33
Make Management Practice Fit National Cultures and the Global Culture
MIRIAM EREZ
This chapter focuses on the interface between cultures that takes place in the global work context. This change in focus is driven by the changes in the work environment, as more and more people around the world work for multinational and global organizations that cross geographical zones and cultural borders.
Organizational behavior principles should take into consideration the context in which they are implemented and specifically the work context that is shifting from local to global. This global context is characterized by economic interdependence across countries, a free flow of capital, and goods, knowledge and labor moving across national and geographical borders (Erez and Shokef, 2008; Govindarajan and Gupta, 2001). It is not very difficult to understand why Thomas Friedman used the metaphor of the “World is Flat” as the title of his recent book, in which he reviewed the factors that are flattening the global business environment, including historical, technological, and communication issues (Friedman, 2005).
Yet, is the world really flat and are managers developing identical or nearly identical principles for managing organizations and people around the world? The answer, as reported both by practitioners and researchers, is “no.” Cross-cultural differences in values, norms, and accepted modes of behaviors still exist and they differ across cultures.
The next question is, therefore, how do managers cope with the paradox of operating in the globally flat business world and at the same time, also manage culturally diverse employees working in culturally diverse subsidiaries and business units? The aim of this chapter is to answer this question by providing some principles to serve as guidelines for managers in navigating between the macro level of the global, flat culture and the uneven level of diverse national cultures lying underneath.
For many years, the dominant theories of organizational behavior were mostly Western/ American, generated and validated on Western samples of managers and employees, working in Western organizations.
In the late 1980s, the fierce competition between Japan and the USA called attention to cultural issues. During this period, articles in business papers reflected fear of Japan, attempting to understand how Japan was growing, why it was dangerous, and what could be done about the supposed threat to Western hegemony (Smith, 1990). Over the years, an increasing number of American managers found themselves negotiating with the Japanese, marketing their products in Japan, offering services to foreign customers, and managing operations outside their home countries. As a result, the popularity of guidebooks on how to do business with the Japanese and other foreign countries grew. The demand for such books testified to the fact that managers recognized their lack of knowledge and competence in managing across cultural borders.
By the late 1990s, the competition between companies situated in different cultures turned from conflict to cooperation in the form of international mergers and acquisitions, joint ventures, and business alliances. A wedding ceremony becomes a common metaphor for international mergers, with a question mark overhanging these unions: will they last, or unravel?
Cooperation rather than competition requires a better understanding of one’s international partner. It is not enough to merely know of one’s collaborator but rather the need for understanding cross-cultural differences and similarities is becoming increasingly crucial for effective international partnerships and their managers.
FIGURE 33.1 A multi-level model of culture (based on Erez and Gati, 2004)
However, recognizing and accepting cultural diversity is necessary, but not sufficient for operating across cultural borders. What is needed is a shared meaning system that enables players in the global work context to communicate and understand each other, so there is a basis for collaboration and coordination (Gelfand, Erez, and Aycan, 2007). This shared meaning system reflects the emergence of a global work culture. The global work culture has emerged as the most macro level of culture which subsumes the national, organizational, group, and individual levels of cultural values nested within each other, portraying a multi-level model of culture (Erez and Gati, 2004), as shown in Model 1, Figure 33.1.
Social scientists drew attention to the dissemination of three socio-cultural values around the world: rationalization, professionalization and actorhood (Drori, Jang, and Meyer, 2006). Rationalization pertains to systemization, standardization, and routinization of actions. Rationalization facilitates comparability across cultures, as evident by the global rating systems of economic, educational, and government institutions. Comparability enhances global competition across all institutional domains. Organizations compete for their relative ranking: business companies, as well as national educational systems, universities, business schools, legal systems, etc. make every effort to be ranked at the top of their respective world list. Furthermore, rationalization enforces universal criteria for professionalism, pertaining to universal knowledge, and expertise that are necessary for becoming a certified professional and a member of local professional organizations, recognized by international professional organizations. Finally, globalization also diffuses the value of actorhood, which champions the proactive individual, with the capacity and motivation for taking a proactive stand and control over him/herself. This value has been globally disseminated by educating for democracy around the world. Such global values provide the infrastructure for the development of a global organizational culture, common to all organizations operating in the global work context.
