Cross-Cultural Management in Multi-National Tourism Hospitality Organizations - Essay Example

?Cross-cultural management in multi-national tourism hospitality organizations Introduction The identification of the strategies that are most appropriate for the development of organizational performance can be a challenging task – especially when the firm involved operates in the global market. Usually, strategies that have been already used – and tested – by firms operating in the same industry are preferred aiming to minimize the risk of a potential failure. However, even in this way, the success of organizational plans cannot be guaranteed. A series of facts can contribute to above outcome: a) the plan attempted has not been appropriately designed – in terms of the resources available for its realization, b) the reaction of employees – internal organizational environment – towards the specific plan has not been the one expected; the resistance developed has led to the cancellation of the plan or to the delay in the completion of one or more of its phases, c) the conditions in the organizational environment have changed at such level – referring to the period between the beginning of the planning process and the beginning of the implementation process – that the development of the plan became non-feasible or the value of the plan for the increase of the organizational performance has been eliminated. Current paper focuses on a particular aspect of the strategic management: the cross-cultural management; reference is made especially to the multi-national firms of the tourism and hospitality industry. The cross-cultural management practices initiated by the managers of these firms are presented and evaluated. It is concluded that even if a range of such practices are available to the managers of these firms, still problems exist in the successful implementation of the relevant projects across these organizations. It has been proved that the above problem is mostly related with the lack of consistency of these strategies across the various departments of these organizations; moreover, failures have been identified in the service delivery to customers from different cultural backgrounds. These issues are analytically discussed below by referring to appropriate literature; the findings of empirical studies, where available, have been also employed in order to highlight the challenges of cross – cultural management in the tourism and hospitality industry worldwide. 2. Cross-cultural management in modern organizations 2.1. Cross-cultural management – description, framework Culture may have different forms within different frameworks or using different criteria: for instance the national culture is differentiated from organizational culture; however, it has been proved that the former can influence the latter (Browaeys et al 2008, 20). The above view can be verified by referring to the study of Hofstede who emphasized on the fact that ‘management can be affected by differences between cultural groupings’ (Browaeys et al 2008, 21); the above researchers studied the performance of the strategies of IBM in markets worldwide – the performance of the firm in 64 countries was reviewed. It was proved that differences existed in the behaviour/ performance of employees in various organizational activities under the influence of the national culture - involved in each case (Browaeys et al 2008, 21). From a different point of view, Adler et al. (2008) noted that, in the context of international market, the understanding by global firms of the national culture is important because of the following reason: being aware of the culture of a foreign country multi-nationals are able to make the necessary adjustments to their existing strategies so that the latter are implemented successfully in the firm’s branch in the particular country (Adler et al. 2008, 13). In this way, the culture of a country is closely related to the strategies used by the organizations operating across the specific country. In order to understand the challenges for the cross-cultural management strategies developed in multi-national firms of the tourism hospitality industry, it would be necessary to refer primarily to the context of the cross-cultural management as a key strategic management process. In its main role, the cross-culture management reflects the practices used by the managers in order to eliminate the problems related to the different cultural background of employees (Earley et al 2000, 2). On the other hand, cross-culture management can also have the following aspect: the resolution of problems related to the transfer of organizational strategies across countries of different cultural characteristics; the specific activity can be quite challenging if the countries involved are totally different in terms of their culture – for instance, the case of the transfer of organizational strategies from Western to Eastern countries (Mead 2005, 16). In the context of the attribution theory, cross-culture management is used in order to reflect the way through which people are likely to face certain situations; the above theory suggests that people tend to perceive differently each cultural framework (Moran et al 2007, 56). For instance, for certain employees engaging in an activity that aims to improve the communication with customers in a foreign market may be perceived as a justified/ normal request of the employee; other employees may be offended. Such example is provided in the study of Moran et al. (2007); reference is made to the employee of an American firm who is asked to clean the shoes of a Japanese businessman; there is the case that the employee will consider this request as justified taking into consideration the cultural differences (in the context of which such service may be provided for honouring the guest); there is also the case that the employee is offended – not thinking of this request as an effort to honour the guest but rather to offend the staff (Moran et al 2007, 56). Like all other organizational strategies, cross-culture management has to be developed following specific rules and principles, otherwise its effectiveness is set in risk. In the literature, different approaches have been used in order to identify the principles on which cross-culture management plans have to be based. One of the key findings of the relevant studies is the fact that management plans used within a particular culture may not be appropriate within a different cultural environment or in regard to different cultural conditions and trends (Dale 1969, 134). Moreover, it has been proved that cross-cultural challenges can be higher in firms operating in the global market – compared to the firms, which do not operate internationally (Moran et al 2007, 26). At this point, the following issue should be highlighted: the elimination of borders in the global market and the introduction of the Internet have increased the potentials of firms to be engaged in international trade activities – even if they are not physically established in a foreign country. From this point of view, cross –culture management has a key role in the performance of firms of all sizes. 