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A Cross-Cultural Perspective On Managing Diversity International Human Resource Management IBUS 618. 02 March A Cross-Cultural Perspective On Managing Diversity International Human Resource Management IBUS 618. 02 March 12, 2005 Khemais Boujema Azza Hararah Michel Harms Stefanie Schmidt

Agenda • Introduction Comparison: United States and United Kingdom (Stefanie) • Managing Diversity The Agenda • Introduction Comparison: United States and United Kingdom (Stefanie) • Managing Diversity The Transition from HRM to IHRM (Khemais) • “Bridging the Gap“ Practical Issues and Implications (Azza) • Case Study: Pfizer and Astra. Zeneca Recap (Michel)

Country Profiles: UK and US Country Profiles: UK and US

Country Profiles: UK and US United Kingdom United States • Area: 244, 820 sq Country Profiles: UK and US United Kingdom United States • Area: 244, 820 sq km • Population: 60, 270, 708 = 646 per sq mi • Area: 9, 631, 418 sq km • Population: 293, 027, 571 = 83 per sq mi • Age structure: – 0 -14 yrs: 18 % – 15 -64 yrs: 66. 3 % – 64+ yrs: 15. 74 % • Pop. growth rate: 0. 29 % • Fertility rate: 1. 66 – 0 -14 yrs: 20. 8 % – 15 -64 yrs: 66. 9 % – 64+ yrs: 12. 4 % • Pop. growth rate: 0. 92 % • Fertility rate: 2. 07

Country Profiles: UK and US United Kingdom United States • Ethnic groups: – White: Country Profiles: UK and US United Kingdom United States • Ethnic groups: – White: 92. 1 % – Black: 2 % – Asian: 4 % – Other: 1. 9 % • Ethnic groups: – White: 77. 1 % – Black: 12. 9 % – Asian: 4. 2 % – Native: 1. 8 % – Other: 4 % • Religions: – Anglican / Roman Catholic: 66. 4 % – Muslim: 2. 5 % – Presbyterian: 1. 3 % – Methodist: 1. 3 % – Sikh, Hindu, Jewish: 2. 2 % – Other / None: 26. 3 % • Religions: – Protestant: 52 % – Roman Catholic: 24 % – Mormon: 2 % – Jewish, Muslim: 1 % each – Other: 10 % – None: 10 %

Country Profiles: UK and US United Kingdom United States • GDP: $ 1. 66 Country Profiles: UK and US United Kingdom United States • GDP: $ 1. 66 trillion (2003) • GDP real growth rate: 2. 2 % • GDP per capita: $ 27, 700 • GDP: $ 10. 99 trillion (2003) • GDP real growth rate: 3. 1 % • GDP per capita: $ 37, 800 • Pop. below poverty line: 17 % • Household income: – Lowest 10 %: 2. 3 % – Highest 10 %: 27. 7 % • Pop. below poverty line: 12 % • Household income: – Lowest 10 %: 1. 8 % – Highest 10 %: 30. 5 %

Country Profiles: UK and US United Kingdom United States • Labor force: 29. 6 Country Profiles: UK and US United Kingdom United States • Labor force: 29. 6 million • Labor force: 147. 4 million • Labor force by occupation: – Agriculture: 1 % – Industry: 25 % – Services: 74 % • Labor force by occupation: – Agriculture: 0. 7 % – Industry: 22. 7 % – Services: 76. 7 % • Unemployment rate: 5 % (2003) • Unemployment rate: 6 % (2003)

Geert Hofstede Cultural Dimensions • Power Distance (PDI): • • degree of equality / Geert Hofstede Cultural Dimensions • Power Distance (PDI): • • degree of equality / inequality between people in the country´s society Individualism (IDV): extent to which the society reinforces individual or collective achievement and interpersonal relationships Masculinity (MAS): extent to which the society reinforces the traditional masculine work role model of male achievement, control, and power Uncertainty Avoidance (UAI): level of tolerance for uncertainty and ambiguity within the society Long-term Orientation (LTO): extent to which the society embraces long-term devotion to traditional, forward thinking values

Geert Hofstede Cultural Dimensions UK: 35 – 89 – 66 - 35 - 25 Geert Hofstede Cultural Dimensions UK: 35 – 89 – 66 - 35 - 25 US: 40 – 91 – 62 – 46 – 29 World Average: 55 – 43 – 50 – 64 – 45

Managing Diversity and the Transition from HRM to IHRM Literature Review Managing Diversity and the Transition from HRM to IHRM Literature Review

Diversity In The U. S. And The U. K. The workforces in the United Diversity In The U. S. And The U. K. The workforces in the United States, and the United Kingdom, are amongst the most racially and ethnically diverse in the world. “. . and it is now projected that by the year 2050, the population of the U. S. will be evenly split between whites and non-whites” (Cox, 1994).

