Chapter 6: Organizational Cultures and Diversity

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PowerPoint slides by R. Dennis Middlemist,
Professor of Management, Colorado State University
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Organizational Cultures and Diversity

• The specific objectives of this chapter are
• EXAMINE some of the major ethical issues and
  problems confronting MNCs in selected countries.
• DISCUSS some of the pressures on and action being
  taken by selected industrialized countries and
  companies to be more socially responsive to world
  problems.

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The Nature of Organizational Culture

• Organizational culture

• Shared values and beliefs that enable members to
  understand their roles and the norms of the
  organization, including
• Observed behavioral regularities, as typified by
  common language, terminology, and rituals.
• Norms, as reflected by things such as the amount
  of work to be done and the degree of cooperation
  between management and employees.
• Dominant values that the organization advocates
  and expects participants to share, such as high
  product and service quality, low absenteeism, and
  high efficiency.

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The Nature of Organizational Culture

• Organizational culture

• Shared values and beliefs that enable members to
  understand their roles and the norms of the
  organization, including

• A philosophy that is set forth in the MNCs
  beliefs regarding how employees and customers
  should be treated.
• Rules that dictate the dos and donts of
  employee behavior relating to areas such as
  productivity, customer relations, and intergroup
  cooperation.
• Organizational climate, or the overall atmosphere
  of the enterprise as reflected by the way that
  participants interact with each other, conduct
  themselves with customers, and feel about the way
  they are treated by higher-level management

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Interaction Between National and Organizational
Cultures

• National cultural values of employees may have a
  significant impact on their organizational
  performance
• Cultural values employees bring to the workplace
  with them are not easily changed by the
  organization

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Cultural Variations
Table 61 Dimensions of Corporate Culture
Motivation
Relationship
Identity
Adapted from Table 6.1 Dimensions of Corporate
Culture
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Cultural Variations
Table 61 Dimensions of Corporate Culture
Communication
Control
Adapted from Table 6.1 Dimensions of Corporate
Culture
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Cultural Variations
Table 61 Dimensions of Corporate Culture
Conduct
Source Reported in Lisa Hoecklin, Managing
Cultural Differences Strategies for Competitive
Advantage (Workingham, England Addison-Wesley,
1995), p. 146.
Adapted from Table 6.1 Dimensions of Corporate
Culture
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Europeans Perceptions of Cultural Dimensions of
U.S. Operations/Same MNC
Adapted from Figure 61 Europeans Perception of
the Cultural Dimensions of U.S. Operations (A)
and European Operations (B) of the Same MNC
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Europeans Perceptions of Cultural Dimensions of
European Operations/Same MNC
Adapted from Figure 61 Europeans Perception of
the Cultural Dimensions of U.S. Operations (A)
and European Operations (B) of the Same MNC
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European Management Characteristics
Table 62 European Management Characteristics
Characteristic
Corporate Commercial Administrative Industrial Fam
ilial
Management attributes Behavior Experiential Profe
ssional Developmental Convivial Attitude Sensatio
n Thought Intuition Feeling
Institutional models Function Salesmanship Contro
l Production Personnel Structure Transaction Hier
archy System Network
Societal ideas Economics Free
Market Dirigiste Social market Communal Philosoph
y Pragmatic Rational Holistic Humanistic
Adapted from Table 62 European Management
Characteristics
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European Management Characteristics
Table 62 European Management Characteristics
Characteristic
Cultural images Art Theatre Architecture Music Da
nce Culture (Anglo-Saxon) (Gallic) (Germanic) (La
tin)
Source Reported in Lisa Hoecklin, Managing
Cultural Differences Strategies for Competitive
Advantage (Workingham, England Addison-Wesley,
1995), p. 149.
Adapted from Table 62 European Management
Characteristics
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Organizational Cultures in MNCs

• There are four steps in the integration of
  organizational cultures in international
  expansions that result from mergers or
  acquisition
• The two groups have to establish the purpose,
  goal, and focus of their merger
• They have to develop mechanisms to identify the
  most important organizational structures and
  management roles
• They have to determine who has authority over the
  resources needed for getting things done
• They have to identify the expectations of all
  involved parties and facilitate communication
  between both departments and individuals in the
  structure

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Organizational Cultures in MNCs

• Three aspects of organizational functioning that
  are important in determining MNC organizational
  culture
• The general relationship between the employees
  and their organization
• The hierarchical system of authority that defines
  the roles of managers and subordinates
• The general views that employees hold about the
  MNCs purpose, destiny, goals, and their places
  in them.