2.2 Common challenges of cross – culture management In accordance with Jostingmeier (2007) the existence of cultural diverse within the organization may have both positive and negative aspects: cultural diversity can promote innovation across organization; in this way, the competitiveness of the organization towards its rivals is increased (Jostingmeier 2007, 188); moreover, cultural diversity can enhance the application of principles like equality and fairness (Jostingmeier 2007, 188) – even if this outcome is not guaranteed in all organizations. From another point of view, cultural diversity can lead to the development of misunderstanding across the organization (Jostingmeier 2007, 188). The practical implication of this fact would be the increase of turbulences in the workplace, the limitation of the employee productivity and the, following, decrease of organizational performance. Another challenge of the cross – culture management is the potential failure of organizational strategies to be transferred in a different environment; this means that organizational strategies, which have been already used, in particular cultural environment may not perform well in different cultural conditions. This issue is highlighted in the study of Dale (1969) where two different views/ theories are presented in regard to the potentials of organizational strategies to be transferred: in the context of the culture-bound theory, the strategies of organizations cannot be effective within different cultural environment. In accordance with this theory, the social, economic and political characteristics of each country are different, a fact that would cause the failure of the attempts to introduce in this country organizational practices used in countries will different cultural environment – as this environment is perceived to be related with the local economic, social and political conditions (Dale 1969, 134). On the other hand, there is the culture free theory, which emphasizes on global character of organizational strategies. The above theory supports the view that organizational strategies could be applied successfully on firms in all countries worldwide – it is perceived that there is dependency of these strategies on culture. Moreover, it is noted that the credibility of the above theory has been tested in practice: the transfer of technology from high developed to developing countries has been successful – where it has been used, a fact that proves the transferability of organizational practices (Dale 1969, 134). In practice, managers who are involved in such initiatives – cross-culture management plans – have faced a series of challenges: a) employees are not always willing to support the schemes suggested by managers in regard to the elimination of turbulences caused by the existence of cultural differences across the organization; on the other hand, the enforcement of the employees to accept the above schemes would not be acceptable (Moran, 2007, 48); it is suggested that measures could be introduced aiming to increase of employee satisfaction across the organization; these measures could help to effectively control the resistance of employees to the changes attempted for the elimination of the problems caused because of the high cultural diversity within the organization, b) the cultural differences across organizations are not, at least not always, clearly identifiable; even if the organization involved is aware of the cultural background of its employees – through the information provided by them during the hiring process – still the potential influences of the relevant cultural characteristics cannot be precisely estimated or predicted (Burton 2008, 102); c) the forms of cross- culture management strategies used in modern organizations are not standardized; the characteristics of the industry in which each firm operates but also the conditions in the internal and the external organizational environment have a crucial role in the mode of cross-culture management strategies initiated within a particular organization (Jostingmeier 2007, 347). The key practical implication of the above problem is the following one: the inability of managers to identify the appropriate criteria on which these strategies need to be based could result to the failure of the relevant efforts. On the other hand, it is noted that the role of managers can be quite demanding, including a range of activities, such as: ‘leading, communicating information, negotiating, allocating resources, planning and evaluating of plans’ (Mead 2005, 15). Therefore, the criteria set for the evaluation of the performance of managers in various cross-culture management practices should be carefully reviewed – as of their appropriateness and fairness. However, since the expansion of companies in the global market is unavoidable – taking into consideration the increase of competition in all industries worldwide – it is necessary for managers to have the skills required in order to respond to the demands of cross-culture management schemes (Earley et al 2000, 2). 