The document explores various HR issues within an organization (MNC) due to cultural diversity. Hofstede framework is used and example of Merill Lynch, Bank of America and Google haven been discussed.

1. Human Resource Issues In
Trans-cultural Organisation
BY-
AAKASH KHANDELWAL (2012-IPG001)
ANSHIKA SINGH (2012-IPG017)
HIMANSHU MEENA (2012-IPG043)
SHUBHANKIT NIGAM (2015-MBA011)
ABV- Indian Institute of Information Technology and Management, Gwalior

2. “Trans-culture” is the passive
and active aspects of
dispersion and diffusion of
culture. It goes beyond cultural
borders, without becoming
homogenizing on the global
level, but still integrates
diversity in the sense of
recognition of differentiation

3. Transnational HRM system
• FEATURES :
Makes decisions from a global perspective
Includes managers from many countries
Based on ideas contributed by people representing a variety of cultures
• Decisions that are the outcome of a transnational HRM system balance uniformity with
flexibility.

4. Issues in Trans-Cultural Organisations
Intercounty
differences
influencing
HR practices
globally.
Political
Legal
Economic
Cultural
• All China Federation of
Trade Union
• German Court Struck
Down Ethics Code in 2005.
• FDI
• Chant and Smile

5. Cultural Issues
Community’s set of shared assumptions about how the world works and what ideals are worth
striving for.
• Culture can greatly affect a country’s laws.
• Culture influences what people value, so it affects people’s economic systems and efforts to
invest in education.
• Culture often determines the effectiveness of various HRM practices.
• Cultural characteristics influence the ways members of an organization behave toward one
another as well as their attitudes toward various HRM practices.
• Cultural differences can affect how people communicate and how they coordinate their
activities.

6. • Organizations must prepare managers to recognize and handle cultural differences.
 Recruit managers with knowledge of other cultures
 Provide training
 For expatriate assignments, organizations may need to conduct an extensive selection
process to identify individuals who can adapt to new environments
Cultural Issues

7. Cultural differences in the workplace
• Waiting to be recognized
• To share or not to share
• Giving suggestions or keeping to yourself

8. Economic Issues
• The economic system provides many of the incentives or disincentives for developing
the value of the labor force.
• In developed countries with great wealth, labor costs are relatively high. This impacts
compensation and staffing practices.
• Income tax differences between countries make pay structures more complicated
when they cross national boundaries.

9. Legal, Political, and Labor Relations Factors
• Employers going abroad must be familiar with the labor law systems in the countries they
are entering
• Managing globally also requires monitoring political risks. Political risks are any
governmental actions or politically motivated events that could adversely affect the long
run profitability or value of the firm.
• The country’s laws often dictate the requirements for HRM practices: training,
compensation, hiring, firing, and layoffs.
• An organization that expands internationally must gain expertise in the host country’s legal
requirements and ways of dealing with its legal system.
• Organizations will hire one or more host- country nationals to help in the process

10. Understanding Employees in an
International Workforce

11. Employees in an International Workforce
• Parent-country national – employee who was born and works in the country in which
an organization’s headquarters is located.
• Host-country national – employee who is a citizen of the country (other than parent
country) in which an organization operates a facility.
• Third-country national – employee who is a citizen of a country that is neither the
parent country nor the host country of the employer.
When organizations operate overseas, they hire a combination of parent-country
nationals, host-country nationals, or third-country nationals.

12. Expatriates – A Global Advantage

13. Source: Managing Expatriates on International Assignment, Gitte Brynningsen
Managing Expatriates :
Selection
Expatriate managers need technical competence in the area of operations.
In addition, many other skills are necessary to be successful in an overseas
assignment:
• Ability to maintain a positive self-image and feeling of well-being
• Ability to foster relationships with host-country nationals
• Ability to perceive and evaluate the host country’s environment accurately

14. Managing Expatriates :
Preparation
• Pre-assignment site visit
• Job orientation
• Country orientation
• Culture orientation
• Language training
• Compensation / benefits / taxes counseling

15. Managing Expatriates – Reasons for Failures
Inability of
Spouse
to Adjust
Inability to Cope
with Overseas
Responsibilities
Lack of
Cultural Skills
Why Expatriate
Assignments Fail
Personality
Personal
Intentions
Family
Pressures

