Cultural Profiling Tools for Global Business Leaders - Research Paper Example

Cultural Profiling Tools for Global Business

Abstract

Cultural profiling is one of the most useful tools that can help an organisation in evaluating how the employees are suitable for the concerned firm. Hofstede’s cultural theories and Hall’s explanation of high and low context culture has helped in framing this essay. This paper represents cultural profiling tools which can be effectively employed in an organisation by the HR managers and leaders within the organisation. These tools will help in resolving the issue arising out of cultural disparities. Based on the principles of Hofstede’s and Hall’s cultural theories the HR professionals can develop the training programme. It will be directed towards developing an environment where employees of Northampton Shoes and Walk-in-China can interact and facilitate sharing of knowledge and information. Certain recommendations have been provided which suggests that the HR managers need learn about the degree of power distance prevailing in the UK and China. The leadership style also requires being tolerant so that it gives ample chance to the new employees to adjust to the organisational changes.

• Introduction

Adam Smith in his book, “Wealth of nations” has identified international trade as the main driver of growth in an economy (Ucak, 2015). International trade not only provides a channel of exchanging goods and services but also provides a way of diffusion of cultures (Ibrahim, 2013). With the advent of Globalisation this age old proposition of Adam Smith materialise. In the contemporary world, the market for organisations is not restricted to their domestic territory; global market offers greater scope and opportunities. Firms are becoming multi-nationals to gain competitive advantage by exploiting operational prospects, like employing low wage workers, catering high demand markets (Pesalj, 2011). Globalisation has resulted transformation in the structure of production specifically by increasing the scale of production. As the companies have crossed international borders to strengthen their market presence and increase their profits, the working environment has become culturally diversified.

Cultural profiling can be regarded as the assortment of employees within an organisation according to their cultural values and beliefs. The expansion of companies has resulted in hiring of employees from various cultural backgrounds making ethnicity a part of organisational culture. Cultural profiling is a tool that helps in understanding how good a person fits in an organisation (Berry, Guillén and Zhou, 2010). For example, if a company has the knowledge of Indian or Chinese culture then the company will be in a better position to serve the concerned market. Cultural profiling offers a great scope of understanding the mix of culture within an organisation and how it affects the entire structure of the organisation. In this paper, the researcher aims at defining the importance of cultural profiling and how that affects the organisational expansion. A shoe manufacturing organisation in the UK is aiming to expand in China owing to greater mart opportunities. This paper thus presents an internal analysis of the company while considering cultural diffusion of this growth.

• Literature review

2.1 Cultural Profiling Tools

According to Hurn and Tomalin (2013), cultural profiling can be identified as the tool that is used for assessment of different styles and preferences of culture. This is also a medium of identifying all those potential challenges that could arise when a company relocates or expands on a different country. This also helps in resolving issues of teams comprising multi-cultural members. This also serves as an important guide line for the managers so that they can match their management style keeping in mind the requirements of the culturally diversified group (Schwartz, 2006).

In case of Northampton Shoes (the UK shoe company), the firm have decided to expand to China so that it can take the advantage of inexpensive labour and target wider market in Asia. The company will be greatly benefitted with cultural profiling as it would provide a summative view of the challenges posed by the cultural divergence when operating in China. The following cultural profiling tools can be implemented to attain this objective.

2.1.1 Hofstede’s Dimension Theory

According to Hofstede (2011), there are five cultural dimensions that vary across the countries affecting the business environment of the organisations operating within the country. These dimensions owe its origin to the beliefs and customs of the societies and are explained below.

Power Distance: This is defined as the extent to which the weaker section of the society accepts and expects that the distribution of power is unequal (De Mooij and Hofstede, 2010). In a country where power distance is large, employees are only expected to follow orders and not participate. This can significantly affect job satisfaction (Hofstede, 2011). Such market will be characterised with only few big business houses and many small firms supplying only a small part of the market specifically satisfying local demands (De Mooij and Hofstede, 2010).

Individualism/Collectivism: Collectivism depicts a well-knit society where people are expected to share their goals and interests. On the other hand, individualism shows week connection among the members of the society were individuals are self-centred (Hofstede, 2011). Collectivism is transpired in harmonious groups which results in establishment of trusted relationships (De Mooijand Hofstede, 2010).

Masculinity/Feminity: This aspect identifies the distribution of the range of values among the members of the society and how they view them (De Mooij and Hofstede, 2010). In masculine societies, success and accomplishments are the governing values while in the feminist societies inter-personal relationships are more valued (Hofstede, 2011). Masculine societies are characterised by the “demonstration” of wealth and status whereas, feminist societies more harmonious interactions among the individuals can be sighted (Soares, Farhangmehr and Shoham, 2007).

