The Cultural Repercussions for Multinational Corporations and Various Approaches to Employee Voice - Essay Example

< Store Design> by Abstract The paper critically analyses the cultural repercussions for multinational corporations and various approaches to employee voice. The discussion is supported with empirical illustrations. Introduction With rapid expansion of the global economy and trade, the multinational corporations have become very common. With this expansion, the owners as well as upper management of the multinational corporation have to modify their cultural as well as their approach to employee voice in the company. MNC The multinational company can be defined as a company that has offices and other assets in at the least one country other than its home country where it has the head office and the management that co-ordinates with the global management. The financial budget of some of the large transnational companies exceeds the budget of small countries. The main reason behind these phenomena is the availability of raw material input or skilled manpower for the production of products or services. As per Franklin Root 1978, the definition of multinational has many dimensions and can be defined from many perspectives such as ownership, structural, management and strategy. Employee Voice Employee voice can be broadly defined as the participation of the employees and their influence in decision making of any firm. The employee voice is mainly concerned about the actual amount of participation of employees in running of the organization. As per Boxall & Purcell, employee voice includes the complete range of structures and processes that enables and empowers the employee’s contribution in company’s decision making, directly and indirectly. But the concept of employee voice can differ from a person, the place from another. For some people, the meaning of employee voice includes increasing in motivation and commitment to company goals whereas other people term employee voice in protection of employees from work exploitation and defending worker’s rights and trade union defence. Culture The definition of culture is changeable as the field of study, context and the time period. The normal definition of culture is the comprehensive human and community behaviour that includes institutions, beliefs, arts, socially transmitted behaviour patterns and other products of the human though and work. The theory of E.B.Tylor, proclaims that the culture can be easily defined as, the complex whole that includes various attributes such as morality, knowledge, customs, habits, moralities, arts and other capabilities which is possible to acquire in any society. Organisational Culture The organizational culture is an important part of it actions as well as various decisions. As the current attitudes, beliefs, ideas and values of the company offer a clear vision for the employees of the organization, so this term is also fundamental for analysis and description of the multinational organization. As per Franklin Root the term, organizational culture can be used as glue to hold the organization together and some refer it as the compass that offers present and future direction. International HRM International Human resource management or IHRM can be broadly defined as the management of human resources worldwide and includes various processes. These processes include sourcing the best talent, allocation of human resources as per requirement and effective utilization of their knowledge, skill, perspective and plan for completion of pre-determined purposes. As per P.V. Morgan, IHRM is the effective interplay among three dimensions that includes HR activities, types of countries and employees. Mechanisms for approaches of employees voice in organizations There are two types of mechanisms for employee voice that includes formal and informal mechanisms. The formal mechanism includes the communication tools adopted by HR Dept, such as suggestion boxes and employee surveys. This mechanism can also include representation through work councils, trade unions and employee consultative committee and financial participation through profit-sharing opportunities and share ownership. The informal mechanism for employee voice includes conversation between employers and employees, meetings, social functions, employee feedback and email communication. The employee’s voice can also influence the course of corporate decision making through some decisive actions such as absenteeism and turnover. The mechanism of employee voice is influenced greatly by the prevailing culture of the country as well as the type of organization. Take an example, the American organisation are mainly characterised by sophisticated employment policies and frail trade unions. Most of the time, US companies prefer to make own employment policies, free from the outside or other party’s interference, including the trade unions or government regulations. For American companies, the onus of well being of the employees should be upon the planning of their managers. As a American senior HR manager noted, “Our corporate position is that we believe its better for the company and better for employees to be able to deal directly with one another.” (Muller-Camen 2004:pp 19) In contrast, there are many countries in Europe as well as other continent where the formal mechanisms of employee voice are very strong such as trade unions, worker’s council etc. More and more companies in these cultures use and encourage different types of formal and informal mechanisms of employee voice in a bid to increase the job satisfaction and productivity of the workers. But, there are many issues which arise, when any MNC expand their reach in a country with different approach to employee’s voice as well as work culture. Approach to employee voice and MNC With rapid growth in technology and opening up of the new markets around the world, globalization has become a natural process. When any transnational company, opens a branch office in any other country than its home country naturally would like to implement their policies and procedures same as in their home country for achievement of uniformity as well as part of streamlined process. It is also an indisputable fact that employees of the branch office are also an important part of this process. Although, the company is multinational, but the employees who are working there are part of their national culture, so there are lot of differences between national culture and organisational culture in the same place and they are bound to have some conflicts. So, here IHRM or International human resource department can play an important part in good compromises and maintenance of proper relationship between both about many issues such as employee voice and others. Take an example, when a US Multinational Company opens an office and other assets such as factories in Germany, where the culture regarding approach to Employee Voice is completely different from the head office, the company has two options. Either, it follows the work practices of head quarters in Germany offices as well as factory and integrates it on complete basis with US system or modifies the system to allow the national culture and practices. There are many advantages as well as disadvantages of both options. When the branch offices implements the work practices of head quarters in Germany offices as well as factory and integrate it on complete basis with US system, these are the main advantages and disadvantages Advantages 1. Same work culture throughout the organization 2. Streamlined process 3. The transferred employee can easily adjust to new place as most of the systems and processes are same. Disadvantages 1. Local employee dissatisfaction due to different approach to employee voice process 2. Confusion regarding the procedure and hence reduction in productivity. When the branch offices modify work practices such as approaches to culture employee voices to allow the national culture and practices, these are the main advantages and disadvantages. Advantages 1. The employees are happy as they are allowed to use their voice in corporate decision making in various ways such as participatory, consulting and others. 2. This helps in increase in productivity and job satisfaction. Disadvantages 1. The managers may think the adoption of national culture as the sign of their failure. 2. The process in some department may seem somewhat complicated to the managers from head-quarters and not worth the trouble. Resolution regarding employee voice and MNC Most often, the resolution of employee voice and MNC depends upon the thoughts and decision of Managers from MNC headquarters, who are managing the branch office. To continue above example, the US HR Manager may take the position that the processes followed by Head office are the best and don’t require any modification in German office. As senior manager of HR noted further during Muller-Camen 2004: 19 study, “We have best place to work initiatives. We strive to be an employer who is attractive so that consultants want to join us and stay with us. And that is more than any works council could offer. When the company, all the HR people and all the senior managers are daily putting a lot of effort into finding ways to make this an attractive place to work, then they are doing exactly the same as what a works council would do.” (Muller-Camen 2004:pp 19) The general attitude of US Managers was that the establishment of the works council, a German approach regarding employee voice was the failure of their employment policies and also the personal one. As one of the work council member said that the initial reaction of American management was that the setting of work council in company represented the failure of management in headquarters’ view and career’s end. This was the main reason behind opposition of management regarding the work council. As per a US Manager, “Works councils are set up if employees want them, if they hope for some advantages by having a works council. If communication between management and employees is good, which is fundamental, there are usually no advantages. Nor­mally, the reason why employees want to set up works councils is because of management mistakes. If a works council is set up, we must ask ourselves what we have done wrong. We cant prevent them. But it is better to be aware of problems before things get that far and to try to solve them through communication.” (, Muller-Camen 2004 pp. 20) But, with time, most of the MNC companies have come to realize that the adoption of the local culture at workplace in some instance have more advantages than disadvantages. The implementation of the local cultural practices also wins allegiance of the employees and enables the increase in productivity. In above example, the member of work council also noted during Muller-Camen et al., 2004: 20 study that, “ “[The company] has now realized the advantages of having a works council, at least in our case. In the past, the attitude was that anyone who criticized [the company] was inherently bad. Now they have realized that criticism can be positive and that people are willing to contribute.” (Muller-Camen et al., 2004:pp. 20) Conclusion With globalization, it is natural that companies should seek other markets as well as established their factories near the areas where raw material is available in a bid to lower the cost and become more competitive in the market. In this process, one of the issues that require appreciation as well as resolution is cultural implications for multinational corporations of different approaches to employee voice. References Boxall & Purcell, 2003, HR strategy and competitive advantage in the service sector, Human Resource Management Journal, [ONLINE]. 13/3, P 162, Available at http://down.cenet.org.cn/upfile/47/200571815220177.pdf [Accessed 04 April 2015] Franklin R Root, 1978. International trade and investment, 4th Edition, South-Western Pub. Co. Muller-Camen, 2004, [ONLINE] Available at: http://www.iese.edu/en/files_html/p26.pdf [Accessed 04 April, 2015] Edward Burnett Tylor, 2010, Primitive Culture, Edition, Nabu, Press Morgan, P.V., 1986, IHRM: Fact or Fictin, Personnel Administrator, 31/9, 44 Read More