16. Realistic Previews
Careful Screening
Cultural and Language Training
Improved Benefits Packages
Improved Orientation
Helping Expatriate
Assignments Succeed
Managing Expatriates – Reasons for Success

17. LITERATURE REVIEW

18. Paper :Diversity management in transcultural organizations
Author: Bryan Christiansen ; Hakan Sezerel [2013]
• This paper demonstrates the importance of global organizations to develop and incorporate
motivational Cultural Intelligence (CQ) programs into their Diversity Management (DM) policies within
the context of Strategic Human Resource Management (SHRM).
• This paper also elucidates workforce diversity in a trans-cultural context via evidence from empirical
research and current corporate practices.
• Effective DM practices which includes providing motivational CQ training, implementing DM ‘‘Best
Practices,’’ and developing ‘‘Global People Skills’’ in rank-and-file employees can greatly assist in
achieving sustainable corporate performance in the trans-cultural organizations of twenty-first
century globalization

19. Paper : Managing Human Resources in International Organizations
Author: Neha Tiwari [2013]
• Multinational Companies (MNC’S) use three types of strategies
for transfer of HR practices across different nations;
 Ethnocentric strategy uses same HR practices of parent company
in host nations
 Polycentric strategy employ local people as workforce and adapts
the HR practices of host nation
 Geocentric strategy only focuses on skills of the employee and
adopts HR practices which are most effective and efficient irrespective of the
nationality
• The international organizations can use culturally sensitive and adaptive
HRM practices for creating competitive advantage in overseas operations.
In attempt to explore new markets and opportunities multinational companies
are adapting to HRM practices across different borders.

20. Paper: Cross-cultural conflict and affirmative action: Inter-and intra-
ethnic dilemmas
Author: Max U. Montesino [2012]
• Focuses on affirmative action policies, both as a mechanism for managing cross-
cultural conflict and as creator of other types of conflict in multi-ethnic
Malaysia.
• The article identifies several cross-cultural conflicts that the nation is facing
after four decades of affirmative action implementation.
• Based on a field research report and a theoretical literature review, the article
provides the reader with information about the complex Malaysian
environment. It points to cross-cultural conflict potentials, as well as the
influence of ethnic identity and conflict management models used in Malaysia’s
workplace.
• The article finally provides the reader with implications for managing conflict in
the Malaysian work context in the future.

21. Examples

22. Cultural Diversity
• Although many companies seek to have cultural diversity, cultural diversity
itself can bring its own set of problems for management professionals if
they are inadequately prepared to deal with such diversity.
• Cultural differences can hamper the sense of togetherness and
belonging that many companies seek to create when consciously developing
a cultural identity for workers.
• The University of Colorado points out that one of the primary issues created
by cultural diversity is the potential inability to effectively communicate with
workers of various backgrounds.
Problems Encountered With
Workplace Culture

23. Religion
• Another cultural problem that can arise in the workplace is the differences in
religious worldview or belief.
• This can be a problem in more than one way.
For instance, if certain individuals are required by their religious faith to
dress in a certain manner or wear a particular piece of cultural garb that
others might find offensive, this can create cultural division within
the workplace.
• Differences in religious ideas can also cause division, especially if those ideas
are discussed freely during times when workers are idle.
Problems Encountered With
Workplace Culture

24. Conflict Resolution
• Cultural differences can also create problems in terms of conflict resolution.
However, problems with conflict resolution are not necessarily a result of
cultural differences.
• Cultural differences can create additional problems when attempting to
resolve conflicts, though. The inability to communicate, for one, can make it
difficult to effectively resolve a problem.
• Conflict resolution is something that companies can deal with effectively if
they have established policies and procedures for when major disputes arise
between workers in the context of workplace culture.
Cultural Awareness
• Cultural awareness, or a lack thereof, is yet another problem that may be
encountered in workplace culture. ("us" versus "them“ )
Problems Encountered With
Workplace Culture

