Cultural Analysis of DHL - Case Study Example

Introduction Business Organizations are distinct and the Organizational culture is best captured in the elements of history, norms, culture and values of the company. According to James G.Hunt (2004:268) the important part of the organizations culture emerges from the collective experience and journey of the employees and these aspects makes it unique and distinct and provide a competitive advantage for the organization. Some of the facets are experienced and observed in day to day practices while others are discovered. The employees of any organization learn about the unique characteristics of the organizational culture and ethnicity by listening to employee stories, observing employee’s actions and through public forums. Some successful organizations share an important cultural characteristic which portrays specific rules and regulations and they are integrated with their daily activities. The timing, presentation, format, communication directives is often distinct and different in each organization. To understand the culture of any organization, it is important to realize the company’s core values. Shared values help in turning the normal activities to valuable, provide distinct source of competitive advantage, corporation goals to values of society. James G.Hunt, John R. Schermerhorn, Jr & Richard N.Osborn (2004:271) stated that unique core values provide strong corporate identity, enhance collective obligation, provide stable social environment. The elements of strong corporate culture of an organization is when Understanding of Organization’s core value and objectives of the business and awareness of the business’s mission and vision. Concern for individuals over rules, policies, procedures and adherence to job duties Recognition of the Hero’s and initiatives taken by the employees and their contribution to the success of the company and demonstrate the company’s shared philosophy. Another important factor for building the company’s brand identity is by implementing a unique ritual and a procedure. Well understood rules of both the employees and from the business The elements of culture can be defined as various facets or windows that reveal the cultures of an organization. Studies have shown that most of the organizations rely only on one element which through chronicle and this leads to miscommunication and does not provide absolute outlook of the organization. (Brown 1990, Meyer 1992). Gerald W. Driskill and Angela Laird Brenton, 2005 defines ‘Cultural analysis’ as a stream of investigation to understand trends, influences, effects, correlations within cultures. A cultural analysis involves refining the techniques through observation, communication, newsletter, dealing with the external communities and interaction with the employees that we use on a daily basis. (Gerald W. Driskill and Angela Laird Brenton 2005) Why is the culture as it is in DHL? Globalizations of DHL, diversity, multiculturalism, transculture are some of the reasons why DHL has a culture by itself. At DHL, the most important and critical challenge is having wide diversity and different cultures. DHL was started in 1969; Deutsche Post DHL is the world’s leading logistics service provider in international express, overland transport, ocean freight, contract logistics and also the originator of the air express industry. DHL UK Sustainability Activities in 2005 states that DHL extends its operations to 1, 20,000 destinations and more than 220 countries and territories worldwide has an advanced, vast and large IT application. Being at this position, the company aims for automation, change in deployment, better performance, increase in number of shareholders and also maintain accurate performance model. One of the reasons why DHL still maintains and sustains a position in the market as the leading international air express is because underpinning DHL culture is a set of strong core values and ideologies which establishes the standard of behavior that DHL expects from its employees. With the acquisition of Exel in 2005, the DHL brand was further strengthened as it took over more than 1, 00,000 employees around the world. DHL has grown through numerous mergers and acquisitions to become a multinational company and has supreme presence globally with the most comprehensive and extensive portfolio in the international logistics industry. DHL had developed ‘corporate symbiosis’ with its own organizational composition to serve the global market better which. This approach encompasses the empowerment of DHL employees and has a direct impact on the DHL marketing strategies. This means that on a comprehensive level, corporate management is determined by the core principles and values of the company while the local management in all the different countries has a freehand to promote these values in the most culturally appropriate way to the employees (DHL UK Sustainability Activities in 2005, 2006; 4) To manage a network which is spread across 200 countries with diverse local cultures, rules, regulations, and policies is very complicated and tricky but since the company had already a strong and clear corporate culture, this was made effortless. Success in any multinational company is very difficult to achieve and depends 100% on the employees. Local people fill the majority of the management and staff positions in DHL which makes it easier