When a business grows to become a multinational corporation (MNC), the range and scope of its operations is expanded. A MNC must have qualified individuals who perform specific jobs at specific places and times to accomplish organizational goals. This process entails obtaining such people globally through human resource planning, recruitment and selection. As a result, the term global manager is often used to describe a manager who works outside their country of origin. Yet, according to a seminal article by Bartlett and Ghoshal (1992), there is no such thing as a universal global manager. Instead, there are three kinds of specialists that are employed by MNC - business managers, country managers and functional managers.
This report examines the concept of a global manager. The problems faced by global managers will be discussed at length because it is a known fact that a significant proportion of global managers fail to perform their tasks well. In particular, the cultural issues faced by these managers will be explored, with an emphasis on the frameworks formulated by Hofstede and Trompenaars. The report will end will recommendations on what companies can do now to prepare their managers for these new markets.
1.1. Global Manager Defined
A critical examination on the relevant literature revealed no satisfactory definition of the term "global manager". Indeed as Bartlett and Ghoshal (1992) have pointed out, there is no single type of global manager. However, for the sake of clarity and simplicity for this short report, the global manager will be referred to as the expatriate. An expatriate can be defined as an employee working in a firm who is not a citizen of the country in which the firm is located, but is a citizen of the country in which the company is headquartered (Mondy et al, 1999). MNCs employ expatriates to ensure that foreign operations are linked effectively with the headquarters. However, research has shown that approximately 30 percent of U. S. expatriates fail in their assignments and are subsequently repatriated (Grainger and Nankervis, 2001). This is due to a number of factors that will be discussed in detail later. In addition, sending an employee on an international assignment is costly to the business as there are normally many perks involved to 'sweeten the deal' to entice high caliber employees to work in overseas branches. Therefore, MNCs need to evaluate the effectiveness of their expatriate remuneration schemes to minimize failure and wastage of resources.
2. REASONS FOR EXPATRIATE FALURE
As mentioned earlier, 30 percent of U. S. expatriate assignments fail each year. It is important to identify the causes of failure as the cost of failure is very high to the MNC. Some of the most common reasons for these failures are:
2.1. Family Dissatisfaction
Many expatriates are married with children. When they are transferred overseas, they normally bring their families along, especially if the assignment is for an extended period. While some families cope well with the change in environment, others find it difficult to get adjusted. Spouses and children may feel cut off from their family and friends, or they may crave for the comforts of the home environment that are not available abroad. In some cases, the family fails to assimilate in the new environment and the result is stress and friction at home (Black and Gregersen, 1999). Consequently, the expatriate may find it difficult to concentrate on the job and may be forced to return home for the sake of the family.
2.2. Cultural Issues
This second issue is somewhat related to the first. Relocating to a new country requires mastering a new culture, which can be very daunting especially if the culture is very different from that of the home country. Apart from the family experiencing difficulty in getting adjusted to a new culture and a new language, the expatriate also faces difficulty in adjusting to the new workplace culture. Failure to understand the culture of the host country might result in conflict at the workplace and unhappiness on both sides (Robbins and Judge, 2007). Executives often make the mistake of trying to replicate the work culture of the home country overseas when it may be incompatible with the locals. This then leads to frustration and failure to achieve organizational goals.
2.3. Feeling of Isolation from Home Company
It is important to identify whether an employee has the right personality and attitude to become an expatriate. Some view a foreign assignment optimistically, seeing it as a way of learning new cultures and expanding their set of job skills. Others may view it as a form of exile and harbor deep resentment at being sent away (Dwyer, 2004). These expatriates may feel isolated from the home company and are unable to perform their best.
2.4. Perception of 'hardship' and Remuneration Package
Initially, international human resource management theories assumed that overseas relocation is inherently problematic, regardless of which country the expatriate is sent to or how cultural and socioeconomic circumstances are similar to the home country (Foster, 1996). However, these theories are being challenged. While American expatriates sent to Africa, the South Pacific or South America may face some level of 'hardship' and alienation the same cannot be said of expatriates who work in locations like Singapore, Hong Kong or Tokyo. Even though there may be slight problems of adapting to a new language and culture, the expatriate is not subjected to substandard living conditions. Therefore, some researchers suggest that instead of 'overpaying' expatriates, a better option would be to prepare the expatriate for the assignment through language and cultural training (Allard, 1996).