Managing Diversity Managing diversity is an active phenomenon—it involves supervising or coordinating the differences Managing Diversity Managing diversity is an active phenomenon—it involves supervising or coordinating the differences of individuals with diverse backgrounds to ensure that the organization’s goal are effectively met. “A way of thinking' toward the objective of creating an environment that will enable all employees to reach their full potential in pursuit of organizational objectives". (Thomas, 1991)

Implications For IHRM Managing diversity is at the core of the transition from HRM Implications For IHRM Managing diversity is at the core of the transition from HRM to IHRM. International HRM involves: • The need for a broader perspective • More involvement in employee’s personal lives • Risk exposure • Broader external influences

The Multicultural Organizations Literature findings suggest that multicultural organizations are more productive because they: The Multicultural Organizations Literature findings suggest that multicultural organizations are more productive because they: • Are more able to recruit and retain culturally diverse staff • Increase their ability to attract new clientele • Create new work and management styles • Develop new patterns of personal relationships • Build structures that better meet the need of diverse staff and clientele

Flaws In The Existing IHRM Literature The dominant IHRM literature is increasingly unsustainable in Flaws In The Existing IHRM Literature The dominant IHRM literature is increasingly unsustainable in a rapidly globalizing business environment • Much of the existing IHRM literature is old • Much of the early research into IHRM was predicated upon limited or non representative samples • The business environment is changing rapidly

Earlier Assumptions Earlier perspectives of IHRM theories include some underlying assumptions: • IHRM is Earlier Assumptions Earlier perspectives of IHRM theories include some underlying assumptions: • IHRM is essentially concerned with the management of long-term Western PCNs employed by multinational companies • The ‘failure’ rates for such expatriates are extremely big • The ‘hardship’ of international relocation demands considerable ‘compensation’ (especially financial) to encourage Western Expatriates to accept such assignments

Wrong Assumptions! The previous assumptions are not valid today because: • The term ‘expatriate’ Wrong Assumptions! The previous assumptions are not valid today because: • The term ‘expatriate’ has a broader definition that includes short term and frequent travelers which only few studies have centered on • Several authors have suggested there is little evidence to support the validity of high expatriate ‘failure’ rates and sharply criticized the data collection methods used in many of the important research studies • A recent survey by Foster-Higgins (1996) reported that 34% of their respondents had actively reduced expatriate payments. Another study in the same year found that 31% of their 351 multinational companies provided no foreign service premiums (Sheley, 1996: 64)

New Approaches To IHRM • Innovative international staffing techniques--use global staffing and recruit the New Approaches To IHRM • Innovative international staffing techniques--use global staffing and recruit the best within and outside the country • Moves towards ‘flexpatriate’ payment systems (Senko, 1990; Dolins, 1998), and away from fixed expatriate packages based upon salary adjustments and allowances • Accommodate a ‘staged’ approach to the selection and preparation of international staff appropriate to their level of interaction with the hostcountry

“Bridging the Gap” United States & United Kingdom Practical Issues & Implications – Everyday “Bridging the Gap” United States & United Kingdom Practical Issues & Implications – Everyday Life

Reality Check Ø Highest number of failed int’l assignments involve Americans in UK and Reality Check Ø Highest number of failed int’l assignments involve Americans in UK and Britons in the US Ø Companies invest in training primarily for countries where English is not official language Ø Expectations of similarity can set-up expats for failure and underachievement

English-to-English Dictionary Now What Did You Really Say… British Say… Americans Say… • • English-to-English Dictionary Now What Did You Really Say… British Say… Americans Say… • • • • • Holiday or hols Bank Holiday To table (an idea) To put aside To strike out To fail To knock-up Pear-Shaped Up to you really Vacation National Holiday To put out for discussion To table To go after something To strike out To visit Disaster Don’t do it/Reconsider HR Magazine December 2004

