Cultural intelligence in business environment can be defined as the ability of an organization to accept and effectively work within various cultures. This term is often applicable to multinational corporations that operate in different parts of the world and thus face the need to work with customers and stakeholders of various cultural backgrounds. The management of such companies is required to have intercultural competence so that they could successfully operate across cultural borders. To be more precise, the leaders of multinational organizations should understand and acknowledge the existing cultural differences in order to make the right decisions in managing the organization’s operations. People are the main determinant of the organizational practices, and they affect the majority of decisions being made. Therefore, understanding them is the major goal in respect to management across cultural borders. Many researches on the impact of cultural differences on international management have been conducted so far, and the main issues that arouse concern in this context include individualism, secularism, uncertainty avoidance, democracy and collectivism, among others. This paper insists that cultural aspects must be applied in the management of multinational corporations, especially in recruitment and training of expatriates because they will help the organization to navigate cultural barriers easily.
According to this model of cultural dimensions, there are six significant values that define the differences between the various societies in the world (Hofstede 1984). These include power distance index, individualism versus collectivism, uncertainty avoidance index, masculinity versus femininity, long term versus short term orientation and indulgence versus restraint.
A society with a high degree of power distance is likely to accept a hierarchical system of management, without seeking justification for the ranks, whereas those in a low power distance would expect equal distribution of power thus creating companies that respect the opinions and efforts of all employees regardless of position (Thorne & Saunders 2002). Employees within an individualistic type of society are more concerned about their personal goals and those of the immediate family. This implies that the organization should to only concentrate on factors that will benefit this limited circle of concern in contrast to collectivist cultures where the general wellbeing of the community is considered to be the highest value. High level of uncertainty avoidance in a country implies the need for job security through long term contracts and other forms of assurance. People in such societies need high wages, better benefit and reward schemes, and generally more security with respect to their work in the organization (Hofstede 1984). They do not like changes and tend to operate in a very systematic and regulated way.
On the contrary, in cultures with lower uncertainty avoidance tendencies, employees take risks more willingly; they have short contracts or work on a temporary basis and improvise in performing their duties in case an unforeseen situation arises. In regard to masculinity vs. femininity, cultures where masculinity is dominant demonstrate assertiveness, competitiveness, ambition, power and materialism over relationships and quality of life in general in contrast to femininity oriented cultures (Hofstede 1997). Long term orientation implies commitment to future; such cultures are more oriented towards pragmatic values such as rewards, saving, persistence and ability to quickly adapt to change. On the other hand, short term oriented cultures are characterized with more relation to past and present, fulfilling social obligations, ensuring reputation and respect for tradition. According to Hofstede, in indulgent societies, people are more impetuous as they are not restricted in expressing their wishes whereas the representatives of restrained cultures have strict norms that are aimed at moderating their desires and controlling their indulgence.
Unlike Hofstede, Trompenaars offers seven dimensions for his model of understanding the differences between cultures. The first dimension, universalism vs. particularism is about establishing what is more important for people, rules or relationships, where universalism means rules oriented society and particularism - relationships oriented (Thorne & Saunders 2002). Individualism vs. Collectivism, on the other hand, questions the society’s orientation with respect to functionality. People in individualistic societies function better as individuals while the representatives of collectivistic societies tend to work in teams (Northouse 2012). In the neutral vs. emotional dimension, the main question is whether displaying emotions is a cultural norm. The specific vs. diffuse dimension illustrates how people in a country separate their work from their private lives, which helps understand to what extent one’s personal life would affect their work roles. In the achievement vs. ascription dimension, Trompenaars asks whether people in a society tend to earn their status through their personal accomplishments or it is attributed to them on the basis of birth. The 6th dimension, sequential versus synchronic, determines whether people in a certain society tend to doing several things at once or they believe in systematic execution that involves following a sequence (Triandis 1995). The last dimension, internal vs. external control, seeks to establish whether the culture encourages controlling the environment or being controlled by it.
Inglehart – Welzel
The Inglehart - Welzel cultural map considers only two dimensions when establishing the differences between various national cultures, and these include traditional vs. secular values and survival vs. self-expression values (Inglehart et al. 2008). According to the first dimension, multinational corporations need to identify whether the country’s inhabitants respect religion, traditional values such as family and authority, or they are secular and have more radical views. The second dimension helps to understand the nationals of a country prioritize economic and physical security (survival values) over environmental protection, gender equality and democracy (self-expression values).
Each of these cultural differences models is significant in understanding the differences in cultures of different countries. The dimensions proposed by both Hofstede and Trompenaars can help meet the challenges of a multinational corporation’s manager. However, when reducing these models to practice, it should be noted that not all of the dimensions are equally important for the company. For example, identifying whether a country orients to survival or self-expression values as in accordance with the Ingelhart – Welzel model can be unnecessary (Inglehart et al. 2008). These differences do not really affect the activities of the expatriate employees in the new cultural dispensation as their roles there would be mainly professional. As such, the most significant dimensions in the Hofstede model and the Trompenaars model to be considered are universalism vs. particluarism, specific vs. diffuse, neutral vs. emotional, individualism vs. collectivism, power of distance and uncertainty avoidance.
