Culture and Organization - Essay Example

'The value of a international experience goes beyond purely the acquisition of language - it lies in the ability to see business and personal issues from other than your own cultural perspective' Charles MacLeod, Head of UK Resourcing, PricewaterhouseCoopers 2008. The Case of Mitsubishi May, 2009 Table of Content 1.0Introduction 1.1 Overview of the activities of Mitsubishi Company 2.0 Justification and Theoretical Framework to conduct this study 2.1 Central Issue to be addressed in this paper 2.2 A critical Analysis of the Problem at stake in Mitsubishi 3.0 Suggested applicable solutions, changes or improvements 3.1Conclusion, Recommendation and the Way Forward References 1.1Introduction In the phase of increasing complex network of activities, business environment has become more turbulent and chaotic than ever before. To survive and take control of the environmental forces, it is vital that a firm can do something better than its competitors (Wonglimpiyarat 2004:1). Hagan (1996) postulates that globalization has not only altered the nature and the intensity of competition but has had to dictate and shape organizations in terms of what consumers wants, how and when they want it and what they are prepared to pay for it (Hagan 1996:1). Arguing in the same light, Kanter (1995:71) on his work of "Mastering Change" stipulated that success in the present day business is not for those companies trying to re-engineer the way they do things, or for those fixing the past (Kanter 1995). To the researcher, trying to fix the past will not be an adequate response. Kanter rather argues that, success is based on an organisation's ability to create, rather than predict the future by developing those products that will literally transform the way the world thinks and view it self and the needs (Kanter 1995:71). Today, it has become quite eminent that, businesses and firms no-longer compete as individual companies but try to corporate with other businesses in their activities (Wu & Chien 2007:2). For example, the much sing song conventional vertical integrated company based business model is gradually being replaced by collaborative relationship between many fragmented, but complementary and specialized value stars and constellation (Wu & Chien:1). This paper examines the human resources challenges and cultural problems Mitsubishi Corporation currently face in the light of the global financial crisis. The paper is divided into four sections. Section one of the paper provides a brief overview of the activities of Mitsubishi Corporation. Section two of the report discusses the central issues to be addressed in this report. Section three presents the central problem and issues, while the last section of the paper suggested applicable solutions and improvement based on the problems identified in the first section. This section also presents pertinent recommendation and a way forward for Mitsubishi Corporation. 1.1 Overview of Mitsubishi Corporation Activities Mitsubishi Corporation is a Japanese based general trading Company with over 200 bases of operations in about 80 countries (Report 2008). According to the company's Report (2008), it activities are diverse and can be classified under seven business groups; industrial finance, logistics and development group, energy and business group; metals group; Machinery group, Chemical group and Living essentials group company (Report 2008). 2.0 Justification and Theoretical Framework to conduct this study According to Dwyer & Kemp (2000), organizational culture is a tool in the management strategic armory which appears to be invisible yet it influences "why" "how" "what" and "when" things are done in an organization (Dwyer & Kemp 2000) in other words "it is the way things are being done here" (Johnson 1992:28, Johnson & Scholes 1997:66). It has been argued by Dwyer & Kemp (2000) that most traditional approach to organisational strategy ignores an important and powerful element of the organisation, that of culture. No wonder, Andrew (1997:52) refers to corporate strategy as "the pattern of decisions in a company. To the researcher, these patterns determines and reveals the objectives, purposes, or goals and the same time produces the principal policies and plans for achieving those goals. Andrew (1997) also included in culture the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities". Here, we can heartily conclude and state that, corporate strategy in effect maps out the businesses in which an organisation intends to compete in a way that focuses resources to convert distinctive capabilities into competitive advantage. (Andrews, 1997). The are two theoretical frameworks adopted in this paper to solve some of the pertinent problem facing Mitsubishi Company at the moment. The first model to be used will be the Paul Iles model. The model is selected based on the evidence in Mitsubishi that support the 'Best Fit' Approach. The second model used in the study is cultural web and the organisational paradigm as construed by Johnson and Scholes (1997 Fig. 2.10, p. 69). For example the Paul lles model covers all aspects that directly or indirectly affect the Business Strategy, Human Resource strategy, and the corporate strategy. The model was chosen because it covers the SWOT analysis, a focus on the training on teams for fostering a more participatory organizational culture. The second model construed by Johnson and Scholes calls for organisation to challenge some of the taken for granted assumptions during the change process. 