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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.

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Organizational cultures and diversity

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.


The nature of organizational culture

The Nature of 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.

  • Organizational culture


The nature of organizational culture1

The Nature of Organizational Culture

  • A philosophy that is set forth in the MNC’s beliefs regarding how employees and customers should be treated.

  • Rules that dictate the do’s and don’ts 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

  • Organizational culture

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


Interaction between national and organizational cultures

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


Cultural variations

ActivitiesOutput

JobPerson

CorporateProfessional

To be consistent and precise. To strive for accuracy and attention to detail. To refine and perfect. Get it right.

To put the demands of the job before the needs of the individual.

To identify with and uphold the expecta-tions of the employing organization.

To be pioneers. To pursue clear aims and objectives. To innovate and progress. Go for it.

To put the needs of the individual before the needs of the job.

To pursue the aims and ideals of each professional practice.

Cultural Variations

Table 6–1

Dimensions of Corporate Culture

Motivation

Relationship

Identity

Adapted from Table 6.1: Dimensions of Corporate Culture


Cultural variations1

OpenClosed

TightLoose

To stimulate and encourage a full and free exchange of information and opinion.

To comply with clear and definite systmes and procedures.

To monitor and control the exchange and accessibility of information and opinion.

To work flexibly and adaptively according to the needs of the situation.

Cultural Variations

Table 6–1

Dimensions of Corporate Culture

Communication

Control

Adapted from Table 6.1: Dimensions of Corporate Culture


Cultural variations2

ConventionalPragmatic

To put the expertise and standards of the employing organization first. To do what we know is right.

To put the demands and expectations of customers first. To do what they ask.

Cultural Variations

Table 6–1

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


European s perceptions of cultural dimensions of u s operations same mnc

Activities

Outputs

Job

Person

Corporate

Professional

Open

Closed

Tight

Loose

Conventional

Pragmatic

30313233343536373839404142

European’s Perceptions of Cultural Dimensions of U.S. Operations/Same MNC

Adapted from Figure 6–1 Europeans’ Perception of the Cultural Dimensions of U.S. Operations (A) and European Operations (B) of the Same MNC


European s perceptions of cultural dimensions of european operations same mnc

Activities

Outputs

Job

Person

Corporate

Professional

Open

Closed

Tight

Loose

Conventional

Pragmatic

30313233343536373839404142

European’s Perceptions of Cultural Dimensions of European Operations/Same MNC

Adapted from Figure 6–1 Europeans’ Perception of the Cultural Dimensions of U.S. Operations (A) and European Operations (B) of the Same MNC


European management characteristics

WesternNorthernEasternSouthern

Dimension(U.K.)(France)(Germany)(Italy)

European Management Characteristics

Table 6–2

European Management Characteristics

Characteristic

CorporateCommercialAdministrativeIndustrialFamilial

Management attributes

BehaviorExperientialProfessionalDevelopmentalConvivial

AttitudeSensationThoughtIntuitionFeeling

Institutional models

FunctionSalesmanshipControlProductionPersonnel

StructureTransactionHierarchySystemNetwork

Societal ideas

EconomicsFree MarketDirigisteSocial marketCommunal

PhilosophyPragmaticRationalHolisticHumanistic

Adapted from Table 6–2: European Management Characteristics


European management characteristics1

WesternNorthernEasternSouthern

Dimension(U.K.)(France)(Germany)(Italy)

European Management Characteristics

Table 6–2

European Management Characteristics

Characteristic

Cultural images

ArtTheatreArchitectureMusicDance

Culture(Anglo-Saxon)(Gallic)(Germanic)(Latin)

Source: Reported in Lisa Hoecklin, Managing Cultural Differences: Strategies for Competitive Advantage (Workingham, England: Addison-Wesley, 1995), p. 149.

Adapted from Table 6–2: European Management Characteristics


Organizational cultures in mncs

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


Organizational cultures in mncs1

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 MNC’s purpose, destiny, goals, and their places in them.