3. MODELS OF CULTURAL DIMENSIONS
As mentioned earlier, owing to cultural incompatibility issues either for the expatriate, his immediate family or both, the expatriate fails in the overseas assignment. Why is this so? To answer this satisfactorily, we need to examine the concept of "culture". Culture can be defined as the values, beliefs, behavior and material objects that constitute a people's way of life (Macionis, 1999). A people's culture is their sense of identity and worth, and some hold on to their cultures very dearly. Indeed, there is a Malay saying that goes, "Biarlar mati anak asalkan tidak mati adat", which can be loosely translated as "Let the child die, as long as the culture does not die".
Culture is so ingrained in our psyche that when we are exposed to different cultures, it can sometimes have an unsettling effect on us. This is referred to as cultural shock which is personal disorientation that results from being exposed to an unfamiliar way of life. The expatriate is prone to cultural shock, especially when the host country culture is vastly different from that of the home country. Two researchers that have made important contributions to understanding cultural dimensions are Hofstede and Trompenaars. Their works in relation to global managers will be discussed in the following paragraphs.
3.1. Hofstede's Cultural Dimensions
Hofstede classifies four dimensions of culture (Rugman & Hodgetts, 1995). They are power distance, uncertainty avoidance, individualism and masculinity.
3.1.1. Power Distance
Power distance is the degree to which less powerful members of organizations and institutions accept the fact that power is not distributed equally (Rugman & Hodgetts, 1995). People in societies where authority is obeyed without question live in a high power distance culture. In countries with high power distance, managers make autocratic and paternalistic decisions and the subordinates do as they are told. Often, these societies have business structures that are typified by close control of operations and a fairly weak work ethic (Hill 2001). Organization structures tend to be tall and managers have relatively few subordinates reporting directly to them. In countries with moderate to low power distance, people put a high value on independence, managers consult with subordinates before making decisions and there is a fairly strong work ethic. Organization structures tend to be flat and managers directly supervise more subordinates than do their counterparts in high power distance enterprises.
3.1.2. Uncertainty Avoidance
Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations and have created institutions and beliefs for minimizing or avoiding these uncertainties (Rugman & Hodgetts, 1995). Countries with high uncertainty avoidance try to reduce risk and to develop systems and methods for dealing with ambiguity. Countries with high uncertainty avoidance tend to formalize organizational activities and depend heavily on rules and regulations to ensure that people know what they are to do. There is often high anxiety and stress among these people, they are very concerned with security and decisions are frequently a result of group consensus (Daniels et al, 2007). Low uncertainty avoidance societies have less structuring of activities and encourage managers to take more risk. People who are less stressed have more acceptance of dissent and disagreements and rely heavily on their own initiative and ingenuity for getting things done.
3.1.3. Individualism
Individualism is the tendency of people to look after themselves and their immediate family only. This dimension is in direct contrast with collectivism, the tendency of people to belong to groups that look after each other in exchange for loyalty (Rugman & Hodgetts, 1995). Hofsted has found that economically advanced countries tend to place greater emphasis on individualism than do poorer countries. Countries with high individualism tend to expect people to be self-sufficient. There is a strong emphasis on individual initiative and achievement. Autonomy and individual financial security are given high value, and people are encouraged to make individual decisions without reliance on strong group support (Timmons & Spinelli, 2009). In contrast, countries with low individualism place a great deal of importance on group decision making and affiliation. No one wants to be singled out for special attention, even for a job well done. Success is collective and individuals praise is embarrassing because it implies that one group member is better than the others. Countries with low individualism emphasize belongingness and draw strength from group affiliations.
3.1.4. Masculinity
Masculinity is the degree to which the dominant values of a society are success, money and things (Rugman & Hodgetts, 1995). Hofstede measured this dimension in contrast to femininity, which is the degree to which the dominant values of a society are caring for others and the quality of life. Countries with high masculinity scores place a great deal of importance on earnings, recognition, advancement and challenge. Achievement is defined in terms of wealth and recognition (Hofstede, 2010). These cultures often tend to favour large-scale enterprises and economic growth is viewed as very important. Countries with low masculinity scores place great emphasis on a friendly work environment, cooperation and employment security. Achievement is defined in terms of human contracts and the living environment. There is low stress in the workplace and workers are given a great deal of wisdom.
3.2. Trompenaars Seven Dimensions of Culture
3.2.1. Universalism/ Particularism
This distinguishes societies based on the importance that is placed on obeying laws and rules instead of personal relationships (Gutterman, 2010). In a universalistic society, such as in Europe, members are concerned with obeying rules, laws and standards and feel that they must be given preeminence over personal feelings and relationships. In other words, laws are applicable to everybody and are used as a basis of distinguishing between right and wrong. Hence, members of such societies employ accurately defined contracts to conduct business and believe that such contracts are final and immutable, and at the same time use global standards for human resource practices and company policies.