Values are instrumental for adaptation to and/or changing one’s environment. The global work environment is known to be geographically dispersed and culturally diverse, highly competitive, dynamic, and uncertain. Paradoxically, while this global environment emerges beyond national cultures it also consists of diverse cultures representing the multiple subsidiaries and business units of the global organization. Unlike managers operating in local organizations, nested within one culture, managers of global organizations operate in a complex environment, where they need to safeguard the global integration of the companies’ operations; on the other hand, alongside this global integration, they must maintain local responsiveness to their diverse subsidiaries and business units, nested within diverse local cultures. The global context determines the principles that should guide managers operating in the global work context. Below is a set of subprinciples for the global manager, as summarized in Figure 33.2.
As evident, the core principle relates to the interplay between global integration and local responsiveness (Kostova and Roth, 2002).
FIGURE 33.2 The four principles of global management
The first subprinciple: Globally implement task-oriented managerial practices and locally implement interpersonal-oriented practices
Research has demonstrated that managers should differentiate between two groups of values and practices: those pertaining to the execution of tasks and operations, and those pertaining to interpersonal relationships with employees, peers, superiors, and customers (Berson, Erez, and Adler, 2004; Erez and Shokef, 2008).
Task-oriented practices enable managers to cope with the highly competitive global work environment, where the competition is on market share, customers, new products, and prices. To cope with such demands, managers of multinational and global organizations should uniformly share the values of competitive performance orientation and customer orientation. They should agree on the importance of their task-related managerial roles of planning and coordination, and initiating changes and innovation, wherever on the globe they manage business units.
On the other hand, interpersonal practices pertain to the relationship between managers and subordinates, peers, superiors, and customers. These relationships should be tuned to the diverse local cultural values and norms. Therefore, interpersonal practices should be loosely implemented, respecting the diverse local cultural values. To maintain the fit between interpersonal-related management practices and local cultures, managers need to identify the variations in cultural values.
The second subprinciple: Identify the cultural characteristics of the countries with which you conduct business
Managers and employees in different cultures bring to their workplace their cultures’ behavior codes and norms. These norms and cultural values shape the organizational processes and managerial practices. Therefore, different managerial practices, in particular the relational ones, are implemented in different parts of the world within the same global organization. For example, in individualistic cultures, such as that of the USA, the selection procedure of new employees is based on his or her personal records. In collectivistic cultures, such as that of Mexico, recommendations by family members, who already work for the company, serve as an important criterion for selecting new employees. In the USA, promotion to higher managerial levels is based on personal achievements, as they appear in an employee’s performance appraisal records. However, in collectivistic and hierarchical cultures such as Japan, seniority plays a major role in promotion decisions. Payment based on results constitutes a greater part of Americans’ compensation packages compared to those in Europe. In European countries, flat salaries are more common than in the USA. The compensation package of American managers includes a large portion of stock options, whereas this is less common for local European and Far Eastern managers. Explicit feedback on performance is highly valued in Western countries, whereas in the Far East implicit feedback is the norm, and explicit feedback is not acceptable. Explicit feedback, if negative, violates the important value of face saving; if positive, it violates the important value of collectivism and the sense of being part of the group rather than being unique and different than others.
There are so many different codes of behavior and variations of management practices that relate to employees and interpersonal relationships that they cannot all be described in the “how to” books. Managers, therefore, should recognize the key cultural values that determine which practices will be positively evaluated by employees, enhancing their sense of self-worth and well-being, and consequently motivating them to stretch their goals (see Chapter 9, this volume) and improve their performance (Erez and Earley, 1993). Managerial approaches that are at odds with prevailing cultural values are unlikely to be effective. Since cultures differ in the values they endorse, people from these cultures often interpret the same managerial practices quite differently than a manager coming in from the “outside” would expect. Identifying the core cultural values will enable managers to fit their management practices to cultural context.
Culture can be defined as a shared meaning (value) system (Schwartz, 1992; Shweder and LeVine, 1984). In metaphorical terms, culture is the software of the mind (Hofstede, 1991). Culture shapes the core values and norms of its members. These values are transmitted from one generation to another through social learning processes of modeling and observation, as well as through the effects of individual actions (Bandura, 1986). Homogeneous societies form tight cultures, and their norms and values, are closely shared by most members of the society. Societies consisting of subgroups with dissimilar norms and values form loose cultures (Triandis, 1989; Gelfand, Nishii, and Raver, 2006).
