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The success of Home Furniture Ltd. (HF) is due to their commitment to provide affordable yet high-quality products. As a result the corporate leaders at HF went the extra mile in developing solutions to rising manufacturing costs as well as shipping costs. For them the best way to lower manufacturing cost is through innovation.
The company developed a system of manufacturing that enabled them to disassemble furniture, ship it to customers, and then re-assembled in the comfort of their own home. It was an overwhelming success. The company was established in Finland but today HF already has a global presence. However, with the global expansion comes the inevitable problems associated with it. The corporate leaders at HF came face-to-face with challenges related to culture and logistics.
Their difficulties were exacerbated by the fact that HF is no longer governed by a Finnish CEO but one who comes from the UK and together with his promotion to the top post, he brought with him a set of cultural beliefs and core values that came in conflict with teams working overseas. The new British CEO must learn how to do business in a global scale and it requires a clear understanding of cultural differences and its impact in developing teams.
Some of the most significant changes made by the new CEO was to adopt the English language as the official language of communication throughout the organisation. Thus, multicultural teams located as far as India and other Asian countries must comply with this new directive.
However, it did not take long for the CEO to realise that the communication strategy used to implement change revealed conflicts due to cultural differences. More importantly the CEO was made aware of the fact that there are serious lapses in human resource management especially when it comes to global operations. There is a need to formulate a strategy to solve these problems and the best way to start is to realise that culture is at the heart of the matter.
A. Provide the new Home Furniture CEO with advice on the policy he should adopt when operating in various countries and employing people from various countries. Refer to the various concepts and outcomes of research on management across cultures.
The CEO must lead the way when it comes to understanding differences in culture and the need to effectively managed multicultural teams (Hogan, 2007, p.81). There must be a program that teaches top managers on how to deal with diversity within the organisation. The struggle in coping with the challenges of diversity is especially true for the expatriates that HF sent to handle their Asian and American business operations.
The said training program should be instilled into the hearts and minds of the top-level managers who will be sent as expatriates to foreign countries. They must learn to respect, appreciate and manage diversity.
They must come to realise that culture is: a) the collective programming of the mind that distinguishes one human group from another; b) important sets of assumptions that are shared by members of a community; and c) a group’s characteristic way of perceiving the environment” (Earley & Singh, 2000, p.18). These are the things that they cannot afford to ignore.
HF’s CEO must emphasise the fact that technical expertise is just part of the learning process, they must also learn the significance of understanding cultural differences. Members of the multicultural teams scattered all over the globe must come to terms with the fact that “Culture give people a sense of who they are, of belonging, of how they should behave, and of what they should be doing, culture impacts behaviour, morale, and productivity at work, and includes values and patterns that influence company attitudes and actions” (Moran & Harris, 2007, p.6).
If the CEO and the top-level managers are in agreement about these issues then they will develop a keen awareness of the strengths and limitations of multicultural teams and how to deal with employees in foreign lands.
A deeper understanding of culture and its impact on the organisation can be understood by referring to a framework developed by a psychologist named Geert Holfstede (Mindtools, 2011 p.1).
These are labelled as follows: 1) Power/Distance; 2) Individualism; 3) Masculinity; 4) Uncertainty/Avoidance; and 5) Long Term Orientation. (Mindtools, 2011, p.1). These five dimensions cover important aspects of business operations such as corporate leadership, teamwork, how to deal with employees and how employees will interact with their supervisors.
It is even helpful when it comes to gender issues. It also give leaders the ability to develop systems and company policies based on the local culture and not on what they believe is true according to their own culture. The framework developed by Holfstede is a helpful tool when it comes to devising strategies for developing human resources.
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The first dimension labelled as Power/Distance is an important contribution in the study of international business. This cultural dimension is the measure of the effect of the perception of power when it comes to the interaction between two people. In the UK it is non-issue if a subordinate will deal with a boss in a manner that will reveal that they are equals, without considering age differences and social status.