in terms of controlling and coordinating. In Nigeria 496 of the employees out of 500 are Nigerians. Consequently, although a multinational company, it is not dominated by one culture or country. At the Global co-ordination center in Brussels, DHL has 47 nationalities speaking over 30 different languages. DHL looks at the mixture of different cultures as a benefit to the organization rather than a barrier as it helps the company to analyze different view, opinions and creates a capability to understand different local customer requirements in different countries. (Silvio De Bono, Beatrice Van Der Heijden and Stephanie Jones 2008:206) DHL has 750 employees in the Bahrain office out of which approximately 70% of the employees are Bahraini nationals. In 2007, DHL was awarded 2 of the most respected awards for contribution to Bahrainisation. One for the in-house coaching provided by the company for 1 year and the other for providing opportunities to the local people. (Andrew Jeffery’s 2008) Local hiring is also one the key factors for creating a natural association to the areas DHL serve as this also allows the company to understand local practices and customs. It provides an opportunity for the employees to think globally, act locally and respect different cultures.(Silvio De Bono, Beatrice Van Der Heijden and Stephanie Jones 2008 :206) Any multi national company will have an array of a multicultural top management team. Depending on the focus of the business, the language of the company is very important. English was chosen as the primary language by Deutsche post, a German company and this made the integration of DHL and Exel easier. With a very unusual approach, Professor Fons Trompenaars (2006:2) has focused on cultural shock emerging out of mergers and acquisitions. DHLhad a seamless transitional change as the top management had vast exposure and experience in mergers and acquisitions. Being globally diverse and having a rich multi cultural heritage is the key to success for any multi national company. DHL retains exceptional people by creating a truly global working environment and valuing its multi cultural heritage. Analysis of Culture in DHL Organization: According to Edgar Schein Workplace culture means’ A common set of beliefs, values, meaning and expectation shared by the members in a work setting that dictates the type of activities and behaviors assumed by those members’. This means that organization creates core cultural values and traditions that will determine on how people perform in a work environment. Workplace culture in any business organization is very vital and essential as it contributes to customer job satisfaction and generates employee loyalty with the company; cut down employee turnover and helps in overall integration for the consumer or the client. Schein (in Teemu Reiman & Pia Oedewald, 2002:6) developed a 3 layer culture model where in the organizational culture can be examined on different levels. The fist level of culture consists of visible organizational processes and artifacts which includes work place environment, quality systems, transparency, safety, social interaction, employee training, breaks, group customs and employee benefits schemes and incentives. This level is difficult to interpret and this represents the most superficial cultural phenomena (Schein 1992). Silvio, Beatrice & Stephanie (2008: 203) conducted a research in the Cairo branch of DHL and found that a’ family spirit ‘and atmosphere that covers the entire work place environment. The reason behind this is that all DHL offices across the globe have a distinctive workplace layout with open partitions and not closed offices or cabins for all the employees including the top management. The corporate structure is aligned to the worldwide company structure with no titles for any employees/This gives the employees a sense of respect and comfort and also provides an open, honest and ethical atmosphere to work in. The company’s long service scheme was launched in 2006 and this program aims at acknowledging the loyalty of the employees who had rendered services for 10,20 and 30 years by awarding retail vouchers worth $100 to $500 depending upon the length of the service rendered.( Nicola Sullivan,2009) Transparency in terms of management decisions helps DHL to promote integration and success to the organization. DHL has always been committed to social and environmental responsibility through extensive training provided to staff and creating awareness. The DHL UK Sustainability Activities in 2005 (2006; 8) states that DHL Express UK obtained ISO14001- International standard in environmental management in 13 sites. More than 1,100 employees have undertaken the general environmental training. 