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Organizational Cultures in MNCs
Adapted from Figure 62 Organizational Cultures
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Organizational Cultures in MNCs

• Family culture
• Strong emphasis on hierarchy and orientation to
  the person
• Family-type environment that is power oriented
  and headed by a leader who is regarded as a
  caring parent

• Management looks after employees, and tries to
  ensure that they are treated well and have
  continued employment
• May catalyze and multiply the energies of the
  personnel or end up supporting a leader who is
  ineffective and drains their energies and
  loyalties

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Organizational Cultures in MNCs

• Eiffel Tower
• Strong emphasis on hierarchy and orientation to
  the task
• Jobs are well defined, and everything is
  coordinated from the top
• This culture is narrow at the top, and broad at
  the base

• Relationships are specific, and status remains
  with the job.
• Managers seldom create off-the-job relationships
  with their people, because they believe this
  could affect their rational judgment
• This culture operates very much like a formal
  hierarchyimpersonal and efficient and loyalties

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Organizational Cultures in MNCs

• Guided missile
• Strong emphasis on equality in the workplace and
  orientation to the task
• This culture is oriented to work
• Work typically is undertaken by teams or project
  groups

• In projects, formal hierarchical considerations
  are given low priority, and individual expertise
  is of greatest importance
• All team members are equal (or at least
  potentially equal
• All teams treat each other with respect, because
  they may need the other for assistance
• Egalitarian and task-driven organizational culture

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Organizational Cultures in MNCs

• Incubator
• Strong emphasis on equality and personaI
  orientation
• Based on the premise that organizations serve as
  incubators for the self-expression and
  self-fulfillment of their members

• Little formal structure
• Participants in an incubator culture are there
  primarily to perform roles such as confirming,
  criticizing, developing, finding resources for,
  or helping to complete the development of an
  innovative product or service

