally, the award system can be managed by all level of managers; each level of managers should responsible for their subordinations. The performance based reward system should base on the responsibility system. It is obvious that the distribution of responsibility including management responsibility and employees' responsibility in JV is not adequate. Company should specify all position, prescribes job descriptions, procedures, routines, and rules. However, the description of procedures and routines is not detail. There are only some suggestions and references. Company's 'let's try' and 'accepts failure' approaches encourage employees to try any ways to accomplish their job. Employees are largely motivated to look for the most suitable way to finish their works. The suggestions and references of the work procedures and routines protect the employees from excessive autonomy so that they would not fell lonely and without support. The authorization system should be established. In this system, each level of managers has their corresponding authority and responsibility which is clearly identified. Training Program for Chinese Managers The training of Chinese managers is also important. There are external training and internal training. In case of internal training, it should be decided what to teach and how to maximize the learning effect of the participants. The teaching programmers and materials should contain knowledge and skills necessary for effective management performance. Appropriate teaching methods for example, practical or theoretical learning or the combination of the two methods in order to achieve the training goals should be chosen. Moreover, the trainees should be able to make use of the technical know-how or management skills after the training: this can be reached through a job empowerment, a transfer to a corresponding workplace or a promotion. In these training, the Chinese managers should also learn the modern concepts of the management. The external training can include the MBA program, exchanging manager to international branch of company, etc. The main purpose of the training is to change the tradition management attitude and to learn modern management skills. In the GM case, the communication of directives, ideas, concepts, and action items, from the American management to the Chinese management and vice versa is a major problem within the JV. Misunderstanding and ineffectiveness of communication are caused usually by faults of both sides: one side expressing its intention vaguely and the other side not listening very attentively. As the case studies show, expatriates may feel unsatisfied with refusal of responsibilities by local employees, while Chinese managers complain about the lack of trust of their foreign bosses. The problem is accentuated by language difficulties. The language issue is the most significant individual obstacle facing the partners in the JV. Although there are currently three translators on the payroll, only one is really a capable translator. The language barrier can be overcome by replacing the unsuitable translators, increasing the number of translators. Also, the Chinese employees can be required to learn English. On the other hand, in the expatriate managers training which is introduced above, the Chinese language course is included to teach the basic language skills to the expatriates. In addition, the culture barrier is another important problem in JV. According to Hofstede, (2003 p 20) It is obvious that the Chinese culture is different from the West Culture. Because it has been widely accepted that cultural difference greatly affects human thinking and Behaviour, the significant differences between USA and China seem to affect some aspects of their management practice. In the cultural different environment, cultural adaptation occurs when individuals acquire an increasing level of fitness or compatibility in the new cultural environment. Cultural adaptation is expressed in different forms and at different levels. Cultural adaptation could involve many essentials including language (verbal and non-verbal), economics, religion, politics, social institutions, morals, attitudes, behavior, traditions, material items, aesthetics and education. In juxtaposition, smooth transition and successful integration of managers going abroad on business would require the individual's cultural orientations to be determined. From an international business standpoint it is crucial for the long-term success of a company to establish and manage good relationships across. Another ways to overcome the communication barrier is relationship. The expatriate managers need to build good relationship with their Chine colleagues. Relationship, the term 'Guan xi' is used in China, are very important in getting on in Chinese society. In China, four culture factors are grouped into relationship (or Guanxi): group orientation (the need to live in his/her community, all his/her identity was related to his/her group); Renqing (if you do me a favor, it means I owe you something. I will pay back someday, as well as you are also expecting me to payback the favor one day.); Ganqing (friendship which implies an expectations and responsibility of receiving /surrendering favorable responses from/to ones friends); and Face (the concept of saving face or losing face indicating a person's social status. Having face means that one has good connection within the community, which makes everything done smoothly. But losing face means one get trouble or feels embarrassed in certain circumstance. In China, Guanxi is crucial for employees to gain a sense of being together and a sense of communicating with on anther. Researchers also point toward