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 skills
USA 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 situations
4. 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 (contd)
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 differences
b. 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 style
a. 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 oriented
China, Japan, France more relationship orientated
e.g. 1. approaching a project communications
2. by passing the hierarchy (to get the job done!): good idea or insubordination?
Role of the manager
Japan, Spain, Italy knowledge expert
USA, 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 relationships
Canada, USA, UK Universalistic
Venezuela, Korea particularist
e.g. traffic ticket question
joint ventures
International negotiations

5. The question of convergence vs. divergence
a. Corporate Hardware is growing more similar. Behavior of people
maintain cultural uniqueness.
b. National cultural differences arent 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.
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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
ones 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
Individualism
High
Low
Power Distance: Organizational Characteristics and Selected HR Practices
Dominant Values Sample
Countries
Organizational
Features
Reward Practices Staffing/Appraisal
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 Distance
High
Low
Uncertainty Avoidance: Organizational Characteristics and Selected HR Practice
Dominant Values Sample
Countries
Organizational
Features
Reward Practices Staffing/Appraisal
Practices

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 Avoidance
High
Low
Masculinity/Femininity: Organizational Characteristics and Selected HR Practices
Dominant Values Sample
Countries
Organizational
Features
Reward Practices Staffing/Appraisal
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
Masculinity
High
Low
Long-Term/Short-Term Orientation: Organizational Characteristics and Selected HR Practices
Dominant Values Sample
Countries
Organizational
Features
Reward Practices Staffing/Appraisal
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 Orientation
High
Low
Culture construct definitions and sample questionnaire items
Cultural construct definitions Specific questionnaire item
Power distance:
The degree to which members of a collective expect power to be
distributed equally.
Followers are (should be) expected to obey their leaders without
question.
Uncertainty avoidance:
The extent to which a society, organization, or group relies on social
norms, rules and procedures to alleviate unpredictability of future
events.
Most people lead (should lead) highly structured lives with few
unexpected events.
Humane orientation:
The degree to which a collective encourages and rewards individuals for
being fair, altruistic, generous, caring and kind to others.
People are generally (should be generally) very tolerant of mistakes.
Collectivism I (institutional collectivism):
The degree to which organizational and societal institutional practices
encourage and reward collective distribution of resources and collective
action.
Leaders encourage (should encourage) group loyalty even if individual
goals suffer.
Collectivism II (in-group collectivism):
The degree to which individuals express pride, loyalty and cohesiveness
in their organizations and families.
Employees feel (should feel) great loyalty towards this organization.
Assertiveness:
The degree to which individuals are assertive, confrontational and
aggressive in their relationship with others.
People are (should be) generally dominant in their relationships with
each other.
Gender egalitarianism:
The degree to which a collective minimizes gender inequality.
Boys are encouraged (should be encouraged) more than girls to attain a
higher education.
Future orientation:
The extent to which individuals engage in future-oriented behaviors
such as delaying gratification, planning and investing in the future.
More people live (should live) for the present rather than the future.
Performance orientation:
The degree to which a collective encourages and rewards group
members for performance and improvement and excellence.
Students are encouraged (should be encouraged) to strive for
continuously improved performance.
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 system
The 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 system
Education 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 relations
Legislation such as the regulation of minimum wages
or respective union agreements with respect to
compensation have an impact on the firms
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 norms
Legislations 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 Contd
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 CULTURES
IN 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 cultures
value system, BUT.

Lesson #1: National Culture may be an elusive concept
Lesson #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