In a country committed to universalism, following the predescribed rules is required no matter what kind of relationships have been established between management and subordinates. At the same time, particularistic cultures expect different outcomes depending on the circumstances and people involved in the situation. Specific vs. diffuse dimension would show the level, to which the employees’ work is interrelated with their lives outside the organization.. This sets the boundaries dictating how much interference the leadership can tolerate in as far as the private lives of the employees are concerned.
The power of distance index is useful in determining the kind of leadership this management is likely to use in countries where hierarchy is only advisable, such as Latin America, or where hierarchy is inapplicable, such as Denmark. In individualistic countries, employees would appreciate education loans and well-developed rewards and benefit scheme while community building initiatives would be more preferable for workers in collectivistic societies. As for uncertainty avoidance index, the HRM is likely to benefit by considering the type of leadership that is structured and predictable for high uncertainty avoidance societies while innovation and stratified decision making abilities are more applicable to the lower uncertainty avoidance cultures (Rath 2009). The classification according to neutral vs. emotional dimension also dictates how the leadership can build relationships with subordinates where emotional cultures would require open and close relationships in order to build trust and neutral ones would prefer managing the emotions in order to maintain respect.
Company Case Illustration
Fujitsu is an international company that often requires exporting workers to their overseas branches. The management needs to train their employees to not only be culturally competent but also practice cultural intelligence in their leadership positions. The company has branches in the US, Australia, Asia, Japan, Europe, Central and South America, as well as the Middle East. This means that they have a presence in practically all parts of the world and thus cooperate with representatives of different cultures. In order to ensure functionality and sustainability in their overseas operations, the company takes the employees through a cultural intelligence training, which teaches them to identify and accept the various cultural differences that they could encounter outside their local countries (Foldy, Rivard & Buckley 2009). The employees are trained using the Hofstede framework of cultural differences where they get acquainted with expectations of high uncertainty avoidance societies, as well as those of low uncertainty avoidance (Griffiths 2014). This kind of training is considered mandatory before an employee can leave for another country given that it is a basic requirement for effective work, especially when the new position is managerial and would require interaction with foreign subordinates.
Recommendations on Multinational Policies
When considering new candidatures for an expatriate position, a number of important factors that must be considered. A multinational organization does not have to choose employees from its domestic country considering the global presence (Eagly & Chin 2010). Thus, the first task would be to choose an individual from a country with similar scores in universalism vs. particularism, specific vs. diffuse, neutral vs. emotional, individualism vs. collectivism, power of distance and uncertainty avoidance. Under any circumstances, this would release the company from intercultural training as such employees are likely to fit for the culture of the country. However, it is almost impossible to find countries with identical characteristics of each dimension. Therefore, it is advisable to find an employee from a country with similar scores and subject them to cultural training that is aimed at making them ideal for the new dispensation.
Powell (2011) notes that the selection process should also pay more attention to the countries where individual values dominate over family ones in order to reduce the expenses. Hiring an American citizen, for example, may only require settlement of travelling and arrangement needs of one individual in contrast to the case with an Indian employee who may actually need to move with their entire family. In addition, it is important to consider the religious views of the individual as sending a secular person to a religious country may create tension and hamper successful collaborations with the locals.
After recruitment, the training process has to be based on the problematic areas in as far as the cultural differences dimensions are concerned (Baum?ller 2006). For example, for an Australian employee who is directed to Latin America, the training must be concentrated on power of distance, universalism vs. particularism, specific vs. diffuse and neutral vs. Emotional dimensions. These are the aspects that distinguish the representatives of the Australian society from the Latin American society. The Australians are used to democratic approach to work, which implies that they can participate freely in decision making, while the Latin Americans expect the decisions to be made by the management and then handed to them for implementation. The Australians are used to follow the rules despite the circumstances and people involved unlike, for example, the Mexicans who would expect some understanding depending on the prevailing circumstances. In addition, the Mexicans are generally more accommodating when one has personal issues that impede their concentration and functionality at the work place while in the Australian society, it is required to separate these spheres Allen & Montgomery 2001). The differences in neutral vs. Emotional dimension would make the Australian employee learn to build trust with colleagues as it is more typical for the Australians to manage their emotions for the sake of respect.
The rewards system in this case depends on the society, which the employee comes from (Moon & Woolliams 2000). People from the high uncertainty cultures prioritize monetary gains over working relationships, and thus, they must be compensated for their accomplishments. Those who value relationships more, on the other hand, would be rewarded by the amount of benefits their position could provide. It generally remains the key concept in the formulation of compensation practices according to the needs and expectations of the employee as far as their cultural orientation is considered (Luthans 2005).
The amount of organizations that are going global today in order to take advantage of the relatively free market is impressive. When such a company intends to send expatriate workers into a country with new cultural environment, their recruitment, selection and training operations must be considered to match the new cultures and make the future cooperation fruitful. This will ensure that the organization is well-prepared to the new conditions to establish effective operation in the long run.