that the job satisfaction and job involvement may well be linked to the quality of one's Guanxi network. As a result, in Chinese JV, Guanxi is unavoidable. Actually, the Guanxi has positive and negative potential consequences. On the one hand, even if technocratic qualifications have become more necessary, but at the same time Guanxi is another major factor in determining who should be promoted. Workers and staff who have special 'Guan xi' with the superiors in power, either through family connections or forming special clues, normally get promoted over others lacking the relationship. On the other hand, Guanxi can enhance the trust between the managers and employees or within the group of employees. Chinese workers look upon high-quality Guanxi with them as one of the most significant credentials of being an excellent leader. This is not conflict with the modern management approaches. In the American-lead JV, the expatriate managers can enhance the trust with Chinese employees through developing the Guanxi with them so that the resistance of changes can be reduced and the performance can be more effective and efficiency. However, the weakness of Guanxi should be avoided by establish a completed set of rules and regulars. The company should allow all employees to discuss the rules and standards and encourages them to make suggestions. Through discussion, the rules and standards become clearer for employees and prevent the lack of creativity. The 'performance-related pay' bases on the performance control. Because the rules and standards are clear and suitable, the target are measurable, the performance control measures and motivates. The forms of vertical coordination are typically more formalized. But it is not always effective. Lateral techniques such as formal and informal meetings, task forces, coordinating roles, and network are more flexible and may be used to fill the void (Bolman, & Deal, 2003 p67). Formal meetings are undertaken regularly. Moreover, the task forces or project teams can be always assembled in JV to coordinate development of new products or services. The organizational intranet should also be developed in the JV. The network enhances the decentralization and democracy in the company because the bias of organizational intranet toward decentralization, teaming, and cross-functional, and cross geographical work makes it well attuned to complexity and change (Bolman, & Deal, 2003 p23). But the networks are difficult to control. It becomes a challenge for managers. Conclusion. As a conclusion, there are a lot of aspects that influence the approach international business is conducted. Differences in social, culture, economic, legal in addition to political conditions can to a great extent have an effect on the way globalize businesses are managed. Doing business in a foreign country presents massive challenges only for the reason that countries and societies are so extremely different. There is a need to understand not simply that these differences subsist, but moreover to understand how these differences impact doing business in a foreign country. Doing business overseas requires flexibility to obey the rules of the values and norms of that country. Adaptation can clinch each and every one of the aspects of an international business's operations in a foreign country, from the technique deals are negotiated, to the suitable incentive pay systems, to the business structure, product names, as well as relations between management and labor. What works in one country the majority to be expected will not work in another. It is also noted that without a doubt maximizing the cultural flexibility skills of expatriates as well as the evasion of expatriate disappointment in host country subsidiaries is of most important concern to organisations. Maximizing the cross-culture performance of expatriate managers in JV must be an integral element of the strategic human resource management planning of organisations in the 21st century as the pace of globalization necessitates that a growing number of organisations are required to think globally as well as make sure that their expatriates are ready and supported to do the equivalent. References Lee G. Bolman &Terrence E Deal 2003; Reframing Organizations: Artistry, Choice, and Leadership Jossey-Bass; 3 edition pp 23; 67 Hofstede, Geert. 2003; Culture's Consequences, Comparing Values, Behaviors, Institutions, and Organizations across Nations Newbury Park, CA: Sage Publications; Second Edition; p 20 Ramlall, S. (2004). A review of employee motivation theories and their implications for employee retention within organizations; Journal of American Academy of Business, Cambridge, 5(1/2), p52. M. Bartol; Martin, David C. and Kathryn 1998. "Performance Appraisal: Maintaining System Effectiveness." Public Personnel Management 27: p223-230 Hutchings,K.(2002). Improving selection processes but providing marginal support: A review of cross-culture difficulties for expatriates in Australian Organizations in China. Cross Culture Management,9 (3),p 32-58 http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch16.html retrieved on 3 May 2007 Bibliography Stephen McKenna 1995; the business impact of management attitudes towards dealing with conflict a cross-cultural assessment, Journal of Managerial Psychology; 10: 7 pp. 22-2 Terence Jackson , Mette Bak 1998; foreign companies and Chinese workers: employee motivation in the People's Republic of China , Journal of Organizational Change Management; 11: 4 pp. 282-300 George Graen , Chun Hui 1996; Managing changes in globalizing business: how to manage cross-cultural business partners, Journal of Organizational Change Management; 09: 3 pp. 62-72 Read More