Cross-Cultural Management - Essay Example

Name Class Unit Topic: Managing a workforce of people with a diverse cultural background employed in home-country wholly-owned subsidiary operating in a host country Importance of the topic in relevance to cross-cultural management With globalisation, managing diverse workforce is multinationals have become a reality today. Multinationals are sending expatriates to manage a workforce with diverse cultural background. The topic is thus vital in determining ways in which expatriates can manage workers in a host country. Managing across cultures is very important for multinationals as it creates a competitive advantage. Managing diversity workforce in a host country leads to employee coexistence and a workplace that encourages innovation. Failure to handle diversity in the workplace appropriately can lead to a lot of issues. This is due to high turnover, lawsuits and absenteeism. Employees become dissatisfied and start leaving the organisation. This makes the topic very important and relevant for cross-cultural management. Table of Contents Importance of the topic in relevance to cross-cultural management 2 Table of Contents 3 Introduction 4 Cultural diversity 4 Expatriates/International managers 5 Cultural differences in international business environments (Risks and cultural challenges for international managers) 5 Parochialism 6 Individualism 6 Ethnocentrism 7 Cultural distance 7 Cultural shock 7 Role of culture in the management of diversity and communicate across cultures 8 Expatriate management three strategies 9 Local strategy 9 Centralized strategy 9 Global strategy 9 Strategies of developing international managers 10 Selection process for international managers 10 Training international managers 10 Managing Cultural differences 10 Language training 14 Effectiveness of international manager 14 Conclusion and recommendations 15 References 16 Introduction With globalisation, management of multicultural workforce plays a vital role in the business process. Success in operations of a subsidiary located in a host country depends on multicultural management. Managing across cultures is a major source of competitive advantage among multinationals (McFarlin & Sweeney, 2014). The aim of managing diversity in a workplace is to come out with the best output from the employees. When the managers can address diversity well, all employees feel included and no one is left out. As an expatriate developing a competent multinationals workforce is a major requirement (Tucker, Bonial & Lahti, 2004). The management helps the MNC to attain competency that is hard to replicate. This report looks at managing a workforce of people with a diverse background employed in a home country wholly owned subsidiary in a host country. Cultural diversity Cultural diversity refers to a variety of cultures in a specific region. By the nature of their operations, MNC has a diverse workforce (Jonsen, Maznevski & Schneider, 2011). The organisation employs employees from different cultures and regions. A subsidiary in a host country is expected to have people who come from a different culture from the company home market (Tucker, Bonial & Lahti, 2004). Managing the subsidiary in a host country is a major challenge for the organisation and expatriates. The differences in cultures and characteristics have a major influence on the way workers think and act. According to Selmer (2001, p.1223) an expatriate managing a diverse workforce will have to face an entirely different culture from the home country. Diversity management is a management approach that encourages diversity as a way of enhancing organisation efficiency. Diversity management is an integral part of human resource management for multinationals. As an expatriate, one has to respect personal and cultural differences. When employees come from diverse cultures, they can enrich the teamwork (Harvey, 1997, p.407). Expatriates/International managers Diversity management of subsidiaries is closely linked with international management. International organisations having activities in foreign countries rely on the centralised parent company. This leads to the home country sending expatriates to manage foreign operations. Expatriates are highly qualified and are sent by the parent country to manage foreign subsidiaries. The logic behind the use of parent company managers is that they are seen as more qualified and competent to manage (Selmer, 2001, p.1225). Cultural differences in international business environments (Risks and cultural challenges for international managers) International managers face a lot of challenges in managing a diverse workforce. The managers have to blend employees who come from diverse cultural backgrounds. A manager entering a subsidiary in a host country is expected to adapt to new leadership methods. According to Tarique & Caligiuri (2009) international managers have to fit in the ways of the host country. The managers are expected to fuse the diverse culture to enhance the production of the subsidiary. The major barriers are parochialism, individualism, ethnocentrism, cultural distance and culture shock. Parochialism The operations of a subsidiary are in most cases located in a country where the social system is different from that of the home country. This makes international manager face difficulty as they try to adjust to the new social system. Jonsen, Maznevski & Schneider (2011), claims that employees posted in a foreign country in most cases shows behaviours that are of their home country. International managers may fail to recognise the key differences between their culture and foreign culture. They may also ignore the differences assuming that they have negligible impacts (Tucker, Bonial & Lahti, 2004). When one assumes that the two cultures are almost similar, they jeopardise making major cultural mistakes. Individualism This occurs when the workforce of the host country is extremely individualistic. This makes the workforce to put more emphasis on their needs and welfare. An international manager from collectivism culture faces a problem as they try to make the employees work in a team (Kawar, 2012, p106). Ethnocentrism This is a major barrier for adapting to a host country culture. This occurs if the international manager is predisposed to believe that home country culture is the best. This is also known as self-reference criterion. Despite the fact that ethnocentrism is seen as natural in human behaviour, it leads to misunderstandings and poor performance for the local employees. The international workers are expected to be well versed in the local culture (Arasaratnam & Doerfel, 2005). Cultural distance Different countries have different cultures based on the Hofstede model (Kawar, 2012, p.106). When a manager moves from one country to another, they are expected to understand the cultural differences between