© 2017 Martin Zafirov, PhD Student, New Bulgarian University (F29144)

Edited by: Yara Mohamed, Mona Timor Shehata

Published by: Ahmed Mohamed Hassan

The necessity of comparative studies of management in the different cultures sets new areas of interest in the analysis of the intercultural business environment and its impact on the organisation. Cultural differences – knowing them, assessing them and taking them into account, are extremely important in achieving effective management of the human capital. The main problems which arise in organisations with different cultural discourse are related to overcoming ethnocentrism (the tendency and mindset to assess a culture only based on the standards of your own culture) and the reaction to the culture shock.

The conditions in the multinational companies and especially the specific characteristics and requirements of the human capital make the issue of the leadership in these companies one of the most important ones for them. It is not possible to build an effective leadership which would lead to effective management of the human capital in a multinational company if the leaders rely only on getting to know the cultural values, stereotypes and cultural trends in this company. It is necessary to apply this knowledge in the actual operation of the company by using different management models and methods for employee motivation for achieving optimal efficiency in the work process. The following table shows in a summarised form the main management tools, approaches and models depending on the reference boundaries of the cultural dimensions based on the Geert Hofstede’s model[1].

 

Table 1: Main management tools, approaches and models for the different boundaries of the cultural dimensions according to Hofstede

Dimensions Low values High values
Power distance – Flat organisational structure

– Most-effective management approaches are used in team activities;

– Efficiency is achieved by adding more persons to the decision making process

– The organisational structure is most efficient when there is a centralised power and clear hierarchy;

– Management from position of power;

– Answers and responsibility are to be found at the high organisational levels.

Individualism versus Collectivism – Harmonious relationships are valued more than honesty;

– Age, traditions and wisdom should be respected;

– Implementation of changes should be done slowly;

– Feelings and emotions are repressed in order to preserve harmonious relationships.

– Punctuality and personal freedom are highly valued;

– Challenges and remunerations for a job well done are a strong form of motivation;

– One of the effective management tools for revealing of potential is encouraging discussions and expression of original ideas as well as acknowledgement of the achievements.

Masculinity versus Femininity – Effective management depends on the equality between men and women;

– Women are capable of doing anything men can do;

– Positions and work relations are organised in a way as to not discriminate against any of the two genders.

– There is an inclination to separate into male and female roles;

– Effective management is achieved based on this;

– Behaviour should comply with the stereotype: Analytical attitude and reservedness by the men, emotionality and expressiveness for the women;

Avoiding Insecurity – Informal business relations;

– Inclination towards changes;

– Effective management is a management which does not create structures and rules unnecessarily;

– Control of the emotions, self-restraint;

– Variety is valued.

– Effective management is based on precise and clear expectation parameters;

– Planning is an important part of the management tools;

– Frequent communication and detailed plans;

– Focus on the tactical part of the project;

– Emotions are expressed through gestures and intonation;

– Structure is desirable and expected;

– Formal business relations, requirements and procedures.

Long Term Orientation versus

Short Term Orientation

– The successful management strategy acknowledges the equality of all;

– It stimulates creativity and individualism;

– Mutual respect;

– Adaptivity towards changes;

– Setting short term goals.

– The family and the family type relationships form the base of society;

– Successful management is based on the traditional positions;

– Acknowledgement and reward for loyalty, stubbornness and dedication;

– Frivolous and extravagant behaviour is not tolerated.

The dynamic world with all the changes happening in it lead to the rise of a new generation of leaders. The main characteristics of this type of manager are presented in Johnson and Oberwise’s article “Your #1 Leadership Challenge: Human Capital Maturity”[2]. According to the authors, it is about the rise of a new type of manager in the big companies (especially the multinational ones), whose experience is totally different from the one of the leaders of the previous years. The claim of the authors about the rise of this type of new leaders mostly in multinational companies seem completely logical, because this is exactly where there are many cultural and value differences regarding the human capital which require the most effective and adequate management.

If we look for the main difference between the new generation of leaders and the ones from the past, undeniably it is that leaders nowadays work in an environment quite different from the one in the past. The main reason for the change in environment is the accelerated globalisation which causes the need for global leadership. The authors of the article claim that most of the managers have to deal very early in their career with the necessity of working with teams whose members are located very far from their homes. So in order to be effective leaders should quickly become aware of and master a concept which is still unknown for the vast majority of current managers, namely human capital maturity.

Human capital maturity may be related to the employees possessing three important attributes (qualities): savvy (rational) understanding of the business, high emotional intelligence and a strong aptitude for continued learning. Even though it may be summarised this way, it should not be forgotten that the concept of human capital maturity may appear in different forms depending on the conditions in which it is applied. Studies show that there are stable differences in the work forces between some economies, relating to how the work force works productively in organizational settings.

This it is extremely important for management based on this concept to clearly take into account the existing stable differences. The existence of stable differences, which was mentioned by Johnson and Oberwise, should be explored not only in the context of the individual countries, but also in the context of the intercultural (cross-cultural) differences which exist between the human capital in multinational companies. In relation to that, in the future the new generation of leaders and managers will be expected to achieve high results and high quality performance no matter where their workplace is located. It is necessary to get to know the many existing variations of human capital maturity and this has nothing to do with the claim that a large part of the employees in some economies are psychologically immature. In some areas of business activity the maturity model is related only with taking into account the fact that the abilities of the employees are built gradually over time, step by step.

