Maeyur Vishwanath Nigudge

CULTURAL DIVERSITY IN MULTINATIONAL ORGANIZATION Introduction Diversity of cultures has become an integral part of global organizational culture and it has posed a real challenge in front of international human resource management of organizations. It has multiple impacts on the working and functioning of the organization. This report will cover all aspects related to diverse cultures and how it makes impact on multinational organizations. It will include various cultural models, theories on culture and the management of expatriates to explain the real issues and challenges of cross-culture working environment. Definition Culture Culture can be defined as the characteristics; behavior; attitude and knowledge of people belong to particular group differentiated by the collective elements such as religion, language, art, music, rituals, social habits etc. According to Hofstede (2010), culture is nothing but a shared pattern of understanding, cognitive constructs, interactions and behaviors that is learned through the process of socialization. It is a symbol of a group identity supported by different social patterns unique to the group. Culture is generally applied to a tribe, ethnic group, an organization or a country/nation. Organizational culture is different from social culture in many senses where social culture is the inherent characteristics of a person whereas organizational culture is the occupational culture within the groups of people in the organization. Organizational culture is engrossed by an employee based on the organizational requirements and demand (Gertsen, 2010). Cultural Diversity at Workplace Diversity can be understood as the differences of understanding, valuing, acknowledging and accepting among people belongs to diverse background in terms of race, class, age, gender, ethnic, disabilities, beliefs etc. Diversity at workplace is highly prevalent in modern organizational structure and almost all organization embrace diversity to become inclusive organization as it provides better competitive advantage and generates greater work productivity (Jackson, 2010). Cultural diversity at workplace is a research area generally found in studies of social networks. According to the principles of social network, people in an organization try to be homogenous from homophilous. It means every individual in an organization like to develop social relationship with similar kind of individuals sharing same personal as well as socio-demographic characteristics. It does not mean that social relationships do not form among people of dissimilar socio-demographic characteristics, but the chances of disconnection of social relationships among people of dissimilar cultural groups is much higher and it is highly fragile compared to the bonding and social relationships of people with similar socio-cultural characteristics (Eagly and Johnson, 2010). According to Lawrence (2009), cultural diversity is the competitive asset in present organizational structure. The management of diversity is one of the key management policies of the organization as every year the management has to review the management practices and strategies to evolve creative approaches to manage diverse people in the organization. The process of globalization and integration of economies have changed the approach and perception of workplace practices. The changes in governmental laws and regulations have made any sort of discrimination at the workplace illegal and unacceptable. These laws and regulations have made organizations and the employer highly accountable towards the rights and responsibilities of employees and equal treatment with each employee (Wanous and Youtz, 2010). Culture Intelligence Culture intelligence (CQ) is the order of the day in this contemporary world where a person using his ability manages his responsibilities under varying and changing cultural environment. Cultural intelligence develops the environment of cross-cultural interactions and cultural tolerance in a diverse cultural environment of the organization. The process of globalization has brought high complexities, dynamism and competitiveness among the organization and it has made highly compulsory to organization to bring dynamic changes in the behavior and attitude of employees who can easily mould them in diverse and varying organizational culture (Watson et al, 2011). CQ provides the right approach to bridge the gap among cultural differences of units of organization situated at different locations in the world. CQ transfer necessary knowledge and information among different groups in the organization in order to build healthy social and organizational relationship for smooth functioning of multicultural organization (Schein, 2009). CQ induces the ability to use the organizational resources in effective manner that help them become innovative and creative which in turns helps the business organization in multipronged manner. CQ includes three major areas: Cross-cultural skills, Cultural knowledge and Cultural mindfulness. These three components are necessarily work together to achieve the effective outcome for the organization. 