Organizational cultures in mncs2

Equity

Project-oriented culture

GUIDED MISSILE

Fullfillment-oriented culture

INCUBATOR

Task Emphasis

Person Emphasis

FAMILY

Power-oriented culture

EIFFEL TOWER

Role-oriented culture

Hierarchy

Organizational Cultures in MNCs

Adapted from Figure 6–2: Organizational Cultures


Organizational cultures in mncs3

FAMILY

Power-oriented culture

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


Organizational cultures in mncs4

EIFFEL TOWER

Role-oriented culture

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 hierarchy—impersonal and efficient and loyalties


Organizational cultures in mncs5

Project-oriented culture

GUIDED MISSILE

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


Organizational cultures in mncs6

Fullfillment-oriented culture

INCUBATOR

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


Four corporate cultures

Corporate Culture

Characteristic

Family

Eiffel Tower

Guided Missile

Incubator

Four Corporate Cultures

Table 6–3

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 6–3: Summary Characteristics of the Four Corporate Culture


Four corporate cultures1

Corporate Culture

Characteristic

Family

Eiffel Tower

Guided Missile

Incubator

Four Corporate Cultures

Table 6–3

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 6–3: Summary Characteristics of the Four Corporate Culture


Four corporate cultures2

Corporate Culture

Characteristic

Family

Eiffel Tower

Guided Missile

Incubator

Four Corporate Cultures

Table 6–3

Summary Characteristics of the Four Corporate Culture

Criticism and conflict resolution

Turn other cheek, save other’s 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 6–3: Summary Characteristics of the Four Corporate Culture


Phases of multicultural development

Phase I (Domestic Corporations)

Phase II (International Corporations)

Phase III (Multinational Corporations)

Phase IV (Global Corporations)

Characteristics/Activities

Phases of Multicultural Development

Table 6–4

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 businessimportant

Product/service New, unique More Completely Mass-customized standardizedstandardized (commodity)

Product Process Engineering not Product and engineering engineering emphasizedprocessemphasizedemphasizedengineering

Adapted from Table 6–4: The Evolution of International Corporations


Phases of multicultural development1

Phase I (Domestic Corporations)

Phase II (International Corporations)

Phase III (Multinational Corporations)

Phase IV (Global Corporations)

Characteristics/Activities

Phases of Multicultural Development

Table 6–4

The Evolution of International Corporations

Technology Proprietary Shared Widely shared Instantly and extensively shared

R&D/sales 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 multidomesticmultinational

Production Domestic Domestic and Multinational, Imports and location primary markets least costexports

Adapted from Table 6–4: The Evolution of International Corporations


Phases of multicultural development2

Phase I (Domestic Corporations)

Phase II (International Corporations)

Phase III (Multinational Corporations)

Phase IV (Global Corporations)

Characteristics/Activities

Phases of Multicultural Development

Table 6–4

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 6–4: The Evolution of International Corporations


Phases of multicultural development3

Phase I (Domestic Corporations)

Phase II (International Corporations)

Phase III (Multinational Corporations)

Phase IV (Global Corporations)

Characteristics/Activities

Phases of Multicultural Development

Table 6–4

The Evolution of International Corporations

Cultural Marginally Very Somewhat Critically sensitivity importantimportantimportantimportant

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. 7–8.

Adapted from Table 6–4: The Evolution of International Corporations


International culture diversity focus

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.


Types of multiculturalism

Types of Multiculturalism

  • Domestic multiculturalism

    • Multicultural and diverse workforce that operates in the MNC’s home country

  • Group multiculturalism

    • Homogeneous groups

    • Token groups

    • Bicultural groups

    • Multicultural groups


Potential problems associated with diversity

Potential Problems Associated with Diversity

  • Attitudinal problems

    • May cause a lack of cohesion that results in the unit’s 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


Advantages of diversity

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


Understanding the conditions for effectiveness

Understanding the Conditions for Effectiveness

Highly ineffective

Average effectiveness

Highly effective

Adapted from Figure 6–5: Group Effectiveness and Culture


Guidelines for effectively managing culturally diverse groups

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


Organizational cultures and diversity

  • Exercises

    • Discussion Questions 1-4 (p. 175)

    • Japan (p. 176)

    • Good faith effort (p. 177)

    • Euro Disney (p. 216)


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