Human Resource Issues In Trans-cultural Organisation

BY-AAKASH KHANDELWAL (2012-IPG001)

ANSHIKA SINGH (2012-IPG017)HIMANSHU MEENA (2012-IPG043)

SHUBHANKIT NIGAM (2015-MBA011)

ABV- Indian Institute of Information Technology and Management, Gwalior

“Trans-culture” is the passive and active aspects of

dispersion and diffusion of culture. It goes beyond cultural

borders, without becoming homogenizing on the global

level, but still integrates diversity in the sense of

recognition of differentiation

Transnational HRM system

• FEATURES : Makes decisions from a global perspectiveIncludes managers from many countriesBased on ideas contributed by people representing a variety of cultures

• Decisions that are the outcome of a transnational HRM system balance uniformity with flexibility.

Issues in Trans-Cultural Organisations

Intercounty differences influencing

HR practices globally.

Political

Legal

Economic

Cultural

• All China Federation of Trade Union

• German Court Struck Down Ethics Code in 2005.

• FDI • Chant and Smile

Cultural Issues

Community’s set of shared assumptions about how the world works and what ideals are worth striving for.• Culture can greatly affect a country’s laws.• Culture influences what people value, so it affects people’s economic systems and efforts to

invest in education.• Culture often determines the effectiveness of various HRM practices.• Cultural characteristics influence the ways members of an organization behave toward one

another as well as their attitudes toward various HRM practices.• Cultural differences can affect how people communicate and how they coordinate their

activities.

• Organizations must prepare managers to recognize and handle cultural differences. Recruit managers with knowledge of other cultures Provide training For expatriate assignments, organizations may need to conduct an extensive selection

process to identify individuals who can adapt to new environments

Cultural Issues

Cultural differences in the workplace

• Waiting to be recognized• To share or not to share• Giving suggestions or keeping to yourself

Economic Issues

• The economic system provides many of the incentives or disincentives for developing the value of the labor force.

• In developed countries with great wealth, labor costs are relatively high. This impacts compensation and staffing practices.

• Income tax differences between countries make pay structures more complicated when they cross national boundaries.

Legal, Political, and Labor Relations Factors

• Employers going abroad must be familiar with the labor law systems in the countries they are entering

• Managing globally also requires monitoring political risks. Political risks are any governmental actions or politically motivated events that could adversely affect the long run profitability or value of the firm.

• The country’s laws often dictate the requirements for HRM practices: training, compensation, hiring, firing, and layoffs.

• An organization that expands internationally must gain expertise in the host country’s legal requirements and ways of dealing with its legal system.

• Organizations will hire one or more host- country nationals to help in the process

Understanding Employees in an International Workforce

Employees in an International Workforce

• Parent-country national – employee who was born and works in the country in which an organization’s headquarters is located.

• Host-country national – employee who is a citizen of the country (other than parent country) in which an organization operates a facility.

• Third-country national – employee who is a citizen of a country that is neither the parent country nor the host country of the employer.

When organizations operate overseas, they hire a combination of parent-country nationals, host-country nationals, or third-country nationals.

Expatriates – A Global Advantage

Source: Managing Expatriates on International Assignment, Gitte Brynningsen

Managing Expatriates : Selection

Expatriate managers need technical competence in the area of operations.In addition, many other skills are necessary to be successful in an overseas assignment:

• Ability to maintain a positive self-image and feeling of well-being• Ability to foster relationships with host-country nationals• Ability to perceive and evaluate the host country’s environment accurately

Managing Expatriates : Preparation

• Pre-assignment site visit• Job orientation• Country orientation• Culture orientation• Language training• Compensation / benefits / taxes counseling

Managing Expatriates – Reasons for Failures

Inability of Spouse

to Adjust

Inability to Cope with Overseas

Responsibilities

Lack of Cultural Skills

Why Expatriate Assignments Fail

Personality

Personal Intentions

Family Pressures

Realistic Previews

Careful Screening

Cultural and Language Training

Improved Benefits Packages

Improved OrientationHelping Expatriate

Assignments Succeed

Managing Expatriates – Reasons for Success

LITERATURE REVIEW

Paper :Diversity management in transcultural organizations Author: Bryan Christiansen ; Hakan Sezerel [2013]

• This paper demonstrates the importance of global organizations to develop and incorporate motivational Cultural Intelligence (CQ) programs into their Diversity Management (DM) policies within the context of Strategic Human Resource Management (SHRM).

