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Organizing Frameworks: A Comparative Assessment. Chapter 6.
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Intuitively, people have always assumed that bureaucratic structures and patterns of action differ in the countries of the Western world and even more markedly between East and West. Practitioners know it and never fail to take it into account. -- Michael Crozier Sociologist, France (p. 155)
Generalizing about organizations is a tricky and not entirely respectable business. -- Patricia Morison Journalist, Financial Times, UK (p. 155)
Opening question: How can organizational structures and processes differ across nations and regions, and what are the implications for global managers?
Consider: East Hope Group How did the Chinese family structure facilitate the creation and business development of East Hope? How did the family structure influence the company’s organization design and management practices? What is the role played by the Chinese government in East Hope’s success? (p. 155)
Topic for today:Organizing Frameworks: A comparative assessment • Culture and organization design: A model • U.S. corporations • Japanese kaisha and keiretsu • Chinese gong-si • German konzern • Mexican grupo
Culture and organization design Culture 1: Normative beliefs about appropriate forms of social organization (e.g., belief in centralized power; importance of individual responsibility; emphasis on rules as the basis for social control) Culturally compatible managerial views on organization design (e.g., preference for tight managerial controls; emphasis on rule compliance and individual responsibility) Culture 1: Organization design principles (e.g., tall organizations with centralized decision-making; competitive HRM environment; extensive employee policies and guidelines) Other influences on organization design (e.g., economic, political, and market forces; ownership patterns; common industry practices; legal or contractual requirements; staffing requirements or limitations; realities on the ground) Culture 2: Organization design principles (e.g., flat organizations with extensive employee empowerment; cooperative HRM environment; extensive employee networking) Culturally compatible managerial views on organization design (e.g., preference for democratic forms of organization; emphasis on teams and cross-departmental cooperation) Culture 2: Normative beliefs about appropriate forms of social organization (e.g., belief in distributed power; importance of collective responsibility; emphasis on relationships as the basis for social control) (p. 158)
Typical U.S. corporation Stockholders Independent capital markets & financial institutions Contracted legal & financial services Board of directors Contracted employment/HRM services Contracted market research & product development Chief executive officer Strong independent unions & professional associations Management Contracted company advocates & government lobbyists First-line supervisors Independent suppliers Independent distributors Employees Contingent workers (p. 163)
Consider: U.S. corporations Wide variations can obviously be found in the organization designs of U.S. companies. What are some of the principal causes of such differences? Despite the rhetoric about employees being their most important asset, the most common organizational form of a U.S. is a fairly rigid top-down hierarchy. Why is this? In your view, is the distance between “members” and “contingent” employees in U.S. corporations becoming larger or smaller? Why?
Consider: Organizations in “Anglo” cultures If Australia, Canada, U.S., and U.K. are all described as primarily “Anglo” cultures, would we expect the organizing principles of their companies to be much the same? Why or why not? If “Anglo” companies are indeed much alike, would we expect management styles to be very similar across these countries?
Typical Japanese horizontal keiretsu Horizontal keiretsu (e.g., Mitsubishi) -------------- Board of directors Group president Legal services Financial services Market research Research & product development Keiretsu-sponsored government liaisons & group advocates Keiretsu-owned or controlled banks & financial institutions President’s council (Kinyo-kai) Support to and from sister kaisha Weak national Unions, professional associations Kaisha Kaisha president Management First-line supervisors Permanent employees Enterprise union Keiretsu-owned or controlled suppliers Keiretsu-owned or controlled distributors (p. 169) Contingent Workers
Consider: Horizontal keiretsu Compared to a typical “Western” corporation, the keiretsu model is far more inclusive of members from various affiliated units (e.g., suppliers, distributors). What are the organizational advantages and disadvantages of this from the standpoint of global competitiveness? How is the role of Japanese trading companies (sogoshosha) different from similar units found in other countries? If the keiretsu model has proven to be so effective in Japanese industry, why is it not widely imitated in the West?
Typical Japanese vertical keiretsu Keiretsu-owned or controlled parts supplier Keiretsu-owned or controlled parts supplier Keiretsu-owned or controlled parts supplier Affiliated banks (e.g., financing, capital) Affiliated horizontal keiretsu (e.g., R&D, trading) Vertical keiretsu (e.g., Toyota) Keiretsu-owned or controlled Asian distributors Keiretsu-owned or controlled European distributors Keiretsu-owned or controlled North American distributors (p. 171)
Consider: HRM systems in Japan How do Japanese HRM policies and strategies support the keiretsu organizing model? Are these HRM models sustainable into the future in view of the changing competitive realities of the global marketplace? Are the basic keiretsu models themselves sustainable?