Uncertainty avoidance: This characteristic shows the value an individual attaches to its risk, i.e., whether he is a risk lover or prefers to invest in safer decisions (Geert Hofstede, 2016).

Figure 1: Uncertainty Avoidance rankings between the UK and China

(Source: Geert Hofstede, 2016)

In the above figure, it can be observed that the UK ranks higher in the uncertainty avoidance parameter with 35 point and China to be at 30. This implies that the UK population prefers to be sure of the outcome and then proceed with their decisions. Conversely, the Chinese businessmen will have greater affinity towards risky ventures. This will also affect their regulatory pattern as the UK market will have more legal bindings than the Chinese market.

Long-term orientation: Long-term orientation depicts the allegiance a particular society shows towards its future while preserving the traditional customs (Khastar, et al., 2011). A low sore in this aspect would determine that a country is not tolerant to adapting advancement and would prefer to hold on to its traditional practices. On the other hand a high ranking would represent a more realistic and flexible social structure (Geert Hofstede, 2016).

2.1.2 Hall’s Cultural Theories

Hall’s theory of cultural divergence is the reflection of the significant influence that culture has on communication. In this case, social norms are important as they define the pattern of relationship between individuals. The two components of Hall’s theory are described below (Warner-Søderholm, 2013).

High-context culture: In high context (HC) societies relationships are closely knit and represent strong attitude towards existing norms. In HC culture, the communication expects more from the listener as only the idea is presented without any explicit illustrations. There is discipline and understanding in a HC society (Kittler, Rygl and Mackinnon, 2011). Such societies are found in Asia, Latin America and African countries. Japanese organisations are the classic examples of high-context culture since most of their social etiquette rules are left for the observer to understand with time and get accustomed to them (Lambe, 2014).

Low-context culture: In low-context (LC) societies communications are defined with explicit use of languages. Under these types of societies explanations are expected from the speakers in order to avoid confusion and misunderstandings (Kittler, Rygl and Mackinnon, 2011). LC communications involve feelings and are mostly carried out in an open setting. This communication style is common in Western Europe and North America where societies are mostly characterised by individualism (Lambe, 2014).

3.0 Discussion

Northampton Shoes is a footwear manufacturing company that specialises in men sneakers is a leading organisation in the UK. It has been successful in establishing its brand name in the USA and is now planning to expand its business in Asia by creating strong foot hold in China. China has always been a leading contender in the footwear manufacturing industry. Currently the industry is facing challenges from South East Asian countries (PR Newswire, 2015). Since, 2010 the revenue of the Chinese footwear manufacturing industry has been yielding an average of 6.6% growth which is very promising for any British company (IBIS World, 2016). The greatest contributor in the high growth rate of the footwear industry also accounts for the 45.7% increase in e-commerce sale (PR Newswire, 2015).

The promising future of China in footwear industry has encouraged Northampton Shoes to enter the Chinese market by acquiring Walk-in-China. This business decision also involves a cultural diffusion which will have a significant impact on the transfer of management. The HR professionals would be benefitted if they use the tools of cultural profiling so that they have clear understanding of the management approach. The success of the leaders is the reflection of the effort that the team has put in. Thus, when mangers of Northampton Shoes will have to communicate with the employees of Walk-in-China then the differences in the business practices may affect negatively. The distinctions in Cultural dimensions presented evaluated according to the Hofstede’s five cultural dimensions have been presented in the figure below.

Figure 3: Hofstede’s Dimensions in the UK and China

(Source: Geert Hofstede, 2016)

The UK business organisations feel that the inequality in context to distribution of power should be minimised whereas in the power distances are acceptable. The culture in the UK societies is based on individualistic behaviour and prefers long-term orientation. Conversely, In China, organisations would be more tolerant to risk, flexibility and collectivism. Thus, the HR professionals of Northampton Shoes would have to recruit those who are potentially fit for the organisation based on the cultural profiling of the Walk-in-China.

In context to Hall’s cultural theories China falls into the category of high-context culture therefore, the communication structure is defined by limited explanation and high discipline. The leader would expect the employees to follow orders and work accordingly. However, the UK culture is aligned to the attributes of low-context culture involving clear communication across the layers of management. Therefore, the step to invest in Chinese market will involve explicit organisational change for employees of both the organisations. However, from the business point of view the acquisition will provide a ready entry to the Chinese market. The research and development team will gather required information about the Chinese culture and analyse them through culture profiling tools. The following approaches will help in making the transformation relatively painless.

