Influence of Cross-Cultural Diversity on Human Resource Management Practices

Title of the submission Influence of Cross-Cultural Diversity On Human Resource Management Submitted To International Conference Organized by Department of Management Sciences (PUMBA) University of Pune, M.S., India Name of the author Parag Arun Narkhede Department and affiliation Faculty & Placement Co-ordinator Department of Management Studies, North Maharashtra University, Jalgaon Mailing address A-68,69 Co-operative Industrial Estate, Ajanta Road, Jalgaon 425003 E-mail address paragnarkhede@yahoo.com, parag.narkhede@gmail.com Phone number(s) +91-9422778876, +91-257-2210474(R), +91-257-2257462(O) fax number(s) +91-257-2258403/406 INFLUENCE OF CROSS-CULTURAL DIVERSITY ON HUMAN RESOURCE MANAGEMENT Abstract The cultural diversity of organizations all over the globe has increased as a result of the globalisation of the world economy. Recent estimates indicate that there are over 1000,000 firms with international operations, and they have annual revenues in excess of $3500 billion. Not surprisingly, the growth in the number of firms with international operations has been accompanied by an increase in the cultural diversity of their employees. All aspects of organizational functioning reflect permeable national boundaries. Yet much of our personal and interpersonal interactions are guided by cultural values, expectations, and attitudes. Some values transcend cultural boundaries and are mutually reinforcing. Other cultural values create interactions with high potential for conflict, misunderstanding, poor performance, and ultimately, individual and organizational ineffectiveness or failure. The increase in cultural diversity of Indian firms may lead to substantial benefits, including increased creativity, improved decision making, and broader markets for products. However, more cultural diversity also may pose important challenges for these firms, whether or not they have multinational operations. For instance, as cultural diversity increases, firms may need to develop new strategies for managing and motivating their employees. Other cultural values create interactions with high potential for conflict, misunderstanding, poor performance, and ultimately, individual and organizational ineffectiveness or failure. Such problems are influencing HR practices in many organizations. This paper handles some of the issues pertaining to human resource practices with respect to cross culture that contribute towards the efficiency and effectiveness of organizations and the performance and well-being of their members. Keywords: Cross Culture, Diversity, Human Resource, Globalization Introduction It is well recognized in studies of managerial behavior that a manager’s effectiveness highly depends upon their success in dealing with interpersonal relationships. An effective manager should be able to “manage” not only his/her subordinates and co-workers but also superiors. In other words, to effectively accomplish work through interpersonal networks, managers must succeed in influencing the behavior of others, including their superiors. Likewise, given the increasing numbers of transnational and multinational corporations in the global economy and the migration of workers from one country to another, more and more managers, whether employed abroad or working domestically, have to work with superiors and subordinates from other cultures(Tong, Raltson, 2002). Developing a more informed understanding of the dynamics of intra-organizational influence behavior from a cross-cultural perspective, undoubtedly should help to improve organizational and managerial effectiveness in multinational corporations. MNC’s and the World Wide Web play a special role, not only in building cross-cultural bridges among home and host nations, but also in providing innovative multicultural understanding through their informational and practical knowledge-based resources. Multicultural expectation has brought people’s thoughts, efforts, and natural resources toward more effective, efficient, and productive managerial outcomes. Because of the rapid growth of such multinational e-commerce and the World Wide Web, people around the globe are becoming more culturally interdependent. Global interdependence is no longer a matter of belief, ideology, or choice; it is an inescapable reality. Multicultural synergy is a provocative effort by modern humans to create innovative thoughts and methods through application of international value systems. Multiculturalism is making possible all human efforts to create an understanding among all cultures. What is Culture Culture refers to an organization's values, beliefs, and behaviors. In general, it is concerned with beliefs and values on the basis of which people interpret experiences and behave, individually and in groups. Cultural statements become operationalized when executives articulate and publish the values of their firm which provide patterns for how employees should behave (Kotelnikov, 2007). Culture is to society what memory is to individuals (Kluckhohn, 1954). We can distinguish material and subjective culture. The tools, dwellings, foods, clothing, pots, machines, roads, bridges, and many other entities that are typically found in a culture are examples of material culture. Subjective culture includes shared ideas, theories, political, religious, scientific, economic, and social standards for judging events in the environment (Triandis, 1972). The language (e.g., the way experience is categorized and organized), beliefs, associations (e.g., what ideas are linked to other ideas), attitudes, norms, role