Managing and Leading People - Essay Example

Analysing the impact of national culture on management and leadership within multi-national organisations: A report Table of Contents Introduction 3 2. Literature findings 3 3. Cultural implications for management and leadership 4 3.1. Impact of culture on labour legislation and management 4 3.2. HRM in cross-cultural contexts 5 3.3 Implications for people management 7 3.4 Culture and leadership styles across borders 8 3.5 Negotiation styles across borders 9 3.6 Implications for innovation and knowledge management 10 4. Conclusions and Recommendations 12 References Appendices 1. Introduction: Rapid globalization and the rise of innumerable multinational corporations (MNCs) in both production and service industries has been the trend during last few decades. While some MNCs flourished, others could not or operated at slower pace. While many factors can be assigned to these fluctuating patterns of business, the one that stands out is cultural differences across borders, an aspect of management studies that has received large and intense attention from many locations. Keeping this significance of national culture in focus, a report will be developed to identify various aspects of management that are contingent upon culture in different ways. Based on some critical research findings related to culture, this report intends to focus mainly on its implications on labour legislation, human resource management (HRM), leadership and people management, cross-border negotiations, knowledge management etc and any other issues that might get noticed during literature study. Finally, conclusions will be drawn based on key findings and applicable recommendations will be made if required. 2. Literature findings: Impact of culture on industry and economics has been established through numerous research and studies throughout the world; the main study that stands out in this sphere is that conducted by Hofstede (1980) whose pioneering work in this sphere has opened up new ways to approach business and management in the international contexts. These studies revealed that national culture has an impact on social norms, which in turn influence work-related values of individuals; and that national culture influences the corporate culture through the kind of policies, practices and procedures followed in the organisation. Values of business owners get translated into practices for employee management. Hofstede’s work identified five dimensions of national culture that get translated into, or influence, management practices. These include power distance, uncertainty avoidance, individualism-collectivism, masculinity-feminity, and time orientation (French et al., 2011). Following Hofstede, many other studies on culture and its impact on management have been conducted with significant findings. Trompenaars and Turner (1993) identified seven dimensions; and Hall’s (1989) work identified aspects of communication that could have different meanings in different cultures. The project GLOBE by House et al., (1997) is yet another groundbreaking work to determine impact of culture on various management aspects (Steers, Sanchez- Runde & Nardon, 2010). A list of dimensions identified in each of these studies is shown in Appendix 1. These studies have provided the basic understanding related to culture and workforce behaviour in different nations, which further has an impact on various management aspects. 3. Cultural implications for management and leadership 3.1. Impact of culture on labour legislation and management: From a labour legislation perspective, Punnett (2012) asserts that organisations are bound by national legal frameworks for operating and are inclined towards national economic requirements. For a nation where changing locations within the country is a norm or requirement for labour to earn an ongoing income, human resource practices and policies need to support such a requirement. The best identifiable example is embracement of diversity policies by organisations according to national legislation rather than organisational preferences. According to the International Labor Organisation’s Factsheet (2007), anti-discrimination policies in the Middle Eastern and North African organisations are comparatively weaker due to which discrimination against migrant -workers and women are still prominently seen. For a MNC from the West operating in the Middle East, a tough challenge emerges when they have to take decisions related to layoffs, which normally would be targeted at the migrant employees, irrespective of their performance or tenure. Though there has been improvement with respect to gender discrimination in the Middle East, migrant women are still at risk of harassment and discrimination due to understanding that has been culturally instilled in the population in religion-dominated regions. Keeping these issues in view, the Business & Human Rights Resource Centre recommends prospective business owners in the Middle Eastern regions to commit to international labour rights standards that define clear rules for employment of national and immigrant workers; and empowerment of women in workplaces (Fazah, Al-Kilani & Short, 2013). 