2.1 Central Issue to be addressed in this paper According to the theory of agency, proposed by Jensen and Meckling (1976) the relationship between shareholders and managers can be regarded from the perspective of the principal agent relationship in which the shareholders (principals) delegate work to the managers (agents). This relationship is governed by the employment contract. (Eisenhardt, 1989: p. 57) The contract stipulates that the manager (the agent) provides returns to the shareholders in the form in return for compensation such as salaries, stock options and other compensation schemes. Since ownership is separated from control in the modern form of corporation, the agency relationship poses two important problems. (Eisenhardt, 1989: p. 57) Firstly, the interests of the shareholder of Mitsubishi Corporation may be in conflict with those of their managers. While Mitsubishi shareholders may expect their managers to satisfy their interests, managers too may be interested in satisfying their selfish interests rather than what is best for the organization as a whole and the shareholders in particular. Secondly, Mitsubishi shareholder may find it difficult to observe the actions of the manager owing to the fact that both parties may have different attitudes towards risk. (Eisenhardt, 1989: p. 57) While the shareholder may be interested in seeing the manager invest in high risk high NPV projects, the manager may be risk-adverse and therefore discard such projects. Consequently, the principal agent relationship results into agency costs which are often incurred by the shareholders. Agency costs represent the shortfall in returns provided by managers to shareholders and the returns that could have been generated if the shareholders were managing the corporation themselves. (Jensen and Meckling, 1976). The second theory used to explain Mitsubishi problems inline with the ongoing financial crisis is the Contingency theory. "Contingency theory is guided by the general orientation hypothesis that organizations whose internal features best match the demands of their environments will achieve the best adaptation". Consequently, organizations must adapt their structure to contingencies such as environment, organizational size and business strategy if the organization must perform well. (Drazin and Van de Ven, 1985; Gerdin and Greve, 2007: p. 2). This core idea of contingency theory was formulated by Galbriath (1973: p. 2) cited in Gerdin and Greve (2007: p. 2) as follows: Thus the question that guides our analysis is whether the present organisational structure maintained by Mitsubishis best suit the environment in which it operates in. The ongoing financial crisis has push businesses to reshape and rethink their strategy. Today, popular words as business as usual is impossible have occupy favorite columns of major newspapers. Consequently, effectiveness in organizational structures depends on the context or environment leading to the conclusion that no universally acceptable way of organizing is present. (Gerdin and Greve, 2007: p. 2). Thus, we will also look into how the current crisis is affecting the organisational culture of Mitsubishi. 2.2 A critical Analysis of the Problem at stake in Mitsubishi Organizations usually face a multiple number of uncertainties or contingencies from their environment and the question that has been posed by many researchers is whether organizational structures and processes should be matched to the environment, size or technology of the organization. (Drazin and Van de Ven, 1985: p. 520). It is difficult to match organizational structures to all contingencies given that multiple and conflicting contingencies may create internal inconsistencies in the structural patterns of organizations which indicate that a pattern analysis is required for the interactions of multiple contingencies and structural patterns on organizational performance. (Drazin and Van de Ven, 1985: p. 520). In the case of Mitsubishi, agency costs existed between the original management of the corporation and the other workers. To better align the interest of the management with the interests of the other workers, Mitsubishi have had to carry out a number of re-structuring plans in the light of the ongoing financial crisis. According to the Company's (2008) Report, Mitsubishi introduced a Management control system which further aligned managers' interests to those of top management and thus those of shareholders. One obvious way of aligning this interest is through the use of target based compensation plans such as share option schemes. Recognizing