Multiculturalism Multiculturalismmeans that people of different cultures (and countries) interact regularly. Global firms are repositories of multiculturalism 5
Cultural predispositionsMNC’s tend to have cultural predispositionstowards managing things in a particular waywhich helps identify specific steps it takes: Ethnocentricism Polycentricism Regiocentricism Geocentricism 6
Ethnocentricism The home country’s culture is sought to be imposed on the subsidiaries. Exports policies and practices from home country to the subsidiary Expatriates from the home country manage the affairs Local employees occupy low-level and routine jobs Decision making and operations are largely centralized out of the home country HQ 7
Polycentricism The multinational adapts to the local cultural needs of subsidiaries. Management policy is oriented to suit local needs Autonomy in decision making to the subsidiary to run their businesses Host country nationals head the organization supported by extensive training by the parent company Parent company ensures cultural parity and corporate philosophy across all subsidiaries 8
Geocentricism The multinational runs the subsidiary as a independent entity. Localization is replaced with building a center of excellence at a global level Hiring the best person for the job….. could be a third country national Remain guided by Parent company culture and philosophy 9
Regiocentricism The multinational runs the subsidiary as a independent entity, within a regional geography. Localization at a regional level, building a center of excellence at a regional level Hiring the best person for the job….. usually a third country national with a regional experience Remain guided by Parent company culture and philosophy 10
Cultural ModelsThree theoretical concepts that help understandthe nuances of different cultures betterGLOBE ProjectHofstede’s Cultural DimensionsTrompenaars Framework 11
Globe Project “Global Leadership and Organizational Behavior Effectiveness” 170 researchers, over 7 years from 17000 managers in 62 countries, covering 825 organizations Identified nine cultural dimensions that distinguish one society from another that have important managerial implications 12
Globe Project“Global Leadership and Organizational Behavior Effectiveness” Assertiveness Future Orientation Performance Orientations Human Orientation Gender differentiation In-group collectivism Collectivism/ Societal Power Distance Uncertainty Avoidance 13
Hofstede’s Cultural Dimensions Based on a study of IBM employees spread across the globe Identified 4 critical cultural dimensions: Power distance Uncertainty Avoidance Individualism Masculinity 14
Power Distance The extent to which less powerful members of institutions and organizations accept that power is distributed unequally. Countries in which people blindly obey the orders of supervisors have high power distance Countries with low power distance tend to be decentralized and have flatter structures with more equality and decision making power 15
Uncertainty Avoidance Extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid this. Countries with high uncertainly avoidance have a high need for security and a strong belief in experts and their knowledge Countries with low uncertainty avoidance accept risks associated with the unknown, less structured activities, fewer written rules, willing to take risk, show initiative and assume responsibility for action 16
Individualism Individualism is the tendency to look after themselves and their family as opposed to collectivism where people tend to belong to groups and to look after each other in exchange for loyalty In countries with high individualism people are responsible for themselves, individual achievement is ideal, and self sufficiency is lauded In countries with high collectivism group membership is paramount, groups protect individuals in exchange for their loyalty to the group, societies tend to promote nepotism 17
Masculinity Where the dominant values in a society are success, money and other material things. Highmasculine cultures distinguish clearly between gender roles where men are dominant and assertive and work takes priority over other duties, and advancement success and money are important 18
Trompenaars FrameworkA European researcher who conducted a research with 15,000 managers from 28 countries, representing 47 national cultures. Uses seven dimensions to describe culture also called the 7d cultural dimensions model Universalism vs. particularism Individualism vs. collectivism Specific vs. diffuse Neutral vs. affective Achievement vs. ascription Past vs. present Internal vs. external control 19
Global IT Companies On a Cultural Make Over In Atos Origin India ( AOI), part of $ 6.6 billion European IT major Atos Origin about 100 odd staff attend French classes after office hrs. At IBM employees employees are being encouraged to think in terms ofa more globally integrated orgn and tap into a programme called “Shades of Blue” to understand business nuances about any other country.
Global IT Companies On a Cultural Make Over contd.. At Accenture and IBM, there is a shift from a country specific strategy to a more global sourcing one. Till recently IBM used to process purchase orders in 300 destinations. Now it does it in just three places – Bangalore, Shanghai and Budapest. Big Blue has shifted Asia headquaters from Tokyo to Shanghai in a bis to fanthom its new growth markets China and India. Atos Origin sees a savings upwards of 50% for client work if done from India. To take the benefit of India sourcing, it has send a team from French car marker Renault to AOI to bridge cultural gaps.
Parth Iyengar, VP Research,Gartner India says………“ for multinationals, hiring staff in destinations loke India is least of the problems. But they are not used to doing small deals and delivering services out of low cost destinations. This does require a cultural change in hoe they work.”
The IBM CaseFrom doing everything from pay roll to developing software to shipping servers as a country specific strategy, IBM is now going for best offshore options.For IBM Japan the hr is done in Manila, Pay roll in Shanghai, Procurement in Schenzen, accounting in Kuala Lumpur, technology support in Australia and so on.
The IBM Case contd..Its‘shades of blue’ cultural orientation programme is targeted towards helping employees understand the needs of staffers across locations easily.The faster they do it the easier it will be for global giants to catch up with their smaller but more nimble competitors.
Cultural Make over of Koreancompanies Koreans working for Companies like LG, POSCO, Samsung and CISCO in India not only learn Hindi, Kannada and Oriya but adopt local names too.Posco (had 35 expats working in India in the year 2009) has made it mandatory to learn Oriya for a better understanding of local environment
Cultural Make over of Koreancompanies contd… Anurag is the name of a KOPrian Chang Chyong Jung working at LG Greater Noida. “We have Korean interns who do their research projects with us and they have even shown cultural adaptation to the extent of adopting Indian names like Pragya and Ashim. Some of them have also volunteered for a Sanskrit learning course arranged by LG India .” Yasho Verma , Director HR & MS LG India ( LG had 20 expats in the year 2009)
Cisco Case All its expats come from 4 places primarily, Europe, Singapore, Beijing and US. In at least two of these places the first language is not English. Cisco has a language course of 160 hrs. They have a 2 day orientation for employee, spouse, and children. They are planning to relocate over 20% of its senior team in the next three years to its globalization centre.
Cisco Case Contd..“The language course that we conduct , could be a combination of 80 hrs. in Hindi, 80 in Kannada or 120 in Kannada and 40 hrs in Hindi.” Syed Hoda Senior Director Operations, Globalization Centre Cisco