International HRM

Multiculturalism

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Nature of Culture Culture is the customs, beliefs, norms and values that guide the behaviour of the people in a society and that are passed on from one generation to the next.

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Dominant Culture extends to the whole of a country. Sub-Cultures exist with in the dominant culture. Organisational Culture Every organisation has its own distinct culture. Occupational/Professional Culture It cuts across dominant cultures.

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Multiculturalism means that people from many cultures (and frequently many countries) interact regularly. Global firms and even many domestic firms have multiculturalism. Infosys has nine percent of total employee strength as foreigners. A multinational corporation needs to maintain a unified culture that knits all subsidiaries together.

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Cultural Predispositions Most MNCs tend to have a cultural predisposition towards managing things in a particular way. Four dispositions are: Ethnocentricism: home countrys culture is sought to be imposed on subsidiaries. The MNC exports its HR policies and practices from home office to foreign locations. Expatriates from MNCs home country manage the affairs of the subsidiaries. Local employees occupy low level and supporting jobs.

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Justification of Ethnocentric policy Perceived lack of competent host country nationals Need to maintain a unified corporate culture among all subsidiaries Greater control and loyalty of home country nationals Key decisions are centralised

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Disadvantages of Ethnocentric policy Host country nationals are denied promotional opportunities Expatriate managers may not be able to adapt to local conditions easily and early Expatriate managers are often poorly trained for international assignments and tend to commit mistakes.

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Polycentricism implies that the MNC seeks to adapt to the local cultural needs of subsidiaries. If management policy is oriented to suit local needs, or if a product is customised to meet customer tastes, it is polycentricism in practice. Operations outside the home country are managed by individuals from the host country. Polycentric approach does not bestow absolute freedom to subsidiary heads to run their business as stand alone units.

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Advantages of Polycentric approach Seeks to eliminate high cost of relocating expatriate managers and families Offers a degree of autonomy in decision making to subsidiary heads Subsidiary heads are in a better position to adapt to local needs and tastes Since host country citizens are used, training costs may not be high Host country nationals are less expensive

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Disadvantages of Polycentric approach Tendency to lose control over subsidiaries Country managers may lose the benefit gaining exposure to overseas market

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Regiocentricism Regiocentric approach operates in the same way as polycentricism except that a polycentric company adapts IHRM practices to countries and the Regiocentric to regions. Regiocentricism has similar features, advantages and limitations as the polycentric orientation.

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Geocentricism In geocentric orientation, subsidiary operations are managed by the best qualified individuals, regardless of their nationalities. Advantages Company becomes truly cosmopolitan, Global managers are able to adjust to any business environment. Disadvantages Additional cost incurred on training and relocation of expat managers. Compensation of expatriates is higher than for host country employees.

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Cultural Dimensions: The three approaches i.e. GLOBE project Team, Hofstdes Model, and Trompenaars 7d Cultural Model provide useful concepts to understand different cultures better.

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GLOBE Project: The Global Leadership and Organisational Behaviour Effectiveness project after extensive research has identified nine cultural dimensions that distinguish one society from another and have important managerial implications. These are:

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GLOBE Project: Assertiveness degree to which individuals in organisations or societies are expected to be tough, confrontational and competitive versus modest and tender. Future Orientation level of importance a society attaches to future oriented behaviours such as planning and investing in future and delaying immediate gratification.

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GLOBE Project: Performance Orientation measures importance of performance and excellence in society. Human orientation degree to which individuals in organisations or societies encourage & reward people for being generous, caring. Gender Differentiation extent to which an organisation or society resorts to role differentiation and gender discrimination.

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GLOBE Project: In-group Collectivism degree to which individuals express pride, loyalty, and cohesiveness in their organisations and families. Collectivism/Societal degree to which organisational and societal practices encourage and reward collective distribution of resources and collective action.

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GLOBE Project: Power Distance degree to which organisational members or citizens of a society expect and agree that power should be unequally distributed. Uncertainty Avoidance extent to which members of an organisation or society strive to avoid uncertainty by relying on social norms, rituals, bureaucratic practices to minimise the unpredictability of future happenings.

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Hofstede's Cultural Dimensions: Hofstedes (Dutch) study (focussed on employees of IBM) preceded GLOBE Research Project. He identified four cultural dimensions. These are:

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Power Distance is the extent to which less powerful members of organisations accept that power is distributed unequally. Countries in which people blindly obey the orders of superiors have high power distance. US, Austria, Ireland, Norway, and New Zealand represent cultures with low power distance. France, India, Singapore, Brazil, Mexico, and Indonesia are examples of societies with a high power distance.

