International Culture and Communication - Case Study Example

International Culture and Communication Importance of HR in an Organization Human resource or HR department is responsible for taking various decisions regarding the management of the manpower in an organization. Their decisions include everything from recruiting an employee to fixing the enumeration and providing them the necessary training to achieve excellence in their designation (Aswathappa & Dash, 2007). The changing of the facets of business in the 21st-century, require every company to work in collaboration with various other countries. These countries usually have an entirely different work culture. The organizations are forced to become global to manage competition and hence become sensitive to the various cultures (Kim, 1999). Be it a major MNC for small-scale business people use the Internet and communicate with various suppliers and customers across the globe to create a wider market for their business. It is evident that the work force in all officer is becoming multicultural and more diverse than ever. The HR department dealing directly with the manpower in every organization should have enough knowledge about the cross cultural factors that might affect the concerned businesses The organization should take enough measures to provide proper training regarding cross-cultural communication to their HR department. The HR department should in turn use their training to impart cultural tolerance among all the employees working in the organization. Culture and HR There is a very close relationship between the HR department and the culture prevalent in the organization. If the HR department adapts a culture friendly outlook, the whole organization will reflect the same mentality. Therefore it is important to encourage such a practice in all HR activities which deals directly with the employees of the organization (Jackson, 2002). The impacts of cross-cultural conflicts will usually be overcome easily or excluded if the organization encourages their workforce to get together on the basis of their personal interests and various other fun activities. The HR department should come up with such activities to promote cross-cultural communication and solve problems through a common understanding. Consider an HR department is selecting a group of people to send overseas for training or auditing. They need to ensure the people sent abroad are given enough briefing about the different culture prevalent in that particular country. Shaking hands or greeting a lady through a hug or a slight kiss is common in the Western countries. But such an act would create great misunderstanding and anger among the people in the Middle East. So it becomes the duty of the HR department to keep their workforce educated about the various cultural differences prevalent in the many countries they do business with. Such measures are necessary to cope up with the ever changing business environment as every organization should develop itself constantly exploring new regions to gain a competitive edge over others. Michael Geoghegan, the CEO of HSBC rightly commented “In today’s world, one can’t afford to wait for business. One has to go where the business is”. This cross cultural adaptation is known as consonance or adjusting to the external environment to attain success (Rumlet, 1980). Failure to do the same will lead to massive losses even though the company has a very good reputation and good business structure. HSBC as Example The HSBC bank suffered constant losses during its expansion phase in south America and the other Asian Countries. However, the bank started efficient steps regarding cross cultural understanding before it was too late which helped them sustain their position as the “The World’s Local Bank”. HSBC has its branches spread across 86 countries with more than 9500 branches. The bank moved its headquarters from London to Hong Kong in 2010. It came up with massive expansion programs in China, Mexico, Brazil and many other South American countries. Various experts criticized the banks approach of isolating the western countries after the 2008 - 2009 economic crisis. Trouble due to Lack of Cultural - Communication But, the leaders of the bank were clear they have to expand where they had little competition and great opportunities, the BRICS (Brazil, Russia, India, China and South Africa) and the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) countries. But, their initial investments cost them huge losses mainly because of the lack of cross cultural communication. HSBC faced several issues like bad debts, insolvency being filed by potential clients and non-adherence to timing schedules. HSBC recorded a loss of over $45 million in Australia and Thailand due to bad debts (AAP, 2012 & Khoan, 2012). They also paid $1.5 billion fine to the U.S. Government for various types of currency frauds which occurred in their new Mexican branches through fraudulent accounts (Slater & Scuffham, 2012). Importance of Communication It is a proven fact that the organization will see considerable reductions in cultural fault lines when the HRM is diverse and cross-culturally related (Fujimoto, Bahfen, Fermelis & Hartel, 2007). HSBC recognized there is a cross cultural issue linked with their consecutive failures in a very short time. The bank has rich experience in dealing with a number of countries all over the world, even though the South American environment is a bit new to them. They started making relevant policy changes in their HR and recruiting local guys who are capable of identifying the potential customers from fraudulent ones. This helped them overcome various bad debt issues in a very short time, registering considerable success in the next quarter. Cross cultural communication and training creates an awareness that sensitive issues regarding cultural differences do exist and they will affect the business structure slowly but gradually. The new employees hired in an institution should be well informed about the versatility in the work force and the diversity in behavior they have to face. Training the new employees to assimilate cross culture tolerance in the organization from the beginning will ensure they are well prepared on what to expect. This communication will make them act with much flexibility to cultural diversity as well as organizational and management changes (Brislin & Yoshida, 1994). HSBC bank kept its western counterparts who provided technical and knowledgeable assistance to the new branches well informed about the cultural differences they will face in the new work environment. Voicing the Opinions Most of the South American countries people found it very hard to adjust to their strict timing adherence expected by the western world. They also found documenting every bit of their work tiresome. The HSBC management was flexible in adjusting the timings with them. But, they were not ready to compromise on documentation. They made it clear that they are ready to adjust certain aspects while they expect strict adherence to certain rules as it is important to important to follow a certain standard business structure globally for the business to thrive. HSBC, headquartered in Hong Kong has opened up several branches in China too. But, the new collective consultation regulations prevalent in China emerged as a massive cultural problem to them. Consultation