1) Cross-cultural skills – it includes wide range of cross-cultural skills in order to achieve effectiveness in developing cross-cultural relationships; for example adaptability that is required to bring necessary changes in behavior and attitude based on cultural demand; rational skills that is required to interact with people from other culture; tolerance of uncertainty that is required handle uncertain, unexpected and ambiguous situation in cross-cultural interaction; perceptual acuity that is needed to understand the feeling and expectations of people from other culture and empathy. Such cross-cultural skills are developed over the period with experience of working in different cultures (Bochner and Hesketh, 2012). 2) Cultural knowledge – It is the process of gaining knowledge and information of other cultures and disseminating it with other colleagues and sub-ordinates. Cultural knowledge can be gained using various secondary sources such as books, journals, newspaper, magazines, internet etc. and various visits to other countries. Such knowledge is important in organizing workforce in much effective manner. 3) Cultural Mindfulness – it is the characteristics that defines the control over learning activities by a person using his cultural experiences and strategies. It defines various cultural contexts and analyzes various socio-interactive environments and conditions (Fiedler et al, 2011). Trompenaars and Turner’s Cultural Model Fons Trompenaars and Charles Hampden-Turner (1998) proposed cultural model using seven different dimensions of cultural diversity to explain cross-cultural environment in multinational organizations in their book Riding The Waves of Culture: Understanding Diversity in Global Business”. This model came into existence after thorough research on various cultures and social networks using a survey of 46000 managers working in different organizations in more than 40 countries around the world. In these researches, they found that each culture differs from other culture in a specific but in a predictable manner. The distinction or difference between cultures is due to different values, perception, belief system and preferences. This model used seven different variables in categorizing people from different groups or cultures: 1) Individualism versus communitarianism; 2) Achievement versus ascription; 3) Universalism versus particularism; 4) Specific versus diffuse; 5) Neutral versus emotional; 6) Sequential time versus synchronous time; 7) Internal direction versus outer direction (Trompenaars, 2008). This model is highly useful in understanding different cultural differences and background in details and how each culture can be different from other culture. This model does not explains that no two cultures cannot be compared and can be verdict with one culture better and other culture bad based on the way and approach of people in the group to interact, behave or thinking. The only disadvantage with this model is that it cannot judge the choices and preferences of people on each seven different dimensions. Other researchers can use this model as a general guide not the detailed or accurate cultural model for the reference (Jackson, 2010). Pros – This model has given an important tool to employees who are allotted international projects and assignments. This model has made easy to understand the culture of other country and it ultimately helps in understanding cross-cultural differences and similarities. This model has presented that every country has its own style of doing business. Cons – This model failed to recognize the behavioral and attitudinal of an individual’s personal characteristics and at the same time does not recommend for improving the individual characteristics (Cox, 2011). Hofstede’s Cultural Dimension In this era of globalization, technology has played huge role in integrating the world and brought each other very closure and well connected. It means people from diverse culture and background can find them working together under one roof and can communicate among them more frequently. But such connection and integration is highly uncertain and frustrating for the people. The main questions arise that how to start conversation and how communication can be developed in an environment of cultural taboos. Building communication relationship with people from different cultures in other parts of the world is one of the dimensions in cultural diversity, but apart from this, developing strategy, structuring projects and motivating people are some other cultural dimensions (Hofstede, 2007). There are some other questions in cultural diversity such as understanding cultural differences; how to relate one culture to another; specific guidelines to follow for each culture etc. All these questions related to cultural dimensions were well studied by Dr. Geert Hofstede through various surveys and interviews of employees of the same organization in almost 35 countries around the world and the collected data and information was analyzed to bring various cultural dimensions. He initially identified four cultural dimensions to distinguish one culture from another and later on a fifth dimension was added to complete the model (Hofstede et al, 2010). The description of five cultural dimensions is discussed below: Power/Distance – It is the degree of social inequality exists in the society/organization and how it is accepted by people with and without power. High degree of power or distance is the indicator of acceptance of unequal distribution of power in the society and people with higher position dictates the terms and rule over their sub-ordinates. On the other hand, low power distance is the indicator of equal sharing of power and equal opportunity to grow in the society. Such society is democratic society where equal rights are given to people (Fiedler et al, 