Cross-Cultural Management in Organization - Essay Example

Cross-cultural management in organization As far as the topic of cross-cultural management has recently become very urgent with the implementation of the globalization processes and related structures, the present paper will be devoted to the discussion of the cross-cultural management in its relation to the notions of management as a whole. Introduction As multinational corporations and similar to them structures win the global market of goods and services, it has become evident that the specific strategy of multinational management should exist on the basis of the already known management notions and theories. Multinational corporations bear certain peculiarities which should be taken into account when developing management strategy for any of them. The topic of the present work is relevant in the framework of the existing numerous multinational corporations for the better understanding of the management processes which take place in them. Most people work and live in familiar environment, in the surroundings we were brought up or places similar to this. Accordingly, people that we meet, work with and entertain, are similar to us, due to the fact that they have the same ethnic context, similar viewpoints and religion, the same framework of values, and the same language, that we speak. The experts describe it with the notion of “inhabiting a culturally homogeneous space”. (Hoerder) The transition of the China's economy towards openness in the area of external economic ties implies the solution of the set tasks for the account of international management expansion, attraction of the foreign capital in the productive form and the use of foreign credits. International management in China nowadays is the most developed form of international contacts. The Chinese international turnover during the years of reforms has grown from $10 billion in 1978 to $325 billion in 1997 (the positive balance equals to more than $40 billion). By the international management volume China now takes the third place in the world, with its export and import in 2005 equaling to $1422.1 billion. (Lloyd 2006, p. 389) More than 220 countries have international management relations with China, among which are USA, Japan, European Union, Korea, Taiwan, Russia, Australia and Canada. On July 1st, 2004 China adopted a new law 'About International Management'. With the aim of stimulating the international management, this law has replaced the regime of considering and registering the right for carrying out external economic operations for the simple system of registration, and there have been created strict regulations, relating to import and export of goods and technologies, international service management, international management order, as well as the protection of copyright according to the abovementioned order. (Garnaut & Song 2005, p. 27) The topic of the present paper is closely related to the field of management. Managing multinational corporations means applying the general notions of management, accounting the peculiarities of the multinational corporation operations and implementing the innovations which ultimately improve the general work of the corporation. Any multinational corporation needs thoroughly developed strategy of development and coping with difficulties which arise at the way of this development, and what else except management notions and theories may be applicable here? It is obvious, that the field of management knowledge represents vast opportunities for the successful management of multinational corporations, for the development of innovative strategies, which will ultimately positively influence the profitability and market position of the product. Despite the fact that multinational corporations take significant part of the market and are huge structures, their development and perspectives are at best viewed from the viewpoint of an individual manager. (Mockler 2002, p. 10) However, to find the best solutions and to create the most successful guidelines for the development of any multinational company this manager should possess deep understanding of the basic processes taking place inside the company, and the impact the external factors create on its business activity, but even understanding these processes and factors, without knowledge of management, its notions and theories it will hardly be possible to create a solid base for the successful management of so large companies, especially bearing in mind that multinational corporations usually deal with production of various, often not even related each other, products; for their stable market position successful management is crucial, and the field of management is closely related to the narrow topic of multinational corporations' management. (Buckley & Carter 1999, p. 227) Modern companies try to respond to the emerging open market opportunities, and for the aim of winning better market share and higher profits, have to pay their attention to the globalization and the need for creating large multinational corporations. A bright example of such changes may be represented by the German Hoechst chemical company, which at the beginning of the year 2000, admitting the rapidly changing positions on the chemical market and understanding the new accents on the global cooperation and production, decided to take this step and create a new structure. Through the 2001 and 2002 it has sold twelve of its businesses in Germany for being no more profitable, and has bought four new pharmaceutical firms outside Europe. Hoechst in Europe was the pioneer of such drastic changes in the multinational management trends. Though the Hoechst's labor force in Germany was decreased almost twice, it became possible to increase the sales over the US continent from 6 to 33 percent of the market share by the end of 2002. These actions could be viewed as an example of new innovative approach to the company's management. On the other hand, and as Mockler (2002) puts it, 'such actions were contributing to unrest and uncertainty in Europe'.