Culture and HRM

Culture and HRM

Managing Diversity in the Global Work Culture

1. General Themes– “Profit Power” of Diversity Management

• Perspectives, brands, reach and information– Tensions

• Global, information – oriented markets vs. local customs, stereotypes, and rules• Tribalism vs. acceptance of differences Over adaptation vs. “respectful intolerance”• “Group think” vs. innovation• Universalism vs. relativism (multi-cultural)

– Leadership challenges: leverage people diversity• Clearer definition of “strategic diversity management”

e.g., “Euro manager” – global skillsUSA Praxis – compliance, “PC” or innovation tool

• Understand “who you are” and “where you are” and “what you (the business) need”• Goal:

1. Create a culture to maximize the potential of personnel and their performance.2. Build a work system wherein employee knowledge and innovation unleash global (and local)

market place power.3. Install practices which reflect an openness to (and ability to leverage) differences in people

and situations4. Apply mature and flexible judgment to country cultures and customs which are very different

(major vs. minor)5. Educate managers to understand and appreciate that heterogeneity, not homogeneity, is the

basic characteristic of the global work culture.

Managing Diversity in the Global Work Culture (cont’d)

2. Special issue of Diversity – Role of women in business around the world – Gender issues differ broadly (context) e.g., exclusion or mandated inclusion Management jobs vs. lower jobs Compensation levels Africa, Middle East, China, Japan, North America, Europe– Business Goals

• Effective use of female managers and the female belief she will be allowed to perform at an appropriate level and grow professionally

• Leveraging most effectively the entire labor pool• Focusing on business needs and local customs

3. Ethics in International management decisions– Legal compliance: home and abroad– Varying definitions of acceptable behavior and transparency– Corruption is “bad business:” costs, sustainability– Common challenges:

• Bribery vs. “gift”• Child labor• Environmental issues

– Universal vs. culturally contingent – “no brainers” vs. “foggy bottom”

Culture and Work“The Boulders”

1. Premise: People organize, manage and work differently from culture to culture. There are systematic and culturally based differences in managers’ values, attitudes, and behaviors.

2. Managers’ Challenge:a. Understand (and feel comfortable with) the differencesb. Use this understanding to design and implement the management tools and relationships

needed to complete the work of the company (the “hardware” and the “software”)3. Example: Managers from more “specific cultures” focus on behavior that takes place

at work. Managers from more “diffuse cultures” focus on a wider range of behaviors (e.g. personal or family lives). USA managers (specific culture) differ dramatically from Chinese or Russian managers (different cultures) on the ideas of employer provided housing.

4. Worldwide differences in managerial stylea. Andre Laurent, Geert Hofstede, and Fons Trompenaar studies provide deep “food for thought”

to guide management understanding of actions.b. Laurent focused on key management approaches to work situations, highlighting the differences

across cultures.• Tasks and relationships:

USA, Germany, Sweden – more task orientedChina, Japan, France – more relationship orientatede.g. 1. approaching a project communications 2. by passing the hierarchy (to get the job done!): good idea or insubordination?

• Role of the managerJapan, Spain, Italy – knowledge expertUSA, Dutch, English – problem solver (help employee to discover solutions)e.g. USA manager interacting with French employees

c. Hofstede focused on 5 dimensions of differences between cultures and nationalities• Individualism and collectivism (see chart)• Power distance (see chart)• Uncertainty avoidance (see chart)• Career success and quality of life (see chart)• Long term – short term view of life (see chart)

d. Trompenaars confirmed findings of Laurent and Hofstede and documented additional dimensions

• Rules and relationshipsCanada, USA, UK – UniversalisticVenezuela, Korea – particularist

e.g. traffic ticket questionjoint venturesInternational negotiations

5. The question of convergence vs. divergencea. Corporate “Hardware” is growing more similar. Behavior of people

maintain cultural uniqueness.b. National cultural differences aren’t overcome by company culture. Laurent

discovered more pronounced cultural differences among employees around the world working in the same company than among those working for local companies in their own countries (“power” of local leadership style and authority).

6. Management lesson: perception, understanding and judgment about multi-cultural differences and impact on work are key global leadership skills.

Individualism: Organizational Characteristics and Selected HR Practices

Dominant Values Sample Countries

Organizational Features

Reward Practices Staffing/Appraisal Practices

• Personal accomplishment

• Belief in individual control and responsibility

• Belief in creating one’s own destiny

• United States

• Great Britain• Canada

• Organizations not compelled to care for employees’ total well-being

• Employees look after their own individual interests

• Explicit systems of control necessary to ensure compliance and prevent wide deviation from organizational norms

• Performance based pay• Individual achievement

awarded• External equity

emphasized• Extrinsic rewards are

important indicators of personal success

• Attempts made to isolate individual contributions (i.e., who did what)

• Emphasis on short-term objectives

• Emphasis on credentials and visible performance outcomes attributed to individual