If the same thing is done in a country like Japan where there is a high score in the Power/Distance dimension, then the boss will be offended by the lack of respect from the subordinate.
The second dimension which is Individualism is the measure of the “strength of the ties people have to others within the community” (MindTools, 2011, p.1). This means that in Asian countries the workers will chose harmony over confrontation. They will do everything not to rock the boat so to speak. This can be frustrating for a Westerner when it comes to dealing with problems in the company and find no one will speak out and talk about the issues that are hounding the group.
The third most important insight that Hofstede contributed to the study of international business is how to measure long term orientation or LTO. This particular cultural dimension is very critical when it comes to introducing something new to the company. It is imperative that HF’s CEO is aware of this facet of culture.
If the CEO ignores the implications of LTO then he will be bewildered when he encounters resistance when it comes to a policy change. This resistance is due to the natural tendency to use what worked in Western societies but does not necessarily mean that it is also effective in an Asian context.
Hiring and Training
Before going into the intricacies of multicultural teams the first thing that has to be done is to hire the best and brightest, train them and then hope to retain their services for a long period of time. It is the finding, training, and retaining of skilled workers that can thrive in Western-style multinational corporate cultures that will ensure the success of HF in foreign lands (Krizan et al., 2008, p.381).
HF’s CEO must be aware of the strength and weaknesses of the talent pool available to him. The best way to illustrate this is to look at HF’s needs in the context of their operations in China.
According to experts there are four types of managers that HF can hire and these are 1) Western expatriates; 2) Asian Expatriates; 3) Mainland Chinese returning home; and 4) Local talent (Lau, 2007, p.1). The same thing can be said of other operations outside Finland thus this is a good way to demonstrate how the CEO will deal with hiring and training expatriates and local talent.
The strength of Western expatriates is seen in the way they understand international business and their familiarity with Western management techniques. However, they do not posses a deep understanding of the Chinese culture and they are very limited in terms of using the Chinese language.
Asian expatriates on the other hand can be as good as Western expatriates in terms of their knowledge with regards to Western management techniques. Furthermore, they have another advantage; they have a far better grasp of Chinese culture and language.
One option open to HF is to hire managers that are from Mainland China who went abroad to study or live there as expatriates and decided to come back to their homeland and work there.
Their advantage is they understand the Western mindset and trained to implement strategies from a Western point of view. This group is valuable to the company in terms of their ability to understand Chinese culture. The only challenge is that HF must offer them an attractive compensation package so that they will be enticed to come home and work in China.
The fourth group are the locals. The problem is that they lack international exposure and deficient when it comes to English language skills. Moreover, they need to be trained to appreciate and embrace the standard of quality expected by HF. Nevertheless, it is more practical to hire local talent than to hire someone from abroad.
This is the reason why HF build teams by hiring a small number of local managers at the level of middle-management and then bring in an expatriat to guide the team initially for four years. This is a good practice because the locals will know that they have job security and that the company has a long term commitment in their country.
Aside from localising the management team one way of retaining top talent is through investing in training and development as seen in the following, “many foreign businesses have extensively rotated local talent through various countries. This rotation and related possibility of promotion is also an effective way of retaining human capital developed by the company” (Luo, 2007, p. 181).
It is important to remember though that training programs should be a product of careful planning with an eye towards the future and not simply a hastily assembled training program that does not meet the needs of multicultural teams. According to Schuler and Jackson, “Enterprises often carry out training without strategic planning, costing or taking into account what the training needs of the enterprise” (2007, p. 282). This will not work for HF.
B. The sophisticated nature of logistics and the innovation and development of products at Home Furniture means that its employees are required to work in teams. Advise the new CEO on what he should take into account when forming multi-cultural teams from various countries where Home Furniture has offices, stores, and production units, and how to manage those teams.
Develop a Training Program
HF’s CEO must design and develop a training program that will transform the way the organisation deals with multicultural teams. According to experts multicultural teams can easily become the most productive teams in the organization but at the same time this type of team can easily underachieve (Adler & Gundersen, 2008, p.140).
