Executive Summary
This paper discusses the critical issues that concern organisations that operate across geographic borders. The latter part of the essay tackles how companies could present solutions in the face of the challenges they meet as they exist on an international level, through effective organisational change and development. As an example, a discussion about highly successful multinational company, General Electric, is included in this discourse.
Introduction
In the present business environment, organisations from different parts of the world aspire to bring their operations on an international level, since a company that is able to effectively make its products and services available across geographic borders signify that such corporation is successful and developed, both internally and externally. However, these types of organisations cannot easily achieve such feat, for they also have to face a number of critical issues and factors that could serve as hindrances in case they are not able to handle these efficiently. These factors, all of which concern culture and cultural differences across geographic borders, would then be the focus of this discourse. With this, it could be construed that for corporations to be able to successfully operate across geographic borders, companies should be able to generate and enact possible solutions. One such solution is organisational change and development, concepts that would also be tackled herein.
Culture: National Culture and Organisational Culture
National Culture. It is a known fact that culture varies from nation to nation—attitudes and assumptions practiced in one country may be perceived as unacceptable and offensive in another. With respect to this, in order to have a deeper understanding of such diversity that different cultures have, one may first consider the national culture of different countries; indeed, a nation’s prevailing culture also affects how individuals from these nations interact and work with each other and with people from countries different from theirs.
National culture is defined as “a community of people, whose members are bound together by a sense of solidarity, a common culture, a national consciousness (1999).” For example, the national culture of the Japan has been typified as “collectivistic, high context, high on power distance, and other-faced oriented. Although the Japanese do not religiously follow these standards in every circumstance, they remain to give much emphasis on status hierarchies and are more group oriented when compared to Germans in an overall group ( 2006).
On the other hand, the national culture of the American society is typically characterized as individualistic, universalist, and self-confident (2001). Because of this, the United States’ business culture is inevitably affected, in such a way that it Americans give much importance on the primary responsibility of the management to answer to the interests and needs of its stockholders. Hence, the dominant culture in every country evidently affects how individuals function as people toward the different aspects of their lives, from their families to their colleagues in the workplace.
Organisational Culture. In connection to the above discourse, individual or national-oriented behaviours of people could also affect how a person conducts himself or herself in the company one works for. For instance, some of these employees deal with their work responsibilities assertively, others may be lenient, while others may exert just the ample amount of effort and quality in their jobs. In the same way, the organisations wherein these people work for also have their own personalities, and these are affected and influenced by the shared standards, attitudes, norms, and expectations that are promoted within and outside these corporations. Such personality of an organisation is more properly termed as organisational culture. With this, it is evident that organisational culture and the other concepts related to it, are fundamental issues that companies have to deal with in order to be efficient across geographic borders.
Numerous researchers have already created their own explanations on what organisational culture is. In fact, corporate leaders and employees have utilized this term so often without full comprehension of what organisational culture really is. However, in the context of this discourse, organisational culture may be defined as “the set of shared behaviours, artifacts, values, beliefs, and assumptions that a corporation develops as it learns to cope with external and internal aspects of survival and success (1997).” From this definition, one could construe that organisational culture is composed of numerous elements within and outside the company; in turn, these factors influence the way things are done in the corporation and how its operations affect its productivity in both the local and international levels.
Hofstede’s Cultural Dimensions
Dutch organisational anthropologist Hofstede divided culture into four dimensions—power distance, individualism/ collectivism, masculinity/ femininity, and uncertainty avoidance (2004). It is important to be aware and comprehend these cultural dimensions for these likewise have an influence on the internal and external workings of companies that operate on an international level.
Power Distance. Power distance is described as “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally ( 2006); more simply, it is concerned with how equal, or unequal, the people are in a specific society or nation. If a country has a high power distance, this means that there is significant amount of inequalities in power and wealth within that nation. As a result, it is quite likely that that society employs a caste system and does not permit significant development for its people ( 2006).
In the organisational context, companies with high power distance make use of a tall organisational structure because there is greater rigidity in terms of hierarchy. On the other hand, if a country has a low power distance, equal opportunities are presented to the people because there is not much importance given on the differences between them, with regard to power and wealth. Also, in the context of international firms, companies with a low power distance present high requirements for entry-level positions, have smaller compensation differentials across ranks, as well as a smaller proportion of managerial to rank-and-file employees. Lastly, these firms also have a more flexible hierarchy since these do not give much focus on centralization of work tasks (1997).