3. Cross-cultural management in multi-national tourism hospitality organizations In order to understand the forms of cross-cultural management practices developed by the multinationals operating in the tourism and hospitality industry it would be necessary to refer primarily to the characteristics of this industry – referring especially to the strategies that are usually developed for facing common organizational problems. Then, the cross-cultural strategies used by firms in this industry will be better evaluated – taking into consideration the fact that the findings have to refer to the performance of such strategies in the international market. This means that the similar practices of firms operating in the tourism and hospitality industry and which have no presence in the global market will not be discussed – a reference to these strategies is necessary though at the level that certain similarities are expected to exist among firms of different sizes that operate in the particular industry. 3.1 Strategies available to managers of large multi-site, multi-national tourism hospitality organizations for managing across cultures. The identification of the most effective cross-culture management strategies for firms in the tourism and the hospitality industry requires primarily the reference to the issues that need to be taken into consideration for choosing these strategies. Then these strategies can be presented, taking into consideration the relevant findings of the literature. One of the key characteristics of multinationals organizations is their ability to respond simultaneously to a wide range of activities; in practice, this means that even if complex or extremely demanding practices need to be implemented in one or more organizational departments, then a multinational firm is more likely to be able to respond to such need – compared to a small/medium size firm which does not have similar potentials. The feasibility of the strategies chosen is of key importance for their success – as already explained above. In the case of multinational firms, this problem seems to be resolved so that the examination of another important criterion needs to take place: is the strategy chosen appropriate in terms of the organizational environment? Because, as already noted above, the position of a firm in the global industry is not standardized; a series of factors tend to influence the organizational performance. Moreover, these factors refer to both the internal and the external environment. In its internal environment, the firm’s managers have to deal with problems of communication, performance, support, technology available, skills, conflicts and resistance to suggested changes, exchanging of information/ cooperation and so on. On the other hand, in the external environment, the most important problem is the ability of the firm to face the pressures of its competitors – as these pressures can be made extremely strong in case of strong financial or social turbulences and instability. The industry under examination, has proved that it has the ability to survive even under difficult market conditions – for instance, the radical decrease of this sector’s profitability the period that followed the events of the September the 11th. The strategies available to the firms of this industry in order to handle their culture-related problems are based on a common principle: the high level of communication required between the employees and the customers – as this requirement also leads to the following requirement: a high standard in these firms’ services in order to keep their customer base. It should be noted that the strategies suggested are similar with those used by firms in different industries – for facing similar challenges; appropriate changes have been made in order for these strategies to be applicable on firms operating in the particular sector. At the first level, the criteria on which the hiring process of these firms is based should be changed: emphasis should be given not just to the level of education and skills of the candidates, but also to their personal perceptions and their ability to communicate. The above strategy is based on the relevant suggestion of Nickson (2007, 5) who emphasized on the communication skills of employees working in the tourism and hospitality sector. The suggested strategy would have the following advantage: employees would be more capable of understanding the changes initiated in the firms cross-culture management policies, a fact that could help towards the protection of the firm’s integration. From a different point of view Saraniemi (2007, 16) notes that the examination of the culture of the host country is extremely important for firms that need to expand their activities. In accordance with the above view, the cross-culture management strategies of the firms in this industry should focus not on the restructuring of the internal organizational environment but rather on the identification of the needs and the characteristics of the targeted market – then, the firm’s policies would be appropriately transformed in order to respond to the local needs. Swarbrooke et al. use a similar approach in order to highlight the priorities for managers in the tourism and hospitality industry; in accordance with the above researchers, the strategies promoted in organizations operating in the specific industry should be mostly related to the needs of the consumers – as these needs can be identified in current market trends (Swarbrooke et al. 2007, 13). The above view leads to the following assumption: managers in this industry should primarily try to understand the consumer behaviour in the targeted market – as this behaviour is influenced by the local culture and ethics; then, a cross-culture management policy would be chosen taking into consideration the level at which this strategy is aligned with the local consumer behaviour. For instance, in countries where the use of Internet for reserving rooms and tickets is extended, then the firm’s online presence in regard to the particular market would be improved: potentially, a website that could operate locally – which should also offer to the customers accessibility to the firm’s central website – could attract the interest of locals establishing a strong presence of the firm in the specific market – or just increasing the firm’s already existed customer base in the country involved. In fact, numerous firms internationally use the above practice aiming to achieve the following targets: a) to improve their communication with the consumers in the targeted market, b) to highlight the relevance/ similarities of the organizational culture with the local culture and c) to make the consumers in the targeted market feel that they use