• This paper also elucidates workforce diversity in a trans-cultural context via evidence from empirical research and current corporate practices.

• Effective DM practices which includes providing motivational CQ training, implementing DM ‘‘Best Practices,’’ and developing ‘‘Global People Skills’’ in rank-and-file employees can greatly assist in achieving sustainable corporate performance in the trans-cultural organizations of twenty-first century globalization

Paper : Managing Human Resources in International Organizations Author: Neha Tiwari [2013]

• Multinational Companies (MNC’S) use three types of strategies for transfer of HR practices across different nations;

Ethnocentric strategy uses same HR practices of parent company in host nations

Polycentric strategy employ local people as workforce and adaptsthe HR practices of host nation

Geocentric strategy only focuses on skills of the employee and adopts HR practices which are most effective and efficient irrespective of the nationality

• The international organizations can use culturally sensitive and adaptive HRM practices for creating competitive advantage in overseas operations. In attempt to explore new markets and opportunities multinational companies are adapting to HRM practices across different borders.

Paper: Cross-cultural conflict and affirmative action: Inter-and intra-ethnic dilemmasAuthor: Max U. Montesino [2012]

• Focuses on affirmative action policies, both as a mechanism for managing cross-cultural conflict and as creator of other types of conflict in multi-ethnic Malaysia.

• The article identifies several cross-cultural conflicts that the nation is facing after four decades of affirmative action implementation.

• Based on a field research report and a theoretical literature review, the article provides the reader with information about the complex Malaysian environment. It points to cross-cultural conflict potentials, as well as the influence of ethnic identity and conflict management models used in Malaysia’s workplace.

• The article finally provides the reader with implications for managing conflict in the Malaysian work context in the future.

Examples

Cultural Diversity• Although many companies seek to have cultural diversity, cultural diversity

itself can bring its own set of problems for management professionals ifthey are inadequately prepared to deal with such diversity.

• Cultural differences can hamper the sense of togetherness andbelonging that many companies seek to create when consciously developing a cultural identity for workers.

• The University of Colorado points out that one of the primary issues created by cultural diversity is the potential inability to effectively communicate with workers of various backgrounds.

Problems Encountered With Workplace Culture

Religion• Another cultural problem that can arise in the workplace is the differences in

religious worldview or belief. • This can be a problem in more than one way.

For instance, if certain individuals are required by their religious faith to dress in a certain manner or wear a particular piece of cultural garb that others might find offensive, this can create cultural division withinthe workplace.

• Differences in religious ideas can also cause division, especially if those ideas are discussed freely during times when workers are idle.

Problems Encountered With Workplace Culture

Conflict Resolution• Cultural differences can also create problems in terms of conflict resolution.

However, problems with conflict resolution are not necessarily a result of cultural differences.

• Cultural differences can create additional problems when attempting to resolve conflicts, though. The inability to communicate, for one, can make it difficult to effectively resolve a problem.

• Conflict resolution is something that companies can deal with effectively if they have established policies and procedures for when major disputes arise between workers in the context of workplace culture.

Cultural Awareness• Cultural awareness, or a lack thereof, is yet another problem that may be

encountered in workplace culture. ("us" versus "them“ )

Problems Encountered With Workplace Culture

Cultural Diversity in India faced by

• When Google founders Sergey Brin and Larry Page visited India a few years ago,they reportedly came across as college backpackers.

