chapter six

Organizational Cultures and Diversity

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Chapter Objectives

1. 2.

3.
4.

DEFINE what is meant by organizational culture; discuss interaction of national and MNC culture IDENTIFY four most common categories of organizational culture and discuss characteristics of each PROVIDE overview of nature and degree of multiculturalism and diversity in todays MNCs. DISCUSS common guidelines and principles used in building team and organizational multicultural effectiveness.

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Organizational Culture

Famous Examples of Cultural Misfit !

Daimler Vs Mitsubishi Renault Vs Nissan

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Interaction between National and Organizational Culture

National cultural values of employees may significantly impact their organizational performance.
Cultural values employees bring to workplace are not easily changed by organization
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Organizational Culture in MNCs

Four steps in integration of organizational cultures resulting from international expansion via mergers/acquisitions (Numeroff & Abraham):
1. Two groups establish purpose, goals, and focus of merger. 2. Develop mechanisms to identify most important structures and manager roles.

3. Determine who has authority over resources.

4. Identify expectations of all involved and facilitate communication between departments and individuals.
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Organizational Culture in MNCs

Three factors which determine MNC culture:

1. General relationship b/w employees and their organization. 2. Authority position defining roles of managers & subordinates. 3. The general views that employees hold about the MNCs purpose, destiny, goals and their place in them.

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Four Cultural Types

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Four Cultural Types

1. Family Culture: Strong emphasis on hierarchy and orientation to
persons. Family type environment that is Power oriented, headed by leader regarded as caring parent. Management takes care of employees, ensures theyre treated well, and have continued employment. When it works well, it can catalyze and multiply energies of personnel or otherwise members can end up supporting leader who is ineffective and drains their energy and loyalties
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Four Cultural Types

2. Eiffel Tower: Strong emphasis on hierarchy and orientation to task. Jobs well defined; coordination from top. Culture narrow at top; broad at base. Relationships specific and status remains with job. Few off-the-job relationships between manager and employee. Formal hierarchy is impersonal and efficient. Change is difficult to implement.
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Four Cultural Types

2. Eiffel Tower: Common in Northwest European countries. MNCs in these countries put a lot of focus on learning, accumulation of necessary skills to fit a role. Thats why use of rational procedures as assessment centers, formal appraisal systems, training & development programs and job rotation in managing its human resources are common in Northwest European countries MNCs.
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Four Cultural Types

3. Guided Missile: Strong emphasis on equality in workplace and in task Culture oriented to work Work undertaken by teams or project groups All team members equal Treat each other with respect Egalitarian and task-driven organizational culture Common in sophisticated & scientific industries like Air & Space , nuclear power plants, R & D firms, big Engineering & Architecture projects
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Four Cultural Types

4. Incubator Culture:

o
o o o o o o

Strong emphasis on equality and personal orientation Organization as incubator for self-expression and self-fulfillment Found in newly established entrepreneurial firms. Little formal structure Participants confirm, criticize, develop, find resources for, or helping to complete the development of an innovative product or service. One of the most short-lived culture. Over the time, this culture is replaced by one of 6-12 the other types of culture.

Managing Multiculturalism and Diversity

Success in international arena often is greatly determined by an MNCs ability to manage both Multiculturalism & Diversity. Both domestically and internationally, organizations lead workforces with a variety of cultures consisting of largely diverse populations: Women and Men Young and Old Muslims & non Muslims Highly Qualified and Less Qualified Black, White, Latin, Asian, Arab, Indian. 6-13

Locations of Cross-Cultural Interaction

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Phases of Multicultural Development

The effect of Multiculturalism & Diversity will vary depending on the stage of the firm in its international evolution.

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Phases of Multicultural Development

Domestic Stage : International cultural diversity has
little influence on domestic organizations, but domestic multiculturalism has a significant impact.

International Stage: Impact of multiculturalism, both

domestic and international cultural diversity, is highly significant.

Multinational Stage: Direct impact of international

culture may lessen slightly. More focus on managing cultural diversity within the company and less emphasis on managing cultural diversity outside the firm.

Global Stage: Impact of international cultural diversity

becomes extremely important. Firms need both internal and external diversity focus.
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How to examine Multiculturalism & Diversity ???

One way is to focus on the domestic multicultural & diverse workforce that operates in the MNCs home country.
Domestic Multiculturalism :

Culturally distinct populations can be found within firms everywhere in the world. Singapore: 4 distinct cultural & linguist groups. Switzerland: 4 distinct ethnic communities. U.S.A: Millions of first generation immigrants have brought both their languages and cultures.
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Types of Multiculturalism

Diverse groups can be categorized in the following ways: Homogenous groups Token groups: all but one have same background. A group of Japanese retailers and a British Attorney who are looking into the benefits of setting up operations in Bermuda. Bicultural groups Multicultural groups 6-18

Potential Problems Associated with Diversity

Perceptual problems
When cultural diverse groups come together, they often bring preconceived, erroneous stereotypes with them.

Lack of cohesion mainly because of peoples attitude. Japanese huddle together and discuss matters in their native language. Inaccurate communication: Mainly because of : Misunderstandings caused by words The way situations are interpreted. Different perceptions of time. 6-19

Potential Problems Associated with Diversity

Inaccurate communication: Mainly because of : Misunderstandings caused by words

I will fax you this report in a fortnight.

British: Fortnight means Two weeks, 14 days. USA: Fortnight means in 04 days.
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Advantages of Diversity
Enhance creativity Lead to better decisions More effective/productive results Prevent groupthink:
Members do not think similarly or feel pressure to conform.

Can facilitate highly effective teams under right conditions

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Managing Multicultural Teams

Select team members for task-related abilities, not solely based on ethnicity Team members must recognize and prepare to deal with their differences Team leader must help identify/define overall goal Mutual respect among members is critical Managers must give team positive feedback on process and output
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