3.2. HRM in cross-cultural contexts: Edwards (1997) initially explained the concept of diffusion and reverse diffusion of HRM approaches within subsidiaries of MNC has been common through adoption of best practices that can enhance productivity, efficiency and to meet changing market demands (Tempel, 2001). However, implications of these practices have been very different from expected. From a culturist approach towards organisational policies, many studies have concluded that impact of national culture on organisational behaviour is inherent, and that individuals follow certain norms that are appreciated and adopted by larger audience, which eventually becomes the culture. If organisations operating in foreign locations fail to recognize what aspects or behaviours are highly valued, they might seriously lose out on something important for their business, or might adopt incongruent practices that will produce negative outcomes. Considering the cultural dimensions, such as power distance and individualism-collectivism, which are different in Eastern and Western nations, HR practices related to promotions and rewards should also be different in these locations. For instance, high power distance regions, like China and India, will not appreciate an individual with less experience but high qualifications to rise to senior leadership role though this individual has proven his/her merit through performance, which is recognized in the individualistic nation, such as the United States. Human resource practices pertaining to promotions should therefore consider an element of tenure in high power-distance nations. Secondly, regulated career progression and standardized personnel development are preferred in high power-distance countries (Sumetzberger, 2005). Milikic (2009) analysed that different sets of cultural dimensions complement each other, which makes it simpler for HRM practitioners in MNCs to formulate practices accordingly. For instance, job descriptions are vague and dynamic in high power distance and low uncertainty avoidance nations with bureaucratic organisations, where subordinates are expected to perform all activities ordered by his/her supervisor; such an ambiguous role and job description will not be favoured in high uncertainty avoidance and low power distance cultures. However, in case of Serbia, as studied by Milikic (2009), which is high uncertainty avoidance and large power distance country, clearer job descriptions are not the norm because both these dimensions have opposing impact, besides the impact from other cultural dimensions such as collectivism and feminity. All these cultural inclinations make Serbian organisation a bureaucratic one with greater authority vesting with the manager. Milikic’s (2009) study of Serbian recruitment practices concludes that they prefer internal recruitment and promotion with more structured selection processes and great emphasis is put on educational qualifications in large power distance cultures. Finding the required skills is another challenge that HR function faces in foreign locations. For instance, Germany places high value on vocational training rather than formal education that is obtained in the US or UK; however, this makes it easier to find non-managerial workforce in Germany compared to finding management professionals (Menipaz, E and Menipaz, A, 2011). Another challenge from policies and practices perspective is performance management and evaluation practices that can work well when congruent with national cultural preferences. Like for example, 360-degree feedback for performance evaluation would work well with individualistic cultures but not with collectivistic and power-distance cultures. Secondly, individual rewards and incentives can motivate employees from individualistic cultures but not collectivistic cultures that believe in team rewards. Determining performance dimensions is also a challenge in cross-cultural contexts. As Aycan (2005) determined, criteria such as productivity, efficiency, quality, and timelines suit individualistic cultures, whereas team loyalty and commitment, harmony, human nature, interpersonal relations, respect for superiors, hard work etc suit collectivistic cultures. Communication of performance feedback is yet another challenge managers can face in international locations where receiving feedback is disliked, say in collectivistic cultures; here, feedback is indirect, subtle and private, unlike individualistic cultures where individuals welcome face-to-face and straight feedback and hence practices such as 360-degree feedback are apt. Individualistic countries put substantial efforts towards training and development of their workforce, unlike collectivistic countries where learning and development largely occurs based on individual’s learning capability and commitment. 3.3 Implications for people management: The most important focus for international managers in foreign locations is the way to deal with their employees, which requires knowledge and skills other than conventional leadership or managerial skills. Towards this effort, the most significant aspect is communication, which includes an understanding of verbal and nonverbal cues such as slang and body language, respectively. Through their study, Tran and Skitmore (2002) concluded that people from high uncertainty avoidance cultures prefer clear communication and rules unlike their counterparts that build relationships based on mutual trust; this could pose a serious challenge to expatriates from the West in Asian countries because Asians might feel offended if the manager fails to understand what they imply to communicate and asks for clear explanation. They also concluded that expatriate managers’ competence decides their