home and host countries. The differences range from minimal to substantial. Irrespective of the amount of cultural differences between the two cultures, they are bound to affect the international manager. International managers in most cases tend to be ethnocentric when in the host country. The problem is made worse in cases where cultural difference is great (Bhawuk & Brislin, 2000). Cultural shock When international manager lands in the host country, they experience culture shock. Culture shock occurs as one tries to adjust to the foreign environment. The training on cross culture management is designed to address issues associated with culture shock. Culture shock involves insecurity and lack of orientation as they encounter foreign culture (Arasaratnam & Doerfel, 2005). The international manager may lose self-confidence or become isolated if they are not well trained to adapt to the new culture. The new culture has different languages, philosophies, attitudes and unique currency. An international management assignment may fail due to culture shock that is very costly for the firm (Bhawuk, & Brislin, 2000). Role of culture in the management of diversity and communicate across cultures In international business, a manager steps into a different cultural environment from the home country. The new culture is characterised by beliefs, languages and values that are different from those of home country (McFarlin & Sweeney, 2014). The differences influence the dimension of the business. The participants have different cultural heritages leading to cross-cultural risks. Cross-cultural risks occur in situations where miscommunication due to culture leads to the value of some workers at stake (Earley, 2006, p.927). The Cultural effect ranges from value chain to interpersonal exchange. The cross-cultural risk is made worse by ethnocentric orientation. This is where one judges others based on own culture. The managers are not supposed to view the international operation in the home country culture. International managers are supposed to be polycentric or geocentric. Being polycentric involves one adopting the host country mind-set and increasing affinity to the country one is working in. Geocentric orientation involves having a global mind-set. Through these approaches, one can minimise cross-cultural risks. Effective handling of the cross-cultural issue is critical for a business to gain a competitive advantage (Bhawuk & Brislin, 2000). Expatriate management three strategies Local strategy Through the use of local strategy, an MNC tries to make the subsidiary to be locally responsive. Expatriates are only used in transferring technical knowledge to the subsidiary. The expatriates are only supposed to go to the subsidiary for a specific task and return when it’s over. For this type of assignment, global competence is not required (Caligiuri & Colakoglu, 2007). Centralized strategy Organisations using this type of strategy try to implement the parent company culture into the subsidiary. These organisations want to eliminate any form of autonomy in the host country. These organisations are not concerned with developing global talent or sharing knowledge across borders. International managers in these types of organisations maintain the home country culture (Caligiuri & Colakoglu, 2007). Global strategy Global strategy is based on recognising the cultural differences between home and host country. The organisation looks for ways in which it can integrate home and host country cultures. The expatriates are expected to help in the creation of a common organisation culture (Caligiuri & Colakoglu, 2007). Strategies of developing international managers Organisations use different methods to manage international managers. This includes a selection of international managers, training them and managing them during their performance and managing repatriation (Caligiuri & Colakoglu, 2007). Selection process for international managers The first step in expatriate management is the selection. Expatriates play a critical role in adopting the organisation strategy. The selected manager must be scrutinised before being engaged in the international assignment (Caligiuri & Colakoglu, 2007). The country of origin of the international manager is a major determiner of the cross-cultural challenges an international manager will face in the host country (Kawar, 2012, p.107-111). The organisation has to gauge the challenges that the manager will experience in the host country due to cultural differences. Training international managers Managing Cultural differences International managers are expected to be confronted with cultural differences in the host country. Through cross-cultural training, managers can remove these differences. Learning to work and live within the host country culture is a major aim of cross-cultural training. Expatriates are taught how to learn and live in the foreign culture (Tarique & Caligiuri, 2009). To manage multinationals in host countries, multinationals engage them in training programmes. Cross cultural training is an important determiner of the success of the expatriates. Cross cultural training helps the international managers to adjust to the new culture gradually. This is an important step in developing international managers. The organisation is expected to utilise cross-cultural management in such a way that it takes care of the cultural transition and the organisation goals (Caligiuri & Colakoglu, 2007). Based on the social learning theory, learning is influenced by both observation and experience. Using social theory in cross-cultural training, international managers can gain skills through observation that enables them to interact well in the host country. This enables the international managers to adapt to the behaviour of the host country at a fast rate. The international manager can adapt fast to a foreign culture is they are aware of what to expect in the host country culture (Bhawuk & Brislin, 2000). International training and development help a lot in enhancing the competence of an international manager. The manager is expected to be well versed in the cross culture knowledge of the host country. Cross cultural training is tailored to help in managing change (Waxin, 2004, p. 64). Personal and the professional plan are designed to help the manager in managing change and attaining the set goals. International managers are taught on coping strategies for cultural change (Morris & Robie, 2001). The manager is taught about the other culture values and how they are expressed in behaviour. Through training on the practical life of the host country, expatriates can attain cross-cultural communication skills. Being cultural astute enables the manager to understand the diversity that exists in the market needs. This helps them to improve the strategies that are aimed at helping the minority and ethnic