definitions, religion, and values of the culture are some of the elements of a cultural group’s subjective culture. Ideas about how to make an item of material culture constitute subjective culture as well (e.g., mathematical equations needed to construct a bridge), so the two kinds of culture are interrelated. Cultures emerge because ecologies (climate, geographic features, ways of making a living) are different from place to place. Cultural diversity emphasizes dissimilarities among people; it emphasizes this notion that we are more different than we are similar. The difference between cultural diversity and multiculturalism is the distinction between classes of people according to their original sociopolitical and cultural ideologies. In cultural diversity, there are majority and minority groups, but in multiculturalism there is no stratification of people on the basis of race, color, ethnicity, and nationality. (Parhizgar, 2002). Why Should Organizations Care About culture? Culture is a basic framework through which one views the world as a community of people. The fundamental idea behind multiculturalism is that everyone is individual and that we are more similar than we are different. This notion is based upon a civic ideology that all subcultures within a society encompass all similar values and people from all ethnicities, religious faiths, political ideologies, and traditions should be treated the same. When members of multiple cultures are organized together, how they see the situation will differ; this potentially leads to conflict, dissonance, and ultimately team process losses. For example, the importance of understanding multiculturalism in the workplace has also been emphasized by Stone (2003), who state that individuals have differing work scripts (i.e., ideas about the appropriate sequence of events within a given situation) and behavioral expectations based on cultural differences. This will ultimately impact the organization in that goals may not be reached (e.g., loss of productivity and profits, accidents in the workplace, failed mergers). In this context, training can be applied to help individuals understand cultural differences that may be present in the work scripts and to help smooth differences in organizational expectations. Multiculturalism means a healthy environment in which everyone has an appropriate place in that particular society according to his or her personal qualifications. People respect each other regardless of their differences and/or group affiliation. Therefore, multiculturalism is the means of collaborative participation among multiple cultures in one social system to share their mutual understanding for pacing the whole social system toward a meaningful achievement for all (Parhizgar, 2002). Influence of cross-cultural diversity on HRM The success of HRM activities across cultures is largely dependent on managers’ abilities to understand and balance the dichotomy of various culture values and practices. If the practices and values of a subsidiary do not fit locally, or expectations of local employees are incongruent with organization practices, the results are often more destructive than constructive. While some research has focused on adaptation to the norms and behavior of a foreign culture as much as possible (Tung, 1991), normative integration is seen to be a useful means of exposing a subsidiary’s employees to the corporate culture and to help them develop a corporate perspective (Dowling et.al 1999). At the level of the subsidiary, it is clear that the subsidiary needs to align HRM practices such as election, appraisal, rewards and compensation with organizational values. A subsidiary is a value-adding entity in a host country which can perform a single activity (such as marketing) or an entire value chain of activities (Dunning, 1994. The various approaches of the multinational subsidiary management should depend on the different activities (roles) taken by the subsidiaries (Birkinshaw & Morrison, 1995). Various country cultures with different values may lead to different strengths and capabilities (Trompenaars, 1993).Therefore, a multinational subsidiary should use cultural differences problem solving styles to perform value-added activities and (hence) create sustainable competitive advantages (Hoecklin, 1994). Therefore, at the level of subsidiary, MNCs should compare the cultural advantages of home country with host country in terms of various value-added activities to determine the dependence of subsidiary on parents’ resources or local cultural resources. Recruitment process Organizations have long been concerned with attracting highly talented employees. One reason for this is that organizational performance is often influenced by the knowledge, skill, and ability levels of their members. Another reason is that there is a growing shortage of highly talented employees in the labor force, and organizations are increasingly competing to attract these individuals. Selection Process Cross-national comparisons of the specific techniques of selection reveal large differences across nations in the use of selection procedures to gather information about applicants. These studies show that many of the standardized selection practices that are identified as “best practices” in Western research are used infrequently in many other cultures. Some procedures seem almost universal in their use. These include the application form and unstructured interviews. Among Western nations, France seems to stand out as a country that makes less use of the interview than others with only 45 percent reporting their use