the services of a firm which can understand their needs – a sense which can be resulted by using the native language for ordering the services of the particular firm. It should be noted that all the above strategies should be developed taking into consideration both the cost involved and the benefits expected – the above two elements would be equal, or at least, as close as possible (Peters 2006, 55). Apart from the practices suggested above, a series of practices commonly used by the managers of multinationals for managing cultural issues would be also available to the managers of multinationals operating in the tourism and hospitality industry. These practices would include: a) the introduction of training schemes that would offer to the local employees the necessary information regarding their firm’s culture and goals, b) the use of managers working in the parent company in order to organize the firm’s branch in the host country; the period of this preparation might be long – depending on the difficulties faced when trying to establishing the firm’s branch in the particular market; in any case, staff originated from the country of origin would be involved in the relevant project ensuring the lack of inconsistency in the organizational plans developed by the firm’s branch in the host country, c) incentives (rewarding schemes and bonuses, performance-based payment schemes) should be provided to local employees in order to support the firm’s plans – taking into consideration the fact that the initial impression of employees regarding the firm can be negative, influenced by the local perceptions on the presence of foreigners in the local market; by developing ‘a friendly atmosphere between management, employees and customers’ (Adeloka et al. 2007, 150), the level of communication and trust in the internal and the external organizational environment will be kept high. 3.2 Should these strategies be consistent across the organization or left to individual managers to decide? The most common problem of multinational enterprises is the existence of consistency of plans developed across the various organizational departments but also those applied on the firms’ branches in the international market. In other words, a multinational corporation has to face two different challenges: to achieve a high integration both in its main department – referring to the firm’s operational centre - as also in its branches globally. The pressure developed for the multinationals’ managers because of the above need is extremely high. In fact, the full achievement of both these targets may be not feasible; this is a fact that has been made clear to the leaders of multinationals operating in the modern market. For this reason, the following strategy has been followed: separate management units have been established – independent at a level from the firms’ central management department/ head office; managers in these units are obliged to search for any failure or weakness in the organizational operations – referring to their branch; at the next level, they are obliged to report, with no delay, this problem to the head office of their firm. Moreover, they have the power to suggest the measures that would be most effective for resolving the particular problem. In other words, a well – structured management network is developed allowing for flexibility and time-saving in the development of key management decisions. Of course, the above framework has also certain risks, such as: a) the existence of differences between the decisions taken by the local managers and the firm’s culture and aims, b) the lack of sufficient resources for the completion of the plans suggested; in many cases, the support of the parent company in the successful development of strategies in its branches is required, a fact that can cause severe delays, eliminating the expected benefits, c) the changes attempted in the branch may lead to strong organizational resistance; in this way, the performance of the parent firm in the particular country will be also negatively affected; in the long term, such phenomena can harm the firm’s financial status, d) errors in the strategies suggested by managers in branches would require the intervention of the parent company – to resolve the conflicts and the claims developed; severe turbulences can be caused within the organization especially in case that the recovery of the relevant damage requires a long period of time or if the cost of the damage has been quite high. If a different management framework is used, i.e. if all key organizational decisions are developed in the firm’s main department and if local managers are allowed to take just limited initiatives while developing the relevant plans, then the risk involved is minimized. However, again, the following problems would exist: a) should be the firm’s main/ central management department able to handle emergent organizational problems without delay? B) would managers in the head office be able to understand the local culture? – referring to the cultural characteristics and ethics of the countries in which their firm’s branches operate. In practice, it has been proved that such potential is difficult to exist; indeed, in many cases the physical presence of the firm’s strategic managers in the countries where the branches are established is necessary. However, it’s not always feasible to develop a long-term presence there. For this reason, the training of locals for the managerial positions available is used in order to ensure the development of management decisions, which will be able to respond to the local market’s culture, and needs. In certain cases, managers of the parent company need to relocate for a long period of time in order to ensure the effectiveness of the firm’s management decisions at least for the initial period of its presence in the foreign market. Under these terms, the strategies developed by multinationals in the tourism and hospitality industry should be based on the following two frameworks: a) primarily, on the firm’s culture and ethics and b) on the local culture – referring to the culture of the foreign countries where these firms operate. As of their content, these strategies should be consistent, following the same basic framework of ethics – organizational culture and ethics, but they should be flexible, being