Today’s managers have to deal with a workforce that is increasingly diverse. Evaluate the managerial implications of Hofstede’s Dimensions of National Cultures in understanding this diversity.
INTRODUCTION
The paper aims to study the increasing relevance of workforce diversity with the help of Hofstede’s cultural framework. The topics covered include workforce diversity, business examples, and Hofstede’s cultural framework.
WORKFORCE DIVERSITY
Bhadury et al. (2000) suggest that amongst the numerous environmental developments that in the recent years that have affected the firms are the briskly changing workforce composition, a phenomenon called workforce diversity. The development of this new workforce diversity trend started in the 1990s was largely owing to the globalisation & liberalization of markets. Fleury (1999) defines diversity as a mix of individuals having diverse group identities in a social system. If a firm’s workforce profile constitutes worker groups showing differences according to demographic or any other facets, diversity emerges. Dessler (1998); Bhadury et al. (2000) suggest that the numerous characteristics which discriminate these groups are geographic origin, race, gender, age, ethnicity, educational or functional background, cognitive and physical capability, cultural background, beliefs, language, lifestyles, economic category, sexual preference and tenure with company. Diversity has been examined both as basic dimensions as well as secondary dimensions with Daft (2003) who put diversity through dual differentiation. Basic dimensions include race, gender, ethnicity, cognitive or physical capability that depict differences that are either inborn or influence in the course of an individual’s life span; which also are the key elements that shape individuals self-images or perspectives. Secondary dimensions include those characteristics that individuals possess all through their lives; that is, qualities that are acquired afterwards and generally are changeable. The secondary dimensions seem less effective than the basic dimensions. They influence a person’s approach and self-identity while simultaneously showing how others perceive these persons. Some specifications like individuals’ beliefs, languages, marital status, social-economic status, business experience and education level of an individual supplement new dimensions for identify themselves as well as for being identified by other people. Higgs (1996); Lavaty and Kleiner (2001) opine that in this 21st century, increase of diversity is amongst the key trends that are affecting workforce. Like in the global population, it has also been observed that diversity progressively also enhances the workforce structure.
It is also significant to understand that along with workforce diversity, cultural diversity in firms is also critical. The workforce composition formed by employees of different cultural groups strengthening a firm’s workforce diversity specifies cultural diversity. A firm’s cultural diversity includes secondary diversity characteristics and has likewise significant impact on the individual’s manners, attitudes and perceptions. Frey-Ridgway (1997); Karoc-Kakabadse and Kouzmin (2001) propose that since distinctive individuals and group qualities that result from a firm’s cultural diversity influence the manner of perceiving one other and the sense of identity; also the dissimilarities in the patterns of organizational attitude, management style, communication styles & behavioural characteristics can largely be tracked backwards to the cultural effects. Shenkar (2001) alternatively has dealt with cultural distance concept, and clarifies the degree to which there can be similarities or differences within cultures. Cultural distance is a vital variable in management, strategy, HRM and organisational behaviour.
REAL-LIFE BUSINESS EXAMPLES
With the rise of global production, global brands and global employment this appears as a global culture era. Here we consider the two contrasting cases of globalization experiences of MNC’s. First, there is GE (General Electric Company) that during the 1990’s expanded into the Western Europe. They acquired more than 100 firms in countries like France, Italy, Spain and Germany. Rather than adapting their business practices for fitting into the these cultures, GE introduced American centered management practices including a standard international accounting system, Work-Outs TM, six sigma, as well as rapid market intelligence (Taras, et al., 2011). The firm managers were informed that titles were now of no relevance, and workers would be evaluated on the basis of what they know, not their organizational hierarchy. Such blatant cultural differences disregard for theoretically ought to have caused enormous outflows of valued European talent, since managers would tend to resist the implementation of overseas business practices locally, however the company achieved success.