in one survey (Shackleton & Newell, 1994). Another exception is China, where employers seldom use the interview (Von Glinow & Chung, 1989). Even among countries where the use of the interview, application, and references is widespread, there are large variations in the information asked of the applicants. Questions about personal background and family are allowed in many countries like India but are often considered illegal or inappropriate in the United States. Job Design Jobs will be designed for individuals in individualist cultures, but in collectivist cultures some job assignments will be made to groups. Erez (1997) suggests that enriching individual jobs will be the goals of managers in horizontal individualist cultures, and placing individual jobs in a hierarchy of authority and responsibility will be the goals of vertical individualist managers. Horizontal collectivist managers will emphasize autonomous work groups, selfmanaged teams, and quality circles, whereas vertical collectivist cultures will emphasize team work controlled by top management teams but will also use quality circles. Cross-cultural training Robert et al. (2000) found that training would be valued more by individualists, who would view this practice as an opportunity for advancement in terms of job knowledge and, by extension, position in the organization. However, their results showed that continuous training was positively related to job satisfaction across the Indian, Mexican, and American subsidiaries. A major concern is how to train expatriates to work in another culture. When collectivists and individualists come into contact, those who are bicultural (have lived a long time in another culture) are high in both individualism and collectivism, whereas Western samples tend to be high only on individualism and Eastern samples tend to be high only on collectivism. Thus, the bicultural individuals will require less training. Much training is required when there is a large cultural distance between the culture of the trainees and the culture of the place they are assigned to. Indians are ready work in any country allover the world compared to people in other countries. The greater the cultural distance there is, the greater the culture shock from visiting another culture is likely to be (Ward et al., 2001). Also, when there is a large discrepancy between the personality of the visitor and the hosts, adjustment is more difficult and depression is more likely (Ward et al., 2001). Conflict Resolution Research suggests there are different levels of conflict avoidance in different national cultures. For instance, Japanese are much more likely than the Americans to avoid conflicts. Japanese participants avoid conflict in more situations than American participants (Triandis et al., 1988). Gabrielidis et.al. (1997) also propose that collectivists display more concern for others than individualists so that the conflict can be more avoided. These findings, of course, are consistent with the view that collectivist cultures are more apt to emphasize harmonious relations, at least with other in-group members, than individualist cultures. Superior–Subordinate Relations and Employee Evaluation Communalists often control the expression of unpleasant emotions in the presence of other people, so as not to disturb the relationship. For example, Stephan, Stephan, and de Vargas (1996) found strong support for the proposition that people in collectivist cultures feel less comfortable expressing negative emotions than do people in individualist cultures. The data came from Costa Rica and the United States. People in Latino cultures, and possibly in all collectivist cultures, expect others to be “nice” during their interactions and become upset when the other person is insufficiently supportive (Triandis et al., 1984). Thus, supervisors in collectivist cultures may have to express their criticism indirectly. Nevertheless, several studies suggest that vertical collectivists accept a critical supervisor more than do individualists. Leadership Good leaders among collectivists are warm, supportive, and also production oriented. However, the specific behaviors that are considered “warm” are not the same in every culture (Smith & Peterson, 1994). For example, criticizing an employee in Japan requires much greater concern for “saving face” than it does in the West. A warm supervisor does not criticize directly but rather conveys the critical information though a trusted close friend of the employee to be criticized. Being nurturing first and then demanding high production is the right way to lead in India (Sinha, 1996). The similarity between leadership style and culture is critical for good performance by the leader’s subordinates. The ideal leader in horizontal cultures would be a resourceful democrat; the ideal leader in vertical cultures would be the benevolent autocrat. Promotions from within will be more common in horizontal cultures, and leadership appointments from the outside or from a high status group will be more common in vertical cultures. In horizontal cultures leadership may rotate, and leaders may treat subordinates as equals. In vertical cultures leadership reflects the cultural hierarchy (e.g., upper class or caste results in leadership even when the individual does not merit the position). Leaders in individualist cultures tend to focus on the behavior of individuals, whereas in collectivist cultures they tend to focus on the behavior of groups. The distance between leader and followers is small in the horizontal and larger in the vertical cultures. Empowerment Robert et.al. (2001) notes that the