Relationships between Corporate and National Culture - Essay Example

Case Study - Eurobank Introduction Modern organizations and banking s in particular are influenced by internal and external environment.Corporate and national culture determines an organization's identity and image, performance and relations with partners and customers. Eurobank is one of the largest banking organizations operating worldwide. The unique organizations' identity is influenced by nationality, core competencies, key activities, zone of operation, structure, degree of unionization, strategic alliances, governance form, type of growth, visual identity, reputation, leadership style, corporate culture, etc. In order to remain competitive and keep strong corporate image, Eurobank creates its culture based on a strong corporate philosophy and unique national values and traditions of the home country. Relationships between Corporate and National Culture The relationships between corporate and national culture can be explained by a strong impact on national traditions and cultural values typical for France. They involve "loyalty and long service, paternalistic values and commitment to labor laws in its redundancy policy" (Baron & Walters 1994). Eurobank adopts the national culture as the core of its ethics and corporate image. Eurobank favors attributes that allow it to define organizational identity from the perspective of organizational actors' experiences (e.g., leadership, governance structure, professional qualities required for climbing the corporate ladder). Top management presents quality service to customers as one of the bank's main defining attributes. This is clear from the presentation of customer service as a mission, a primary goal, a tradition, a constant, a strength, a reason for everything else the bank does, and a distinctive Eurobank trademark (Brake et al 1995). A company's culture is actually an aggregate of subcultures that have developed in response to unique challenges faced, by different groups within the organization (Brake et al 1995). For instance, the unique features of Eurobank are: centralism and unique approach to team=working, decision-making as a part of front management line and consultation support. Unique and strong corporate culture is crucial for Eurobank operating in 80 countries around the world. The organization provides a broad range of financial services and has an extensive national and international network. It is a highly visible and successful organization that has vied for a superior position among its competitors on many levels. The goals of the organization are pursued in accordance with an underlying ideology, or philosophy, based on beliefs, values and attitudes (Brake et al 1995). This ideology determines the 'culture' of Eurobank and provides a set of principles which govern the overall conduct of the organization's operations, codes of behavior, the management of people and its dealings with other organisations. These sets of principles may be recognized and implemented informally as 'accepted conventions' of the organization or they may be stated formally in writing. It is mission is to "offer a localized service which mirrors the values of local customers yet provides access to a sophisticated banking network is an important strand in the business strategy" (Baron & Walters 1994). In this sense, Eurobank management has an effect on corporate culture by setting an expected standard. Managers have a high degree of autonomy which allows them to reward employees within their departments. Still, day to day, interpretations of corporate values are left up to the individual employees. They may be somewhat independent in thought, but there also may be a "groupthink" that develops in much the same way as assumptions do. Leadership helps to influence values within the corporate culture but, still, it cannot control them. Aspects of culture bleed into every activity of the organization. For Eurobank, they are often intangible qualities, but they are significant none the less. To be part of the organization's identity, an organizational feature must be core, enduring, and distinctive. It is likely that corporate culture criteria are specific to each identity facet (Brake et al 1995; Schein 1999). Culture, in general terms, refers to "formal and informal rules for how we think, how we behave, and what we assume to be true" (Deal & Kennedy 2000, p. 54). As people gather, they gradually form commonly held ideas that govern the way they behave. Their ideas may conform to what policy or lawmakers lay down, or they may conflict. It is very difficult to change human ideas and behavior merely by edict. Eurobank operates in much the same way. Differing cultures may arise among disparate groups of employees. Interaction among those cultures can influence the overall culture over time. Corporate culture is comprised of a complex set of factors. Corporate leaders first must recognize that influencing organizational culture is not easy. It requires a well thought out collaborate process. It cannot be done simply by edict. Employee feedback is critical. Negative feedback should be taken as a learning opportunity. Through this process management can discover what motivates employees and how to capitalize on those elements (Deal & Kennedy, 2000). A certain irony exists for those attempting to adapt the existing culture. The most stable and dependable employees are often the most resistant to change. In contrast, the employees most amenable to change are often the least dependable and the least capable of following a prescribed process. Influencing the corporate culture within industries such as this may be all the more difficult. An attempt to rapidly alter or manage culture within the corporation is often a recipe for disaster. Rarely do such attempts provide a sense of security for the employees. This can have a devastating impact on morale. A process of research and interactive collaboration can identify what changes truly need to be made, as well as smoothing the transition toward such changes. Shaping a corporate culture in order to achieve a desired effect involves a combination of psychology and management skill. Most importantly, it requires interconnectedness between those managing the culture and the culture itself. Attempts to alter the culture should not be overly ambitious. This can not only lead to needless expense, it can create a backlash among the very culture it intended to change (Deal & Kennedy, 2000; Schein 1999). Cross Cultural Issues Eurobank is an international organization with 80,000 employees worldwide. The main problem is that the top management has