2011). Individualism/Collectivism – This dimension is the indicator of bonding and ties of people with other people in the same community. High individualism and low collectivism means people are self centric and have loose connection with other people. Such people give importance to their family and themselves only and they look for self-actualization in their duties. On the other hand, people of low individualism and high collectivism have strong bonding and interpersonal relationship with others in the group and society and they give high respect and loyalty to their group members. Such people look for achieving collective organizational goals and focus on team work (Chatrnan et al, 2008). Masculinity – It describes how much society distinguishes the role of men and women in society and how society treat men and women based on their values and traditions. High masculinity refers to the male dominant society where male is assumed to be assertive, provider and tough. Even women have to have separate professions and workplace from men. On the other hand, low masculinity society promotes equal roles and responsibilities for both men and women and we can see both men and women working in the same professions altogether. Women are allowed to be hard working for professional success, whereas men can be sensitive as well (Jehn, 2011). Uncertainty Avoidance – It refers to the degree of anxiety to which people in a society feel especially when they are in unknown or uncertain situation. High uncertainty avoidance index (UAI) society tries to avoid uncertain and ambiguous situations in every possible manner. People in such society follows stipulated rules and regulations in strict manner and they also look for collective truth. On the other hand, low UAI society performs their duty in much relaxed manner as they are bound by little no. of rules. These people enjoy their life and also encouraged to explore their life’s truth. Long Term Orientation – It refers to the society that has long term orientation based on their values and traditions rather short term orientation. People in such social values and tradition are highly work-ethical and they give great emphasize on education and training. This was the fifth cultural dimension introduced by Hofstede during 90s based on the findings in Asian work culture. This cultural dimension is highly differentiating factor of organizational work culture of Western countries from the organizational work culture in Asian countries (Hofstede, 2010). Pros & Cons of Hosftede Cultural Approach Pros – This model is highly useful for understanding different organizational culture. This model has helped organization in expanding their business at international level without much cultural hindrances. It can help the management in differentiating the behavior and attitude of people in two different cultures; international brand strategy; used in advertising etc. This model induced Corporate to globalize their business. Cons – Hofstede cultural model has also faced many criticisms all over by the practitioners. Some experts feel that this model is not accurate and cannot differentiate one community from other community. According to Hofstede, a country has same organizational culture throughout the region, but in reality many countries have different work culture in their organizations in the same country. A country cannot be analyzed using these five dimensions as these dimension do not give detailed and minute information sufficient to differentiate one culture from another culture (Jackson, 2010). Hofstede and Trompenaar-Hampden Turner’s Theory Correlation – The concept of individualism and collectivism is quite similar in both theories. Both Hofstede and Trompenaars model gives high importance to where and how status of cultural differences. Hofstede and Trompenaar’s model is quite similar in differentiating team work and individualism, but power distance dimension of Hofstede also covers other issues. In the similar manner, Hofstede’s individualistic/collectivist dimension and uncertainty avoidance dimension can be considered the same dimensions as mentioned in Trompenaar’s dimension of universalism/particularism because these dimensions have discussed about how countries differs in giving selection to rules over relationships. The researchers using these two models have found that these two models are quite similar in nature and either can be used to study cultural diversity at the organizational level. For example, India and Japan is a collectivist nations with low individualism index; whereas US and UK are highly individualist nations and low collectivism (Schein, 2009). Contrary – Hofstede and Trompenaars model are contrary to each other in many senses and it can be seen in their research outcome. For example, Hofstede’s model shows Spain and Mexico as individualistic country whereas Trompenaars model does not feel so. Trompenaars model has declared hierarchical culture of Germany, whereas Hofstede’s model has declared it as low in power distance. Even cultural dimensions to explain cultural differences are different in both models i.e. Hofstede model has five dimensions and Trompenaars model has seven dimensions. Hofstede model does not suit to present global environment as it was introduced in 60s and 70s and its results cannot be the same as culture has changed in many organizations and countries over the time. Hofstede model is quite restricted approach, whereas Trompenaars model is broader and more analytic cultural model (Watson et al, 2011). Expatriate Management In this present global organizational system, the role of international human resource management has taken a new stand and now it has started shaping and preparing their employees to take challenges of various work assignments in any country in the world. Trompenaars cultural model explains that universal cultural approach has now emerged as a popular culture for employees who have to take foreign assignments in the same organization and such ability of taking responsibility can be achieved by keeping laws, rules, values and obligation high and developing effective communication and negotiation with people from other cultures. Most of the developed countries such as US, UK, European countries, Australia etc. have developed a universal cultural environment for their organizations so that people from the other countries can find them highly suitable working in these organizations; and even employees in these organizations are prepared to accept foreign assignment without feeling any cultural glitch and hindrance (Gertsen, 2010). An expatriate is a person who is prepared to take any foreign assignment for the organization after going through structural training process and this training process has six different stages that prepare an expatriate to face cultural differences and smoothly working in foreign cultural environment: 1) Pre-program Assessment – It is the first stage of training process where an expatriate along with family members are given brief introduction of host culture and the nature of work assignment, understanding the personal tendencies, previous international projects and assignments and past experience in international assignments etc. 2) Knowledge enhancement – Expatriate is given training about the host country’s culture, belief system, day-to-day practices and value system in order to minimize the misconception and misunderstanding of foreign culture and improving cross-culture experience (Foeman and Pressley, 2008). 3) Briefing the Project/Assignment – An expatriate is briefed up about the team culture and the host manager with whom the project would be carried out so as to bridge the communication gap and improving the understanding level. 4) Project Alignment – It is the process where the mutual understanding of the expatriate and the project manager is improved through effective communication. 5) In-country Coaching – It is the training being arranged to improvise the behavior, attitude, approach and activities of expatriate so that their performance in foreign assignment can be effective improved. 6) Documentation – this process includes the documentation of knowledge management process of expatriate so that such documents can be used for the management of future expatriates and the issues related to these expatriates can be minimized (Eagly and Johnson, 2010). Significance of Expatriate The reasons for becoming an expatriate may vary person to person and being ambitious for opting international assignments. Some of the most common reasons are: High salary offers and monetary benefits International exposure Varied and challenging tasks Loyalty for the company Better job profile CQ and Expatriate Cultural intelligence is highly beneficial to an expatriate as he can effectively utilize diverse resources in better manner. An expatriate has to be innovative and creative at the work place and it could be possible when he is well aware with cultural differences, varied cultural demands, emotionally matured, keeps social skills and intelligent enough to deal with people from different culture in more effective manner. Culturally intelligent expatriate have the ability to utilize the available workforce in most effective manner in a multiple perspectives and manage them work together for the same objectives without cultural misunderstanding and resistance (Gertsen, 2010). Multi-cultured Awareness The awareness about multi-cultured environment is highly important in a multinational organization and also for expatriates and the awareness can be improved by several ways: Recruiting and selecting people from diverse culture, race, gender and background in the organization so employees can feel a universal culture environment in the organization. Frequent training sessions for employees so as to develop understanding of different cultures, value & belief system, employee expectations and organizational structures etc. Regular foreign tours for learning the prevailing work culture and people’s behavior and attitude towards their work and organization. Monetary and non-monetary benefits to successful expatriate and set them as role model for other people in the organization through regular interactive sessions and meetings (Cox, 2011). Conclusion Cultural diversity is a real challenge for the HR management of the organization and the real success of an organization lies on the fact that how organization manages different cultures in the same organization located at different destinations across the world and how expatriates can be prepared to take the foreign assignment for successfully executing the assigned task. It is clear from the report that cultural intelligence and effective management of available resources is the real key for the success in cross-cultured environment. Awareness and mental preparedness for the cultural diversity can be the real solution in this competitive environment. References Bochner, S., and Hesketh, B. (2012). 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