attitude and behaviour towards their understanding and empathy. And, communication is the quintessential factor for exercising effective leadership and management. Therefore, it becomes important for the manager to understand if the national culture is high or low context. Even differences in time orientations have serious implications on relationships in different cultures. O’Hara-Devereaux and Johansen (1994) explain that leaders need to understand the nature of polychromic and monochromic time orientations in order to better manage people. For instance, Hall and Hall (1989; adapted from O’Hara-Devereaux & Johansen, 1994) have clearly identified the differences between both these time orientations (see Appendix 2). In Western cultures, categorized as monochromic, scheduling, confidentiality, discipline, and task-based relationships are given high importance; hence, expatriate managers in the Asian or Middle Eastern countries, which are polychromic should be able to deal with frequent interruptions, seeming lack of focus, indiscipline, relationship-focused individuals with lot of patience and understanding. For instance, arriving late to a scheduled meeting is considered as normal and acceptable in the Middle Eastern companies, which the Western expatriate manager should be willing to accept. 3.4 Culture and leadership styles across borders: Through her extensive study, Jogulu (2010) found out that numerous researches have been performed to conclude that culture has an impact on leadership style of an individual owing to differences in values, attitudes and beliefs. Moreover, the leadership behaviours demonstrated by different individuals are interpreted and understood differently in different regions. As Jogulu (2010) evaluates, individualistic countries consider leadership as effective based on financial and efficiency outcomes, whereas collectivistic nations label leadership as effective based on degree of loyalty from subordinates and their satisfaction with the leader. In large power distance cultures, leaders are seen as authoritative, powerful and of higher order unlike in low power distance cultures where leaders are regarded as equals with special capabilities of influencing others and achieving desired outcomes. These differences can have serious implications for expatriate managers in leadership roles. Leaders from individualistic cultures are more participative, which individuals from collectivistic cultures might view as weak leadership as they believe in leaders exercising control, authority and command over subordinates. The most significant work towards identifying attributes and practices that differentiate and predict leader behaviours based on cultural attributes is House et al.,’s Globe project (1997; cited in House et al., 2002). This study found out that apart from differences, many individual leadership attributes were universally acknowledged and accepted; some of these include qualities such as encouraging and motivating, positive, focus, knowledge and/or intelligence, trustworthiness, honesty and forward thinking abilities. However, qualities such as cautiousness and uniqueness, class-consciousness, domineering, elitist, passive, serious, enthusiastic, etc are perceived differently in different cultures. 3.5 Negotiation styles across borders: Understanding and interpretation of communication has a major role to play in effective negotiation in the international business world. Negotiation activities are involved in various management functions ranging from agreements and business deals to managing employees and inspiring them to achieve desired goals. Gulbro and Herbig (1995) had long ago asserted that arriving at the right conclusion post communication requires understanding of the other person’s intent, behaviour, habit and attitude, which are usually influenced by cultural conditioning. Hall’s identification of monochromic and polychromic cultures provides significant insight into this aspect of cultural conditioning. For instance, monochromic cultures focus towards financial, legal, rule-based negotiation processes unlike polychromic cultures that focus on relationships and trust. Gulbro and Herbig (1995) also added that negotiation processes are complex in international contexts and often fail due to cultural differences and incorrect perceptions formed due to lack of cultural awareness. While some cultures, like the American, prefer straightforward and open expression of ideas, intentions and beliefs, the same will be viewed as aggressive, rude, overpowering, and insincere in polychromic cultures, such as Japan. Such differences and lack of their understanding have caused many negotiations to fail irrespective of similar intent from both negotiating parties. To strengthen negotiation process, organisations must employ local negotiators on their behalf. Hofstede and Usunier (2003) assert that successful negotiation requires negotiators to share national culture and values of their country in order to earn trust. Values, as the core components of culture, can manifest in the form of habits or rituals, behaviours, feelings, commonly understood symbols or signs. One of such rituals in the emerging markets is the issue of bribe, which is regarded as a norm for successful negotiation, but a serious challenge faced by international firms; however, the international firms have to make a stern decision whether they would want to venture into such a relationship that would harm the society at large or adopt other practices to mitigate issues of bribe and corruption, which Usunier (2003) refers to as challenging cultural relativism. 