Contrastingly, Wal-Mart Stores have experienced innumerable global expansion worries, most conspicuously in Germany. In spite of a more fruitful UK based ASDA retail acquisition $10.8 billion in 1999, Wal-Mart’s Germany venture achieved less success (Taras, et al., 2011). Wal-Mart in 2005 sold the 85 stores Germany to competitor Metro incurring $1bn loss. Wal-Mart’s for the first in over a decade witnessed a loss. The American model of business replicates success in Germany for GE but not for Wal-Mart? One of the possible reasons why GE was successful whereas Wal-Mart failed was in understanding the relevance of culture, and, possibly more significantly, when the culture matters. A critical warning signal for cultural gaffes of such kind is turnover, particularly at top levels (Taras, et al., 2011). Indeed, Wal-Mart in contrast to GE filled its top managerial positions with expatriates in Germany, a move which was perceived by the German executives as arrogant. As a consequence, talented managers left the company in large scale; depriving it of treasured local expertise that the matters became worse with Wal-Mart insisting that every German manager would have a U.S. origin superior, escalating the costs. Wal-Mart in 2006 also sold its South Korea stores and faced similar difficulties in Great Britain and Japan (Taras, et al., 2011).
HOFSTEDE’s CULTURAL FRAMEWORK
Hofstede’s cultural framework has helped in generating an extensive body of substantiation which has been utilized successfully in a business. Culture has been defined by Hofstede (1980a) as a mind’s collective programming that differentiates the human group’s one member from another. He developed his framework using morale survey data of IBM’s employees across 72 nations. On the basis of factor analysis at a country level, he classified countries in 4 dimensions. First dimension was IND–COL, in which IND represented a loosely interwoven social structure in which individuals care for themselves or for their immediate relatives, whereas COL refers to social framework having individuals distinguish among ingroups as well as outgroups, where they expect ingroup for looking after them, where in return they feel obligated to being extremely loyal to them (Hofstede, 1980b). The 2nd dimension being (PD) power distance, which has been defined by Hofstede (1980b) as the magnitude to which the society consents to the truth that the power in organizations and institutions is unequally distributed. 3rd, (UA) uncertainty avoidance has been defined by Hofstede (1980b) as a degree to which one society believes threatened by ambiguous and uncertain situations while trying avoiding these situations through making available better career stability, instituting added formal rules, believing in expertise attainment & the absolute truth and not tolerating divergent behaviors & ideas . The 4th dimension being (MAS) masculinity and (FEM) femininity, with MAS according to Hofstede (1980b) being the degree to which a societies dominant values are ‘‘masculine’’ such as, assertiveness, money or other thing’s acquisition, and not bothering about others, the life quality, or other people and while FEM considered opposite to MAS. A fifth dimension was developed Hofstede and Bond (1988) known as Confucian dynamism (in other words short-term vs. long-term orientation). Whereas long-term orientation referred to the future-oriented values like thrift & persistence, the short-term orientation on the contrary referred to the values of past- and present like tradition as well as fulfilling of social obligations.
According to Sivakumar and Nakata (2001)The work of Hofstede’s (1980a) has received criticism for simplifying culture as an exceedingly simplistic 4or 5 dimension concept; restricting the sample size to one MNC; failing to account for the flexibility of culture during the course of time; while ignoring the heterogeneity within the culture of a country. Despite the criticism, this 5 dimension framework has been favourable among researchers due to the clarity, resonance and parsimony with managers.
CONCLUSION
Development of this new workforce diversity trend started in the 1990s was largely owing to the globalisation & liberalization of markets. Diversity is defined as a mix of individuals having diverse group identities in a social system. Like in the global population, it has also been observed that diversity progressively also enhances the workforce structure. A firm’s cultural diversity includes secondary diversity characteristics and has likewise significant impact on the individual’s manners, attitudes and perceptions. Hofstede’s cultural framework has helped in generating an extensive body of substantiation which has been utilized successfully in a business. Culture has been defined as a mind’s collective programming that differentiates the human group’s one member from another. On the basis of factor analysis at a country level, he classified countries in 4 dimensions including IND–COL; power distance; uncertainty avoidance and masculinity & femininity. Confucian dynamism was a fifth dimension added later. Understanding the relevance of culture, and, possibly more significantly, when the culture matters is extremely critical.
REFERENCES
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Web sources
Taras, V.; Steel, P. and Kirkman, B.L. (2011) “Three decades of research on
national culture in the workplace: Do the differences still make a
difference?”, [Online] accessed on 15th April 2013 from http://webcache.googleusercontent.com/search?q=cache:http://www.vtaras.com/Taras_Steel_Kirkman_Three_Decades_of_Research_on_Culture.pdf