2OutlinePart I. What is culture? Understanding the concept of culturePart II. What is the impact of culture? Leadership and HRM practices incultural contextPart III. How to manage cross-cultural interactions and culture change? Case discussions Cultural intelligencePart IV. Developing global culture and identities
3Part IUnderstanding the Concept ofCulture and Cross-CulturalDifferences
4Culture & Globalization In the Eighties October, 1989A developmentalapproach tounderstanding ofCulture:Change of Mindset1990-2005
6Cross Cultural AlliancesMay, 1999
7From Culture’sDifferentiation toCulture’s integrationGeneration EA -Ethnically AmbiguousNYTimes, Dec. 28, 2003
8From ToMindset Fear of other Cultures Culture’s Differentiation Ethnocentric MindMindset Alliances across cultures Culture’s Interface &Integration Global MindWhere were we, where are we and where are we going?
9What is Culture?A Shared Meaning System. Shared Values Shared Cognition Social Glue (Smircich, 1984) The software of the mind (Hofstede,1990). Shared knowledge structure that results indecreased variability (Erez & Earley,1993).
10Artifacts and Creation- Art -Technology- Patterns of BehaviorValuesTestable in the physical contextTestable by social consensusBasic Assumptions aboutRelationship to EnvironmentReality, Time, SpaceHuman Nature, Activity & RelationshipCulture – a Multi Layer Construct(Schein,1985)Visible -ExternalGreater Levelof AwarenessInvisible –Internal
11Representations of Culture Artifacts: Architecture and design Rituals Physical Proximity Dress Codes Expression of Emotions Beliefs and values
13Cultural Values(Hofstede, 1980, 1991, 2001) Individualism Vs. Collectivism - The waypeople relate to each other:Individual Vs. group goalsNuclear Vs. Extended familiesSelf interest Vs. interest in group membersPreference to be by oneself Vs. with others
15Cultural Values (Cont.) Power Distance (Equality Vs. inequality)-The extent to which members of a cultureaccepts inequality and large differentialsbetween those having power, and thosehaving little power.
16Cultural Values (Cont.) Uncertainty Avoidance - reflects the emphasison rules and regulations, rituals, and extensivedocumentation. Masculinity Vs. Femininity -Gender differentiation in roles and occupations ishigh in masculine cultures, and low in femininecultures. Future Time Orientation –Long versus short term planning.
19 National Culture (House et al., 2004) Israel Germany USA SingaporeChina Mean Mean Mean Mean MeanUncertaintyAvoidance 4.01C 5.22A 4.15B 5.31A 4.94APowerDistance 4.73C 5.25B 4.86B 4.99B 5.04BCollectivismGroupbased 4.70B 4.02C 4.25C 5.64A 5.80APerformanceOrientation 4.08B 4.25B 4.47A 4.90A 4.45A
20High Context Vs. Low Context Cultures Collectivistic cultures tend to be highcontext cultures.In this culture the context of the messageis important for interpreting the messageand for sense-making. Individualistic cultures tend to be lowcontext cultures.In these cultures the message isinterpreted independent of its context.
21Tight Vs. Loose Cultures Tight Cultures - High level of homogeneity,and strong shared values. Loose Cultures - Low level of homogeneity,and high diversity.
23Model InterpretationCultural Values are represented in the Self. shape different selves - Independent andInterdependent Self. serve as criteria for evaluating the meaning ofmanagement practices. managerial practices positively affect behaviorwhen the self interprets them as contributing to aperson’s self-worth and well-being.