(p. 12) Despite life in familiar surroundings is usual for the majority of people, there are some exceptions to the rule. Since the beginning of the humankind history, there were many groups of people or individuals that moved to foreign countries for multiple purposes – for work, getting education, teaching someone, to entertain or just to change the place of residence. Diaries of the most famous travelers, such as Christopher Columbus and Marco Polo are full of descriptions devoted to what the scientists now call “culture contact”. (Hoerder) With rapid scientific and technological progress, advanced means of communication and transport, more and more people travel abroad, and the range of purposes they tend to achieve, enlarged as well. Many people now travel to share organizational and business experience, study abroad to come back home, many people travel just to see and study cultural background of other countries, some of them come to other countries with peace missions. Unfortunately, political and economical conditions in many countries of the world make many people move abroad as immigrants or refugees. But, regardless of the travel purposes, the notions of cultural contact and cultural shock are relevant for all categories of travelers. (Hoerder) Before examining this phenomenon it’s necessary to give a strict definition of it. At first, it’s necessary to mention that there are some titles to define this phenomenon: “cross cultural relations”, “between society culture-contact”, “cross-cultural interaction” etc. Here is the definition of this phenomenon provided by Bochner: “between society culture-contact refers to individuals who travel beyond their countries of origin for a particular purpose and for a specified period of time, and the relationships they establish with members of the host society”. (1986, p.23) There are also some necessary terms used to describe these relations, for instance “sojourner”. This term is used to refer to “culture travellers, indicating that they are temporary visitors intending to return home after achieving their aims”. (1986, p.33) On the contrary, people of the visited society are called “host-society members”. It’s evident that changing society background in any case demands some contact on personal level, when the representatives of various societies interact. From the part of sojourner it demands much effort to integrate into unusual social and cultural patterns. This may cause stress, especially in the case of immediate and unexpected transition, and this condition is defined by the specialists as “culture shock”.(Bochner) The dependence of Chinese economy on the international management has grown significantly, which witnesses about its deep involvement into the world international ties and processes. Though China takes the third place in the world economy by the international management volume, its weight in it can still become higher. The main obstacle for this is the low quality of the bigger portion of the goods, produced by the processing industry, which don't survive the rivalry of the similar products on the world market, and the absence of possibilities for increasing the raw materials export. The main task of the Chinese export policy is the providing of import financing, which is built with the account of the international conjuncture. The main efforts are directed at stimulating predominant growth of finished goods' export with the growing portion of science-heavy products; these processes are accompanied by achieving the quality of goods, which will correspond to the international quality standards. Considerable growth has been achieved in the total volume of finished goods’ export, which by the beginning of 90s constituted already 2/3 of the Chinese export. The first place in export (50%) belongs to the consumer goods, among which clothes, shoes, toys, etc. An important place in the international management of China is taken by the raw materials processing with the further export of the finished products – it constitutes about 50% of the total country’s turnover. China is the leader in exporting textiles and silk. Textile industry is the main source of foreign income for China. (Kent 2002, p. 344) Less than 20% of export accounts for machine building and electro technical products. The growth of the specific gravity of these products in the world export is being restricted by the fact, that their quality is not competitive with that of other suppliers. The portion of Chinese machine building in the world export does not exceed 0.3%. (Manilla Bulletin 2005, p. 12) The structure of the international management in China was described here to decide, what challenges are set in front of Chinese economy and foreign management as the essential part in its development. The definition and determination of challenges will lead us to the definition of the possible ways for improving international management. Cross-cultural management is often treated as a discipline of transnational management that touches upon mainly cultural collisions that happen between what is regarded as well-structured and homogeneous institutions. It is also supposed to provide effective tools for fixing cultural diversifications that are regarded as the reasons of misunderstanding, conflicts and failure in communication. But recently some authors have started to treat this approach as irrelevant and not corresponding to the terms of business reality today. Now it is necessary to speak about transnational corporations that face the task of managing global networks and multicultural teams, collaborating and interacting regardless of the boundaries with the help of modern technologies of communication. There are the specialists that point out the need for working out alternative strategies and approaches that will be based upon the needs and demands of increasing complexity of interrelation within the companies and between the companies. They state that it is necessary to observe institutions and interrelations of various cultures in a context of growing globalization of the business sphere. (Soderberg) The demands of the present day require new professional skills in addition to those that were necessary in the past. The specialists point out a list of general issues for the managers. These issues are to be taken into consideration when the person is tending to avoid possible mistakes in the process of establishing and supporting successful and effective cross-cultural interaction and collaboration. 1. Develop cultural empathy 2. Recognize, understand, and respect another's culture 3. Be culturally neutral 4. Never assume transferability of a concept from one culture to another. 5. Get cultural informants involved into the decision-makings. (Soderberg, p. 117) There are some important issues that are included into idea of successful and effective cross-cultural management. One of the most important issues is the strategy which allows provide for effective communication. It is necessary to describe it in detail to see how manager may train his staff in order to achieve mutual understanding and appreciation. Strategy of training the stuff may be various depending upon the industry, but the main purpose is to teach staff and managers to understand, realize, and appreciate the influence of behavioral models in the process of communication. The key purpose is to encourage the employees to increase their productivity and reach mutual cultural understanding, appreciation and respect. Many people state that problems in communication appear due to language barriers, differences between the cultures, but the main issue is evidently the differences in communication styles, defined by the personality of an employee or a manager. People belong to various cultures and viewpoints, and taking into account the peculiarity of individual style of behavior and communication is important for company’s success in forging