Individualism versus Collectivism. Individualism is how a society perceives achievement and personal relationships, may it be collectively or individually. Furthermore, according to Hofstede (1980, 1984, 1991), individualism is a set of values that concern the relationship of a person to his or her collectivity in the society (1997). Evidently, a nation with high individualism believes that individuality or independent rights are highly significant within the society. In connection to this, people in an individualistic community think in terms of themselves. On the other hand, a nation with low individualism has a collective nature wherein close bonds exist among the people ( 2006). Moreover, collectivistic people also perceive themselves in relation a societal and cultural context.
Concrete examples of places with high collectivism are the United States and Europe, as can be observed through the nature of their families. People who reside in such locations live in nuclear families, as oppose to highly collective Asian individuals who normally live with members of their extended families.
Masculinity versus Femininity. This refers to gender differentiation, or the extent of how a society applies the traditional perception of man as a model of success, control, and authority. In nations with high masculinity, men control a major part of the society and power structure, while females are restrained because of such male supremacy ( 2006). On the other hand, in countries with low masculinity, gender discrimination does not exist for females and males are given equal opportunities voice out their views and demonstrate their capabilities.
Hofstede gives emphasis on the importance of masculinity and femininity in terms of achievement, industrial strife, high growth, aggression, work stress, and conflict. To be more specific, firms that are more masculine are fast-paced, aggressive, and focus more on development and growth over harmony and stability ( 1997). On the other hand, a feminine-oriented company is more concerned on the social interaction and operations among human resources. Moreover, such firm has a considerate and nurturing nature, which means that there is more focus on interpersonal functioning and harmony over personal gain (1997).
Uncertainty Avoidance. As was defined by Hofstede (1994), uncertainty avoidance is the “extent to which the members of a culture feel threatened by uncertain or unknown situations (). Countries with high uncertainty avoidance have low tolerance for uncertainty and as a result, usually generate policies and regulations that would accordingly reduce the amount of ambiguity. Conversely, countries with low uncertainty avoidance are less rigid when it comes to change, could handle risks, and have less rules and regulations, since they could effectively endure diverse opinions ( 2006).
In an international organisational setting, uncertainty may come from the internal and external environment of the company. An organisation’s response to such ambiguities, through the use of rules, rituals, and technology, affects its image of high or low uncertainty avoidance. For example, a company with a low level of uncertainty avoidance that is faced with an unfamiliar situation would immediately utilize the available resources to immediately respond to the ambiguous situation. On the other hand, a company with a high level of uncertainty avoidance would embrace changes and take risks and try to turn these transformations into success.
External and Internal Corporate Environment
Culture is brought about by the inevitable need of internationally recognized companies to cope with internal and external issues that could affect their continued worldwide existence and success. Corporations confront choices and influences as they deal with customers, suppliers, and other elements that belong in the external work environment. To deal with the external business setting, companies should therefore improve the following aspects in their organisations: 1) their mission or purpose; 2) their objectives and strategic approach to achieve their corporate mission; 3) lower-level tactics and goals that are concentrated on the product-market approach; and 4) methods that could determine and modify planned courses of action (1997). Conversely, in order to incorporate and adapt to the internal work setting, companies should focus on these issues: 1) a vision, or a sense of collective meaning; 2) structure of the organisation; 3) the growth and efficient supervision of human resources; 4) the management and design of work processes; and 5) consistent improvement of people and procedures (1997).
On a combined perspective, it could be assumed that the aforementioned solutions to international organisations’ problems with regard to differences in culture could be collectively termed as organisational change and development.
Organisational Change and Development
According to (1995), organisational change is “a transformation of an organization between two points in time… on the basis of content, major changes consist of transformations that involve many elements of structure or those that entail radical shifts in a single element of structure (1998).” More specifically, these changes could happen in the company’s size, decision-making approaches, and hierarchy of control. Changes could likewise occur in the company’s corporate effectiveness, division of labour, goal succession, and ability to adapt to innovation ( 1998 ). In a nutshell, change and development take place when deeply established organisational formations are accordingly transformed to adjust the identity of the company.