24A Multi-Level Model of CultureA Multi-Level Model of Culture ((Erez & Gati, 2004Erez & Gati, 2004))IndividualCultural self-representationGroup CultureOrganizational CultureNational CultureGlobal CorporateCultureTop-DownBottomUpForcesat macrolevelsaffectchangesat microlevels ofcultureNew sharedmeanings at microlevels shape themacro level culturesthrough bottom-upprocesses
25Part IICulture’s Consequences:Leadership & HRM in Cultural Context
26Leadership: What is it for Who? “Arabs worship their leaders – as long as they are in power” “The Dutch place emphasis on egalitarianism and are skepticalabout the value of leadership. Terms like leader and managercarry a stigma. If a father is employed as a manager, Dutchchildren will not admit it to their schoolmates…” “Russians seek power, strength and authority in their leaders.” “The Malaysian leader is expected to behave in a manner thatis humble, modest and dignified.”
27 “The Americans appreciate two kinds of leaders. They seekempowerment from leaders who grant autonomy anddelegate authority to subordinates. They also respect thebold, forceful, confident, and risk-taking leader as personifiedby John Wayne.” “For Europeans,everything seems to indicate that leadershipis an unintended and undesirable consequence ofdemocracy.” “Indians prefers leaders who are nurturant, caring,dependable, sacrificing and yet demanding, authoritative,and strict disciplinarian.” “German leaders / managers are expected to have theexpertise in resolving technical problems. There is no needto ‘motivate’ workers; all they need to do is to answer all thequestions.”
28‘Universal’ definition of Leadership(GLOBE project; House et al., 2004) The ability of an individual to influence,motivate, and enable others to contributetoward the effectiveness and success of theorganization of which they are members.
29Leader values,beliefs,assumptionsLeaderBehaviorSubordinatebehaviorReinforce = culture fit: leader acceptance & effectivenessNot reinforce = no culture fit: no leader acceptance & effectivenessCulture: Societalvalues, beliefs,assumptionsInfluence of Culture on Leadership(Aycan, 2003)Culture: Values,prototypes, ILTs,expectations,norms, beliefsSubordinateperception &attributionCulture: Repertoireof behavior,enactment, powerCulture:Repertoire ofbehavior,motivationOrganizationalcontingencies andstructural context;assessment of memberneedsIndividualcharacteristics (age,gender, experience,competencies)Individualcharacteristics (age,gender,competencies)Organizationalcontingencies andstructural context;assessment of leaderintentions
30“EmployeeswantParticipation”Ask opinionsof employeesSilenceNot reinforce = no culture fit: no leader acceptance & effectivenessCulture X(low power distance)Culture Y(high power distance)“He istesting us” or“He doesn’t dowhat to do”Influence of Culture on Leadership:Illustration 1
31“Employeeswant care andguidance in theirpersonal &professional life”Ask how employeesare doing in theirfamily lifeSilenceNot reinforce = no culture fit: no leader acceptance & effectivenessCulture XCulture Y“He is violatingour privacy” or“Why is he askingthis? What is his/herintentions?”Influence of Culture on Leadership:Illustration 2
32Ideal Leadership Prototypes(House et al., 2004) Charismatic / value-based: visionary, inspirational, self-sacrificial,integrity, decisive, performance-oriented. Team-oriented: team integrator, diplomacy, benevolent,administratively competent. Self-protective: self-centered, status-conscious, conflict-inducer, facesaver, procedural. Participative: non-autocratic, participative Humane: modest and humane oriented. Autonomous: individualistic, independent, autonomous, and unique.
