What HR Manager at Pepsi Should Do to Promote Diversity in the Workplace - Case Study Example

Leadership in a changing context Executive Summary The report emphasises on the need to embrace diversity at workplace especially for the companies which have a multicultural presence. It takes the case of Pepsi and analyses the company on the basis of 4 different models such as Bennett model/ Bennett Scale, Hofstede’s model, Trompenaars, Hall’s model to find out how people of different cultures interact with each other. It emphasises on the positive and negative impact of the mingling of different cultures. It also tries to answer how as an HR manager one should try and analyze different cultures and try to iron out differences between people belonging to different cultures. Lastly it recommends what Pepsi or the HR manager at Pepsi should do to promote diversity in his workplace so that the organization may emerge with more flying colours in the future. Contents Contents 3 Introduction 4 Theoretical exploration of potential opportunities/challenges 5 Bennett model/ Bennett Scale: 6 Hofstede’s model: 7 Trompenaars 9 Hall’s model 10 Putting theory into practice: the case of Pepsi:- 11 Hofstede’s model: 11 Bennett model/ Bennett Scale: 13 Hall’s model: 14 Trompenaars: 14 Conclusion 15 Recommendation 16 References 17 Introduction Leadership is a highly complex process and it comprises of interaction amongst leaders and followers. The concept of leadership is all about managing people effectively in order to accomplish organizational goals. It is organizing group of individuals so as to achieve common goals and interests. Human relationships are forming beyond local territories of a company and this is leading to high demand for unique leadership competencies. These competencies or behaviours are required to meet global conditions. Situational changes arise while expanding to international environment from local environment. Modern culture demands a high level of consciousness in team leaders. Increasing business, cultural and social complexity necessitates change in characteristics of competent leadership. Human needs should be addressed by leadership and human potential shall be explored by human behaviour transformation. On the other hand, leaders have to be capable of creating a transcendent impact on employees working in a firm. Those organizations which operate in a single culture follow a specific kind of leadership but companies having global operations require leaders to have cultural intelligence. The capability to manipulate and gather information is stated as cultural intelligence. In one cultural setting there is specific behaviour observed in individuals that has no resemblance in different cultural setting. Cultural competency is an essential component as it helps a leader to control widespread operations. Motivation, cognitive knowledge and appropriate behaviour are required in leaders in order to adapt to cultural differences. Multi-cultural workforce is a common factor in all multinational companies. Though cultural diversity in workforce appears to be a challenge for leaders but it can result into highly productive workplace environment. In this study, strengths and weakness of cross-cultural teams will be analyzed and some suggestions will be highlighted in order to facilitate co-operation from diverse culture teams in nearby future. A thorough analysis will be conducted on Pepsi as it is one of the companies having subsidiaries in Germany, China and India. Employee involvement strategy will be outlined in the study and shall be closely associated with high performance work teams. Theoretical exploration of potential opportunities/challenges As said in the introduction the company chosen for the analysis is Pepsi. For any organization whether it is present in one nation or has a multinational presence, it is very important that the people of the organization work coherently. The organization culture of the organization should be such that keeping aside all individual differences the employees work as part of one body and mind. Achieving this status is rather simple for a company which has its operations just in one country but is quite a challenge for multinational companies (Ashkanasy, Wilderom & Peterson, 2011. For multinational companies like Pepsi the Hr should aim at integrating people who are different not only at individual level like religion, gender, gender identity, sexual orientation, ethnicity, cast, marital status etc. but also the fact that they belong to different cultures, ethnicity and race (Alvesson, 2012). When people come from different cultures their brains are actually programmed and conditioned over the years to think in a certain way, to work in a certain way which they have learned through their childhood or rather through their association with parents, their neighbours or everybody that they meet. So when they come across people from other cultures at workplace there is bound to arise some conflict. The challenge for the head of Hr in particular and the whole company at large is to make the new person feel comfortable or, rather make him feel welcome in the family. There are various models that aim to understand the way in which people of different cultures react to people of other cultures. Some of those models have been discussed over here. Bennett model/ Bennett Scale: Developed by Mr. Bennett, the Bennett model or Bennett scale or DMIS (Developmental model for intercultural sensitivity) tries to understand and explain the ways in which people reacts to others from different cultures. Bennett says that there are 6 stages of this interaction (Sam & Berry, 2006) The first the stages can be grouped