Cultures differ in their content components. The two values that depict most of the variance among cultures are: collectivism versus individualism, and power distance.
Individualism-collectivism signifies the level of inter-relatedness among members of one culture (Hofstede, 1991, 2001; Brewer and Chen, 2007). Collectivism means preferring to work in teams, subordinating personal goals to group goals, being concerned about the group integrity, and having an intense emotional attachment to the in-group. In contrast, individualism emphasizes personal autonomy and independence, adherence to personal goals, and less concern and emotional attachment to the in-groups (Triandis, Bontempo, Vilareal, Masaaki, and Lucca, 1988). The USA, Australia, and England are highly individualistic cultures, whereas South America, Pakistan, Korea, Japan, and Taiwan are highly collectivistic.
Power distance reflects the level of equality in the society. High power distance means low equality in the society and a clear power structure in organizations. Employees in such cultures know their place in the organizational hierarchy, and there are clear status symbols that differentiate between employees of different organizational levels. On the other hand, in low power distance cultures, employees feel free to disagree with their superiors and to express their ideas openly. Malaysia, the Philippines, Arab countries, India and some of the South American countries are known for their high level of power distance. In contrast, Israel, Scandinavia, and New Zealand are known for their low levels of power distance. Recently, a group of more than 80 researchers, headed by Robert House from the Wharton School, joined together to conduct the Globe Study in 60 different countries. (House, Hanges, Javidan, Dorfman, and Gupta, 2004). This study assessed differences and similarities in cultural and organizational values, as well as in preferences for leadership characteristics. Table 33.1 depicts the cultural values of collectivism and power distance in a sample of eight countries that includes the USA, England, West Germany, East Germany, Russia, Finland, Japan, and Israel.
The results demonstrate that in this sample, East Germany and Russia are the countries with the highest level of power distance, and Israel is the most egalitarian country. Similarly, the USA is the most individualistic culture, and Japan and Russia have the most collectivistic cultures.
Three additional values that help differentiate cultures are: uncertainty avoidance, masculinity/femininity, and future time orientation.
Uncertainty avoidance reflects the extent to which members of the society feel threatened by uncertain or unknown situations. High levels of uncertainty lead to anxiety. Organizations that seek to avoid uncertainty have formal rules and regulations, clear task definitions, and low tolerance for deviation from their rules and norms. In opposition, organizations with a high tolerance for uncertainty are less formal, more flexible, and allow for higher levels of heterogeneity in norms and behavior. Cultures with high levels of uncertainty avoidance are: Switzerland, Sweden, and Singapore; cultures with low levels of uncertainty avoidance are Greece, Venezuela, and Russia.
Masculine versus feminine cultures - the former pertains to societies in which social gender roles are clearly defined (i.e. men are supposed to be assertive, tough, and focused on material success, whereas women are supposed to be more modest, tender, and concerned with the quality of life). Femininity pertains to societies in which social gender roles overlap (i.e. both men and women are concerned with the quality of life; Hofstede, 1991). Kuwait and South Korea are classified as the most masculine country. The most feminine cultures are Hungary, Denmark and Sweden.
Table 33.1 Differences in cultural values across selected countries ( based on House et al., 2004)
Future time orientation reflects the extent to which the culture focuses on long-term planning and outcomes, and on the delay of gratification. The most future oriented countries are Singapore, Malaysia, Switzerland and the Netherlands.
Employees internalize the respective cultural values and use them to evaluate the meaning of different managerial and motivational approaches as either opportunities or threats. For example, differential reward systems would be positively viewed by employees in individualistic cultures, and team-based incentives would be appreciated by employees in collectivistic cultures.
People in different cultures internalize the prevalent cultural values of their society. Therefore, they differ in the meaning they ascribe to a particular managerial approach. To further understand what motivates employees in other cultures, and how they interpret the meaning of various managerial practices, managers should first develop self-awareness and understanding of their own motives and values (see Chapter 8).
The third subprinciple: Understand yourself and the cultural values you hold
The self is shaped by the choices one makes and by the shared understanding within a particular culture of what it means to be human (Cushman, 1990; Markus and Kitayama, 1991). People develop self-knowledge through introspection (Chapter 8), direct experience and evaluations provided by significant others.