3.6 Implications for innovation and knowledge management: Different cultural dimensions impact the process and outcome of innovation in organisations. Innovation stems from creative thinking and is supported by resources, funding, encouragement, and also direction and time. In their study, Kaasa and Vadi (2008) stress upon societal factors besides organisational factors that can impact innovation process and its outcomes. The base for innovation lies in the extent of and attitude towards risk-taking behaviour, both culturally contingent. Cultural dimensions can provide an insight into extent of innovation supported by different cultures. For instance, large power distance cultures where information sharing is hierarchical and less, innovation is slow and lesser compared to low power-distance cultures. Secondly, uncertainty avoidance is significant to understand extent of innovation. In high uncertainty avoidance cultures, such as Asian countries, new ideas and approaches might be viewed as dangerous to the situation, either from finance perspective, or relationship perspective as it would challenge both. Moreover, individualistic cultures are considered to be more innovative compared to collectivistic cultures as the latter put greater emphasis on relationships; challenging a status quo could seem to threaten relationships. Contrasting views from different perspectives have been put forth by Baker and Carson (2011), which focus on factors of attachment and adaptation that managers tend to adopt depending upon the situation. They argue that managers, irrespective of cultural influence, tend to create new methods or stick to proven ways of doing things depending upon external forces of action. Contrary to traditional belief, though with high uncertainty avoidance in German culture, new businesses flourished as the business owners adopted a planned approach by adapting to the demands of market. Knowledge sharing and transfer are yet other critical aspects of management in MNCs that rely heavily on knowledge-based activities. Minbaeva et al., (2003) assert that MNCs are no long recognized by their own knowledge repositories but have become vehicles of knowledge transfer across the globe. They also raise the point made by Simonin (1999) that employees’ motivation to acquire knowledge can be an inhibiting factor to knowledge transfer, which can be addressed by managers by acquiring cultural sensitivity and awareness. Here, characteristics of local staff need to be understood, such as their openness, attitude to learn, and team working abilities besides knowledge and technical know-how will be essential for effective knowledge transfer. Project GLOBE teaches that transfer of tacit knowledge is complex and difficult because of lack of cultural awareness and sensitivity (Javidan et al., 2005). Findings from a study conducted by Egerkrans and Weckner (2007) on knowledge transfer between IBM Nordic and IBM India indicate that the manner and place in which knowledge transfer decisions are taken has an impact on its effectiveness from a power distance perspective; secondly, methods and channels of knowledge transfer also impact its effectiveness in cross-border management; communication differences, both verbal and non-verbal can affect knowledge transfer effectiveness; and finally, motivational factors, both intrinsic and extrinsic, affect knowledge transfer outcomes. 4. Conclusions and Recommendations: To conclude this brief study on implications of national culture on management and leadership that has large potential for exploration and debate, it would be appropriate to agree that national culture is instilled in its workforce in the form of values, beliefs, attitudes and habits that could be rigid and complex, and these attributes are difficult to modify by any form of external force. Nevertheless, globalization powered by advanced communication and information technology sources have made it possible to at least understand these complexities in human behaviour influenced by culture, which has given management scholars immense room for study and made it possible for them to translate these phenomena into implementable strategies for managers across the globe. Cultural dimensions identified by various researchers in the past have provided a strong base towards this effort and has made it simpler to understand cultural implications on management and leadership. Overall, findings indicate that national culture can have an impact on almost every aspect of management, leadership and business activities. Based on these studies and various researches explored during the development of this report, some of the critical factors for managers towards effective management across nations, which have been identified, include cultural awareness, cultural sensitivity, openness and flexibility, tolerance, willingness to learn, and knowledge related to business, legislation, and technology. Secondly, it should be noted that boundaries of adaptation should be identified by ascertaining the ethical and unethical approaches/practices, which could potentially benefit or harm the organisation, respectively. Thirdly, integration of cross-border personnel and strategies should be based on clear understanding of target nation’s cultural facts, legislation, and ethics. Lastly, it would be appropriate to