under ethnocentric in which people consider their own culture as central to reality and do not regard other cultures. But as the interrelation progresses the people slowly become sensitive to those from other cultures and develop ethno relative views meaning that they start giving value to people from other culture and starts developing a more liberal view towards them. Denial: In this stage of interaction people tend to view only their own culture as the ‘real’ one. They either do not know about people of other cultures or form very simplistic assumption about them in their own mind. People in this state are not interested to know about other cultures. So when confronted with people of other cultures they may react aggressively and may not accept other cultures (Landis, Bennett & Bennett, 2003). This sort of behaviour is normally formed in people who are geographically and socially isolated and have not much interaction with people of other cultures. Defence: In this case the people acknowledge the existence of other culture but feel somehow threatened by them. They are in a state of denial towards other culture. They may either romanticize other cultures as far superior and probably the best way to live or look down upon people from other cultures and frown upon them. Minimization: In this case or state people recognize other cultures but super simplify the differences. In other words people tend to have a belief that people of all other cultures will have the same habit pattern or will act in the same way as they do. They fail to understand and respect the subtle differences that people of different cultures have among themselves. Acceptance: In this state people slowly start moving from ethnocentric to ethno relative. They start accepting cultural differences without judging them as positive or negative. Adaptation: People in stage tend to expand their vision as narrow to an inclusive one to encompass the view of other cultures. They expand their frame of reference to understand and be understood across different cultures. Integration: People in this stage are able to interact comfortable with people of different cultures. They have expanded their view point to freely interact, move in and move out of different cultures. Hofstede’s model: Hofstede made a thorough research on the people working at IBM globally and came up with a model. With this model Hofstede tried to quantify the observed differences between different cultures by means of five factors (Piepenburg, 2011). Hofstede compared different countries based on 5 different parameters on which each country got its own index for each dimension of evaluation. The 5 different parameters are Power distance index, uniqueness vs. socialism, index of uncertainty evasion, immoderation vs. restraint, Long term orientation vs. short term orientation and maleness vs. femaleness. Power Distance Index: It emphasizes and focuses on the human inequalities that are present in the society. It analyzes how the society treats people at different levels of the society. Do the less powerful feel that power is distributed unequally or not? uniqueness versus communism: Individualism reflects if the peoples who live in the society believe in living in an individualistic way and taking care of just their own responsibilities and responsibilities of immediate family members. On the other hand collectivism refers to a society where people’s decision and actions are influenced by other members of the society. maleness versus femaleness: A masculine society is such that assigns qualities such as heroism, achievement, material reward higher value. Such a society is more competitive in nature. On the other hand a feminine society is characterized by values such as cooperation, care, modesty. Such a society is more consensuses oriented. Index of uncertainty evasion: It expresses to what degree a society is comfortable with uncertainty. Is it more comfortable with a risk free way of life or it thrives in conditions which are unpredictable and causes adrenaline rush? Long Term Orientation versus Short Term Normative Orientation: This factor actually goes on to explain how societies view change. Are the members of the society so deep rooted in their past and belief system that they shun any type of change and view change with suspicion or are they ready to welcome change as it happens? Immoderation versus Restraint: This characteristic shows whether the members of the society are indulgent or prefer to control and have a check on their desires. Trompenaars Developed by Mr. Fons Trompennars the model focuses on communication across different cultures. Trompennars notices the condition when companies go to establish their operation across different countries and thus crosses cultural boundaries (Aswathappa, 2010). Concerns arise when companies goes on to establish same management practices across different cultures ignoring the cultural differences that exist. They fail to understand that practices which have worked in one culture may not be accepted by people of a different culture. In this model 7 dimensions have been identified as a basis in each culture. Universalism vs. particularism: In a society that follows universalism. Rules are the key word and the guidebook. There are universal rules that everybody follows. Rules come before and are valued more than relationships (Trompenaars, 2003). Specific vs. diffuse: This tells whether people keep their private and professional lives separate or not? Uniqueness vs. communism: This factor tells whether the people of society are guided by group behaviours or take their decisions on their own accord (Shaules, 2007). Neutral vs. emotional: Neutral people can be said to