outcomes associated with empowerment are quite different across countries based on horizontality-verticality. For example, Robert et al. (2000) discuss the fit of empowerment and national culture based in part on power distance and also on collectivism. They argue that power distance should moderate the relationship between job satisfaction and perceived empowerment. Employees in the United States, Mexico, and Poland were found to have more favorable views of their supervisors when perceived empowerment is high, whereas Indian employees rate their supervisors low when empowerment is high. However, the relationship in Mexico (like India, a high-powerdistance country) was weaker than in the United States and Poland (both low power-distance countries). The reasoning is that workers in higher-power-distance cultures would be less comfortable with acting autonomously and their superiors less supportive of empowerment efforts, thus leading to conflict and tension. Conclusion It is clear that organizations are becoming more culturally diverse, and a better understanding of multiculturism and its impact on organizations is to be focused. If a company has a welldefined corporate culture, it can create an environment that leads to success and that can see it through difficult times. As this paper indicates, there is much diversity within a given culture as well as across national cultures. Much of our knowledge of human resource management (HRM) practices in organizations is based upon research conducted in single cultures or about diversity within a given country (e.g., United States, India, Mexico or China). There is a need for more discussion and research about the influence of multiple cultures on HRM practices. References 1. Birkinshaw, J.M. and Moorrison, (1995) Configuration of strategy and structure in subsidiaries of multinational corporations. Journal of International Business Studies, 26:729-754 2. Dunning J.H. (1994) Multinational Enterprises and the Global Economy. Workingham, England: Addison-Wesley Publishing Co. 3. Erez, M. (1997) New perspectives on international industrial and organizational psychology (pp. 193–242). San Francisco: Lexington Press. 4. Evans P. and Doz Y. (1989) Human resource Management in International Firms: Changes, Globalization, Innovation, London: Macmillan 5. Hoecklin L. (1994) Managing Cultural Differences: Strategy for Competitive Advantage. Workingham, England: Addison-Wesley Publishing Co 6. Kluckhohn, C. (1954). Culture and behavior: Handbook of social psychology (Vol. 2, pp. 921–976). Cambridge, MA: Addison-Wesley 7. Kotelnikov Vadim ( 2007) Corporate Culture, retrieved from http://www.1000ventures.com/business_guide/crosscuttings/culture_corporate.html 8. Parhizgar, Kamal (2002). Multicultural behavior and global business environments. New York: International Business Press: Binghamton 9. Robert, C., Probst, T. M., Martocchio, J. J., Drasgow, F., & Lawler, J. J. (2000). Empowerment and continuous improvement in the United States, Mexico, Poland, and India: Predicting fit on the basis of dimensions of power distance and individualism. Journal of Applied Psychology, 85, 643–658. 10. Shackleton, V., & Newell, S. (1994). European management selection methods: A comparison of five countries. International Journal of Selection and Assessment, 2, 91–102. 11. Sinha, J. B. P. (1996). The cultural context of leadership and power. New Delhi: Sage. 12. Smith, P. B., & Peterson, M. F. (1994, July). Leadership and event management: A cross-cultural survey based on managers from 25 countries. Paper presented at the International Congress of Applied Psychology, Madrid, Spain. Retrived from www.google.com 13. Stone, D. L., Stone-Romero, E. F., & Salas, E. (2003). The influence of culture on role conceptions and role behavior in organisations. Applied Psychology: An International Review, 52(3), 328–362 14. Tong, Raltson (2002) Moving Toward a Global Understanding of Upward Influence Strategies: An Asian Perspective with Directions for Cross-Cultural Research, Asia Pacific Journal of Management, 19, 373–404 15. Triandis, H. C. (1972). The analysis of subjective culture. New York: Wiley 16. Triandis, H. C., Brislin, R., & Hui, C. H. (1988). Cross-cultural training across the individualism-collectivism divide. International Journal of Intercultural Relations, 12, 269–289. 17. Triandis, H. C., Marin, G., Hui, C. H., Lisansky, J., & Ottati, V. (1984). Role perceptions of Hispanic young adults. Journal of Cross-Cultural Psychology, 15, 297– 320. 18. Stephan, W. G., Stephan, C. W., & de Vargas, M. C. (1996). Emotional expression in Costa Rica and United States. Journal of Cross-Cultural Psychology,27, 147–160. 19. Tung, R. L. (1991). Motivation in Chinese Industrial Enterprises. In Motivation and Work Behavior. New York: McGraw-Hill 20. Von Glinow, M. A., & Chung, B. J. (1989). Comparative human resource management practices in the United States, Japan, Korea, and the People’s Republic of China. Research in Personnel and Human Resource Management, 1, 153–171. 21. Ward, C., Bochner, S., & Furnham, A. (2001). Psychology of culture shock. Hove, England: Routledge. 22. Watson, W. E., Kumar, K., & Michaelsen, L. K. (1993). Cultural diversity’s impact on interaction process and performance: Comparing homogeneous and diverse task groups. Academy of Management Journal, 36(3), 590–602. 23. Trompenaars F. (1993). Riding the Waves of Culture. London: The Economist Books. 24. Wasti, S. A. (2002). Affective and continuance commitment to the organization. Test of an integrated model in the Turkish context, International Journal of Intercultural Relations, 25, 525–550.