25. Cultural Diversity in India faced by
• When Google founders Sergey Brin and Larry Page visited India a few years ago,
they reportedly came across as college backpackers.
• They just seemed too informal, given their responsibilities for managing Google. Their
experience illustrates the fact that countries differ widely in their cultures in other words, in
the basic values their citizens adhere to, and in how these values manifest themselves in the
nations arts, social programs, and ways of doing things.
• Cultural differences manifest themselves in differences in how people from different
countries think, act, and expect others to act.
• For example, in a study of about 330 managers from Hong Kong, Mainland China, and the
United States -
• The U.S. managers tended to be most concerned with getting the job done.
• Chinese managers were most concerned with maintaining a harmonious environment.
• Hong Kong managers fell between these extremes

26. The Hofstede Study
• Professor Geert Hofstede - Dutch social
psychologist, former IBM employee, and
Professor Emeritus of Organizational
Anthropology and International
Management at Maastricht University in
the Netherlands
• The study illustrates other international
cultural differences.
• For example, Power distance represents
the extent to which the less powerful
members of institutions accept and
expect an unequal distribution of power.

27. The Hofstede Study
• He concluded that acceptance of such inequality
was higher in some countries (such as Mexico) than
in others (such as Sweden).
• In turn, such differences manifest themselves in
different behaviors. Such cultural differences
influence human resource policies and practices.
• For example, Americans heavier emphasis on
individuality may help to explain why European
managers have more constraints, such as in
dismissing workers.
• As another example, in countries with a history of
autocratic rule, employees often had to divulge
information about their coworkers. Here,
whistleblower rules, popular in America, are
frowned upon.

28. Mergers Don’t Always Lead to Culture Clashes ?
In 2005 when banking giant Bank of America (BOA) announced its $35 billion
acquisition of credit card giant MBNA, there many thought that in a few years
this merger would join the heap of those done in by cultural differences.
MBNA’s culture
• Free-wheeling
Entrepreneurial spirit that was also quite secretive.
MBNA employees also were accustomed to the high life. Their
corporate headquarters could be described as lavish.
Employees throughout the company enjoyed high salaries and
generous perks
Bank of America`s Culture
• Low-cost
No-nonsense operation
Size and smarts were more important than speed
In short, the cultures in the two companies were very,
very different

29. Mergers Don’t Always Lead to Culture Clashes ?
• To try to manage the cultural transition, executives of both companies began by
comparing thousands of practices covering everything from hiring to call-center
operations.
• In many cases, BOA chose to keep MBNA’s cultural practices in place. In other cases,
BOA did impose its will on MBNA.
• For example, because MBNA’s pay rates were well above market, many MBNA
managers were forced to swallow a steep pay cut. Some MBNA employees left, but
most remained
• In other cases, the cultures co-adapted.
• For example, MBNA’s dress code was much more formal than BOA’s business-casual
approach. In the end, a hybrid code was adopted, where business suits were
expected in the credit card division’s corporate offices and in front of clients, but
business causal was the norm otherwise

30. Was it a Successful Merger ?
• YES. The merger is working very well.
• BOA made another, more recent and much larger acquisition: Merrill Lynch.
After a rough start, most evidence suggests this mega-merger saved Merrill
from bankruptcy and appears to be working well, which
might suggest that BOA has found the secret to successful mega-mergers.

31. Is it realistic for a company to try to institute a standardized human resource
management system in its facilities around the world ?
Develop the
international HR
system, such as
by
forming global
networks
Take steps to ensure
the system is
acceptable to those
who must implement
it, such as by investigating
pressures to differentiate
practices
Implement the
international HR
system and
practices,
such as by allocating
adequate resources
• A study suggests that the answer is yes.
• In this study, the researchers interviewed
human resource personnel from six global
companies Agilent, Dow, IBM, Motorola,
Procter & Gamble, and Shell Oil Co. as well
as 123 international human resources
consultants.
• The study's overall conclusion was that
employers who successfully implement
global HR systems do so by applying several
best practices. The basic idea is to develop
systems that are acceptable to employees in
units around the world, and ones that the
employers can implement more effectively.

32. People must be judged not on the basis on
the color of their skin, or the beliefs in their
faith but the merit of their ability and
content of their character.
Dr. Bemurdez Svankvist

33. THANKS!
Any questions?