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Four Corporate Cultures
Table 63 Summary Characteristics of the Four
Corporate Culture
Relationships between employees
Diffuse relation-ships to organic whole to which
one is bonded
Specific role in mechanical system of required
interaction
Specific tasks in cybernetic system targeted on
shared objectives
Diffuse, spontaneous relationships growing out of
shared creative process
Attitude toward authority
Status is ascribed to parent figures who are
close and powerful
Status is ascribed to superior roles that are
distant yet powerful
Status is achieved by project group members who
contribute to targeted goal
Status is achieved by Individuals Exemplifying
creativity and growth
Ways of thinking and learning
Intuitive, holistic, lateral and error correcting
Logical, analytical, vertical, and rationally
efficient
Problem centered, professional, practical, cross
disciplinary
Process oriented, creative, ad hoc, inspirational
Adapted from Table 63 Summary Characteristics
of the Four Corporate Culture
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Four Corporate Cultures
Table 63 Summary Characteristics of the Four
Corporate Culture
Attitudes toward people
Family members
Human resources
Specialists and experts
Co-creators
Ways of changing
Father changes Course
Change rules and procedures
Shift aim as target moves
Improvise and attune
Ways of motivating and rewarding
Intrinsic satisfaction in being loved and
respected
Promotion to greater position, larger role
Pay or credit for performance and problems solved
Participation in the process of creating new
realities
Management by subjectives
Management by job description
Management by objectives
Management by enthusiasm
Adapted from Table 63 Summary Characteristics
of the Four Corporate Culture
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Four Corporate Cultures
Table 63 Summary Characteristics of the Four
Corporate Culture
Criticism and conflict resolution
Turn other cheek, save others face, do not lose
power game
Criticism is accusation of irrationalism unless
there are procedures to arbitrate conflicts
Constructive task related only, then admit error
and correct fast
Improve creative idea, not negate it
Source Adapted from Fons Trompenaars and Charles
Hampden-Turner, Riding the Waves of Culture
Understanding Diversity in Global Business, 2nd
ed. (Burr Ridge, IL Irwin, 1998), p. 183.
Adapted from Table 63 Summary Characteristics
of the Four Corporate Culture
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Phases of Multicultural Development
Table 64 The Evolution of International
Corporations
Primary Product/service Market Price Strategy
orientation Competitive Domestic
Multidomestic Multinational Global
strategy Importance of Marginal Important
Extremely Dominant world
business important Product/service New,
unique More Completely Mass-customized
standardized standardized (commodity) Pro
duct Process Engineering not Product and
engineering engineering emphasized process emph
asized emphasized engineering
Adapted from Table 64 The Evolution of
International Corporations
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Phases of Multicultural Development
Table 64 The Evolution of International
Corporations
Technology Proprietary Shared Widely shared
Instantly and extensively shared RD/sal
es High Decreasing Very low Very high Profit
margin High Decreasing Very low High, yet
immediately decreasing Competitors None
Few Many Significant (few or many) Market
Small, domestic Large, Larger, Largest,
global multidomestic multinational Production
Domestic Domestic and Multinational, Imports
and location primary markets least cost exports
Adapted from Table 64 The Evolution of
International Corporations
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Phases of Multicultural Development
Table 64 The Evolution of International
Corporations
Exports None Growing, high Large, saturated
Imports and potential exports Structure
Functional Functional with Multinational lines
Global alliances, divisions international of
business hierarchy division Centralized
Decentralized Centralized Coordinated,
decentralized Primary Product/service
Market Price Strategy orientation Strategy
Domestic Multidomestic Multinational
Global Perspective Ethnocentric Polycentric/
Multinational Global/ regiocentric
multicentric
Adapted from Table 64 The Evolution of
International Corporations
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Phases of Multicultural Development
Table 64 The Evolution of International
Corporations
Cultural Marginally Very Somewhat Critically
sensitivity important important important importa
nt With whom No one Clients Employees
Employees and clients Level No one Workers
and Managers Executives clients Strategic
One way/ Many good One least-cost Many
good assumption one best way
ways Way Ways equifinality simultaneously
Source Nancy J. Adler, International Dimensions
of Organizational Behavior, 2nd ed. (Boston
PWS-Kent Publishing, 1991), pp. 78.
Adapted from Table 64 The Evolution of
International Corporations
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International Culture Diversity Focus
Phase1 Domestic firms
Phase2 International firms
Phase3 Multinational firms
Phase4 Global firms
Source Nancy J. Adler, International Dimensions
of Organizational Behavior, 2nd ed. (Boston
PWS-Kent Publishing, 1991), p. 123.
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Types of Multiculturalism

• Domestic multiculturalism
• Multicultural and diverse workforce that operates
  in the MNCs home country
• Group multiculturalism
• Homogeneous groups
• Token groups
• Bicultural groups
• Multicultural groups

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Potential Problems Associated with Diversity

• Attitudinal problems
• May cause a lack of cohesion that results in the
  units inability to take concerted action or to
  be productive
• Perceptual problems
• When culturally diverse groups come together,
  they often bring preconceived, erroneous
  stereotypes with them
• Inaccurate biases.
• Inaccurate communication

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Advantages of Diversity

• Can enhance creativity, lead to better decisions,
  and result in more effective and productive
  performance
• Can prevent groupthink
• Social conformity and pressures on individual
  members of a group to conform and reach consensus
• Can be very effective team under right conditions
• Tasks requiring innovativeness
• Activities must be determined by the stage of
  team development

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Understanding the Conditions for Effectiveness
Highly ineffective
Average effectiveness
Highly effective
Adapted from Figure 65 Group Effectiveness and
Culture
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Guidelines for Effectively Managing Culturally
Diverse Groups

• Select team members for their task-related
  abilities
• Team members must recognize and be prepared to
  deal with their differences
• Team leader must help the group to identify and
  define its overall goal
• Members must have equal power so that everyone
  can participate in the process
• All members must have mutual respect for each
  other.
• Managers must give teams positive feedback on
  their process and output