Actually, it is possible to make a wrong read too (to reach a wrong understanding) about the strong sides of the maturity concept in each of the mentioned areas. For example, the authors mention cases in which employees may be unusually empathetic and communicate clearly and even eloquently, but at the same time they are so used to showing respect for their bosses and for traditional methods that they are averse to learning new ways of doing things.

According to the author of this paper, even though nowadays the human capital maturity concept is gaining in popularity it still has not reached the necessary level of development and awareness. If the education and development programs should be evaluated on a global scale this evaluation will show that they are not at the required level which would give the leaders enough training on how to evaluate human capital maturity. This conclusion is exactly what gives a reason to formulate one necessary direction for future improvement of the management activity at multinational companies.  During the current stage as a step in this direction may be pointed out that even just the action of becoming aware of the existence in differences in human capital leads to significant changes in the management process.

Johnson and Oberwise give two more pointers for successful work at multinational companies, which in my opinion are useful to the leaders and respectively lead to increased efficiency of the business activity in these companies. The first advice is based on the specific characteristics which become apparent in the process of working in a team made of members from different countries and respectively different cultures. In order to optimise the work process it is not enough to just get in touch (meaning establishing a way to communicate – with or without a translator). It is also crucial to understand cultural nuances which impact the quality of the human capital and its capability of working as a team within a multinational company.

In this case, in my opinion, it is not always necessary to use the services of a professional translator, if it is even necessary to use such for performing the communication. Regardless, a good approach would be to use an associate who knows well the cultural specifics of the region where the affiliate of the multinational company is located and respectively the human capital used by it. This is the only possible way of overcoming the differences which arise when combining human capital with different cultural specifics. This would lead to a significantly easier performance of the duties of a leader and an improvement of the end results of the business activity of the company.

The second advice is partly intended to reduce the negative impact of conducting inefficient communication i.e. a discrepancy between expectations and reality. When there is a difference between what the employees should be able to do based on their experience and expertise and what they actually do, it is a clear signal for the manager that it is necessary for some time to be spend on finding the causes which lead to this discrepancy. According to the authors, there are quite a few leaders who believe that these differences are due to a lack of sufficient communication on the part of the employees or a lack of quality communication between the manager and the employees. But it turns out that these are only a few of all the possible causes for the creation of this difference. In my opinion, if we have to look for another reason for this occurrence, it is undeniably related to the fact that the companies in question are multinational ones in which in almost all cases there are cross-cultural differences present in regards to human capital.

If the issues regarding human capital maturity as a leadership concept are explored from another point of view, and the results show that nowadays in order for organisations to develop their leadership they should make an effort to also include this concept as a base for improving the qualification and expanding the qualities of the managers working in a time of globalisation and an increasing number of multinational companies. Global leaders with a more realistic understanding of what to expect from their employees in the different environments will be much better prepared to improve their efficiency and respectively the efficiency of the company.

The thoughts presented so far show that successfully identifying, developing and maintaining the talent of the managers has a decisive impact on the long term success of every organisation, including multinational companies. This is why many of them, especially the largest ones, depend on “talented management” during the whole work process. This means hiring such managers who possess leadership qualities which will lead to a successful coordination of their actions with the actions of the departments responsible for the human resources of the company.

In his article “You Can’t Delegate Talent Management to the HR Department”, Ron Ashkenas explores the need for these so-called “talented leaders” or “talent management leaders”. According to Tomas Chamorro-Premuzic, talent concerns the abilities, skills, and expertise that determine what a person can do. These talents enable those managers among the company’s roster who manage to implement processes thanks to which they are able to receive a direct assessment of the quality of the human capital and the possibilities for its improvements and at the same time to improve the concept of increasing the talent of the leaders themselves.

The author of this report accepts Ashkenas’s claim with no hesitation whatsoever because it is not possible and it is also inappropriate to demand development of the human capital in a multinational company without at the same time seeking a way to increase the efficiency of the system which manages and coordinates the actions of the company’s employees.

The article mentioned above also presents another important question which is an integral part of the explored question. As mentioned above, “having a talented leader” becomes a strategic advantage for every multinational company (and also for the other types of companies). Because of this, a decision to organise a company in such a way that the managerial decisions are made by a centralised body consisting of such talented leaders may be considered to be a successful one. The centralised function allows for an in-depth and objective look at the talent of the company’s employees and makes it easier to implement the decisions which had been made.

Investments in building a centralised managerial structure based on talented managers have lead to mixed results. According to a CEB survey from 2013 “in only one out of four organisations there is a successful integration of the talented managers practice when executing the strategic goals of the company.” A survey conducted by EY in 2012 reached the conclusion that almost 600 of the global business managers think that the functions of the talented management are limited to only measuring “easy indicators” like employee turnover. At the same time, such important factors for the organisation as whether the right persons possessing the necessary skills works at the correct (suitable) position remain outside the main focus.

My personal opinion is in agreement with the stated conclusion since it is quite possible for the lack of accurate human resource management (meaning accurate assessment of their qualities and capabilities and based on that wrong selection of a work position) to lead to much worse results than the high employee turnover.

 

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