• They just seemed too informal, given their responsibilities for managing Google. Their experience illustrates the fact that countries differ widely in their cultures in other words, in the basic values their citizens adhere to, and in how these values manifest themselves in thenations arts, social programs, and ways of doing things.

• Cultural differences manifest themselves in differences in how people from different countries think, act, and expect others to act.

• For example, in a study of about 330 managers from Hong Kong, Mainland China, and the United States -

• The U.S. managers tended to be most concerned with getting the job done. • Chinese managers were most concerned with maintaining a harmonious environment. • Hong Kong managers fell between these extremes

The Hofstede Study

• Professor Geert Hofstede - Dutch social psychologist, former IBM employee, and Professor Emeritus of Organizational Anthropology and International Management at Maastricht University in the Netherlands

• The study illustrates other international cultural differences.

• For example, Power distance represents the extent to which the less powerful members of institutions accept and expect an unequal distribution of power.

Individualism

Masculinity

Long Term Orientation

Uncertainty Avoidance

Power Distance

The Hofstede Study• He concluded that acceptance of such inequality

was higher in some countries (such as Mexico) than in others (such as Sweden).

• In turn, such differences manifest themselves in different behaviors. Such cultural differences influence human resource policies and practices.

• For example, Americans heavier emphasis on individuality may help to explain why European managers have more constraints, such as in dismissing workers.

• As another example, in countries with a history of autocratic rule, employees often had to divulge information about their coworkers. Here, whistleblower rules, popular in America, are frowned upon.

Mergers Don’t Always Lead to Culture Clashes ?

In 2005 when banking giant Bank of America (BOA) announced its $35 billion acquisition of credit card giant MBNA, there many thought that in a few years this merger would join the heap of those done in by cultural differences.

MBNA’s culture • Free-wheeling

Entrepreneurial spirit that was also quite secretive.MBNA employees also were accustomed to the high life. Their corporate headquarters could be described as lavish.Employees throughout the company enjoyed high salaries and generous perks

Bank of America`s Culture

• Low-cost No-nonsense operationSize and smarts were more important than speedIn short, the cultures in the two companies were very,very different

Mergers Don’t Always Lead to Culture Clashes ?

• To try to manage the cultural transition, executives of both companies began by comparing thousands of practices covering everything from hiring to call-center operations.

• In many cases, BOA chose to keep MBNA’s cultural practices in place. In other cases, BOA did impose its will on MBNA.

• For example, because MBNA’s pay rates were well above market, many MBNA managers were forced to swallow a steep pay cut. Some MBNA employees left, butmost remained

• In other cases, the cultures co-adapted. • For example, MBNA’s dress code was much more formal than BOA’s business-casual

approach. In the end, a hybrid code was adopted, where business suits were expected in the credit card division’s corporate offices and in front of clients, but business causal was the norm otherwise

Was it a Successful Merger ?

• YES. The merger is working very well.• BOA made another, more recent and much larger acquisition: Merrill Lynch.

After a rough start, most evidence suggests this mega-merger saved Merrill from bankruptcy and appears to be working well, whichmight suggest that BOA has found the secret to successful mega-mergers.

Is it realistic for a company to try to institute a standardized human resource management system in its facilities around the world ?

Develop theinternational HRsystem, such as

byforming global

networks

Take steps to ensurethe system is

acceptable to thosewho must implement

it, such as by investigatingpressures to differentiate

practices

Implement theinternational HR

system and practices,

such as by allocatingadequate resources

• A study suggests that the answer is yes.• In this study, the researchers interviewed

human resource personnel from six global companies Agilent, Dow, IBM, Motorola, Procter & Gamble, and Shell Oil Co. as well as 123 international human resources consultants.

• The study's overall conclusion was that employers who successfully implement global HR systems do so by applying several best practices. The basic idea is to develop systems that are acceptable to employees in units around the world, and ones that the employers can implement more effectively.

People must be judged not on the basis on the color of their skin, or the beliefs in their faith but the merit of their ability and content

of their character. Dr. Bemurdez Svankvist

THANKS!Any questions?