34Self-efficacingStatus consciousExcellence orientedHonestElitistAutonomousRisk takerWorldlyIndirectFraternalIntra-group competitorUnited StatesChinaUSA vs. China (Javidan et al., 2006)
35Culture and managementof work eventsUse of sources of guidance: Superiors Unwritten rules Specialists Opinions based on own experience Formal rules & procedures Widely accepted beliefsInfluenced by the cultural context…
36HRM in cultural context:The challenges For multinational corporations Global standardization vs. local competition Transition in the HRM approach:globalization glocalization localization For multicultural domestic organizations Diversity management; “unity through diversity” Domestic organizations in transitioning economies Adaptation of ‘US’ HRM philosophies and practices to localcultural identity Change of organizational culture
37Influence of Culture on HRM:The Model of Culture Fit (Aycan, Kanungo, et al., 2000)Ecological,Socio-Economic& Political ContextEcological ContextLegal & PoliticalContextHistorical EventsSocializationProcessOrganizationalCharacteristicsMarket CharacteristicsOwnership / ControlResource AvailabilitySocio-CulturalContextInternal Work CultureHRM PracticesJob DesignSupervisory PracticeReward AllocationNature of IndustryTask-Driven AssumptionsEmployee-RelatedAssumptionsValues, assumptions,belief systems,behavioral patternsPrevailing managerialassumptions aboutwhat the key tasks are and howthey should bebest accomplished.Prevailing managerialassumptions aboutemployee nature andbehaviorSize, structure, strategy
39Cultural Variations and HRM practices(Aycan, 2005)1. Individualism vs. CollectivismCollectivism Individualism2. Performance-orientationLow HighMaintain Good InterpersonalRelationships & In-group HarmonyImprove Performance3. Attitudes towards workWork to live Live to work4. Attitudes towards rulesParticularism Universalism4 74 744
406. Attitudes towards criticismsNegative Positive8. Problem-solving approachAvoidance Third-party involvement Confrontation7. Communication styleIndirect, subtle Direct, assertive5. Nature of work relationshipsEmotional Contractual4 7444
41Maintain good interpersonalrelationships and in-group harmonyImprove performance• Subjective evaluations in recruitment, selection,and performance appraisal; indirect, subtle and non-confrontational feedback.• Objective and systematic evaluations inrecruitment, selection, and performance appraisal;direct and explicit feedback.• Preference for internal or network-basedrecruitment• Preference for formal, structured and widespreaduse of recruitment channels• Criteria used in need assessment for training, careerplanning, and compensation and reward managementemphasize loyalty• Criteria used in need assessment for training,career planning, and compensation and rewardmanagement emphasize performance outcomesand merit• Strong emphasis on employee welfare programsand intrinsic rewards• Awards, recognition, and bonuses for goodperformance• Criteria used in recruitment, selection, andperformance appraisal emphasize ability to maintaingood interpersonal relationships and work inharmony with others.• Criteria used in recruitment, selection, andperformance appraisal emphasize job-related andtechnical competencies
42Maintain Status Hierarchy Promote egalitarianism& participation1. Societal & Organizational Structure (Power Distance)Hierarchical Egalitarian3. Attitudes towards rulesParticularism Universalism2. Decision making processCentralized Consultative Participative4. Most common leadership StyleAutocratic Paternalistic Democratic4 74 74 74 7
43Maintain status hierarchy Promoteegalitarianism & participation• Criteria used in recruitment, selection,performance appraisal, training and developmentneed assessment, and compensation and rewardmanagement emphasize good interpersonalrelationships with higher management, social class,seniority, and age• Criteria used in recruitment, selection,performance appraisal, training and developmentneed assessment, and compensation and rewardmanagement emphasize job-related competenciesand merit. Equal employment opportunity isencouraged• Differential criteria and methods used inrecruitment, selection and performance appraisal• Uniform criteria and methods used inrecruitment, selection and performance appraisal• Top-down performance appraisal • Multiple assessors and multiple criteria inperformance appraisal• Non-participative decision making in training needassessment, job analysis, and human resource andcareer planning• Participative decision making in training needassessment, job analysis, and human resource andcareer planning• One-way lecturing; role-modeling of superiors • Participative, interactive training
44Inflexibility; lack ofbeliefin change &developmentFlexibility; belief inchange & development1. FatalismHigh Low4. Perception of human natureEvil & stable Good & malleable2. PlanningPast-oriented Present-oriented Future-oriented(short-term) (long-term)3. Attitudes towards changeNegative Neutral Positive4 74 74 74 7
45Inflexibility; lack of belief inchange and developmentFlexibility; belief inchange and development• Preference for internal or network-basedrecruitment• Preference for external recruitment• Low performance-reward contingency • High performance-reward contingency• Process-oriented performance evaluation(intention, effort, motivation to do the job)• Results-oriented performance evaluation• Not-so-strong emphasis on training anddevelopment• Strong emphasis on training anddevelopment• Detailed, narrowly defined, fixed jobdesciptions• Broad, flexible, dynamic job descriptions• Employee security plans • Equity principle in compensation and rewardmanagement; individual bonuses /commissions
46Summary of Part II National and organizational culture has an impact on leadership and HRMpractices. There needs to be a fit between the cultural context and HRM practices.Which one to change first to enhance the fit: values or practices? The winning combination: adapt the HRM practices to fit the organizationalculture & adapt the organizational culture to fit the HRM practices. Start changing the HRM practices gradually. Start the change at the behavioral level. Through rewarding and modeling of thecorrect behavior, values are expected to change. Leadership is the key in thisprocess. Cultural change should be supported by HRM systems: recruitment & selection,training & development, performance appraisal & rewarding.