open to changes in accordance with the local culture – it is at this point that the culture of the foreign culture could intervene in the development of organizational decisions. In other words, it is necessary that the integration of organizational policies is made clear in all the firm’s branches worldwide. This fact would also have the following benefits: a) the firm’s brand name would remain strong – or it could even increase its power, b) customer loyalty would be expected to be increased; this is particularly important for firms operating in the tourism industry where the use of Internet by the customers has increased the level of competition. Moreover, the consistency of the firm’s strategies in all its branches worldwide should not be decreased below a particular level: this level could be identified through the firm’s existing culture. In other words, the firm’s cross – culture practices should not lead to the change of its key culture and ethics; otherwise, its credibility in the market would be set in risk, given the impression of an organization which does not have standardized ethics and rules and which can change the principles on which its operations are based if there is a need for increasing its profitability. 3.3. Identification of the potential – if any – relationship between service delivery to customers from different cultural backgrounds and the issues arising from cross cultural management As noted above, in the tourism and hospitality industry, the quality of the service delivery should be quite high – allowing the firm to face successfully its competitors. At this point, the effort for achieving a service delivery of high standard should result to the following problem: the firm’s other policies may not be adversely affected – or else, these policies would not be adequately supported – as the firms’ managers would emphasize on the quality of the service delivery (Kusluavan, 2003). On the other hand, the service delivery to customers is a key part of the operations of firms in the tourism and the hospitality industry. In this context, the provision of high support to the specific organizational department would not be regarded, at least up to a level, as a negative element of the strategic framework of a firm operating in the specific industry. Moreover, as noted above, the successful implementation of cross-culture management practices requires the engagement of an important part of the firm’s existing resources – referring not just to the staff and technology but also to the funds required for the relevant projects. This means that if the resources used for the improvement of the service delivery part of the organization are extended, then it is possible that there are no adequate resources left for the realization of the firm’s cross-culture management plans, and vice versa (Tesone, 2009, 34). In practice, this is a problem that can be identified in any case that the simultaneous development of organizational strategies is attempted. However, for the firms operating in the tourism and hospitality industry there is an important implication: for these firms, their survival in the global market is closely related to the quality of their service delivery practices; if the quality of these practices is kept at low levels – aiming to support the firm’s cross-culture management initiatives, then the latter would have no value – since the firm’s existence would have set in risk (Enz 2009, 64). For this reason, it is suggested that, in the case of the multinationals operating in the tourism and hospitality industry, emphasis should be given primarily on the development of their service delivery sector; if the quality of the services provided to the public is high – or at least quite satisfactory, then, the use of the firm’s resources for the development of necessary cross-culture management practices should be decided. 4. Conclusion The examination of the aspects of cross-culture management within the modern market has led to a series of important findings: a) culture, in all its forms, is quite important for firms operating in all industries; this fact has been made clear to managers who try to locate the practices that will best suit to their firms’ relevant needs, b) national culture is closely related to organizational culture; this fact makes clear the position of organization within its environment. Organization is an entity quite important for the economic development of its market. However, its operations need to be aligned with the local cultural characteristics and trends; otherwise, it will fail to survive in the local market, c) the measures taken by managers regarding the resolution of culture-related problems are not always appropriate; this is a result not just of the lack of adequate managerial skills but also of the lack of effective communication within the internal organizational environment. At this point it has been proved that employees have a crucial role in the success of cross-culture management practices; the resistance of employees to accept the organizational changes proposed in the context of these practices can cause severe turbulences across the organization. The issues mentioned above have been also identified in the relevant initiatives developed in the tourism and hospitality industry. The multinational tourism and hospitality firms have to face an additional challenge: by their nature, the activities of these firms are extremely exposed to cross-culture management differences – in the context described previously. For this reason, it is suggested that for this firms, additional measures are developed for supporting the cross-culture management practices. However, the criteria on which these initiatives should be based cannot be standardized; most commonly, issues like the resources available, the expected outcome and the response/ skills of employees should be taken into consideration for introducing new cross-culture management strategies in the particular sector. Bibliography Adekola, A., Sergi, B. (2007) Global business management: a cross-cultural perspective. Ashgate Publishing Adler, N., Gundersen, A. (2008) International dimensions of organizational behavior. Cengage Learning Browaeys, M., Price, R. (2008) Understanding cross-cultural management. 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