out cross-cultural relations. Companies are responsible for teaching the staff to understand engagement levels. The scholars point out three such levels. The first level is widely described in the books devoted to business ethics and etiquette. This level includes general regulations of communication skills and delivering appropriate relations. These rules can be applied to any person, and include general topics, such as coming in time, being polite and attentive while speaking to customer and other employees. Besides, the rules in the limits of one particular culture should be taken into account. If one and the same issue has different implementations in other country, the person should act according to the customs of the country he works in. It is necessary to be aware of such details, because lack of knowledge may result in misunderstanding or even insult. (Cost) The second level includes more discrete regulations. These regulations touch upon the issues that vary from region to region. Some things that were correct in the past may be incorrect in other regions: “for example, when doing business in Australia, there are regional differentiations between acceptable business interactions in Sydney as compared to Melbourne. Likewise, there are differences between Shanghai and Hong Kong”. (Giovannini et al, p. 145) People often study and train on the first level, they sometimes pay attention to the second level, but level three is learnt very seldom. This level includes an individual complex of engagement that each person has. There are unwritten regulations that are different for planning communication with each individual. Here individual style of a person should prompt or demonstrate what the person wants and waits for, in order a manager should provide it for this person. Forging out effective cross-cultural communication on organization level should be based upon all these three levels. In addition, organization should provide for necessary service as to teach the staff how to implement the second and the third level into practice. This demands much practical experience. Another one important aspect of making successful cross-cultural interrelations is to be considered. Building up mutual understanding and successful communication demands self-assessment. Each employee should clearly understand and evaluate the styles he or she uses in various situations, and to what degree. According to the researches, “many companies discover that the diversity of style within the group—even groups with participants from around the globe—is about the same as if all participants in a room were from the same city”. (Hamada et al. p. 46) Ability to appreciate other people is significant for successful cross-cultural communication and cooperation. Each person should be aware that it is important to find time to pay attention to other people, to understand and evaluate their style and behavior. For instance, within a definite firm, manager staff members may represent a wide range or personal styles: “with regard to completing reports, one team leader may require pages of details, and the other leader wants only bullet points of information”. (Harris et al, p. 89) As regards to such peculiarities, cultural and language differences do not matter. Staff members should learn how to understand each other better. This will push them to understanding that each client or consumer has his own unique style as well. Successful team working derives from admiration of diversity. It does not mean that every person and every style are to be appreciated, but it means that it is necessary to respect people for the features that make them unique. “In our work with international companies, we too often paint other cultures with a broad brush and fall into a trap of stereotyping instead of drilling down into individual styles. Many countries in the world, based on world events, group all Americans as “fill in the blank.” Americans are often offended by that, though they likewise tend to paint other cultures with broad brushes, rather than taking into consideration the regional and individual differences?” (Rossiter et al. p. 113) Of course, learning and implementing into practice three levels described above is to produce positive effect on business strategy and productivity. In case some employees have certain problems in communication with clients, they are to write down a strategic plan how to resolve these problems. Of course, various techniques of staff engagement are to be worked out, and each person should implement this engagement individually. Each company strategy should take into consideration that neither the products nor the services will be sold in case the primary source of making decisions is not satisfied. Cross-cultural management also demands the strategy of effective motivating the employees to be worked out and implemented. Diversifications in cultural viewpoints and values demand specials skills while attempting to motivate employees’ behavior. Supervising managers should carefully interpret the circumstances and conditions and work out a strategy that will fit the values, needs and interests of each individual. The process of forging out effective strategy is challenging while manager works with people of the same social and cultural pattern. But it gets much more difficult when this manager needs to motive those employees who have quite different pattern and values. Understanding is the starting point for working out effective strategy of motivation. Design of successful motivation strategies can be divided into three stages. They will be described below. These are the steps providing a manager with necessary tools for creating motivation strategy based on the principles of cross-cultural cooperation and understanding. They will be also helpful in upholding a productive working environment with multicultural background. The first step may be defined as interpretations. Effective changes of behavior starts with detailed interpreting the terms under which the individual is involved into behavior that needs to be changed. It is necessary to understand his motivation in these or that circumstances. Understanding these aspects will make the process of motivating the person easier and predictable. For instance, many supervising managers suppose that speaking foreign languages during working process is the evidence of employee’s laziness, disrespect and desire to detract from the work. But in fact many employees use another language while attempting to perform some information related to their work more accurately. Sometimes it may be the evidence of stress or tiredness, or just an attempt to make the process of communication faster. (Bandyopadhyay, p. 64) Almost every manager would ask how it is possible to know why this it that person behaves this way. If it is not clear what reasons this individual has for his behavior, a manager should just ask this person about the reasons. And the results may be quite unexpected for the manager. “Ask