People strive to have positive self-perceptions and to experience self-worth and well-being. They do their utmost to fulfill the motives of enhancement, efficacy, and consistency. Self-enhancement is the experience of a positive cognitive and affective state of self-worth and well-being; self-efficacy (Chapter 10) is the conviction that one is competent and efficacious in relation to specific tasks; self-consistency is the desire to sense and experience coherence and continuity.
People monitor and evaluate the extent to which their behavior leads to the fulfillment of the three motives and the degree to which the work setting offers opportunities for such behaviors (Bandura, 1986; Markus and Wurf, 1987).
The self and self-motives are shaped by one’s choices and one’s cultural values and they set the standards and criteria for self-evaluation. These criteria vary across individuals and cultures and, consequently, result in different self-conceptions. Individualistic cultures support the independent self, who attends to personal criteria and standards for evaluating the meaning of certain management practices as enhancing or inhibiting opportunities for self-worth and well-being (Triandis, 1989; Markus and Kitayama, 1991). On the other hand, collectivistic cultures support the interdependent self, who internalizes the criteria and standards advocated by one’s reference groups. One common measure of the independent and interdependent selves is the Twenty Statement Test, which asks a person to write 20 statements starting with the words “I am . . .” People with a strong independent self use individual characteristics, such as: “I am smart” or “I am tall,” more frequently than those who rank high on the interdependent self scale. The latter use attributes that reflect their relationships with others, such as: “I am a father,” “I am a member of the ABC organization,” etc.
Managerial and motivational practices that satisfy self-motives of the independent self would be different than those satisfying the interdependent self. For example, self-enhancement driven by the independent self motivates individuals toward personal accomplishment. The independent self evaluates positively managerial practices that provide opportunities for individual success. People driven by the interdependent self, on the other hand, experience enhancement when they contribute to the group’s success because their self definition is in terms of their relationship to others. This does not mean that independent people cannot work in groups but it would be out of self-interest rather than duty. Similarly, self-efficacy is salient for people with a strong independent self, whereas collective efficacy, or the perceptions of the group as competent, is important for the interdependent self. Finally, self-consistency of the independent self is interpreted in reference to the individual’s personal history. Conversely, the interdependent self evaluates the level of collective consistency in line with the collective history of the group to which one belongs.
The self constitutes the link between the macro level of culture and managerial practices, and the micro level of employee behavior. Employees use their cultural values as criteria for evaluating the potential contribution of various management practices to the fulfillment of their self-derived motives (Erez and Earley, 1993).
Managers who are aware of their own cultural values and motives are more amenable to developing an understanding of other people’s values and motives. Once they identify the cultural characteristics of people from other cultures, they can more easily follow how employees in foreign cultures would react to various managerial approaches.
However, employees working in the global work context belong not only to their local national culture, but also to their global organizational culture. The social identity theory (Tajfel, 1981) proposes that individuals develop a sense of belongingness to the group that is meaningful to them. Extrapolating, we can say that individuals working in the global work context develop a dual identity - a local identity, which reflects their sense of belongingness to their local cultures, and a global identity, reflecting their sense of belongingness to their global work culture. People may hold multiple identities and they apply the relevant identity to the context. When they communicate with others in the global work context, their global identity and sense of belongingness to the global organization become dominant, regardless of their location and national culture. On the other hand, when they relate to others in their local organizational unit, their local identity becomes dominant and they expect to be treated according to the norms of their local culture. Thus, successful managers working in the global work context should be able to recognize the dominant facet of the other person’s self identity, whether it is the global or the local self-identity and relate to the dominant facet accordingly.
The fourth subprinciple: Implement employee-related management practices that fit in with the cultural values
Managerial practices represent certain ideological or philosophical frameworks. For example, individual-based differential reward systems and flat salary or team-based reward systems reflect different values. The former represents cultural values of individualism and the importance of personal achievement, whereas flat salary or team-based rewards represent cultural values of collectivism, where productivity is often measured on the team level and compensation is based on team performance. Top-down communication systems represent high power distance cultures, whereas a two-way communication system represents low power distance cultures.
Formal rules and regulations and extensive written documentation represent high uncertainty avoidance, whereas flexibility, risk taking, and low levels of formality represent low uncertainty avoidance. Long-term investment in R&D represents future time orientation, whereas short-term goals and balance sheets reported every quarter represent a short-term orientation. Finally, the high percentage of women in socially oriented professions rather than in engineering and sciences, and their low representation at the top managerial levels, represent masculine rather than feminine cultures.