Normally, organisations undergo changes in order to achieve two major goals. The first of these goals is for the company to effectively adapt to its environment; and the second is to generate the necessary internal behavioural patterns of the company’s human resources, for them to have the ability to adapt to change and development. As was earlier mentioned, organisations, especially those which operate across geographical borders, encounter changes in its external environment. These transformations may either be advantageous or disadvantageous to the company, but regardless of whether it would benefit the organisation or not, it is necessary to introduce internal corporate changes that would permit the company to effectively deal with new challenges. Specific examples of such challenges are technological improvements, new government policies, critical social demands, and intensified competition (1970).
The second objective of organisational change and development is triggered if the company could not competently adapt to its environment, unless most of its human resources behave differently with regard to their relationships with other employees and to their work responsibilities (1970). It is a known fact that companies are not sustained merely through computers; they operate through people that perform organisational tasks and make corporate decisions. The attitudes of these individuals may be derived from formal and informal ground regulations in the company, that determine how an efficient manager or employee should behave when they relate with others, when they perform their responsibilities, and when they make decisions (1970). Hence, any changes or development in the organisation, whether generated through a new organisational structure or through a training program, should try to get employees to acquire new patterns of behaviour and ground regulations for interacting with colleagues, performing their work tasks, and generating decisions, both locally and internationally.
Organisational Change and Development in Multi-National Company: The Case of General Electric
During the 1980s, General Electric (GE) became a victim of the transformation of its business environment—the organisation’s diverse businesses were mostly domestic, profit margins declined for others, and other GE customers began to support other foreign competitors who were able to produce quality goods with cheaper prices (1998). Jack Welch, GE’s Chief Executive Officer (CEO) for twenty years, immediately recognized these warning indications. He realized that for the organisation to survive the 1980s and emerge triumphant in the years to come, far-reaching changes were needed, a new corporate vision was necessary, and innovative business strategies had to be generated.
The Restructuring of GE: Boundarylessness and Work-Out
Generally, when Welch became CEO, GE’s business setting was non-global and it was not able to maximise its capacity in the international business setting (1998). Also, GE only made use of a modest and outmoded technology in most of its businesses, which means that it did not take advantage of the society’s industrial advancements at that time. These are concrete international issues that show that it is necessary for GE to adapt to the dynamic environment wherein it exists, for it to survive and eventually succeed.
In order to do so, Welch made necessary changes with regard to the existing structure at GE. More specifically, he applied the concepts of boundarylessness and work-out. In a boundaryless company, barriers between company functions are removed, barriers between organisational levels are eradicated, and barriers between company locations are eliminated. As a result, the organisation reaches out to significant suppliers and makes them part of a sole procedure (1998). Additionally, he measured consumer fulfilment, generated strategic alliances, and built teams with GE suppliers and consumers, so as to remove the external barriers between the suppliers, consumers, and external stakeholders of GE (1998).
Next, to enact the concept of work-out, the human resources of GE would hold meetings for three days to frankly discuss both positive and negative issues and opinions (1998). The employees included in these meetings are senior and junior managers as well as subordinate workers. In the work-out sessions, it is necessary for the managers to answer all the questions of the subordinate employees (1998). Moreover, there could be exchange of ideas among employees, as well as healthy discussions and debates about any matter that concerns their work at GE. In essence, the objective of Work-Out is to empower the human resources of the company, lessen unnecessary work, spread the new GE culture, and to develop mutual trust between subordinates and GE’s leaders (1998). Welch believes that it is vital to have constancy and trust among the employees at GE because subordinates who do not trust their leaders would only follow their instructions out of fear and not out of respect and esteem. On the other hand, if corporate leaders do not trust their colleagues, they would not be able to believe in their capabilities to perform organisational tasks and responsibilities.
Conclusion
From the above discussions, it could be concluded that there are a number of critical issues faced by organisations that operate across geographic borders, all of which pertain to the dominant culture that is upheld in the corporation; and if not handled effectively, such companies could fail to exist and be locally and internationally successful. Fortunately, there are ways that the company could employ so as to efficiently deal with such factors and issues, and these could be collectively enacted through effectual organisational change and development.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment