How Culture Helps or Hinders Organizations Performance - Case Study Example

How Culture helps or Hinders Organization’s Performance Name Institution Introduction Organizations like the individuals bear personalities normally termed as the organizational culture. For a manager to be effective he or she must comprehend how organizational culture is developed and communicated to employees (Zhu, Nel & Bhat, 2006, p.321). It implies that the culture of an organization could be its greatest asset or liability depending on how it is handled. In the recent times, competition has intensified in local markets compelling companies to expand their expansions in other world markets so as to increase profits. Furthermore, Hersey, Blanchard and Johnson (2008) argued that in a bid to get the competitive advantage, companies have expended their search for talents across the globe to improve their operations. In the process, companies now find themselves with employees with a diverse cultural background. The difference in cultures could heavily affect the performance of the organization. In a nutshell, Gelfand, Erez and Aycan (2007, p. 482) claimed that if employees’ individual culture is allowed to thrive, it can demotivate other employees leading to dismal performance. Therefore, this paper will describe the culture of Heinz Company and explains how it helps or hinders the organization’s performance. The paper will draw relevant concepts, theories or approaches to put this discussion into context. Company background and culture The Heinz is a food processing company firm which was set up in 1869 in Pittsburgh, Pennsylvania by Henry Heinz (Heinz, 2015). The multinational company processes, market and sells food products across 200 countries within six continents. Heinz 150 brands which are either number one of two in the industry. According to Heinz (2015) the ketchup brand is ranked number one in the US market with the market share of 50%, the frozen potato, Ore-Ida commands 46% of the customers. As started earlier, the company has grown significantly and now operates in several countries including Canada, Australia, India, Indonesia, United Kingdom, Netherlands, Philippines, and China among others. Heinz employs over 32,300 employees across the globe to help the production and other operations (Heinz, 2015). As a company with Western roots, its corporate culture has often clashed with those of other countries such as China. Heinz culture has ensured that employees are majorly given an individual assignment to improve personal growth. Despite the production demand from customers, the company highly promote work-life balance through weekends-offs, and various leaves. According to Chen, Wen and Johanson (2013) Heinz employees take business within the organizational seriously and would not want their social life to interfere with company’s daily operations. Negotiation and business deals are also conducted secretly not to interfere in individual’s affair. In brief, the company highly believes in a person’s liberty and privacy. Chen, Wen, and Johanson (2013) contended that he employees working at Heinz have mastered the art of small talk before a deal reached between them and the client. Their managers claim that small talk as opposed to long conservation and creating business relationship helps them save time so that several clients can be served. Another aspect of culture is effective customer service combined with honesty. Heinz employees are confident, honest and are risk takers especially on issues of material gains and light-hearted (Heinz, 2015). Also, they value laws, efficiency, and time. However, they do not take much time on rituals, formality and social rules. This is because Americans believe that time wasted can help in improving organizational performance. As the company was expending in China in 2002, the managers did not carry adequate research or just ignored the reality of culture (Chen, Wen & Johanson, 2013). Employees from the parent company were deployed in China without proper training on cultural intelligence. It did not take long when the company started facing difficulties. How Culture helps or hinders Heinz China performance based on Hall and Hofstede Theories Studies in the recent years have established a relationship between cultures and organizational performance in relation to success factors like sale volumes, revenues, stock prices and market share (Mahrokian, Chan, Mangkornkanok & Lee, 2010, p. 17). An increasing body of documents in literature illustrates the benefits of put heavy investing in the performance-based culture which emphasizes focuses majorly on leadership and values. Choong Lee and Jennifer Lee (2014, p.36) stated that cultures differ extensively based on how they are incorporated into the behavior norms and practices of the organization. This implies that a company must develop a corporate culture which takes into consideration different cultures to stop organizational conflicts. The vigor of corporate relies on the level to which a collection of values and norms are broadly held and shared all over the organization. Weak culture depicts no concurrency between norms, and values, whilst a stronger culture depicts broad agreement, with the leadership playing critical roles in all these cases (Hall & Hall, 1990). The successful performing companies hold the high-performance culture which is characterized as strong, very tight and distinctive. In some companies where members do not belong to purported strong culture hold a short tenure as they could be compelled to resign or quit willingly. According to Leung et al. (2005, p.359) management experts recommend effective leadership such as transformative in developing the organizational culture which takes into account every member’s personal culture. Transformative leadership communicates clear vision by defining a binding corporate culture to every member. In such cases, the leader poses cultural intelligence and understands how favoring of one culture can cause internal conflict hence lowering performance of the