Very often, consultants and practitioners serve as agents of certain managerial techniques. They advise management how to implement these techniques, following success achieved in other places, while overlooking the cultural and ideological meaning of such techniques. For example, the CEO of one steel company in Israel, who came to the company after many years of military service, was known for his authoritarian leadership style. He visited the steel industry in Japan and was very impressed with the participative management approach and the quality control circles he saw. Upon his return to Israel he called in all his senior managers, told them about his visit, and instructed them that “from now on, you are going to implement participative management in the organization.” Obviously, his style of dictating to his subordinates was not a good model for participative management.
The three principles - understanding the cultural values, knowing your motives and values, and understanding the values reflected by various managerial approaches - should serve managers when selecting and implementing managerial practices. These principles enable the fit between people-oriented management practices and local cultural values.
Management practices represent the way things are done in the organization: The way managers delegate authority, allocate rewards, make decisions, and design jobs.
Figure 33.3 depicts the differences in management practices between collectivistic versus individualistic cultures, in combination with high versus low power distance.
The following section elaborates on the implementation of goals and feedback, reward allocation, participation in decision making and empowerment, and quality improvement systems in different cultures.
Goals and feedback
One major responsibility of managers is to set goals and motivate their employees to achieving them. There are different ways to set goals - either by assigning them or by involving employees in making the decision about them - and different ways to realize them. In some cases, employees can be empowered to set their own work goals. Employees in Western cultures are more intrinsically motivated when they are involved in setting the goals rather than when goals are externally set for them. Empowerment is considered to be a strong motivational approach in Western cultures. This is not the case in India and the Far East. In these high power distance cultures, employees expect their boss to set goals for them and they are highly motivated to accomplish externally set goals. In fact, managers who empower their employees to set goals are considered to be weak and they often lose the respect of their subordinates.
FIGURE 33.3 Fit interpersonal management practices with local cultures
Employees in Asian countries, where there is high collectivism and high power distance, are often more strongly motivated to avoid errors and failures than they are motivated to win and be the first one. This may be because of the fear of authority should they fail, and because of fear of failing the group to which a person belongs, as his/her personal failure is attributed to the entire group. Therefore, employees in the Far East are likely to set moderate rather than difficult goals, to reduce the risk of failure.
The motivations to avoid failure and to save face have implications for what is deemed the acceptable form of feedback. Feedback is considered to be a strong motivational factor in Western cultures, in particular when it is provided at the individual level. Yet, in countries such as Japan, feedback takes a different form. Explicit individual feedback threatens the individual’s status in the team. It violates the important value of face saving, causing a person to feel shame. For this reason, implicit and impersonal feedback, oriented to the collective rather than to the individual, is considered to be the norm. Consequently, Western managers operating in the Far East should recognize such cultural differences and adjust their feedback to their employees to the local culture.
Reward allocation
A key issue is how to allocate rewards in order to enhance motivation. If you are an American manager, you most likely implement the principle of equity. Indeed, in most individualistic cultures, the rule of individual merit serves as the criterion for reward allocation. Employees receive rewards based on their individual contribution to goal attainment. Implementing rewards for performance requires the setting of criteria and standards for performance and an appraisal system for evaluating employees according to these criteria.
Payment-by-results dominates individualistic cultures such as the USA, England, and Australia. In collectivistic cultures payment-by-results may violate group harmony. Furthermore, it threatens the organizational hierarchy, as the most effective employee may not necessarily be the most senior and respected one. In that case, seniority plays an important role in the reward structure. Furthermore, when the work design is for teams, as is often the case, the reward differential is team based.
Managers in different cultures value different work components when evaluating their employees. Western managers evaluate employees mostly on the basis of performance effectiveness. Yet, Chinese managers put less emphasis on work performance as a criterion for rewards, compared with American managers. Rather, they consider the quality of interpersonal relationships to be more important for work than Americans (Zhou and Martocchio, 2001).
Rewarding for performance is less acceptable in collectivistic cultures and mainly when it is public. Chinese managers use the rule of equality more often than Americans mainly with respect to in-group members. However, for out-group allocation, equality is used when the allocation is public, to maintain face saving, while in-group favoritism often takes place when allocation is done privately. Similarly, Koreans, as opposed to Americans, perceive allocators who use equality rather than the merit rule more favorably. Swedish people use equality more frequently than Americans. The Swedish educational system discourages competition in favor of cooperation and teamwork.
In addition, the Swedish view the idea of need more positively than do Americans. The need rule is most highly preferred in India and in other collectivistic cultures, particularly when needs become visible (Murphy-Berman, Berman, Singh, Pachauri, and Kumar, 1984).
The above findings lead to the conclusion that the application of an inappropriate distribution rule may engender feelings of injustice, mitigating employees’ motivation. Therefore, knowledge about cross-cultural differences with regard to preferences of allocation rules is vital for managers who operate outside their home country.
Teamwork and multicultural, virtual teams
Teams have different meanings in individualistic versus collectivistic cultures. Metaphors of teams in Puerto Rico and the Philippines, two collectivistic countries, are often in relational terms such as family and community. On the other hand, Americans use metaphors involving sport teams, reflecting an instrumental approach to teams as the means of accomplishing certain outcomes (Gibson and Zellmer-Bruhn, 2001).
Team work and tasks of high interdependence among team members prevail in collectivistic cultures. Yet, individualists prefer to be personally responsible for their job and to get personal recognition for their performance outcomes. Individualists are intrinsically motivated when empowered by their managers and when given the autonomy to craft their jobs to fit their personal resources. In contrast, collectivists are empowered when participating in the team decision-making process and when their team voice is being heard. Work autonomy, whether at the individual or the team level, is not acceptable in high power distance cultures. Yet, in low power distance cultures, such as that of Israel, employees react negatively to goals that are assigned to them, as compared to employees who were allowed to participate in goal setting (Erez and Earley, 1987). Social loafing as observed by group performance loss is more prevalent among individualists who do not share responsibility and prefer to take a free ride, mainly when their individual contribution to the team cannot be identified. In contrast, social loafing was not observed in group-oriented cultures, such as China and Israel, providing the team members had a specific goal to acheive (Earley, 1989; Erez and Somech, 1996). In individualistic cultures, social loafing disappears when team members’ contribution can be identified and when they are held personally accountable and responsible for the group outcomes (Weldon and Gargano, 1988).
Recent developments in communication technology have supported a relatively new form of virtual-multicultural teams (see Chapters 15 and 32). Such teams collaborate on joint projects while their members are located in different geographical zones and cultural environments.
Managing multicultural, virtual teams requires first and foremost the creation of a shared understanding among the team members. This is done by cultivating the global work values to be shared by all team members, and by creating a team identity that strengthens the sense of belongingness to and identification with the team.
Personal dilemma in an international acquisition
David A. is the CEO of Diamob, a young Israeli start-up in the medical instrument industry that develops high-resolution ultrasound diagnostics equipment on mobile computers. Diamob has just been acquired by a large US-based multinational company - Medica. Right after the acquisition there were rumors that Medica was going to transfer the new technology to other existing departments, closing Diamob Israel. The small group of 40 engineers and scientists was in a state of high ambiguity and each one of them had to decide what to do next. There were two options: to leave the company and search for another job, or to stay as a group and negotiate with Medica to let Diamob grow to a self-sustained profit unit.
David A. - Diamob CEO - knew that he could easily get a job in another company. Yet, if he quit, it would probably lead to the end of Diamob. David was a personal friend of most of the other engineers in Diamob. Many of them served together in the Israeli Defence Force and have remained friends since then. David was proud to see that in the first month after the acquisition the group stayed together and no one left in search of a new job even though their job security was at risk.
David gathered together the unit managers to discuss their future strategy. After long hours of discussions they developed a business plan that justified their continuous growth as a sustainable profit unit. David had to meet with Jeff S. - CEO Medica - and present to him the new Diamob business plan.
The meeting took place in an airport hotel on the East Coast. David’s voice represented the voice of all his 40 engineers and he was very determined to succeed in getting Jeff to support the new business plan. Jeff listened to David and said: “listen, David, you are a very small group. We acquired Diamob because of your technology innovation and your initiative to develop the new product. We plan to recruit a small number of key experts from Diamob to Medica by offering them a high salary and then close Diamob, letting all other members go. You are the first one we want to hire. Your salary will be equal to the top executives in Medica, with a nice package of bonuses and stock options. You and the few people we hire will have to move to the US. Israel has a very small market and there is no reason for us to keep the site there.