On the other hand, members of particularistic societies feel that human relationships and friendships are more important that rigid rules and believe that the former should be used as a basis to determine what is morally right and that different circumstances warrant different requirements, for example in Asia.
3.2.2. Individualism/ Collectivism
This is similar in concept to the dimension explained by Hofstede. In individualistic societies, the individual happiness, well being and welfare are of the utmost importance. On the other hand, in collectivistic societies, the group is more important that individuals.
3.2.3. Achievement/Ascription
This is also similar in concept to Hofestede's power distance. In achievement oriented societies, high status is given to individuals who have accomplished the most and not because of who they are. Such societies are more egalitarian as power and authority is based on merit. Organizations tend to be flatter and less bureaucratic. In contrast, ascription oriented societies attribute status based on social position, gender, wealth and other factors. Titles are frequently used and there is a rigid stratification of society based on class and the workplace is characterized by multiple levels of hierarchy.
3.2.4. Neutral/Affective
This dimension is based on how societies view display of emotions by members (Gutterman, 2010). Neutral societies are those that maintain a stiff upper lift and refrain from open displays of emotions. Hence, members tend to act cooler and show more restraint in showing their feelings, such as in Japan. However, members of affective societies are very open and vocal about their feelings, such as in India. They are unabashed about showing their emotions towards others.
3.2.5. Specific/Diffuse
This dimension focuses on how members in a society engage with their colleagues in specific or many areas in their lives (Brealey, 2005). In a specific oriented society, there is a clear distinction between work and social life. Bosses at work are not treated as bosses outside the workplace, for instance in a social setting. Similarly, colleagues may not be regarded as personal friends. On the other hand, in a diffused society, the distinction between work and social life is blurred. As a result, the hierarchy of authority at work can reflect into social areas outside of work hours.
3.2.6. Internal/External
This dimension refers to the extent to which members of a society believe they are able to control their environment as opposed to the environment controlling them (Brealey, 2005). Members of internal societies believe that while the world is complex, they are masters of their destiny and are able to control it if they put in the necessary effort. People are more dominating and resistant to change. However, members of an external society, while not fatalistic believe that they cannot control nature and therefore choose to live in harmony with it. Such societies are more fluid and flexible.
3.2.7. Time Orientation
This refers to whether members of a society prefer to do one thing at a time or multiple things at a time (Gutterman, 2010). People who live in sequential societies like to do one thing at a time and follow strict plans and schedules. In contrast, those who live in synchronic societies view time as flexible and are able to do several things at the same time. Schedules are followed loosely and activities are chosen based on their priorities.
4. RECOMMENDATIONS
Based on the models by Hofstede and Trompenaars, it is obvious that there are many dimensions in which cultures differ. With these differences in mind, companies should then formulate strategies to prepare their managers for these new markets. Some of them are as follows:
4.1. Expatriate Development Programs
These should comprise every step of the overseas assignment. Prior to departure, the expatriate and family should receive orientation and training. This requires learning as much as possible about the foreign country's language, culture, history, local customs and living conditions (Bracken et al, 2001). During the assignment, the expatriate should attend continuous development programs. This entails expanding the expatriate's skills set, career planning and home country development. Finally, repatriation programs need to be held when the expatriate returns for the transition may sometimes be uncomfortable.
4.2. Cultural Training
The following are some aspects of cultural training that can improve the success of an overseas assignment:
Style of Negotiation. Negotiation styles are different in each country so expatriates must be aware of them. In some countries, individual decision making is common while in others, collective decision making is prevalent.
Communication. How business contacts address and communicate with each other and the level of intimacy is different across the globe (Frazee, 1999). Non-verbal cues are also highly significant in some cultures. In some countries it is acceptable for business contacts to address each other by first name while in others, formal titles are used.
Social relations. In America, businesspeople try to create a more informal work environment to make things more comfortable. In contrast, Europeans are more formal and view such informality as rudeness.
4.3. 360-degree Feedback
This in an increasingly popular approach in which managers obtain ratings from multiple sources (Luthans and Farner, 2002). These include peers, managers and even customers. Information that is gathered is used to develop the manager by identifying strengths and performance gaps. It can also be used for administrative purposes, such as for performance appraisal and training.
5. CONCLUSION
In today's era of globalization, it is inevitable for an ambitious business to expand its operations internationally. However, many global managers fail in their assignments which is unfortunate and should not occur if they receive proper training and development. Indeed, an overseas assignment can be an exciting and rewarding life experience for the global manager if the manager has the right attitude and has the necessary cultural awareness to succeed.