47HRM PracticesLeadershipOrganizationalCulture: ValuesChange: Where to start?
48Part IIIHow to Manage Cross-CulturalInterfaces and Culture Change
49 Cultural intelligence is being skilled and flexible about understanding aculture, learning increasingly more about it, and gradually shapingone’s thinking to be more sympathetic tot eh culture and one’sbehavior to be more fine-tuned and appropriate when interacting withothers from the culture (Thomas & Inkson, 2005). Knowledge – of culture and of the fundamental principles of cross-cultural interactions. Knowing what culture is, how cultures vary, andhow culture affects behavior. Mindfulness – the ability to pay attention in a reflective and creativeway to cues in the cross-cultural situations encountered. Behavioral skills – based on knowledge and mindfulness. These skillsbecome competent across a wide range of situations and involvechoosing the appropriate behavior from a well-developed repertoire ofbehaviors that are correct for different intercultural situations.CQ: A Key to effectively managing cross-culturaldifference
50“A person with high cultural intelligence can somehow tease out of aperson’s or group’s behavior those features that would be true of allpeople and all groups, those peculiar to this person or this group, andthose that are neither universal nor idiosyncratic” (Earley & Masokowski,2004, p.140)Cultural intelligence has three components (Earley & Ang, 2003)Cognitive: The skills needed to conceptualize a new culture and to gatherinformation about a new world.Motivational: Desire to adapt to the other culture.Behavioral: Capability of an individual to actually engage in behaviorswhich are adaptive.
51Case analysis Moscow Aerospace Mr. Smith and Mr. Gonzales
55Approaching Globalization at twolevels The corporate level – A Global CorporateCulture The individual level – A Global Identity
56How a Global Corporate Culture isCreated? Culture = Shared Meaning System(Bandura, 1986; Hofstede, 1980; Kluckhon, 1952;Shewder & LeVine, 1984;Triandis, 1972) Shared Meaning ~ Belonging to sameCulture Global Culture = Shared Meanings andValues by Players in the Global Context
57Definition: Global Corporate Culture: the sharedunderstanding of the visible rules, regulationsand behaviors, and the deeper values andethics of the global work context, beyondnational borders
58 The Functional role of values:Adaptation to the Environment
59Global Work Context Geographical dispersion Cultural Diversity High Uncertainty Global Competition Threat to one’s cultural Identity –Getting LostGlobal Values High Interdependence-Networks Openness to Diversity Trust & Ethical Behavior Low Power Distance(Partnership) Openness to Change Learning Competitive Performance Quality and Innovation Customer Orientation People focus
60SStudy 1:tudy 1:Global Corporate Values in MNCGlobal Corporate Values in MNC(Berson, Erez, & Adler, 2004)(Berson, Erez, & Adler, 2004)Organization: A Fortune-20 high tech organizationA Fortune-20 high tech organizationOperating in more than 100 countriesOperating in more than 100 countriesMeasures: Content Analysis of:Company Annual Reports from the year 2000 CEO speeches from 2000
61CEO quotes regarding IdentityAnnual Report Speeches“Our … beliefs and corevalues…., include•Respect for theindividual• Contribution tocustomers• Contribution to thecommunity”.“Who are we? What do webelieve? What are our values?•We preserve…values liketrust, respect, integrity,•…Contribution to ourcustomer, as well as to thecommunity…”