urge managers in foreign lands or cultures to acquire cultural knowledge in terms of communication patterns, personal and professional intentions, leadership and management styles, and follower characteristics, clues of which can be obtained by studying cultural dimensions and their complementary or negating effects. References Aycan, Z., 2005. The interplay between cultural and institutional/structural contingencies in human resource management practices. International Journal of Human Resource Management, 16(7): 1083-1119. Available from http://zeynepaycan.net/doc/j18.pdf (Accessed 21 April 2014). Baker, D.S and Carson, K.D., 2011. The two faces of uncertainty avoidance: Attachment and adaptation. Institute of Behavioural and Applied Management, 12 (2): 128-141. Available from http://www.ibam.com/pubs/jbam/articles/vol12/no2/3%20-%20Baker%20and%20Carson.pdf (Accessed 23 April 2014). Discrimination at Work in the Middle East and North Africa, 2007. Factsheet. International Labor Organisation. Available from http://www.ilo.org/declaration/info/factsheets/WCMS_DECL_FS_92_EN/lang--en/index.htm (Accessed 22 April 2014). Egerkrans, H and Weckner, L., 2007. The effects of culture when transferring knowledge in offshoring projects: A case study conducted between IBM Nordic and IBM India. Independent Thesis by Department of Business Studies: Uppsala Universitet. Available from http://www.diva-portal.org/smash/get/diva2:131597/FULLTEXT01.pdf (Accessed 23 April 2014). Fazah, R, Al-Kilani, S and Short, A., 2013. Business and human rights in the Middle East and North Africa: A regional briefing. Business & Human Rights Resource Centre. Available from, http://business-humanrights.org/media/documents/briefing-business-and-human-rights-in-mena-10-dec-2013.pdf (Accessed 22 April 2014). French, R, Rayner, C, Rees, G and Rumbles, S., 2011. Organisational behaviour. 2nd ed. New York: John Wiley & Sons. Gulbro, R and Herbig, P., 1995. Differences in cross-cultural negotiation behaviour between industrial product and consumer product firms. Journal of business & Industrial Marketing, 10 (3): 18-28. Available from, http://www.iei.liu.se/fek/722g86/uppladdning-av-artiklar-infor-artikelseminarium/1.512376/856651.pdf (Accessed 23 April 2014). Hofstede, G. 1980. Motivation, leadership, and organisation: Do American theories apply abroad? Organisational Dynamics, 9: 42-63.Available from, http://alangutterman.typepad.com/files/motivation-ldrshp-and-orgn-do-american-theories.pdf (Accessed 21 April 2014). Hofstede, G and Usunier C, J., 2003. Hofstede’s Dimensions of Culture and their influence on International Business Negotiations. In Ghauri, P and Usunier C, J’s International business negotiations. 2nd ed. Oxford, UK: Elsevier. (137-154). House, R, Javidan, M, Hanges, P and Dorfman, P., 2002. Understanding cultures and implicit leadership theories across the globe: an introduction to project GLOBE. Journal of World Business, 37 (1): 3-10. Javidan, M, Stahl, G.K, Brodbeck, F and Wilderom, C.P.M., 2005. Cross-border transfer of knowledge: Cultural lessons from project GLOBE. Academy of Management Executive, 19 (2): 59-76. Available from, http://kimboal.ba.ttu.edu/MGT%205384%20Spr%202012/globe%20project.pdf (Accessed 23 April 2014). Jogulu, U.D., Culturally-linked leadership styles. Leadership & Organisation Development Journal, 31 (8): 705-719. Kaasa, A and Vadi, M., 2010. How does culture contribute to innovation? Evidence from European countries. Economics of Innovation and New Technology. 19 (7): 583-604. Available from, ftp://ftp.repec.org/opt/ReDIF/RePEc/mtk/febpdf/febawb63.pdf (Acccessed 23 April 2014). Menipaz, E and Menipaz, A., 2011. International business: Theory and practice. London: Sage. (Ch.12; pp: 439-472). Minbaeva, D, Pedersen, T, Bjorkman, I, Frey, C.F, and Park, H.J., 2003. MNC knowledge transfer, subsidiary absorptive capacity, and HRM. Journal of International Business Studies. 34, 586-599. Available from, http://www.palgrave-journals.com/jibs/journal/v34/n6/full/8400056a.html (Accessed 23 April 2014). O’Hara-Devereaux, M and Johansen, R., 1994. A Multicultural Perspective: Transcending the barriers of behaviour and language In Globalwork: Bridging distance, culture and time. San Francisco: Jossey-Bass. (Ch.2; pp: 54-63). Punnett, B.J., 2012. International perspectives on organisational behaviour and human resource management. 3rd ed. New York: M.E Sharpe. (Ch2; 20-53). Steers, R.M, Sanchez-Runde, C.J and Nardon, L., 2010. Management across cultures: Challenges and strategies. Cambridge, UK: Cambridge University Press. Sumetzberger, M.W., 2005. Managing human resources in a multinational context. Journal of European Industrial Training, 29(8): 663-671. Tempel, A. 2001. The cross-national transfer of human resource management practices in German and British multinational companies. Verlag, Germany: Rainer Hampp. Tran, D.D and Skitmore, M., 2002. The impact of culture on inrernational management: A survey of project communication in Singapore. The Australian Journal of Construction Economics and Building, 2(2): 36-47. Available from, http://eprints.qut.edu.au/3440/1/3440_1.pdf (Accessed 21 April 2014). Usunier, J-C., 2003. Ethical aspects of international business negotiations. In Ghauri, PN and Usunier, J-C’s International business negotiations. 2nd ed. Oxford, UK: Elsevier. (437-460). Appendices Appendix 1 Adapted from Steers et al., 2010; p.56. Appendix 2 Source: O’Hara-Devereaux, M and Johansen, R. 1994; p.60. Read More