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Uncertainty Avoidance is the extent to which people feel threatened by ambiguous situations. Denmark and Great Britain are examples of low uncertainty avoidance cultures. Germany, Japan, and Spain typify high uncertainty avoidance societies.

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Individualism is the tendency of the people to look after themselves and their family only. The opposite of this is collectivism. Individualism is common in US, Canada, Australia, Denmark, and Sweden. People of India, Indonesia, Pakistan and a number of South American countries exhibit collectivism.

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Masculinity refers to a situation in which the dominant values in a society are success, money and other material things. In highly masculine societies, jobs are clearly defined by genders.

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Country Power Distance Individualism Uncertainty Masculinity Avoidance Austria 11 55 70 79 Canada 39 80 48 52 Denmark 18 74 23 16 France 68 71 86 43 Germany 35 67 65 66 Great Britain 35 89 35 66 India 77 48 40 56 USA 40 91 46 62

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Trompenaars Framework: Trompenaar, an European researcher after extensive research describes cultural differences using seven dimensions. These are: Universalism versus Particularism: In cultures with universalistic orientation, people believe in abstract principles such as rules of law, religion or cultural principles.

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Individualism versus Collectivism In individualistic societies the focus is on I" or me and orientation is on ones growth. In collectivist societies, focus is on groups. Neutral versus Affective In neutral cultures, the tendency of the people is to control their emotions so that it will not interfere with their judgement. In contrast, affective cultures encourage the expression of emotions.

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Specific versus Diffuse Focusses on how a culture emphasises on notions of privacy and access to privacy. In specific cultures, individuals have large public spaces and relatively small private spaces. A diffuse culture does not allow any distinction between public and private spaces. In diffuse cultures, an executives' office and home are not divided as clearly as they are in specific cultures, and work relationships often extend into personal relationships. Cultures of Sweden, UK are specific whereas those of Mexico & China are diffused.

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Achievement versus Ascription This dimension describes the methods used to acquire status. In an achievement culture, an individual is accorded status based on how well he/she performs his/her functions. Status depends on achievement. In ascription culture status is based on who or what a person is, his age, gender or social connections.

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Time Dimension Two dimensions. In first dimension, different emphasis on past, present and future. Second dimension refers to sequential versus synchronic cultures. In sequential cultures, people tend to do only one activity at a time and follow plans strictly (US, Mexico, France). In synchronic cultures (Portugal and Egypt), relationships are more important than schedules. Activities are not scheduled with definite starting or ending times.

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Internal versus External Control Where individuals believe that they have control over outcomes, they are said to be followers of internal locus of control.

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Managing Across Cultures Dimensions of Multicultural Management: 1. Motivation Across Cultures 2. Leadership Across Cultures 3. Communication Across Cultures 4. HR Practices in the National Context 5. Multicultural teams 6. Work Values

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1. Motivation Across Cultures motivation refers to the way an individual engages himself or herself in need fulfilling activities. Management Styles Control Emotional Appeal Recognition Material Reward Threats Cultural Values

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2. Leadership Across Cultures is the ability to influence others in order to work towards the achievement of shared goals. Leader of an MNC needs following skills and abilities. Cosmopolitan Skilled at International Communication Culturally Sensitive and capable of rapid adjustments Knowledge about Cultural and Institutional Influences on Management

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2. Leadership Across Cultures A Facilitator of Subordinates Intercultural Performance User of Cultural Synergy Commitment to Continuous Improvement in Selfawareness and Renewal Building a Multicultural Organisation Thru Creating Pluralism, Achieving leadership Diversity, Structural Integration, Bias free Organisation, Organisational Identification, Minimising Intergroup Conflict

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3. Communicating Across Cultures Critical dimensions in intercultural communications are: Language and Culture High and Low Context Languages Use of Interpreters Non-verbal Communication

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Tips for Effective Communication Across Cultures: Learn the Language of the Host Country Learn to Neutralise Language Accents Be aware of Cross-Cultural Barriers Use Straightforward Language and Speak Clearly Be sensitive to NON-verbal Communication Develop Cultural Sensitivity

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4. Human Resource practices in the National Context HR practices such as employee hiring, training and development, compensation and performance appraisal differ from country to country to suit different cultures and to have synergy in HRM practices.

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5. Multicultural Teams Strategies for managing multicultural teams are: Adaptation Acknowledging cultural gaps openly and working around them Structural Intervention - Changing shape of team Managerial Intervention Setting norms early Exit Removing a team member when other options have failed

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6. Work Values are the aspects of a job that bring satisfaction. Framework of Work Values Independence Conformity Individualism Collectivism Authority Equality Compliance Empowerment