• High turnover; commitment to organization for career reasons

• Performance rather than seniority as criterion for advancement

• Team accomplishment

• Sacrifice for others

• Belief in group control and responsibility

• Belief in the hand of fate

• Singapore• South Korea• Indonesia

• Organizations committed to high-level involvement in workers’ personal lives

• Loyalty to the firm is critical

• Normative, rather than formal, systems of control to ensure compliance

• Group-based performance is important criterion for rewards

• Seniority-based pay utilized

• Intrinsic rewards essential• Internal equity guides pay

policies• Personal needs (such as

number of children) affect pay received

• Value of credentials and visible performance outcomes depends on perceived contributions to team efforts

• Low turnover; commitment to organization as “family”

• Seniority plays an important role in personnel decisions

• “Fitting in” with work group crucial; belief that interpersonal relations are important performance dimension

IndividualismHigh

Low

Power Distance: Organizational Characteristics and Selected HR Practices




• Top-down communications

• Class divisions seen as natural

• Authoritarianism

• Malaysia• Philippines• Mexico

• Centralization and tall organizational structures

• Traditional line of command

• Hierarchical compensation system

• Difference in pay and benefits reflect job and status differences; large differential between higher- and lower-level jobs

• Visible rewards that project power, such as a large office or company car

• Limited search methods in recruitment; emphasis on connections and “whom you know”

• Few formal mechanisms of selection

• Superior makes selection choice for his or her sphere of influence

• Egalitarianism• Status based on

achievement• Joint decision

making

• The Netherlands

• Australia• Switzerland

• Flatter organizational structures

• Decentralized control• Great degree of

worker involvement

• Egalitarian-based compensation systems

• Small differences in pay and benefits between higher- and lower-level jobs

• Multiple search methods; extensive advertisement

• Formalized selection methods “to give everyone a fair chance”

• Superior constrained in making selection choices

• Selection based on merit; loyalty to superiors deemphasized

Power DistanceHigh

Low

Uncertainty Avoidance: Organizational Characteristics and Selected HR Practice




• Fear of random events and the unknown

• High value placed on stability and routine

• Low tolerance for ambiguity

• Greece• Portugal• Italy

• Mechanistic structures• Written rules and

policies guide the firm • Organizations strive to

be predictable

• Bureaucratic pay policies utilized

• Compensation programs tend to be centralized

• Fixed pay more important than variable pay

• Bureaucratic rules/procedures to govern hiring and promotion

• Seniority an important factor in hiring and promotions

• Government/union regulations Limit employer discretion in recruitment, promotion, and terminations

• Unexpected viewed as challenging and exciting

• Stability and routine seen as boring

• Ambiguity seen as providing opportunities

• Singapore• Denmark• Sweden

• Less-structured activities

• Fewer written rules to cope with changing environmental forces

• Managers are more adaptable and tend to make riskier decisions

• Variable pay a key component in pay programs

• External equity emphasized

• Decentralized pay program is the norm

• Fewer rules/procedures to govern hiring and promotions

• Seniority deemphasized in personal decisions

• Employer provided much latitude in recruitment, promotions, and terminations

Uncertainty AvoidanceHigh

Low

Masculinity/Femininity: Organizational Characteristics and Selected HR Practices




• Material possessions important

• Men given higher power and status than women

• Rigid gender stereotypes

• Mexico• Germany• United

States

• Some occupations labeled as “male” others as “female”

• Fewer women in higher-level positions

• Differential pay policies that allow for gender inequities

• Tradition an acceptable basis for pay decisions

• “Male” traits rewarded in promotions and other personnel decisions

• De facto preferential treatment for men in hiring/promotion decisions into higher-level jobs (even if it is illegal)

• “Glass ceiling” for women• Occupational segregation

• Quality of life valued more than material gain

• Men not believed to be inherently superior

• Minimal gender stereotyping

• The Netherlands

• Norway• Sweden• Finland

• More flexibility in career choice for men and women

• More women in higher-level jobs

• Jobs evaluated without regard for gender of job holders

• Focus on work content rather than tradition to assess value of different jobs

• Well-developed “equity goals” for pay determination

• Gender deemphasized in hiring/promotion decisions for any job

• More women in upper-level positions

• Occupational integration between the sexes

MasculinityHigh

Low

Long-Term/Short-Term Orientation: Organizational Characteristics and Selected HR Practices




• Future-oriented• Delayed

gratification• Long-term goals

• Japan• Hong Kong• China

• Stable organizations• Low employee

turnover• Strong company

culture

• Long-term rewards• Seniority as basis for pay• Managers rewarded for

multiyear accomplishments

• No expectation of frequent pay adjustments

• Slow promotions• Promotions from within• High employment security• High emphasis on saving

employees’ face• High emphasis on coaching

versus evaluation• High investment in training

and employee development

• Past- or present-oriented

• Immediate gratification

• Short-term goals

• United States

• Indonesia

• Changing organization• High employee

turnover• Weak company

culture

• Short-term rewards• Recent performance as a

basis for pay• Managers rewarded for

annual accomplishments• High expectation of

frequent pay adjustments

• Fast promotions• Internal and external hires• Low employment security• Low emphasis on saving

employees’ face• High emphasis on evaluation

versus coaching• Low investment in training

and employee development

Long-Term/Short-Term OrientationHigh

Low

Culture construct definitions and sample questionnaire items

Examples of the impact of the cultural and institutional context on HRM practices

HRM practices Impact of the cultural context Impact of the institutional context

Recruitment and selection

• In societies low on ‘in-group collectivism’ individual achievements represent important selection criteria.