David reflected upon what he just heard. From a personal point of view he had an opportunity to grow, to open up his horizon and scope and to get promoted in a large MNC. His salary and compensation package was going to be much higher than the present one. He would be able to support his family easily without any financial worries. On the other hand, it would mean that he would be separated from his colleagues, they would be losing their jobs and their dream to develop the small start-up company into a large profit organization would not materialize.
What is David’s reply going to be? To answer this question, please take into consideration the cultural values of Israel, as summarized in Table 33.1.
What do you think David’s reply would be if he were an American, working in the US and getting an offer from a European MNC?
Take into consideration the tension between global integration and local responsiveness and elaborate on how this tension is going to influence David’s decision.
Cultural differences between employees and their manager
Red Algae is a Japanese company located in Eilat, a tourist town on the Red Sea, the south point of Israel. The location, the water and the temperature are most suitable for growing Red Algae, which is considered to be a very healthy food supplement consisting of high percentages of beta-carotene.
The company grows the Red Algae in Eilat, produces it as a food supplement pill in Japan, and sells it in the global market. The patent for Red Algae was written by life science researchers at the Weizmann Science Institute in Israel. The climate and type of soil in Eilat are considered by scientists to be most suitable for this purpose. The founder of the company and the top management team are all Japanese, but the chief scientist and the employees are all Israelis. The profit gain on the raw material grown in Israel is not that high. Most of the profit is being made on the food supplement pills. The Israeli inventor who has the technological patent is interested in making a joint venture with the Japanese company and to produce the pill in Israel. However, the Japanese headquarters strongly objects to it. In their view, Israeli employees do not strictly follow the rules, they like to improvise and they do not pay enough attention to detail. They are good in idea generation and innovation, but not in the careful, error-free implementation.
Mr. Takashi was appointed the Israel site manager. He oversees the process of growing the Red Algae in a special outdoor farm. The process is highly automatic and for this reason, the number of employees is relatively small, about 35, including Dan, the chief scientist. Mr. Takashi learned the production process with the help of Dan. He carefully read all the existing literature on growing Red Algae, including the patent of the Weizmann Institute. He, then, developed a set of procedures that should be carefully followed by the employees, to assure the high quality of the Red Algae.
Mr. Takashi wanted to implement Japanese management procedures. He expected all employees to appear on time, early in the day, to get together for the morning meeting to get updated about special problems and to align expectations. However, he has difficulties controlling the Israeli employees. First, they do not arrive at the same time in the morning. For this reason, he cannot properly hold the morning meeting. Second, they hardly follow the rules that he set for them. Some of them take a break during working hours to complete some family duties they have outside the workplace. Then, they stay late on their own, to compensate for the time taken, rather than working in close coordination with all other employees. Furthermore, employees are careless with respect to documenting their activities, as he requested. He often worries that the lack of standardization and documentation will result in a big disaster - the Red Algae will not grow to the quality and size needed. It often gets to critical points when he does not know how to cope with unexpected situations. These are exactly the moments when the Israeli employees become very alert, full of energy and resourcefulness, and they manage to improvise, rather than going by the book to resolve the problem.
Mr. Takashi keeps saying to his Israeli employees: “Please, do what you are required to do, please follow the rules very accurately. If you do this you will not have to improvise. I gave you specific guidelines. Simply follow them. Why argue with me all the time that there is a better way to do things. If I give you instructions, you need to follow them without any arguments.”
Mr. Takashi feels that he does not properly manage the site and does not want to fail. Therefore, he asks his board to send him back to Japan. The Red Algae site in Israel now operates without the CEO.
Answer the following questions:1. Should the company replace the Japanese manager with a local manager?
2. What are the main differences between Japanese and Israeli cultures?
3. Do you see these cultural differences as an advantage or a disadvantage to the company?
4. How can managers turn a potential disadvantage of cultural diversity into an advantage?
5. Think of culturally diverse teams. How can you bring people from diverse cultural backgrounds to work, communicate, and collaborate with each other effectively?
CONCLUSION
Global managers in the third millennium operate across cultural borders and geographical zones. They need to cope with the complexity of the global work environment, which consists of both the macro level of the global culture and the level of diverse national cultures nested underneath it. The core principle is, therefore, one of maintaining a global integration of one unified organization, but in parallel, understanding the cultural values and norms of the diverse workforce and relating to employees in each cultural setting according to their codes of behavior.
