Understanding Cultural Environments

Rapidly changing environment leads to organizational members facing the globalization of business. There are no more national borders as a barrier for producing goods and services abroad.

Examples

BMW German Car manufacturer, Cars build in Sout Carolina
Walmart expanding retail operations in China
General Electrics expected to receive 60% of its revenue growth from developing countries in the next ten years
Toyota makes cars in Kentucky
Mercedes sports cars build in Alabama
American John Deere farm equipment made in the USA and shipped to Russia, China to the Middle East, Indian and German made to the USA. Tractors assembled in the USA with parts received from twelve countries and are shipped to over 110 countries.

--> HRM professionals and organizational members need to adapt to cultures, legal systems and business practices in many different countries.

In mid 60's did multinational corporations MNC's become commonplace. These corporations maintain significant operations in more than two countries simultaneously but are based in one home country (Neste).

USA Companies with a significant amount of revenues streaming from foreign operations.

Procter & Gamble
Apple
Disney
Coca-cola

The rise of multi-and transnational corporations places new challenges for HRM. Employees with the approppriate mix of knowledge, skills and cultural adaptability are needed to handle global assignments.

Each country needs to be understood in its own context but HR professionals.

Status

Ascribed status, France: Seniority and Education
Achieved status, USA: Personal accomplishments

Countries that value Individualism and acquiring things: United States, Great Britain, Australia, Canada, Netherlands, New Zealand

Countries that value Collectivism, Relationships and concern for others: Japan, China, Pakistan, Singapore, Venezuela, Philippines

Human resource managers need to understand social issues such as status that might affect operations in another country. USA law guards against an employer taking action against an employee solely on the basis of an employee's age. Important to recognize the cultural dimensions of a country's environment. Cultural values Individual vs Collective.

Cultural variables

Status differentiation
social uncertainty
assertiveness (itsevarmuus)

These variables indicate a country's means of dealing with its people and how the people see themselves.

In an individualistic country as USA people are primarily concerned about their own families.

in a collective society like Japan, people care for all of the individuals who are part of their group.

A strong US employee might not work well in the collectivistic surrounding in Pacific Rim country, Flexibility and adaptability are required from employee's working abroad. HRM has a thorough understanding of the culture of the areas around the globe to which they send employees. Also, mechanisms are needed which help multicultural individuals to work together. Important to reduce conflict: age difference, custom, language, background.

The Impact of Technology

Internet, GPS, smartphone etc. top innovations of the last twenty years.

Thomas Friedman, a Pulitzer prize winning New York Times author explains three eras of globalization:

1. Transportation. Columbus 1492 discovery of new world to 1800. During this time countries tried to establish their place in the world by conquering or collaborating with other countries and territories. Emphasis was the national identification and economic domination. The world shrank from a size large to a size medium

2. Communication. 1800 to 2000. Multinational companies emerged, seeking labor and markets for the goods of the industrial revolution. The expansion was fueled by lower costs and increased speed of transportation and communication, shrinking the world size from medium to a size small.

3. Technology. 2000-->. Countries, companies, and individuals were able to compete on an almost level playing field aided by cheap, instantaneous communication via fiber optics and the internet.Fast inexpensive transportation of people and goods aided this transportation of power that further shrank the world from a size small to a size tiny. Individuals are now empowered to compete globally regardless of a country of origin.

Friedman projects that world economies will be dominated by empowered individuals, creating a business environment that is more diverse and less dominated by organizations in Western countries.

3.0 Globalization has already been experienced. Supply and Demand have shifted to other countries. Globalization 3.0 has shifted demand for manufacturing and services such as customer service to low-cost providers in Mexico, India, and China. NB Finland to Estonia: Nordea, UPM, Atoy.

According to Friedman these changes are inevitable and will only grow in their impact. Global organizations need to recognize that this diverse world includes many different nationalities, languages, and cultures. HR professionals need to be prepared for the challenge in welcoming diversity and adapting training.

Knowledge worker

Technology has had bad and good impacts on workers. The demand for manufacturing has reduced but an increase in demand for service producing and technology positions. IT along internet publishing and wireless telecommunications expected to be the fastest growing job sectors in the next decade.

Peter Drucker: Key to the productivity of knowledge workers depends on the ability to use technology to locate and use information for decision making.

Knowledge workers as a group- individuals in jobs designed around the acquisition and application of information-currently make up about a third of the US workforce. Knowledge workers include nurses, accountants, lawyers, teachers, engineers. Also technologists such as computer programmers, software designers, and system analysts.