• In societies high on ‘in-group collectivism’ the emphasis in the recruiting process is more on team-related skills than on individual competencies.

Education systemThe reputation of educational institutions such as public and private universities varies in different countries. This is reflected in the recruiting processes (i.e., HR marketing) and selection criteria of the firms in those countries.

Training and development

• In societies high on gender egalitarianism women have the same chances for vertical career advancement as men.

• In societies low on gender egalitarianism female managers are rare.

Education systemEducation systems differ between different countries (existence of a dual vocational training system, quality and reputation of higher education institutions). This has an effect on the training needs perceived and fulfilled by MNEs.

Compensation • In societies high on uncertainty avoidance employees tend to be rather risk averse and prefer fixed compensation packages or seniority-based pay.

• In societies low on uncertainty avoidance employees tend to be rather risk0taking and accept high income variability through performance based pay.

Legislation and industrial relationsLegislation such as the regulation of minimum wages or respective union agreements with respect to compensation have an impact on the firm’s compensation choices with respect to pay mix and pay level.

Task distribution • Societies high on collectivism tend to emphasize group work

• Societies high on individualism rather attribute individual responsibilities in the work system

Legislation and normsLegislations and respective norms support gender-based division of labor to a differing extent in different countries. While in some countries the percentage of female managers is relatively high, in other countries it is not common that women work at all

HRM PRACTICES AND CULTURE “FIT”

HRM “CHOICE” “BEST FIT” CULTURE/COMMENT

1) Pay-for-performance 1)

2) Decentralized Selection 2)

3) Flat Structure 3)

4) “Fixed” Pay 4)

5) Performance Evaluation Focus 5)

6) Merit Driven Selection 6)

7) High Employment Security 7)

8) Group Based Pay Plans 8)

9) Broad Career Paths 9)

10) Fast Promotions 10)

HRM PRACTICES AND CULTURE “FIT” Cont’d

HRM “CHOICE” “BEST FIT” CULTURE/COMMENT

11) Seniority Based Pay 11)

12) Line Management Driven Selection 12)

13) Objective Job Evaluation 13)

14) Multi-Year Pay Plans 14)

15) Performance Coaching Focus 15)

16) “Equity Goal” Pay Plans 16)

17) Tight Management Systems 17)

18) Few Work Rules 18)

19) Hierarchical Pay Structure 19)

20) Great Employee Involvement 20)

MANAGING HUMAN RESOURCES IN DIFFERENT CULTURESIN THE BUREAUCRATIC CULTURE IN THE TECHNICAL CULTURE IN THE MANAGERIAL CULTURE

Structuring the Organization

Establish rational and detailed organization chart to be communicated throughout the organization.

Develop, organize and obtain consensus or interrelationships among functions.

Keep organization minimal and adaptive to changes.

Designing Jobs Formalize and standardize job descriptions.Put emphasis on tasks to be performed.

Formalize relationships as accountabilities will be most often shared.

Be flexible and formalize accountabilities. Put emphasis on end results to be accomplished.

Delegating Decision Making Authority

Extremely limited delegation and freedom are required.

Decision making must be mostly controlled.

High degree of delegation and freedom is supported.

Controlling and Assessing Performance

Need for a heavy system of administrative checks and balances to measure how tasks are performed. Emphasis is on compliance with standards and norms.

Effective cost accounting system is required to measure efficiency.Emphasis is on qualitative criteria.

Sophisticated control system is required to measure end results. Emphasis is on quantitative criteria.

External Competitiveness Internal Equity

Usually minimal.

Must be absolute and normative.Must integrate seniority and diplomas.

Median

Limited.Must reflect balance of power among functions.

High

Fair.Must reflect job value and performance.

Incentive Components Benefits

None

Highly formalized and common throughout the organization

Limited.

Formalized and Personalized.

High

Informal and personalized.

Providing Job Security Must be absolute Fair Minimal

Career Development Strict and objective rules and procedures must be established for promotions and career developments.

Develop bridges between function to improve organizational integration.

Reward high performers through rapid promotions

IHRM “TRUTHS”/LESSONS(2010 CONSULTING STUDY)

Effectiveness of an HRM practice depends on how well it matches a culture’s value system, BUT…………………………….

Lesson #1: “National Culture” may be an elusive conceptLesson #2: Cultures change over time.Lesson #3: HQ sometimes blames international personnel problems on

cultural factors without careful study.Lesson #4: Hard data on the success or failure of different HRM practices as a

function of national culture are practically non-existent.Lesson #5: Different cultures have very different notions of right and wrong.Lesson #6: The business laws of other countries often force companies to change their HRM practices.Lesson #7: Global companies must find the Right Balance between tailor-made HRM policies to fit particular cultures and the need to integrate global consistency with local adaptability

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Culture and HRM