Global integration should take place with respect to the task-oriented managerial roles and values. These values should be homogeneously adopted across all subsidiaries and business units to allow communication and coordination of all organizational activities towards organizational goal accomplishment.
Nonetheless, local responsiveness should be implemented, mainly with respect to interpersonal relationships. Sensitivity to others begins with self-knowledge. Managers who learn about their own motives and cultural values recognize how such values shape the motives for coming to work, the desire to achieve goals, identification with the organization, and adaptation to the changing requirements. Managers who are aware of the meaning of their own self-worth and well-being can be sensitive to others’ values and they are aware of the meaning of respecting these values for a person’s sense of self-worth and well-being. Recognizing the diverse cultural environment should guide managers in selecting and implementing management practices that best fit the cultural values of employees in the business units they manage. While there are potentially many different practices that managers can implement, cultural values, once acknowledged, should serve as criteria for selecting and implementing the most effective management practices.
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The MCT project - bonus allocation
You are the global HR manager in a big multinational company that provides programming services. The company received a big project from a new global Chinese customer. The estimated time for accomplishing the project was one year.
A multicultural team (MCT) from a few subsidiaries was nominated to complete the mission. The virtual MCT consisted of five employees who worked on this project, which was estimated to bring revenues of about $2,000,000. However, the customer needed to have the project completed within nine months due to some changes in the market.
You talked with the team and promised them a bonus if they meet the new deadline. The team members stayed long hours and put in a lot of effort. As a result of the extra time and effort, the team was able to make it on time.
You have $100,000 to allocate as a bonus to the five group members. You have the following information about the five employees:Person A: American nationality. He was the team leader. Put in a lot of effort and extra time to accomplish the project. He is very young (26 years old), single, individualist, and a promising manager.
Person B: German nationality. Did his best to get the project done within nine months and stayed extra hours at work, despite the fact that he is a single parent with two young children.
Person C: Mexican nationality. She is an excellent team member, very helpful to the other members. She badly needs more money to cover extra medical expenses for her parents.
Person D: Chinese nationality. He is a very influential person in his community. His social network helped the company to get this project. He spends a great deal of time socializing with employees of the customer Chinese company during the project.
Person E: Indian nationality. She is a specialist. She has the specialized knowledge necessary to do the work. Her contribution was crucial to the project and accounted for about 30% of the total time saving.
Distribute the $100,000 among the five team members. Indicate the percentage allocated to each member, the amount of money allocated to each member, and why. Specify the reasons for your decision.
Getting to know the host culture
Practice target
Develop an awareness of cultural differences and identify the underlying cultural values of observed behaviors.
Instructions
1. Four volunteers leave the classroom for a few minutes.
2. The remaining students receive the following instructions: When your friends return to class, you will act as employees from a foreign country. When you answer their questions, you must follow these rules:a. You refer to “We” and not to “I.” You do not respond to very personal questions concerning your personal opinion, feelings, etc. You look at your classmates, trying to get their agreement to what you say. (Individualism-Collectivism)
b. You answer only when they use your family name, or another gesture of respect (e.g. Mr., Dr.). You also respond with gestures of respect. (Power distance)
c. When a woman is being asked, the man sitting next to her will reply instead. (Masculinity-femininity)
d. Your answer should not be factual or evidence based. Rather, you should respond in vague and ambiguous terms. (For example, “it will be all right“; “people say . . . ,” “we’ll give it a try . . .,” etc.). (Uncertainty avoidance)
e. You avoid conflicts and disagreements. (Harmony)
3. Please call back the volunteers and say: “Your multinational organization sent you as expatriates to work on a project which runs in a foreign country. This is your first day in the new site. You want to establish relationships with the local employees. Employees in your host country have different cultural values and rules than the ones you have. Your objective is to discover these rules. You can ask your foreign employees any question you like.”
4. Let the class play the game for 15 minutes.
5. Discussion: At the end of the exercise you ask your class to interpret the rules in terms of Hofstede’s cultural dimensions (1991, 2001). Identify differences between the host country and the expatriates. Ask the class to reflect upon the process of discovering the rules of behaviors and their underlying values. In addition, ask the participants to say how they felt about each other, what frustrated them, whether they were able to relate to each other and whether they believe they could successfully work together.