a different views and perceptive on organizational structure and functions. "The general manager of the London office describes the bank as transnational. Other managers felt the bank operates on a national basis, marketing itself overseas, and that it was not yet truly a transnational or global organization" (Baron & Walters 1994). This is a crucial point for Eurobank and its cross cultural management because management influences in which direction the culture moves, but only if it is fully connected with that culture. Memos and other written documents do not convey the need for change particularly well (Deal & Kennedy, 2000). They also do not allow for feedback. These face-to-face interactions are what allow managers to construct policies that are effective and not over-reaching. Realistic goals for managing change within the organization must be established. It is possible to say that a strong corporate image and strong culture of Eurobank which reflects French traditions causes friction that management is successfully addressing. Organizational culture affects both the overall performance of Eurobank and the lives of the individuals within it. Given this reality, it is not surprising that it would become a focus of management. There is a certain danger, however, that a culture of blame may arise. If to take an organization and its structure, successful management of cultural differences at workplace has a great impact on the individual, particularly in terms of reward, and an emphasis on selection training appraisal and communication networks. Managing cultural diversity is usually associated with the creation of a strong corporate culture with an emphasis on commitment, and it is inevitably portrayed as having a strategic and integrated focus. Since customs, culture and norms can be very different from their own, managers need to learn how to adapt to different cultures. The essential step here is to learn about how people behave and conduct business in other countries. Thus, the studies of organization's and country's culture are closely connected and correlated (Driskill & Brenton 2005). For Eurobank, corporate culture and its adoption by local headquarters have a great influence on the global financial market as well. The transition to the knowledge economy, globalization, and omnipresence of information and communication technologies (ICT) require a permanent updating of the skills and competences of organizational workforce. Business is not all about profit but also for organizational value creation. However, the key issue is how to manage these valuable knowledge, make it easily accessible and understandable by all employees across global workplace and creating a culture of knowledge sharing and trust. For the manager, the key advantages of convergence are that ideas and techniques developed in one cultural or national setting may be transferred to another and used effectively. Furthermore, developing nations are able to learn from those more advanced countries and thus benefit from the mistakes of others. Such thinking is clearly behind the adoption by British and French firms of Japanese techniques such as quality circles and just-in-time and the focus on American theories of motivation by British management trainers. Belief in the transferability of techniques has led management to turn elsewhere for solutions to problems. The underlying theory behind all the above is that convergence on a particular type of technology and business organization is more significant than the cultural features of a particular society. The key elements in the convergence process are technology, the growth of big business and professional management and the impact of multinationals. The main imperative of all nations was seen as efficient production and the key elements were developments in science and technology that were available to all. Businesses in all nations, faced with the same problems, adopted the same solutions (Driskill & Brenton 2005). These included increasing size, increasing specialization and formalization, the development of similar systems of authority, occupational types and structures and adopting similar systems of education and training (Driskill & Brenton 2005). Support for the convergence hypothesis may be found in the universality of similar forms of productive technology, in the growth of big business and the multinational with global influence and in the growth of professional management with increasing influence. The assumption is widely held that the theories and approaches to management and organization were universal, and that the same recipes (usually American) could be applied irrespective of the cultural context. The managers single out significant national differences in the way people approach work and organizations. It is possible to assume that power distance is the main problem faced by employees in different geographical regions. In societies like France, Mexico and Hong Kong the power distance is large and formed the basis of social relations. In those societies such as Germany, Sweden and the USA, the power distance was small and such societies were noted for their attempts to reduce inequality. Individualistic societies such as the USA and the UK are depicted by a preference for looking after yourself or immediate family group, a belief in freedom and a tendency towards a calculative involvement with work organizations. Collectivistic societies such as India, Singapore and Mexico show concern for a much wider group and emphasize belongingness which can extend to organizations. These variables shape the values and hence the behavior of people operating in work organizations and enable us to explain differences in the way different countries conduct their business affairs. The advantage of corporate philosophy adopted by Eurobank is a high degree of flexibility and freedom in strategic directions. These policies help management to level cultural differences and adapt French culture to their organizational settings (Driskill & Brenton 2005). The influence of culture on structure should not be underestimated. There is evidence that different structural forms are favored in different countries. For example, French firms developed initially through the adoption of divisional structures, while in Britain people favored the holding company. Firms in different countries often reflect different emphases, so it has been noted that while American firms stress the finance and marketing functions, those in Germany have a production orientation; industrial relations management plays a much more significant role in Britain than either of those two