organization. Culture can of help or hindrance to company’s performance. Hall & Hall (1990, p.12) described culture as people’s routine mode of life. The routines comprise of values, attitude and artifacts, learned behavior, and trends and patterns. Management professionals claim that culture is usually s subconscious since it bears invisible control procedure operating in employees’ thoughts. Therefore, culture is something which is shared with each member of an organization or a social group is passed from one generation to another. Culture influences negotiations, communication and behavior factors among one group of employees. Guidham (2011, p.24) argued that because culture is often distinctive, employees from one cultural background ought to understand the diversity and meanings not to offend his colleagues from another culture in their communication and other organizational activities. Like many cultural management researchers, Hall conducted far-reaching studies to determine how differences in cultural affect behavior, communication and negotiation practices in companies in different countries. In this theory, Hall & Hall (1990) suggested the categorization of cultures into low versus high context cultures in order that managers can understand the essential disparities in cultural problems and communication styles. The operation of Heinz parent company in the US is influenced low context culture while that in China is influenced by high context culture (Chen, Wen, & Johanson, 2013). Heinz Company entry and operations in the China was marred with issues not only affecting employees but the company in general. The CEO failed to conduct a proper research on the risks the company might face in the foreign market. The negligence came to haunt the company as it posted dismal performance. A research revealed that what was ailing the company performance was the cultural diversity. However, the management replicated Western culture (low context culture) into Heinz while having the majority of employees being Chinese. Western culture majorly promotes individualism. Heinz went ahead to offer individual assignment with predetermined deadlines. The management reasons that individual assignment are quick to finish as the decision is fast compared to group decision where the opinion of the majority as to be considered. In addition, employees from the US like individual work owing to the fact that they would want to gain individual merit out of performance. In fact, a study done by Hofstede (2015) shows that the US scores highly in (901) on individualism whilst China sores lowly (20) on the same. This implies that China culture is rich in collectivism. Liu, Zhang, and Leung (2006, p.328) stated that in countries with high individualism employees prefer to work alone in preference to the group. In the present business environment, teamwork is considered as one of the effective management practices adopted by highly performing companies in the world (Caligiuri, Lepak & Bonache, 2010). As a firm which operating within collectivist society of China, Heinz employees who highly depend on teamwork for morale and ideas were greatly affected. On the other hand, Leung et al. (2005, p.362) claimed that American employees are shaped by low power distance culture thus favors forming a strong business relationship with their managers. Hofstede (2015) thinks that the low power distance culture has made managers more accessible, and enables employees to liaise with them on different challenges about work. Chinese culture, however, promotes high power distant. Therefore, organizational conflict did happen at Heinz China because Chinese managers wanted employees to keep distance and allow them enjoy power whilst the same employees wanted to be closer to power. Hofstede (2007, p.415) stated that China which is the parent home of the company is high in collectivism and employees work in the interest of group and not individual. Such culture believes that team work increases the speed of completing tasks. In addition, Chinese collectivist culture maintains that more ideas and skills can be realized within the group which can be used to improve organizational performance (Choong Lee and Jennifer Lee, 2014, p.35). The clash where Chinese employees need teamwork while Heinz expatriates require individual work lowered the performance of the company due to lack of unity for a purpose. Individualism impacts how people communicate and negotiate with one another. For example, when individualism at Heinz Company was left to flourish, Chinese employees regarded America’s reception as cold. The climate reduced the morale in the company hence low performance. Thus, Farh, Hacket and Liang (2007, p.718) argued that global managers have to form employee teams which can create positive relationship between employees. This means that high context culture focus on interpersonal relationships. Creating trust is a critical step in business transactions and forming a formidable team for the positive performance. Another cultural challenge which had affected Heinz China challenge is uncertainty avoidance.Hofstede (2001) argued that uncertainty avoidance is the level to which a social group of people feels susceptible by unfamiliar happenings and has created institutions and beliefs that tries to evade them. When comparing the two countries, Chinese culture depict a low score 30 whilst the US scores an average of 46 meaning that the Chinese employees are normally comfortable with the culture ambiguity and are never prepared to adjust any aspect of their culture (Hosftede, 2015). However, the US where the parent Heinz Company is situated has a faintly low certainty avoidance implying that its people are likely to accept a new culture whenever they meet new people. Choong Lee and Jennifer Lee (2014, p.35) asserted that the rigidity of the Chinese culture to adopt new ways makes it hard for Chinese employees to work or communicate effective with employees from another culture. The complexity in work relationship makes it hard to achieve desirable results as seen