3.1 Organising Training Program

The employees of Walk-in China would require training which could make it easier for them to adapt to the new leadership of Northampton Shoes. The design of the training would be based on the analysis of the cultural profiling. There are five cultural profiling approaches that can significantly contribute to the structuring of the training program. This program will not only help in identifying the areas of concern but also will provide the necessary knowledge to the HR professionals. The application of these cultural profiling tools will diminish future chances of conflicts arising from diverse cultural mix within the organisation. The decision-making process should incorporate the existing ethnic values. It will not only strengthen the interpersonal relationship among the employees but also contribute towards increasing performance of the organisation (Tung and Verbeke, 2010).

According to Chirico and Nordqvist (2010), in an organisation that has been structured on collectivism training needs to be given by forming teams. Moreover, the HR manager needs to ensure that workers employed in Walk-in-China needs to be trained so that they understand risk is not always associated with positive results it might lead to loses. Training program will provide the optimal opportunity to the Chinese workers so that they could interact with their British counterpart. This will make employees of both organisations to work together by respecting each other’s cultural practices.

3.2 Transforming Leadership

Culture determines the power distance and thus affects leadership within an organisation. Researchers have commented if management style considers cultural disparity then organisational success becomes common objective of the culturally diverse teams. Leaders need to identify the organisational goals with their vision. However, if the organisational goals vary from the individual goals there can be issues and workers may feel disinterested about their responsibility. In an individualistic society leaders will be more resulted oriented and view personal success as the organisational goals. Conversely, in a collective society, leaders identify growth of the society as the focal point of their objectives. Individualism is aligned to autocratic and charismatic leadership styles. Therefore, when the shift in leadership will take place within Walk-in-China, the leaders of Northampton Shoes need to understand the exchange between employees and management of the former. Chinese culture is based on collectivism and thus, the management of Northampton Shoes needs to consider characteristics of democratic leaders where team is prioritised instead of individual objective of Charismatic or Autocratic leaders (Chirico and Nordqvist, 2010).

3.3 Facilitating Organisational Change

The HR professionals of Northampton Shoes need to consider the organisational change that both the companies would be experiencing. It is their responsibility to facilitate organisational change in the most painless way. The leadership style has a direct influence on the workplace environment which in turn is responsible for facilitating the change. Communication plays a pivotal role in leading a change ensuing right message is received by the right people that would lead to actions in the desired direction (A. Gilley, J. W. Gilley and McMillan, 2009). Culture is an integral part of an organisation and international expansion needs to incorporate it within strategy formulation. A change within the organisation may be a continuous process or involve discrete time periods (Linnenluecke and Griffiths, 2010).

Organisational culture is defined from the interaction of the employees and their relationship with the management (Tsai, 2011). Researchers have found that companies with masculine organisational culture can implement a change with greater ease. The UK and China share same rank in terms of masculinity and thus, Walk-in-China will be able to adapt to the restructuring initiated by the management of Northampton Shoes (Geert Hofstede, 2016). Since, the management of Northampton Shoes is detail oriented they would be making explicit plans for facilitating change and the HR managers need to be vigilant regarding the implementation of those plans. However, if the HR professional fails to provide the required environment for organisational change the entire system may fail due mistrust among the culturally diverse teams. Chinese shoes industry is highly competitive and cultural profiling is time consuming and would create delays in decision-making (Ferraro and Brody, 2015; IBIS World, 2016).

• Conclusion

Culture is integrated within the structure of an organisation which affects the strategies taken by the management thus, cultural profiling helps in effective formulation of successful strategies. This paper aims at analysis of Northampton Shoes business venture in China through cultural profiling tools. The business decision of Northampton Shoes to shift its base in China has been evaluated based on its strength and weaknesses so that it can effectively address the opportunities and threats. The business would involve acquiring a Chinese footwear company, Walk-in-China. This business decision involves a cultural diffusion which can affect the organisational change. Hofstede cultural theory and Hall’s theory of high and low context culture helps in defining the cultural profiling of the Chinese organisation. The HR professional of the Northampton Shoes would be able to recruit those who are suitable for organisational success. Chinese organisation structure is based on low risk-avoidance and thus Northampton Shoes will find relatively easier entry into the Chinese market. However, their limited communication may restrict in effective decision making. Thus, HR managers need to arrange for training and group activities to facilitate implementation of leadership and organisational change. This study helps a reader in understanding the impact of cultural divergence on organisational structure and how expansion in a foreign country be facilitated though cultural profiling.

5.0 Recommendations

The leaders need to understand the values associated with culture while expanding the business in foreign countries. The leadership style needs to incorporate employees’ behaviour as it will effect in eliminating resistance while implementing an organisational change. The workplace environment should uphold the cultural values so that employees feel comfortable in the new organisational structure. The HR professionals need to learn about the power distance so that they can predict the reaction of the employees to a particular change.

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