628 staffs were provided transport and health safety as a part of training program. With Flexible Benefits Scheme, the employees were given the freedom to break their income between cash and benefits In addition to this; HR has also attempted to standardize policies and procedures in relation to health and absence management, fairness to work and in recruitment. In 2005, there was restriction on the work timing by the road transport regulating the number of hours the employee can work; DHL ensured that its employees took additional regular breaks whilst on the road. (DHL UK Sustainability Activities in 2005, 2006; 12) Teemu Reiman & Pia Oedewald (2002), p.214 states the second level of cultural level according to Schein model consists of organization’s espoused values. Espoused values include company’s corporate culture, declared norms, principles and operating philosophy. DHL organization is described as a learning organizational culture that tries to apply the double loop learning principle(Fiol and Lyles, 1985) where the errors of the business is corrected by modifying the organizational objectives, policies and procedure. One of the programs that was introduced to link to the business strategy is by the introduction of ‘DHL way’ and by this DHL management engaged the employees to develop motivation and commitment to customers and provide the best service. Another way of leading towards the corporate core values is by recognizing the exemplary work done by DHL’s employees. This gives the employees a great source of motivation and inspiration. According to The DHL UK Sustainability Activities in 2005 (2006;13) The ‘Customer Heroes Scheme’ was initiated and designed to recognize the employees achievement. The top DHL recognition award is the CEO award and it is the CEO’s appreciation of extraordinary effort of those staffs who executed the tasks beyond the call of duty and ensuring customer satisfaction. The third cultural level is the underlying assumptions related to the internal integration and solutions to the problems. Problems relating to defining group limits, level of authority relationships and interactions as well as rewards and punishments (Teemu Reiman & Pia Oedewald; 2002:216) One of the DHL core values is to take social responsibility and believes that community investment is an extension to their business. Social responsibility offers employees to get involved and this in turn promotes motivation to provide better customer services which is the core corporate value at DHL. In the past, DHL has organized several programs for the under privileged children to bring in a small change in the society. For DHL, responsibilities to their society and people are as important as their responsibilities to business partners, customers and local communities (DHL UK Sustainability Activities in 2005 (2006;15) Another initiative was taken by DHL supported by UNESCO and in partnership with Oman National Commission for education, culture and science which aims at promoting intercultural discussion between young people from different nations. This training and development program focuses on personality development, conflict resolution, managing cross cultural issues, diversity, community and strategy building and better understanding between different people from different cultural background. (DHL 2007) DHL Express introduced ‘Skills in motion’ in order to develop the transferable skills of its employees and also mutually benefit both the employees and the society. This was a skill sharing venture which required effective management. The primary business benefit of ‘skills in motion’ is the competency development of DHL express staff which helped in developing transferable skills such as project management and relationship building.( CSR case studies series, 2007) Safety culture at DHL- According to Teemu Reiman & Pia Oedewald (2002), a good safety culture does not mean that no mistakes and 100% risk free environment are made; it means mistakes are responded to properly (IAEA 1996 in Teemu Reiman & Pia Oedewald, 2002:14) .The criteria for good safety culture is as follows: A good safety culture is reflected in the company’s policies and procedures Adds positive values and commitment towards safety Competent staff and good training methods used by the organization Quality and up to date rules and regulations and high quality maintenance of technical equipment. Continuous strive for improvement in operations and in safety techniques Adequate information and interpretation of reporting events and accidents. It’s very essential that DHL provides a safe working environment as majority of the employees work in the company warehouse, vehicles and sorting areas. DHL is trying to reduce the number of accidents by way of creating awareness through health and safety training provided to the employees on their sites. 628 employees were given in-depth transport safety training in 2005 accredited by the Chartered Institute of Environmental health. Training manuals are also being circulated to all the warehouse staff to reduce the risks of accidents at site levels.( DHL UK Sustainability Activities in 2005 ,2006;12) Few studies exist in the recent organizational research on the use of “clan culture” and supervisory style by Chan 1997 in (Bruce E. Winston, Karen Cerff and John Jerome, nd: 10). Clan culture is that of shared values and goals, individuality and a sense of we-ness. Clan culture places a lot of emphasis on team work and human resource capacity. Chan concluded that the characteristics of Clan Organization for DHL are (a) Importance of the individual clan member (b) Importance of internal reliability (c) Internal Cohesiveness and a sense of belonging (d) differentiation of the clan from the external surroundings. Cameron and Quinn (2005) define clan culture as being focused with the sense of family. There is a sense of independence with people acting more out of sense of duty rather than compliance to the rules. Every year, DHL organized family day across all centers to spread the family spirit and building a clear culture. According to Silvio De Bono, Beatrice Van Der Heijden and Stephanie Jones [Eds] 2008, DHL treats its employees as an extended family in the Asian tradition. Most of the top jobs are filled internally and this way the company works gives the chance for its employees to move on to the next role and helps in self improvement. As a part of the family promotion program, DHL has flexible working schedules for all the employees which make it easier to co-ordinate personal and professional needs. Gagliardi and Schein (in Teemu Reiman & Pia Oedewald,2002: 11)says that Leadership is a central position in organizational culture and plays an important role as creators of corporate culture play a key role by translating strategies into operational metrics, aligning the organization around the execution of strategy. According to Adrian Gostick & Chester Elton 2006, DHL with the merge with Airborne Express launched ‘carrot philosophy’ as an integral part of the employee engagement strategy as the employees from both the organizations required motivation to be more focused and move in a single direction. In order to create the carrot culture, DHL began taking initiatives for promoting culture of engagement and this was done through training programs. Under this philosophy recognition was a major factor to greater business results while bounding people to the organization and in the 1st six months, turnover within the IT department of DHL reduced by 27 percent as carrots increased employee morale, engagement and satisfaction. By associating recognition with behavior that exemplifies company core values and goals, it helps the company achieve success. The success of the program was attributed to its core business values and principles and the company’s effort to train managers to create a high performance culture in the organization.(Adrian Gostick 2007) Culture helps or hinders the strategic development of the organization A company’s corporate culture is made up of values, beliefs, habits and norms that characterize the way the employees perform work and interact in their marketplace. Research by Harvard Business School has shown that depending on company’s culture characteristics, it could either enhance or detract the economic performance. It was also found that if the corporate culture is not aligned to the company’s strategic objectives this has an overwhelming impact on organizational success or failure. There are different types of corporate culture that the organizations adapt of which some are pioneering; some are performance driven while some are detrimental to the organization. (Gabrielle O’Donavan, 2003) To be able to achieve the company’s goals and objectives, DHL adopted and implemented the use of the balanced scorecard, which addresses serious deficiencies in the management systems. It helped the business in achieving the business strategies, visions, feedback and the employees were given an opportunity to learn, improve and perform better with the help of the balanced scorecard. This was introduced to integrate their strategic learning with the employee performance. The employees of DHL share common values and strong corporate culture and this helps the company in becoming stronger than its competitors. Management requires expertise knowledge, good service standards Management and strategic decisions are made based on facts and analysis, to do so the management requires combined expertise knowledge and inputs from the team functioning across all locations and units. It is very essential that the company improves the service standards by embracing strategies that manage the feelings and attitudes of the employees. (DHL, 2010) One of the important corporate strategies is to help in exceeding customer satisfaction and improve product quality. To achieve this goal, DHL launched ‘first choice program’. The launch of ‘first choice ushers’ was strengthening the financial performance of the company .First choice was implemented in various series of reference projects including planning of aviation ,proactive shipment tracking and tracing, call centers and other global business services. This program was also successful as it helped in improving customer communication and complaints management at regional and country level and the company’s financial performance of the company also increased by 25% in 2005 and 5 billion Euros in 2009. 50,000 employees were involved in implementing the first stage and this in turn reflected in the employee’s appraisal. The success of every DHL delivery is attributed by the company’s complex service process which includes taking the orders, picking the goods, documentation, monitoring of supplies and deliveries for assurance purpose and control, billing, packaging, transporting and delivery, problem resolution team to resolve the grievances of any customer (DHL,2006). According to Po-chung (2001), customer service and customer satisfaction is the primary objective for any courier service. In DHL, the employees ensure that the work is done accurately and ensure customers provide positive feedback and experiences. In order to achieve exemplary service standards, DHL are trying to improve and maintain the different aspects of their employees such as to eliminate any unhappy feeling about the company and address their grievances to the HR team and to provide job security. Another important aspect of corporate culture that DHL believes and follows is to act according to clear priorities. This requires good understanding and cooperation among all parties both internally and externally. According to Po Chung 2001, there are 3 management philosophies that DHL follows in order to achieve their goals and they are- Creating an atmosophere and believe that business is an extension of the family. Decision making authority provided to the lowest levels Strategic thinking at all levels of management The first, unique combination of Asian family values is the belief in the corporation as an extension of the family.DHL takes care for its employees as if they were an extended family in the Asian tradition.This develops a sense of personal loyalty, commitment and hard work from the employees. This also enables to have a stable workforce with low employee turnover. DHL believes in the spirit of family and promote individual responsibility. The business success factors of this organization lie in its adoption of the culture and structural characteristics of a clan organization.Clan organizations can create for themselves a more manageable social space that will provide them protection and stability. Family like relationships between the management and the employees enables workers to find meaning in their work and makes it easier to manage changes and reduce conflicts with the organization. The clan metaphor provide guidelines and principles to be used by business to manage strategically even during tough environement. The second key philosophy is decentralization which means to give more authority and responsibility to carry out decisions by the lowest levels. In DHL, senior and regional management allow local managers to proceed with their jobs with minimum interference. For example, a regional manager in Hong Kong has the authority and discretion to make decisions required to run the business, have his own budget plan set and proceed without any interference from the regional headquarters. According to DHL, the most powerful force in the company is pushing decisions to the lowest level as this allows the local managers to take ownership of their department as if it was his own company and helps in bringing out the entrepreneurial drive of the managers. The company is able to give the managers big responsibilities because of the trust the company has in them. This is the greatest form of incentive that the company can provide which allows its employees to develop what he/she thinks is the best. By letting people at all levels participate in the making decisions, it brings in high degree of job satisfaction. This also spreads the decision workload among the top management which results in less executive burnout. It helps immensely in area of talent development as it allows the lower level people to learn the business quickly and it forces them to use their common sense and also acquire the skills required to do the job quickly.It forces people to develop a good working relationship, identify future leaders and build a good rapport. For instance, airport supervisor has to decide on which bag to leave behind because of limited space and by this he learns to make decisions and have a good rapport with the airline staff, customs officers and other airport authorities so that he can request for accommodating the baggage on other flights. This management practice of pushing decision to all levels of management is the key reason for the phenomenal growth in the last 25 years. Po Chung 2001 also stated that the third philosophy is also imbedded in DHL’s corporate culture which is to believe in the importance of strategic thinking. Usually, the senior managers are expected to think strategically but in DHL, strategic thinking must be done at all management levels. Another essential corporate culture is to act with intergrity both internally, within the group and externally with the business partners ,shareholders, customers and general public. The employees are given the oppurtunity to develop individual performance regardless of the caste, gender and religion. (Po chung 2001) Diversity management is also an essential component as it is anchored by core values and conduct in allignment with DHL’s corporate culture. Employees from different ethnic background, age groups work together to provide services to similar hetrogeneous customers across the globe. DHL also strongly promoted the company’s diversity and pledged their support for equal oppurtunity. This also helps the company to have a competetive edge through diversity. Innovation is the key success factor for companies and the varied experience of the employees provide a competetive edge . It encourages the employees to provide better ideas. The creativitity of the employees offers huge untapped potential that can be systematically leveraged with the help of the ‘Idea Management Program’ developed by DHL. The aim of this program was to enhance the value of the company in the long term and provide better solutions. In 2008, 219,000 ideas were submitted by the employees on how to process effectively and efficiently and enhance environmental protection out of which 74% of the ideas were implemented and this helped in Euro 265 million savings for the company. For every idea that was implemented, the employees receive some bonus points and appreciation from the top management and depending upon the potential savings, the employees also get a