in Heinz China. Another Hofstede’s cultural dimension that hindered Heinz performance was indulgence versus restrain. Geert, Hofstede and Minkov (2010) illustrated indulgence as the level to which individuals endeavor to control or manage their impulses or desires anchored on how they grew up. Fairly weak control of the behavior in termed to as “indulgence” whilst a stronger control is called the “restraint”. With a score of 24, China is rated to as a society with restrained culture with pessimism tendencies, not focusing on leisure and controls of the desires. On the contrary, Hofstede (2015) demonstrated that the US scores highly with up to a rating of 68 on this dimension and are considered a highly indulgent nation. The employees from this nation have been impacted with willingness to realize their desires and impulses pertaining to having fun or enjoying social and business life. They are influence with the optimism culture, great extent of leisure time, and spending highly on leisure. Hofstede (2007, p.415) opined that although leisure pertaining flexi-time is greatly recommended for modern employees, Chinese employees think that American pursuing such social life are time waster and lazy. Chinese have a culture where people believe that who they are in the society should earn them some status at the workplace. In this culture, people are judged and rewarded by the title they hold in the society such as elder or parent (Guidham, 2011). Due to the fact that Heinz is an American company has set up an outlet in China where people believe in ascription and not achievement, it has been be very difficult to improve performance because of a conflict between the manager and employee. In the contemporary business world, majority of successful companies compete on achievement. Equally, Gahan and Abeysekera (2009, p.131) asserted that most of staffs understand that their best achievement rests on the performance gauged against other staffs. Due to the fact the business environment is being oriented towards achievement culture, firms usually reward staffs based on this dimension through certificate of achievement, promotion, salary increment or encouragement. Communication and Negotiation Communication and negotiation influences the performance in business as effective communication and negotiations obviously leads to positive performance. Business communication and negotiations entails battle of tactics and wits. Zhu, Nel & Bhat (2006, p.321) contended that since cultures are unique, a person involved in the negotiations with foreign clients requires to be acquainted with different negotiation styles in the world. For example, Ralston et al., (2008, p.13) stated that the Chinese companies or employees still consider rites in negotiation since the country is deeply influenced by the Chinese traditional culture, especially the Confucian concepts. In negotiations, Chinese pay much attention to equality among the bargaining group. Ralston et al., (2008, p.17) went ahead to claim that if the equality is not achieved, they will feel belittled in negotiations. According to Ralston et al., (2008, p.19) the Americans are frequently known as rugged individuals who antagonize and try to be noticeable by the crowd during business negotiation. They known are to be straight forward people who get straight to the point in their communication. Americans are honest and confident take risks particularly on matters of material gains. In addition, American employees put high value the efficiency, time and laws (Martin & Chaney, 2006). Americans are openly communicative and are known for making jokes hence may be considered as rude to the other members of the group. On the other hand, Choong Lee and Jennifer Lee (2014, p.36) posited that the Chinese have a habit of not giving straight forward and clear answers during business negotiation hence they take a long time to make decision. The Chinese consider that time is elastic and can be contracted or stretched in terms of the situation (Martin & Chaney, 2006). Efficiency, time management and quick and effective decision are some factors for positive performance since competition has intensified in business. Due to the differences in Chinese and American culture on time management, employees from these countries working in the same organization such as Heinz China have openly disagreed. Communication also differs between generations. Yu and Miller (2005, p.39) argued that while the baby boomers are patient, X generations are not patient wants the deal to be conclude quickly. The differences in culture hinder performance within the organization. Conclusion In conclusion, this paper has described different issues and theories that which has led to Heinz China’s struggle in its operation. The paper as discovered several management difference in cultural aspects between China and US which created social challenges to employees and managers. In the research, this paper has discovered that Chinese culture promote collectivism, building friendship, bureaucratic organizations, long power distance and how indulgence among others. The culture has made Chinese to form strong business relationship at the organizations and even failing to separate social life at work and that one at work. The practices are much different from Heinz parent company in the US. Such foreignness liabilities could make it difficult for a Heinz company to operate successfully in China. To resolve such cases, this paper suggest for more training and polycentric staffing. Training will foster cultural intelligence and enable Chinese citizens to drop their cultural difference and adopt dominant culture within the market. References Caligiuri, P., Lepak, D., & Bonache, J. (2010). Managing the global workforce. Chichester: Wiley-Blackwell Chen, X., Wen, W., & Johanson, M. (2013).Heterogeneous Features of the Frozen Food Market in China: A Case Study of Heinz Guided by Integrated Marketing Philosophy. Uppsala University Farh, J. L., Hackett, R. D., & Liang, J. (2007). 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