and Industrial Relations in China Economic reforms in China have led to major changes in the administrative as well as labor laws. The traditional administrative regulation which existed for a very long time is no longer applicable to new companies. The new contractual regulation based on the western markets rules the modern workforce. This system enforces a collective consultation among the unions, employers and management for any issue. This tripartite consultation often results in various disagreements, strikes and public protests. Chinese workforce is used to taking orders from the upper management. The people in the administrative section usually employed workers for generations and worked for their best benefit instead of earning massive profit for the company. But, the new companies emerging from the west does not have such cultural backgrounds or deep rooted emotions towards the employees. Lack of proper judicial regulations and industrial laws makes the contractual regulations a failure. The employees are not able to address their concerns directly and the management does not understand why they protest work so vehemently. In short, industrial relations in China are dwindling day by day due to collective consultation. People in countries like South America and China are used not very used to voicing their opinions and needs directly to the administrative heads. If a low level employee is in need of a loan for their children’s education or to build a house, they just express their desire to the traditional ‘leaders’ who make the necessary arrangements and grant them a sum of money. This money usually does not depict on any ledgers and is given at the base of long standing relationship between the owner and the employee of an organization. Cultural Differences in Employee Voice The western companies work in a completely different way. An employee informing them about his child’s education is a news to them. They expect the employees to go through the company procedures and apply for a loan if they are in need of finance. The institutional head does not understand the employee is demanding money and the worker does not understand the streamlined process like loans and insurances available to help them. This cultural barrier leaves both the parties terribly dissatisfied as the worker feels betrayed in time of need and the organizational head feels disturbed for every petty issue. Escalating every small issue through a well defined system does not work well with Chinese as well as South American people because they feel, it takes lots of time for the issue to get sorted out. It is true to a certain extent as the administrative system is not as smooth as it is in western countries in most of the developing countries. Often, this leads to high dissatisfaction among the workers. Collective and Individual Voice There are two types of chances for the employees to voice their opinion. They can directly talk their issue through with authorities regarding salary or leave or voice their opinion in a collective way through unions opposing or favoring certain rules and regulations like work timings or benefits. The well educated and informed western labor force knows their rights the ways to fight for it. But, the majority of the workers in the China, South American and other Asian countries go with their union leaders words and have very little knowledge about their own rights and privileges. Hence, they are easily exploited and collective consultation becomes a hurdle rather than an efficient means of communication in such countries. Employee Voice in International Context HSBC faced the same issues with its many branches in China and South America. The employees were not ready to voice their concerns regarding certain shaded clients with the management directly, fearing they might land in trouble. This lead to the bank lending loans to inappropriate people resulting in major losses. However, HSBC tackled this problem quite proficiently in a short period of time. They initially acknowledged it is a cross cultural issue which needs to be handled by the HR. They provided relevant training to the HR regarding the cultural differences prevailing among the work force. The HR people conducted various training sessions for all the existing and new employees. They emphasized culture is nothing but an amalgamation of ideas fed into them from childhood. They made them accept how adapting to the new work culture will make it easy for the management as well as the employees to enjoy a better life. They conducted several group meetings and training sessions to make them aware of their basic right, how to escalate issues through computer software and various other westernized way of running the corporate offices. Similarly, they gave in to reasonable commands of the employees. Various cultural activities, get togethers and outings helped them break the ice with their employees. In addition to making them adapt to the new management strategies, they harvested their indigenous knowledge about the local people to identify potential clients and genuine clients. HSBC stopped transforming them into westerners and started thinking like the locals when it came to core issues. An open debate and discussion was called on whenever there was an issue regarding cultural conflict. Hearing the employee voice with an open mind instead of the traditional master, worker manner made them work better. We cannot say HSBC has overcome all its problems in migrating to east. But, it has certainly taken a few appreciative steps regarding cross-cultural communication which helped them manage their issues in a much better way. References 1. Aswathappa & Dash, (2007), ‘International Human Resource Management’, McGraw-Hill, New York. 2. AAP (2012), Bad debts slash HSBC Australia first-half profit by $45m, Business With The Wall Street Journal, Retrieved March 24, 2013 from, http://www.theaustralian.com.au/business/companies/bad-debts-slash-hsbc-australia-first-half-profit-by-45m/story-fn91v9q3-1226439577031 3. Brislin, R. W. & Yoshida, T (1994), ‘Improving intercultural interactions: modules for cross-cultural training programs’, Sage publications. 4. Fujimoto, Y., Bahfen, N., Fermelis, J. & Härtel, C.E. (2007), ‘The global village: online cross-cultural communication and HRM’, Cross Cultural Management: An International Journal, Volume 14, p. 7-22 5. Geoghegan, M. (2010), ‘From the West to East - a new phase for the global economy’, Oslo Chamber of Commerce, Retrieved March 24, 2013 from http://www.chamber.no/From+West+to+East+a+new+phase+for+the+global+economy.9UFRrIWy.ips 6. Jackson, T. (2002), ‘International HRM: A cross-cultural approach’, Sage publications. 7. Khoan, D. (2012), Vietnam banks hide bad debts: HSBC expert, Intellasia.net, Retrieved March 24, 2013 from http://www.intellasia.net/vietnam-banks-hide-bad-debts-hsbc-expert-196607 8. Kim, P. S. (1999), ‘Globalization of Human Resource Management: A Cross-Cultural Perspective for the Public Sector’, Journal of public personnel management, Volume 28, p. 2. 9. Rumelt, R. (1980), ‘The Evaluation of Business Strategy’, Business Policy and Strategic Management, McGraw-Hill, New York. 10. Slater, S & Scuffham, M (2012), HSBC fears U.S. money laundering fines to top $1.5 billion, Reuters, Retrieved March 24, 2013 from http://www.reuters.com/article/2012/11/05/us-hsbc-earnings-idUSBRE8A400920121105 Read More