How Technology Affects HRM practices?

Technology has affected positively internal operations and the way HRM work. HRM professionals have become the primary source of information in many organizations. Communication quick through company websites and intranets, email, Facebook, and Twitter.

Human Resource Information Systems HRIS allow HRM professionals to better facilitate human resource plans, make decisions faster, clearly define jobs, evaluate performance and provide cost effective benefits that employees want.

Technology helps to strengthen communication with both the external community and employees:

1. Recruiting

Contacting a pool of qualified applicants is one of the most critical aspects of recruiting. Also, word of mouth, newspaper advertisements and college visits have been replaced by internet job postings. Company websites and specific job-search websites such as careerbuilder.com or Monster.com, help to reach a larger pool of applicants showing also basic technology skills required. Electronic resume.

2.Employee Selection

Technology-based organizations hard to find good people, unique brand of technical and professional skills required. Qualified applicants can receive numerous offers. Final applicants have to be scanned well and see if they fit in the organizations' culture. Realities of today's organization: informal,team-spirited workplace, pressure and timing critical, 24/7 work mentality. Companies like Four Seasons and Southwest Airlines recruit employees who convey a positive attitude, which for them is a better indicator of job success and fit with company culture than experience.

3. Training and Development

The technology has changed the way HRM orient, train, and develop employees and help them manage their careers. Web-based training and development to employees on demand whenever the employee has time to concentrate on the material. Four Seasons has discovered the advantage of delivering language training and management development classes online. Teleconferencing allows group collaboration and training regardless of location. Organizations, which rely heavily on technology find an increased need for training. Online teleconferencing and training help HR departments to stretch the budget.

4. Ethics and Employee Rights

Privacy vs surveillance of employees. The desire to control employees. Sophisticated surveillance software brings the problem of how far organizat

ion should go in monitoring the behavior of their employees. Technology can allow an opportunity for misuse and nonproductive work behaviors. The American Management Association reports that 66% of employers monitor employee's internet use and 28% have fired employees for e-mail misuse.

5. Motivating knowledge workers

More vulnerable to distractions that can undermine their work effort and reduce their productivity. Employees are not hired to shop online. Recreational on-the-job web surfing costs over a billion dollars in wasted computer resources and billions more in lost work productivity annually. Significant cost to the business in terms of time and money,

6. Paying Employees market value

Harder for organizations to find and retain technical and professional employees. Many companies have invented a list of attractive incentives, signing bonuses, stock options, cars, etc. These have downsides as it can lead to a feeling of inequality among other co-workers. Stock options can reduce employee motivation if market conditions are not favorable.

7. Communications

Direct communication on individual level possible without going traditional routes (secretary?). The open communication systems break down historical organizational communication pattern flows. Technology also redefines how meetings, negotiations, supervision and water cooler talk are conducted. Facebook, LindedIn, Twitter and other social media allow employees to keep in close contact regardless of position or location. Makes also International gossip communication possible.

8. Decentralized Work Sites

Challenge for HRM's revolves around training managers to establish and ensure appropriate work quality and on-time completion. Decentralized work sites remove traditional face-time and there should be no need for the m+anagers to control the work all the time. Greater employee involvement allows workers to discretion to make decisions that affect them. Managers must recognize that due dates have to flexible for off-site workers, they can work three hours now and then. The emphasis is on the final product not on by the means how it is accomplished. Should in the future be basis salary or paid per worked hour?

9. Skill levels

What are the skill implications of this vast spread of technology? Employee's job skill requirements will increase. Workers need the ability to read and comprehend software and hardware manuals, technical journals and detailed reports. The Technology tends to level the competitive playing field.

Competetive playing field

The Economic and legal environment in which all competitors, irrespective of their size or financial strength, follow the same rules and get equal opportunity to compete.
Read more: http://www.businessdictionary.com/definition/level-playing-field.html

It provides organizations possibility regarding the size the ability to innovate and bring products to the market rapidly. Also, respond to customer requests.

Globalization 3.0 states that individuals compete worldwide in purchasing and providing services. Companies have found out that services in technology, programming, radiology, and financial analysis can be provided by skilled employees in India as easily as an employee in the United States.

10. A legal concern

Clear policy needed that thoroughly explains what is appropriate and inappropriate use of company Internet use, e-mail and social media. Employees need to understand that there is no privacy when they use e-mail, blogs, and social media. Personal comments and photos are often grounds for discipline if they can be interpreted as discriminatory, harassing or defamatory.

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