that it was their company, Mitsubishi made it clear to all the managers that there are not in need of those managers who perform below the A standard. Such managers would be phased out of the company while outstanding managers would be provided share option schemes. Share option schemes imply that such managers would subsequently own shares in the company if they meet the performance targets set by the top management. Human Resource Issues Facing Mitsubishi Company According to the Company's Report (2008), Mitsubishi is one of the largest employer in Japan and a major car manufacturer in the country. As one of the market leaders in the car industry, the company is highly reputed among customers and has established a high level of credibility and goodwill in this and other business related areas. While their staff are competent in their respective profession and departments certain issues pertaining to the human resource department to this organisation remains a puzzle. These problems include:- Poor communication and lack of information flow between the various departments, Lack of job satisfaction, headhunting of key staff members by competitors, weak organisational structure, weak reward strategy and organisational culture and the absence of training and career development for some level of staff (Company Review 2008). The company has neglected the soft sides of its business, that of the organisational culture. Today, culture is a core competence of an organisation. Culture being the taking for granted assumptions is absent and neglected in Mitsubishi in the phase of the ongoing crisis. This has created a high level of distrust and lack of commitments amongst workers. The entire business requires direct interaction with the customers, and it is through a strong culture that cost can be reduced especially at this critical moment where all businesses appear to be winning up. The present financial crisis, the East Asian crisis, the absence performance reward systems, supportive work environment, and defined duties for workers has pushed the organisation into a situation of not being up to date with the market demands, as key personnel are being head hunted by competitors 3.0 Suggested applicable solutions, changes or improvements According to Sveiby (1997) a key to retaining personnel in knowledge based-organisation is ensuring that employees had the opportunities to work on interesting projects with interesting careers challenges clearly defined. From the problems identified above, the Brokers tend to be very goal oriented and one can deduce that the management believes that conducive workplaces are an argument against competitiveness. According to Sveiby (1997), organizations under such a situation should create and incorporate healthier psychological work environments. This was the same position echoed by Gilbreath (2008) when the researcher postulates that, healthy psychological environments contribute to career conduciveness. According to Gilbreath (2008), creating strong HRM policies requires creating a strong psychological environment in which employees can thrive. Such an environment requires conducting stress audit, monitoring the work of the environment, matching people and work environment and using teams of employees and researchers to study the work environment. Mitsubishi should eliminate unnecessary stressors (e.g., poor job design, ineffective supervisor behaviour, poor communication, mismatches between employee's skills and job demands). The Human Resource department of Mitsubishi can also facilitate this through greater involvement, employee's autonomy, physical comfort, organisational security and recognition. To be critically useful to management, Ellis et al(2007) argue that an overall HRM framework should capture and integrate various functions and also clarify how various aspect of HRM add value to an organisation. Gilbreath supported this argument when the researcher calls for organisation facing communication and job satisfaction problems to institutes good fit between employees and their work environment. Under good fit theory, demand ability fit, suppliers value fit, self concept jobs fit and person group fit should be primary for workers integration and commitments. One factor that affects the implementation of HRM practices that has received significant attention is culture. Culture can be defined at different levels that range from the group to the organization to the national level (Erez&Earley, 1994). Culture comprises values and norms that guide individuals' behavior. Many view organizational practices and theories as culturally bound (Hofstede, 1980) which would mean that the values of a country should be compatible with a management practice for it to result in employee motivation Kotter (1995), in his article "Why transformation efforts fail", argues that, the bad outcome of most change efforts is caused by the management's failure to take the company through a series of important change steps. According to the author, these failures are caused by generally under performing management rather the researcher postulates that, there is little experience out there when it comes to organisational change processes and as he states; "Even capable people often make at least one big error" (Kortler 1995). It is important to recall here that, one big problem identify with "The Brokers" was resistance to change. According to Kotter, successful organisation implementing change process needs to follow and adopt his eight-step model for transforming organisation. This model includes establishing a sense of urgency, forming a powerful guiding coalition, creating a vision, communicating the vision etc. To properly formulate its corporate strategy, an organisation must assess its organisational strengths and weaknesses, as well as its environmental threats and opportunities, which will enable it choose among alternative courses of action. (Hofer and Schendel, 1984) cited in Schneider, (1998). This indicates that an organisation must perform a SWOT (strengths, weaknesses, opportunities and threats) analysis prior to formulating corporate strategy. A number of factors have been identified as having an effect on corporate strategy formulation: for example, Kets de Vries and Miller (1984) suggest that managerial personality and experience is an important determinant of the strategy formulation process; Janis (1972) considers group dynamics as an important factor affecting the formulation of corporate strategy while Frederickson (1984); Lyles and Mitroff (1985) suggest that organisational structure plays an important role in strategy formulation. Schneider (1998) citing Schein (1985) notes that National culture could play an important role in strategy formulation as it derives from assumptions regarding relationships with the environment as well as relationships among people. Schneider (1998) argues that these assumptions will influence how information is gathered and how that information is interpreted within the organization. The strategy formulation process can therefore not be considered 'culture-free' because information is embedded in social norms and acquires symbolic value as a function of a particular set of beliefs in a particular set of cultures. (Feldman and March, 1981). Kotter (1995) in his eight-step change model argues that, establishing a sense of urgency requires rallying the rest of the company around this decision. Kotter recommends as a tool to reach this goal could be a fabricated crisis. That is, by over exaggerating an existing problem, the whole process off communicating the urgency for change can be made easier. According to Kotter (1995) forming a powerful guiding coalition requires a strong group of people who can drive change, and without the group, the change process will never accumulate the momentum needed to evolve the organisation to where it is heading to, the vision. This vision must be succinctly communicated, planned for short term wins, and people empower to implement this change through removal of obstacles. In the situation of "Mitsubishi Corporation" a void has been created through resistance to change. Management should thus, through removal of large obstacles of change will result into adequate change success. For failure in creating short-term wins will result in lowering motivation among previously committed employees. Thus, the management of Mitsubishi should make compelling evidence visible for the employees to go on the long march. Kotter (1995) went further and stipulates that:, Most people won't go on the long march except they see compelling evidence or that the journey is producing expected result" (Kotter 1995:6). Dwyer & Kemp (2000:3) postulated that, "the forces at work in the environment and the organisations capabilities in coping with these, are made sense of in terms of the individual experience of managers and the collective assumptions within the paradigm". Figure one below summarizes the cultural web and the organisational paradigm as construed by Jonhson and Scholes (1997 Fig. 2.10, p. 69) These assumptions are more commonly observed in conversations, discussions between the different stakeholders in an organisation (Dwyer & Kemp 2000). In some situations assumptions are deeply embedded in an organisation and its' members that it can only be manifested through peoples action (Dwyer & Kemp 2000). In all, these assumptions, ways of doing things are the backbone of the organisation (Johnson 1992, Johnson &Scholes 1997). Johnson & Scholes (1997) contend that, using the organisation paradigm a new cultural environment can be created. This is so because, by looking at the cultural web, the management of Mitsubishi can see what the organisation is like "now" and mimic how they want it to be in future. The difference is the change the organisation intends to make. The same idea was supported by Dwyer & Kemp (2000) when the researchers argued that, most organisations only look at the paradigm during a change process. From the cultural web above, six major types of artifacts can be distinguished - rituals and routines, stories, symbols, power structures, organisational structures and control systems (Johnson & Scholes 1997). These artifacts are the wider aspect of an organisation that give a clue of the paradigm, reinforces the assumption behind the paradigm and represent that organisational aspect taken for granted (Johnson & Scholes 1997, Dwyer & Kemp 2000, Johnson 1992). During a strategic change process, an organisation paradigm becomes quite useful because it identify within the cultural web what is now, how the organisation wants it to be. The difference between what it is and what the organisation wants it to be is the intended change (Johnson & Scholes 1997). Looking at the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn't working, and what needs to be changed (Johnson & Scholes 1997:68). Thus with, this the taken for granted assumptions are easily sorted and you start aligning organisational elements with one another, the strategy to reinforces or build the new way of doing things around here(Dwyer & Kemp 2000). 3.1Conclusion, Recommendation and the Way Forward This study was initiated to develop suitable recommendations for pertinent Human Resource Management issues facing Mitsubishi Corporation. In the first part of the paper. and inspiration drawn from Paul Ilsles best fit model, and using the work of some researchers a number of recommendations were drawn calling on the management, to create conducive environment, more workers participation, career succession planning, career relevant training, greater opportunities for higher roles, job satisfaction, trust and commitment will be enhanced. If this recommendation is properly implemented a number of benefits could be achieved which include developing a set of shared values, reducing costs when the relationship finishes and increasing profitability as a greater number of end users customers are retain. The forgoing indicates that cultural factors have a significant effect on corporate strategy and thus calls for a critical consideration of cultural differences especially for multinational companies that usually operate in a number of different countries with varying degrees of culture. A company therefore stands to gain a lot from being ethical. Companies that are perceived as being unethical may suffer from declining sales and thus declining profit margins. There are also differences as far as ethical issues are concerned. What may be considered unethical in one country may be considered ethical in another country. For example, Muslim communities do not eat pork meat and thus will consider a company that attempts to market pork related products as contravening their cultural believes. In addition there are considerable differences in relation to organisational hierarchy across countries. In countries where power distance is considered very important, information is likely to flow only from top to bottom and not from bottom to top. In addition, an autocratic form of leadership is likely to prevail in such societies. On the contrary, in a country where power distance is considered less important, there would be a two way flow of information and a democratic leadership style is likely to prevail. For example, Mitsubishi faced a number of problems when it expanded its activities to South Korea. (Siegal et al., 2007). In like manner IKEA, the giant furniture dealer faced difficulties when it expanded its activities into the United States. (Grol et al., 1998). References Andrews K. (1997). Resources and Strategy: A Reader, edited by Nicolai J. Foss. Oxford University Press, ISBN 0198781792, 9780198781790 Dwyer, K. & Kemp, S., (2000). An examination of an organisational culture- The Regent Hotel Sydney. International Journal of Hospitality Management. Vol. 20, Issue 1 Pp. 77-93 Gilbreath, B., (2008). Creating Career-Conducive Organizations. A primary intervention approach. Advances in Developing Human Resources, 2008-10 Kotter, John. P.,(1995). 'Leading Change: Why Transformation Efforts Fail', Harvard Business Review, Vol. 73, Issue 2, p59 Sveiby KE. (1997). The new organizational wealth: managing and measuring knowledge-based assets. San Francisco: Berrett-Koehler; 1997. Schneider S. C. (1989), "Strategy Formulation: The Impact of National Culture", Organization Studies, vol. 10, pp. 149-168. Siegel, J. I., Licht, A. N., Schwartz S H. (2007). Egalitarianism, Cultural Distance, and FDI: A New Approach available at: http://ssrn.com/abstract=957306 Turner, R. Keegan, A & Hueman, M., (2006). Human Resource Management in a Project-Oriented Company. A Review. International Journal of Project Management 25 (2007) 315-323 Youndnt, A. M., & Snell, A. S., (1995). Human Resource Management and firm performance: Testing a contingency model of Executive controls. Journal of Management. Vol.21, No. 4, 711-737 Johnson, G., (1992). Managing strategic change: strategy, culture and action. Long Range Planning 25 1, pp. 28-36. Johnson, G. and Scholes, K., (1997). Exploring Corporate Strategy, Prentice-Hall, Europe Johnson, G. et. al., (2006). Exploring Corporate Strategy, Prentice-Hall, Europe Read More