groups in the host country. Cultural understanding helps in acculturation (Caligiuri et al., 2001). This is a major step towards improving the manager cultural abilities and proficiency. Research shows that multinational organisations require managers who are well versed in global issues (Ko & Yang, 2011). Social learning theory is used to illustrate the cross-cultural training and learning. Based on the social learning theory, there are three main aspects that are crucial to managers learning. The first aspect is the self-dimension that looks at enhancing managers’ confidence in dealing effectively with cross-cultural settings. This is based on the fact that self-efficacy is a vital element in motivation concept of cultural intelligence. The second aspect is the relationship dimension. This deals with the managers skills on relationship and behaviours when they are interacting with people from a different culture (Triandis, 2001, p.19). Training international managers on behaviours goes beyond social interaction to involve issues such as drama training and mimicry. The third concept is perception. The managers are provided with a global view and cognitive tendencies of peoples from the host country culture. This involves being trained in other cultures rituals, practices and other issues of the host country. The training enables the employee to increase their tolerance towards ambiguity that is vital when dealing with another culture (Morris & Robie, 2001). Cross-cultural training based on the learning theory was expanded by the work of Braslin and Howarth (1997). This led to the inclusion of three more aspects that are; attribution, self-awareness and experiential (Brislin & Horvath, 1997). In attributional training, culture relativity is emphasised. The manager is taken through critical situations that can lead to misunderstanding among members from different cultures. Experiential training involves being trained in ways in which managers can use emotions to engage in the training as they attain experience on culture. In self-awareness, managers are taught on awareness of their culture and reactions that can occur when people feel that their culture is challenged (Ko & Yang, 2011). The methods used to train managers on cross-cultural management differ. An organisation can use global management training, executive coaching among other methods (Palthe, 2004, p.41). An organisation may also use an international assignment for the manager as form of training. During training, it is recommendable for the managers to be taught on intercultural communication. This helps the managers to become competent when dealing with complexities of a foreign culture (Littrell & Salas, 2005). A manager can increase their cultural intelligence. Cultural intelligence is composed of three main aspects. The first aspect is the manager ability to comprehend and make sense of the culture and develop new cultural cognitive components. The second is the drive and motivation adapt to the new culture while the third is the ability to attain culturally appropriate behaviours (Earley & Peterson, 2004). Since national cultures are different, cross-cultural differences are bound to continue existing in human resource management (Kawar, 2012, 108). Language is a major factor in cross-cultural communication. When coming up with cross-cultural training, organisations observe the local language, values and culture. This is due to the fact that they have a great impact on the manager learning. Based on the culture of the host country, some of the cross-cultural training methods may be less effective. For example, Asian cultures prefer more supervision when carrying out a new task rather than taking the task. Different cultures have different ways of learning and methods for the home country are not effective in a different culture setting. This is based on Hofstede model that classifies national cultures (Waxin, 2004, p.63-71). Language training Cross cultural training is accompanied by teaching the language. Ko & Yang (2011) asserts that managers are supposed to know the foreign language in order to succeed in managing the diverse culture they will face. International manager has to live and work in the host country. Language is very vital in culture and contains a lot of cultural aspects. An international manager is expected to live with workers and nationals of the host country. When international managers can understand the local language chances of misunderstanding are minimised. This makes them to adapt to the foreign culture more easily. The manager can negotiate and work more effectively. Language enables a major in a subsidiary to communicate with workers more easily and improve their understanding ability (Ko & Yang, 2011). Effectiveness of international manager The success of the international manager is based on their ability to adjust to the assignments. The success is conceptualised on three main levels. The first level is intercultural competency that is based on the success of the managers in their work. The second is organisation success which is determined by the success of the training programmes and lastly training effectiveness that is looked at the perspective of the host country (Ko & Yang, 2011). The success of training for the international manager is based on several factors such as cultural differences between home and host country and the coverage of the training materials (Tarique & Caligiuri, 2009). Conclusion and recommendations The most important need for international managers is the ability to have cultural intelligence when managing across cultures. Cross-cultural differences exist and hamper the effectiveness of international managers. Since international organisations have subsidiaries in different countries, employees and management are expected to be able to cope with different cultures. Managers expected to manage subsidiaries in host countries are supposed to be trained in cross-cultural communication. Cross cultural training is supposed to help the managers to manage across cultures. International managers are supposed to be developed to fit into the foreign culture. This starts with the selection process, training and monitoring. The organisation should include language training in their cross-culture training programme. This is due to the fact that language forms a vital component in culture. Based on social learning theory, cross-cultural training must include three main aspects that are self-dimension, relationship dimension and perception. The effectiveness of cross-cultural management is supposed to be gauged by ability to adjust to the assignment, organisation success and the host country perception on the manager. Without cross-cultural training, it would be impossible to manage diverse workforce in a host country. References Arasaratnam, L. 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