countries. Studies on such aspects as the shape and extent of the management hierarchy have also noted differences between countries. For example the hierarchies in French firms tend to be steeper than those in the UK, and much steeper than those in Germany. Structure may also reflect specific organizational cultures; for example, those firms favoring the involvement of employees in decision-making may set up participative forums to facilitate this (Driskill & Brenton 2005). Communication Problems Possible communication problems are caused by cultural differences and lack of cross cultural management techniques. For instance, "the English managers believe that the French reluctance to shed staff is inhibiting their efforts to create a high-performance culture since a high proportion of staff have been imbued with a directive culture which encourages them to sit back and wait to be told what to do rather than taking decisions for themselves or using initiative" (Baron & Walters 1994). This example shows that a strong corporate culture may have a negative impact on headquarters and employees relations (Schein, 1999). Without exception, the dominance and coherence of culture proved to be an essential quality of HRM. Moreover, the stronger the culture and the more it is directed to the marketplace, the less need is there for policy manuals, organization charts, or detailed procedures and rules (Driskill & Brenton 2005). These examples show that cultural influences in different societies will result in different styles of organization behavior and different patterns of organization structure, as well as variations of influence in the business environment, such as the role of the state or trade unions. As a result, the policies of multinational corporations may well need to vary in different countries and managers operating out of their home environment need specific training in cultural differences. For the UK branch, the main weakness of strong traditions and values is that "the general manager post has always been filled by a French national. Most English staff think it is unlikely that they or any other English national would never be appointed to this post" (Baron & Walters 1994). Much of management behavior is culturally determined and that the key to successful international management lies in the understanding of these cultural differences. It is possible to singles out an anthropological approach and attempts to examine cultural differences in the way managers relate to others, in their attitudes to time and in their attitudes to the environment. Following Driskill & Brenton (2005) in countries such as the USA, France and Germany, the prevailing culture is much more universalistic and rules are applied irrespective of the situation. On the other hand, cultures such as Malaysia and Indonesia tend to apply rules in a much more particularistic fashion and personal relationships can be more important in some situations than the rules governing conduct. In such universalistic cultures greater use is made in business of lawyers and contracts and in multinational operations, the head office plays a more directive role (Gesteland, 1999; Hoecklin, 1995). Resistance to the changes is explained by a strong impact of corporate and national culture on headquarters and subsidiaries. For instance, The culture in France makes it very difficult for a manager to express criticism or for a subordinate to question the manager's authority. The French managers agreed that in France when a subordinate does not like an order they are most likely to say 'right away sir' but do the opposite, since they are more comfortable agreeing with their manager and they know they are unlikely to encounter criticism for not obeying instructions" (Baron & Walters 1994). Eurobank's corporate culture and national values reside in the capacity to maintain a coherent but evolving account about the self, an account that continually integrates the pertinent events in the external world. How the projected corporate identity created by managers in discourse evolves and integrates elements of the external environment can be best understood through a longitudinal study. Such a study would enable us to trace the evolution of organizational identity over time, as different strategies may be used to reduce gaps between the divergent projected and attributed facets (Gesteland, 1999). It traces the evolution of the organization's top management identity discourse in a situation in which the external perceptions of the organization were inconsistent with top management's definition of the organization. For Eurobank, it is important to take actions in order change the attributes of the organization in the direction of national culture. Conclusion The case of Eurobank shows that strong corporate culture based on national values and traditions have a crucial impact on the organization and its performance, corporate identity and image. The corporate culture, which is related to the notion of the company's mission, and which was mainly intended for the internal public, is very closely related to the norms and practices established by Eurobank. As emphasized earlier, corporate culture is backed by strong external communication and unique cultural values. One of the fundamental changes that took place within the company was its internationalization, or rather, a change in the nature of its international development. The implications of a culture specific approach are twofold. First, managers must be extremely cautious in the way they borrow business and management ideas from other cultures. In dealings with people from other cultures and local subsidiaries, managers must recognize that differences do exist and be prepared to adjust behavior and expectations accordingly. This is the theme of many recent initiatives in training for international management. Bibliography Baron A., Walters, M. 1994, The Culture factor: Corporate and International perspectives'. Institute of Personnel and Development. Short Run Press Ltd, Exeter. Brake, . Walker, D. M., and Walker, T. 1995, Doing Business Internationally. Burr Ridge, IL: Irwin Professional. Deal, T., Kennedy, A. A. 2000, Corporate Cultures. Perseus Books Group; 1 edition, Driskill, G. W., Brenton, A. L. 2005, Organizational Culture in Action: A Cultural Analysis Workbook. Sage Publications, Inc. Gesteland, R. 1999, Cross-Cultural Business and Behavior 2nd edn. Copenhagen Copenhagen Business School Press. Hoecklin, L. 1995, Managing Cultural Differences: Strategies for CompetitiveAdvantage. Wokingham, England: Addison-Wesley. Schein, E. 1999, The Corporate Culture Survival Guide. Jossey-Bass. Read More