62Annual Report Speeches•“The company…” haslong been admired for ourculture-•A performancemeritocracy• ..and a firm belief thatevery community in whichwe…. work should benefitby our presence”.•Benefiting from each others’successes and suffering fromeach others’ failures…•As diverse as our languages,our cultures… may be,together we are all part ofone ecosystem now”.Interdependence
63Annual Report Speeches“Leadership in the digitalrenaissance will not beabout hierarchy, title, orstatus”Egalitarianism:“Our highlydecentralizedstructure has enabledus to move quickly”Acceptance of Diversity“Every community inwhich we live and workshould benefit by ourpresence”.“Diversity nourishes thesoul of our company”Egalitarianism; Diversity
65International AlliancesMNCInternational Mergers & AcquisitionsStudy 2. Cultural Interface: How LocalSubsidiaries & Employees Adapt to the GlobalCorporate Context?How to bridge betweenCultural icebergs?
66Cultural Adaptation(Berry, 1992)High LowHigh Integration AssimilationLow Separation Marginalizat.AttractivenesstotheGlobalCorporateCulturePreservation of Own ValuesGlocalLocalGlobal
68KSFs SuccessIntegrationEnhancing success in StructuralEnhancing success in StructuralCooperations - a system modelCooperations - a system modelAnalysisSynthesisIdentifying gaps in KSFs is a necessary butinsufficient action for success
69Study 3:Global and Local Managerial RolesOrganization: A Fortune-20 high tech organization.Operating in more than 100 countriesParticipants: 406 mid-level managers from 21countries, classified into 6 regional zones.MeasureA 31-item survey of Managerial Role Perceptions
70TaskPeopleStrategicPlanningChangeImprove organizational efficiency… align workwith vision...Demonstrate uncompromising integrityManage business processes to achievebreakthrough objectivesBuild and execute a financial strategy thatachieves growthIncrease the org. ability to anticipateglobal trendsLead the organization through ongoingchangeConstructively intervene to resolveperformance problemsCreate an environment of trust andrespect.184.108.40.206.220.127.116.11Four Factors of the Managerial RoleFour Factors of the Managerial RoleLocal FocusLocal FocusGlobal FocusGlobal Focus
71Findings Similarities across Cultures with respect toGlobal managerial roles Significant Differences across Cultures withrespect to Local managerial roles.
72How Individual Employees Adapt to theGlobal Context? Developing a sense of belongingness Social Identity Theory (Tajfel, 1978; Tajfel & Turner,1979) Identity reflects individuals’ membership in agroup
73Global Identity – A Sense ofBelongingness to a Worldwide Culture (Arnett, 2002).Global Corporate Identity:“Individual’s sense of belonging to, andIdentification with groups)such as multicultural teams(,operating in the global work environment ofmultinational organizations (Gati & Erez, in press(
74 A Global and a Local Identity Multiple Identities
75SummaryAdaptation to Cultural Interface by Developing Global Corporate Values Acceptance of Diversity Interdependence Openness to change Balancing the global corporate values with the localcultural values. Think Global Interact Local Creating a sense of belongingness to the MNC andstrengthening employees’ Global Identity Creating opportunities for involvement in global activities Facilitating the integration/Duality of a Global and a LocalIdentity by a supportive corporate culture