The reason for this is the inability of the CEO to manage diversity (Adler & Gundersen, 2008, p.140). This is a crucial aspect of multicultural teams that HF must consider. If the CEO has no idea what to do with cultural diversity within a multicultural team then conflict will arise and he will be powerless to deal with it.
Experts are saying that the usual method of conflict resolution is by avoidance using the divide and conquer tactic evident in compartmentalisation or departmentalisation of an organisation (Earley & Singh, 2000, p.21). Another method is through suppression by using the power of corporate hierarchy to stifle dissenting voices (Earley & Singh, 2000, p.21)
But recent studies indicated that conflict is something that organisations must learn not to avoid; they must learn to embrace it. This is especially true when it comes to “functional conflicts” because a closer inspection will reveal that this type of conflict is “viewed as a way of surfacing more ideas, criticisms, and opinions of group members regarding task performance and can make a positive contribution to group performance” (Earley & Singh, 2000, p.21).
This is why the CEO must create an environment where conflict is addressed properly and not discourage team members to voice out their opinions and suggestions.
With regards to the creation of a training program for multicultural teams, HF’s CEO must design it in such a way that team members will be able to “reflect on their own self (My Biography); they should be objective and accurate observers (Ethnography); they should communicate effectively (Inter-cultural Communication); interact successfully with people from other cultures (Inter-cultural Interaction); they should come to terms with their emotions (Emotional Management); and deal with different issues of diversity (Diversity Management)” (Guilherme & Glaser, 2010, p.187).
The training program must teach top-level managers, middle-management and key leaders in the company to understand culture by being able to reflect on their own cultural bias and then use that to observe the cultural differences that exist around them. By doing so they have achieved a level of awareness that will enable them to communicate effectively to team members in a multicultural team. As a result they are able to resolve conflict and enhance teamwork.
The said training program that will be initiated by HF’s CEO must also contain a module wherein team leaders and team members are taught the value of communication. In the context of a multicultural team verbal skills is not enough.
According to experts in the field of international business, communication is a complex subject matter that it can even be broken down into smaller components such as: words, material things and behaviour (Hall & Hall, 1990, p.3). In other words a team member must try to decode what was said not only by listening to the words that was said but also by determining the silent language being conveyed. This new skill is not mastered easily and requires team members to spend more time together.
HF’s CEO must develop a system of hiring and training local talent. There is nothing wrong with bringing in an expatriate to guide the team in the initial stages of development. Therefore, HF must learn to manage multicultural teams. The next step is to create a training program that will instil in the hearts and minds of every single employee that they live in a globalised workplace.
It is no longer enough to focus on ones culture; it is time to understand cultural differences that exist within the team. In this way multicultural teams can be more effective and HF will be able to expand in other countries because it is now possible to hire and retain the best talent.
Adler, N. J. & Gundersen, A., 2008. International Dimensions of Organisational Behaviour. UK: Thomson Higher Education.
Earley, P. C. & Singh, H., 2000. Innovations in International and Cross-cultural Management. London: Sage.
Guilherme, M. & Glaser, E. 2010. The Inter-cultural Dynamics of Multicultural Working. Bristol: Multilingual Matters.
Hall, Edward T. & Hall, M., 1990. Understanding Cultural Differences: Germans, French and Americans. Yarmouth, ME: Inter-cultural Press.
Hogan, C., 2007. Facilitating Multicultural Groups: A Practical Guide. London: Kogan Page.
Lau, D., 2011. China: Skills Shortage Makes Long-Term Talent Management Key to Success. Web.
Luo, Y., 2007. Guanxi and Business. New Jersey: World Scientific Publishing.
MindTools, 2011. Holfstede’s Cultural Dimensions. Web.
Moran, R.T. & Harris, P.R., 2007. Managing Cultural Differences. 7th ed. London: Butterworth-Heinemann.
Schuler, R. & Jackson, S. E., 2007. Strategic Human Resource Management. 2nd ed. MA: Blackwell Publishing.