the employee why he or she is late for work or why he or she failed to get the job done on time. If you do so with respect, you gather valuable and accurate information that will help you motivate the change you desire.” (Dahringers, p. 84) The next stage may be defined as expectations. A manager should be skilled enough to understand an individual that was brought up in the terms of quite different culture and social background. The specialists state that hardly any person may imagine how often managers and employees fail to understand each other in detail while communicating at a workplace. If we would take US culture as an example, guest workers from foreign countries are not instructed enough about the values inherent to culture in the USA. They are aware of the desires and demands of USA management system very seldom. (Bandyopadhyay, p. 66) It is often uneasy to explain the others what we want from they even in case we are communicating with the person from the same country. It often happens that even most familiar and common procedures and expectations are difficult to explain. For instance, manager should take into account that his employees need to have a possibility to express their possible complaints and tell about problems if they have any. As the specialists state, “a noncomplaining staff could be a hindrance, because you do not have the information you need to solve problems”. (Bandyopadhyay, p. 69) It is necessary to explain the workers that they have the right to complain and articulate their problems, and moreover, they should do it. In fact many guest workers that come to the USA from abroad suppose that complaining is a sign of disrespect to the managers and of the disloyalty to the company in general. They find speaking about their problems inappropriate. But reasonable complaining and discussing the problems is to be encouraged. It is evident that the staff will not be aware of the manager’s demands and expectations unless their manager examines their needs and problems that are the obstacle for productive work. The experts in cross-cultural management advice managers to get the staff informed about their expectations: “employees will never know what is expected of them until you take the time to spell out that you need to know about problems to do your job well and that a good employee brings difficulties to the manager's attention” . (Bandyopadhyay, p. 74) The last step is positive reinforcing. This concerns the schemes of undesired behavior that need to be changed. Desired behavioral patterns are to be reinforced. It is not very hard for the manager to do it. But the manager should always notice when the workers fulfill his demands and praise their activity. This is easy when the matter concerns staff consisting of the workers that belong to one culture, but the task is more complicated concerning multicultural teams. Of course, it will be hard for a manager to reinforce definite types of behavior, such as complaining for the problems or for the lack of attention and understanding, because naturally such behavior calls irritation in the person. It is challenging for the manager to compliment a worker for bringing bad news about damaged equipment or missed deadline. In this case the manager should distance himself from the trouble itself for some time and praise the worker for his initiative. This worker deserves praise for his intention to get his manager aware of all necessary issues, so it is necessary to compliment him to encourage such behavior. (Bandyopadhyay) Another possible difficulty that may happen with reinforcing is when a manager takes definite behavioral schemes of granted. For instance, “US managers may not realize how difficult it is for non-English speakers to consistently speak English in the workplace and will, therefore, fail to compliment them on that effort.” (Rossiter et al. p. 129) Thus, a professional manager should always remember that there are some behaviors that are natural for him but difficult for the workers of foreign culture. It is necessary to take into consideration that all workers are different, but each of them will respond to praise or sincere kind words. Professional manager should realize that the problems of cross-cultural relations affect many spheres of business and economy, for instance, marketing, both domestic and international. It is necessary to take into consideration that, for instance, USA culture consists not only of native culture. Foreign culture of the state is made up not only by foreign citizens. American citizens now may have foreign origin, for instance, Indian, Chinese, Canadian, Australian or Russian. That is why understanding foreign cultures is important for the workers in any sphere, even if they deal with domestic consumers and companies. For those who have business relations with foreign customers of companies such skill is compulsory. The process of globalization and changing conditions of the world market made all spheres of business and finance a cross-cultural phenomenon, which demands that managers on all levels must be aware of cultural differences and means of establishing successful relations to succeed in the market. Conclusion The policy of international management development witnesses that China is denying the autarkist course, which has existed in the country before, having replaced it for the policy of active foreign ties’ expanding and attraction of foreign capital. The development of the Chinese economy should be performed on the base of its own efforts combined with the international organizations’ cooperation. Management in multinational organizations may be supposed to be a part of the general management science. The role of management for such large business structures is crucial for their success on the global market. Many multinational companies have admitted the importance of the open market opportunities which now arise through the present day reality. It has become evident that not only may multinational management be a part of the general management theories, but the challenges and needs of the multinational corporations should be applied and used for the creation of innovative managerial approaches in relation to these business structures. Managing multinational corporations and structures implies the necessity of accounting cultural differences, which appear while the business expands all over the world, it is also necessary for each worker, and not only the top management, to understand the importance of management in the whole company's operations, and each manager should be supported in his initiatives and individuality through the prism of the general company's objectives. Multinational companies try to implement new management approaches, which at times causes either creation of the totally new theories or contributes into the development of the short-term uncertainty on the market with the striving for long-term goals (an example with Hoechst). 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