be guided by their brains. They do not rely on instincts but take decision through reasoning. They even do not like to display their emotions openly or by chance through their body language. Emotional people are just the opposite of neutral people. Sequential vs. synchronic: Are the people multi-taskers or prefer completion of one task before attempting the next? Internal vs. external control: Does the environment controls the people or are the people controlled by them? Achievement vs. ascription: Does the society believe in giving status to only those who earn it by effort or are given status automatically by means of birth (Schermerhorn, 2010)? Hall’s model Hall tries to differentiate cultures based on communication. Best on whether the peoples of a particular culture in general use more words to communicate their messages or are able to communicate their messages in fewer words Hall divided cultures into two groups: High context and low context (Amant, 2007). High context culture: In a high context culture much of the words are left unsaid and people tend to communicate most of the messages as implied and communications are taken for granted. Low context culture: In a low context culture nothing is taken for granted and each and every message has to be said and codified (Nunez, Mahdi & Pompa, 2007). Putting theory into practice: the case of Pepsi:- Pepsi as a company is multinational in nature. In fact as per as the website of the company it has its presence in more than 200 countries worldwide. It is quite an obvious fact that people of different countries will have different cultures so Pepsi cannot design its management style keeping in view of just one culture but has to encompass each culture and has to if possible design its management policies according to the country where its operations are being set up (Griffin, 2007). To understand how Pepsi manages cultural divide let us look at the case of Pepsi from the view point of Hofstede’s model (Ito, Zhang, Robu, Fatima, Matsuo & Yamaki. 2010) Hofstede’s model: As has been pointed out earlier Hofstede compared different countries based on 5 different parameters on which each country got its own index for each dimension of evaluation. To analyze Pepsi on the basis of hofstede’s model let us first have a look at the indices for the 5 factors defined in the model for each of the three countries (Kotter, 2008): Factors Country PDI IDV MAS UAI LTO Germany 35 67 66 65 31 India 77 48 56 40 61 China 80 20 66 40 118 Let us look at IDV index that is uniqueness vs. communism: It can be seen that where as Germany has a high index in this sector India and china have low index. So, it can be said that Germany is a country which values individualism which values individualism more than collectiveness where as China and India value collectiveness more than individualism. As the websites of these different countries are considered this difference becomes clear as Pepsi uses image of individuals in its German website and images of groups in its Indian and Chinese website. In the index for maleness vs. femaleness (MAS) it can be found that all the three countries have relatively moderate indices showing this. According a look at the organization composition goes on to show that Pepsi has undertaken steps to enforce gender equality and inclusion of both male and female in their workplace (Pride & Ferrell, 2007). The UAI index which stands for index of uncertainty evasion is higher in case of Germany than the two Asian countries shows that German people are more emotional compared to India and China. Pepsi has designed its strategies accordingly for these countries. In case of LTO (Long term orientation) Germany has the lowest index and China the highest. So Pepsi has designed its strategies accordingly for these countries. In case of PDI or Power distance index. It can be seen that India and China has a higher index than Germany. Bennett model/ Bennett Scale: In the Bennett model it is said that when the people of different cultures interact they start with ethnocentric and goes on to being ethno relative. Ethnocentric consists of first three stages in which the people value their own culture more and prioritize their own culture. Ethno relative is stage where people gradually starts accepting and mingling with peoples of different cultures and starts accepting other cultures freely. To promote diversity in its company the company promotes and accepts diversity among people including diversity in ethnicity, creed, caste, race, sexual orientation, sex, marital status, national origin etc. To promote diversity and inclusion in work place Pepsi has even constituted two awards to reward people who promote diversity within the organization (Ahlstrom & Bruton, 2009). The awards are: The Harvey C. Russell Inclusion Award: Hervey was the main man who laid the foundation on which Pepsi’s diversity initiative is built. So top respect his contribution this award was started in his name. The Global Steve Reinemund Diversity and Inclusion Leadership Legacy Award: This award rewards senior management staff who shows examples of leadership and helps in promoting diversity within the organization. Hall’s model: Applying hall’s model on the three countries we find that countries like India and China belong to the domain of high context whereas Germany belongs to the domain of low context. In India and china most of the messages are not said explicitly but implies or understood. Whereas Germany, which follows a culture that is more realistic or pragmatic in nature; belongs to the domain of low context. No communication is taken for granted. Each communication is highly codified so there is no place of assumption. So Pepsi has to design its advertising strategies organization culture accordingly for the countries (Schein, 2010). Trompenaars: Universalism vs. particularism In case of countries such as Germany and china Rules will be more important but just the opposite for India. Uniqueness vs. communism In Germany individual contribution is valued more but whenever we talk about countries like India and China Group always comes first. Neutral vs. emotional German people are more neutral than people of India and China Specific vs. diffuse Does private and professional lives mingle with each other or are kept separate. Achievement vs. ascription In India and China status is ascribed often in the form of birth credential. Germans believes in achieving status based on performance. Sequential vs. synchronic Germans being practical in nature are more sequential and Indians and Chinese are more Synchronic. Internal vs. external control Indians and Chinese can be said to be controlled by their environment whereas Germans control their own environment. While comparing the factors we find that there exist a lot of differences among the countries, especially cultures of India and china from that of Germany. So Pepsi designs different organization strategies and structures in these countries (Woodside, 2010). Conclusion As per the study, team members need to work coherently whether it be an organization in single country or has its operations in multiple countries. This study is based on Pepsi and its cross-cultural functions. There have been various theoretical frameworks incorporated in this study so as to determine the most appropriate leadership in context of cultural change. Organizational culture needs to be framed in such a manner that individual differences are eradicated and every team member work towards a common goal. However these individual differences can be eliminated efficiently from firms operating in local markets but global operations bring forth new set of challenges or conflicting opinions. It is highly evident that certain leadership qualities are essential in order to manage people belonging to diverse culture. Individuals working in a diverse culture workplace tend to be more creative by nature and this in turn initiates high performance in an organization. On the contrary, it can even be stated that high performance is directly associated with successfully managing team members. For instance HR of Pepsi needs to integrate people belonging to different culture, race and ethnicity. In such a scenario it is important for the management to be neutral towards proclaiming their ideas. This helps in conveying message that team leaders consider the entire workforce to be equal and there is no difference on basis of culture or race. Though certain precautions are taken by leaders while performing in cross cultural workplace but in most cases it gives rise to conflict. This is because a set of beliefs and attitude is maintained within individuals belonging to a particular culture. In this study certain models are utilized to describe potential challenges and opportunities in diverse culture workplace. These theoretical frameworks are Bennett model, Hofstede’s model, trompenaars and hall’s model. The models are applied on real time scenario of Pepsi to identify loopholes in the system and highlight suggestions for future improvement. Recommendation Handling workforce of different cultures is quite a challenge to handle. But if done systematically then it can serve to be a big boon. To understand this we have to first appreciate that the customers of Pepsi in different countries have different tastes and only people of that particular country will be able to know this clearly. Another reason is that when people find out that people from their country are welcome in the company they feel connectedness to the company and find that their association with the company and do not treat it as foreign. Pepsi already does quite well in managing its diverse work force which comes from such a variety of background. However Pepsi can improve on certain respect. To improve on its current scenario in has to include more diversity in its workplace and emphasize a more conductive culture. In places such as Saudi Arabia where it has poor male to female ratios in workforce it should try and include more women into the workforce. Although Pepsi has its primary focus on the youth and likes to focus itself as a brand for the new and forward looking generation, it should also focus on the old specially for countries such as India and China. In order to manage workplace diversity a central training and development session can be organized by the company. This will serve as a platform to encourage team members belonging to different cultures to come forward with innovative ideas. On the other hand, conducting such session quarterly will enable individuals belonging to different subsidiaries interact or exchange their views or opinions. It can be stated that employee engagement can only be facilitated if leaders and followers have a common goal to accomplish. The leadership approach needs to change in cross cultural atmosphere since different individuals possess different set of views and opinions. References Ahlstrom. D & Bruton G., 2009. International Management: Strategy and Culture in the Emerging World. NYC: Cengage Learning. Alvesson. M, 2012. Understanding Organizational Culture. London: SAGE. Amant, K. S., 2007. Linguistic and Cultural Online Communication Issues in the Global Age. London: Idea Group Inc Ashkanasy, N. M., Wilderom. C. P. M & Peterson M. F., 2011. The Handbook of Organizational Culture and Climate. 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