cash voucher upto Euros 100,000. The discussion between the management and the employees about improvement suggestion helps to create an open corporate culture. (DHL 2009) One can have great strategies and the strategies can be aligned to corporate culture to achieve better performance but without the right execution they are meaningless. If there is no effective participation, there can be a failure in execution if there is no effective participation of the management on the strategies into action. One of the great challenges seen by most of the multinational company is the lack of employee buy-in, hindering co-ordination between the top management and employees which is essential. The Organization of DHL solutions have decentralized management and consist of multiple management levels consisting of operating unit managers, local managers, regional management and top management which can also create problems sometimes from co-ordination and control perceptive. There are also clear weaknesses in DHL as an Organization. There is no clear vision and plan for the future and this causes friction between the employees and this affects the efficiency and effectiveness of the company. Culture can be the most difficult of all barriers to overcome beyond technology or cost. If business managers are not ready to lead a cultural shift, there would be a higher attrition rate because of improper guidance and double standard culture. (Silvio De Bono, Beatrice Van Der Heijden and Stephanie Jones, 2008: 204) The culture of an organization can either support the company’s strategy or work against it as a significant barrier. All organizations will have a subjective or invisible culture that will influence the company’s success or failure. One company can have a culture that stops the forward progress of a change initiative while the same can be implemented in another company seamlessly. The company’s can be a great assistance to employees if it is receptive to new ideas and adapt to changes as it involves restructuring core values and objectives, change in behavioral pattern and require lot of time from the employees but if the company can create a cultural environment that encourages success, supports the organization’s objectives, it makes it a better place to work in (James Manktelow n.d) Literary References Andrew Jeffery’s (2008) ‘The Report Bahrain 2008- Special delivery’ Oxford Business Group Allison Murray & Nicolas Stopps (2006) ‘DHL UK Sustainability Activities in 2005’- DHL Express (UK) Limited and DHL Aviation (UK) Limited Adrian Gostick (2007) ‘Kudos- DHL- Delivering Results’ 11(1) 1-4 Adrian Gostick & Chester Elton (2006) – ‘How the World’s Largest Express Delivery Provider Uses Carrots to Accelerate Improved Business Results’ [Online] available from http://www.carrots.com/managers_tools/research/training_for_results [Accessed 6th Jan 2010] Article 13 and CBI (2007) CSR- Case studies Series- DHL Express’ [Online] available from http://www.article13.com/A13_ContentList.asp?strAction=GetPublication&PNID=1377[Accessed 6th Jan 2010] Bruce E. Winston, Karen Cerff and John Jerome (nd)’ Different Supervisory styles for different Organizational Level- A Phenomenological Case study’, School of Global supervisory and entrepreneurship Cameron, K.S and Quinn, R.E(2005) Diagnosing and Changing Organizational Culture: based on Competing Values Framework’ revised edition, San Francisco, Jossey- Bass DHL (2006) Deutsche Post World Net Launches new, global quality initiative. Press Release [Online] issued 14th March 2006.Available from http://www.dhl.com/publish/g0/en/press/release/2006/140306.high.html [7th Jan 2010] DHL (2007) DHL connecting Cultures Expedition welcomes leading UK personal development Specialist. Press Release [Online] issued 22nd Jan 2007 Available from http://www.syncroconsulting.com/pages/documents/CCPressRelease.pdf [7th Jan 2010] DHL (2009) DHL Employee CSR. Press Release [Online] issued http://www.dp-dhl.com/SR2009/servicepages/downloads/files/employees_dp_csr09.pdf[7th Jan 2010] DHL (2010), values and culture [online] Available from http://www.dhl.com/publish/g0/en/careers/dhl/values_and_culture/7values.high.html[accessed 6th Jan 2010] Gerald W. Driskill and Angela Laird Brenton (2005) ‘Organizational culture in action- A cultural analysis workbook’ London; Sage Publications James Macktelow (n.d) ‘The cultural web- Aligning your team’s or organization’s culture with strategy’ James G.Hunt, John R. Schermerhorn, Jr & Richard N.Osborn (2004)’Organizational Behavior The concept of Organizational Culture’, China, Wiley’s Edition 8, PP267-290 Maurice Rozet [Ed] (2006), ‘Alexander Hughes European Newsletter- Successful Multi Cultural Integration –Science, Art or Craft?’ 29(2) 1-6 Nicola Sullivan (2009),’Rewards for Long Service Boost Staff Morale’ [Online] available from http://www.employeebenefits.co.uk/item/9702/23/5/3[Accessed 6th Jan 2010] Po-Chung Conference Speech [Online] Available at http://pochung.com/pdf/conf_speech.pdf [accessed 6th Jan 2010] Silvio De Bono, Beatrice Van Der Heijden and Stephanie Jones [Eds] 2008 ‘Managing cultural diversity’ Netherlands, Meyer & Meyer [UK] Ltd; Vol 3, PP 203-216 Schein, E.H (1992) Organizational Culture and Leadership (2nd ed) San Francisco: Jossey- Bass Teemu Reiman & Pia Oedewald (2002)’The assessment of Organizational Culture- A Methodological Study’ VTT Tiedotteita- Research Notes 2140, 39p Read More