Kongfuzi’s five cardinal virtues (p. 177)
Typical family-owned gong-si Family owners Family management (including executive and general management, marketing, R&D, HRM, logistics, accounting and control; frequently seniority-based) Non-family guanxi network Extended family members and “overseas” Chinese First-line supervisors (frequently contingent) Extended family or guanxi network suppliers Extended family or guanxi network distributors Production or service workers (largely contingent) (p. 179)
Consider: Chinese gong-si Chinese gong-sitend to have a very small core of “members,” while everyone else is “contingent.” What are the competitive advantages and drawback of this model? How well would the family-based gong-simodel work as Chinese organizations increase in size and diversity?
Typical German konzern Works councilNominated by employees and unions; elected by employees; focus on working conditions Supervisory board Elected to five-year terms by members of the works council, management, & stockholders. Board includes worker representatives Stockholders Including banks Government policies and regulations Management board Top management team, appointed by Supervisory Board Codetermination (Mitbestimmung) Codetermination rights Working hours Payment methods Hiring and transfers Social amenities Training programs Policies governing vacations Safety regulations Performance appraisal Participation rights Human resource planning Employee dismissals Work procedures Operational changes Job description changes Work design changes Management Frequently promoted from the rank-and-file employees First-line supervisors Meisters, selected based on job skills and knowledge of Technik Employees Frequently hired and developed through state-sponsored apprenticeship training programs Industrial unions National unions; focus on wages & job security (p. 183) Contingent workers
Consider: German organizations Why is the concept of industrial democracy so popular in Western Europe compared to other regions of the world? How do the roles of Germany’s supervisory and management boards differ from similar entities in other Western countries? How does a Meister in a German firm compare to a first-line supervisor in the UK, US, Australia, or Canada? The apprenticeship system in Germany has come under increasing attack recently for being slow, exclusive, and expensive. If this system were to fail, where would German firms get their highly skilled workers ?
Typical Mexican grupo Family-dominated Stockholders Close business-government ties Family-controlled board of directors Appointed by family-owners to serve at their convenience Many firms maintain virtually monopolistic control over major economic sectors Close ties with other major firms through cross-board membership, often allowing oligopolistic control over industrial and service sectors Owner-CEO Strong entrepreneurial executive; family control and participation in top management team Management Professionally trained; loyal to family-owners; paternalistic and autocratic management style First-line supervisors Selected based on loyalty and ability; paternalistic and autocratic supervisory style Strong national industrial unions; tied to political parties; focus largely on wages and job security Employees Frequently hired through connections with management; loyalty to boss important (p. 191) Contingent workers
Consider: Carlos Slim and GrupoCarsa Mexico is filled with highly successful entrepreneurs like Carlos Slim, yet the country is poor and is not known for nurturing individual or group success. Why is this? How would you describe the organizational structure and management practices of GrupoCarsa? To what extent do these organization and management principles follow from Mexican cultural trends? (p. 192)
Consider: Contingent workers How might the role of contingent workers differ across these five countries? In what country or countries do you think contingent workers might be better off? Why?
Manager’s notebook:Culture and organization design • Organization designs are often highly correlated with the cultural traits of their home countries. • Organizations and their managers reflect learning systems that build on past experiences and future expectations, both of which are tied to culture. • Organization designs are continually evolving in varying degrees in response to local and global changes. • The organization designs discussed here represent central tendencies, and wide variations can often be found within individual nations and regions.
Manager’s notebook:Key success factors in working with organizations from other cultures
Application:Kirin Holdings Company • Kirin is a global leader in the highly competitive beer and soft drink market. • Kirin is part of the Mitsubishi keiretsu. • Question: What are the implications of Kirin’s keiretsu membership for its global market success? (p. 171)
Application:Kirin Holdings Company • What are the advantages and drawbacks for Kirin of being a member of the Mitsubishi keiretsu? • Does the keiretsu organizing framework provide Kirin with an unfair advantage in the marketplace by shutting out potential competitors? • How would you work to compete against Kirin in the beer and soft drink markets in both Japan and globally?
Think about it:Working for a “foreign” company • For you personally, what are the pluses and minuses of working for a “foreign” company—that is, a company headquartered outside of your home country? • What would be your biggest hurdles or challenges of accepting such a job? • What might you do to overcome these hurdles?