Communications Styles AMERICANS • Loud and clear • Speak one’s mind BRITISH • Understated Communications Styles AMERICANS • Loud and clear • Speak one’s mind BRITISH • Understated and indirect • Much of what they mean is in what is NOT said

Perceptions VS AMERICANS VIEWED AS: • Over-the-top • Pushing • Difficult to work with Perceptions VS AMERICANS VIEWED AS: • Over-the-top • Pushing • Difficult to work with • Hire and Fire Culture • Enterprising • Arrogant • Superficial • Uncultured BRITISH VIEWED AS: • Phlegmatic • Imperialist • Isolationist • Overly cautious • Consensus oriented • Constantly seeking approval • Unreliable - near perfect record for late delivery

Communication & Work Style Challenges British with Americans • British harbor a degree of Communication & Work Style Challenges British with Americans • British harbor a degree of mistrust towards Americans in the workplace • American enthusiasm – always coming up with the solutions, even when solution not asked for • What else drives the British crazy… – – American Ambition Tendency to speak one’s mind Emphasis on getting things done – the faster the better Willingness to take risks – “Just Do It”

Communication & Work Style Challenges Americans with British • Americans are easily frustrated with Communication & Work Style Challenges Americans with British • Americans are easily frustrated with British need for consensus and cautious approach to making decisions • British “live and let live” approach at odds with American intensity • Meetings are a big source of frustration for Americans: – British approach to decision making – British tendency to sit quietly while one or two key people make decisions – British hesitation to push forward new ideas

A Case Study Pfizer & Astra. Zeneca A Case Study Pfizer & Astra. Zeneca

Astra. Zeneca (U. K. ) • Workforce in over 25 countries • Over 50, Astra. Zeneca (U. K. ) • Workforce in over 25 countries • Over 50, 000 employees

Company Awards • 46 th best company to work for (2002) • One of Company Awards • 46 th best company to work for (2002) • One of the 'Best Places to Work (2003 ) • 5 th top employer in Science Magazine (2004) • Ranked top 10 of most desirable company (2004) • Lead the top 10 Companies for Executive Women

“Chemistry is a useful and transferable skill “Chemistry is a useful and transferable skill" • International assignments are encouraged • Project work that requires traveling • Taking assignments overseas • 6 months – 2 years

Astra. Zeneca’s Policy • Equal opportunities • Open management • “Total Rewards” strategy – Astra. Zeneca’s Policy • Equal opportunities • Open management • “Total Rewards” strategy – competitive base & incentive pay – generous health and welfare benefits – healthy work/life balance – opportunities for growth, creativity and development.

Total Reward Strategy Total Reward Strategy

Diversity Three different areas • Marketplace – Programs to address different communities • Workforce Diversity Three different areas • Marketplace – Programs to address different communities • Workforce – Increase visible diversity • Workplace – Employee Network Groups (ENG`s)

Pfizer (U. S. ) • Workforce in over 60 countries • Over 122, 000 Pfizer (U. S. ) • Workforce in over 60 countries • Over 122, 000 employees • Majority works outside U. S.

Global Perspective • Combination of racial and gender diversity with thought and perspective • Global Perspective • Combination of racial and gender diversity with thought and perspective • Defining global employees’ value proposition – – – Identifying key rewards that employees value Building competitive compensation & benefit programs Creating common language Assessing and improving “work content” Increasing commitment • Attending various diversity conferences • Cross-pollination of learning

Diversity • Popular among African-Americans • Special recruitment programs • Partnerships with HBCU’s • Diversity • Popular among African-Americans • Special recruitment programs • Partnerships with HBCU’s • Relocation programs – Cross cultural counseling & language assistance – Focus on the spouse – Package deals

Recap • Managing diversity is supervising and coordinating people´s differences to give the organization Recap • Managing diversity is supervising and coordinating people´s differences to give the organization a competitive advantage • The existing IHRM literature is not keeping pace with the change in the international business environment • Today´s IHR professionals have to adopt new and innovative approaches for staffing, compensation, and training • Companies that invest in training do so primarily for countries where English is not the official language • YET the highest number of failed assignments involve Americans and Britons • Astra. Zeneca and Pfizer are excellent benchmarks on how diversity can be well-managed

The End Thank you all! ; -) Questions ? The End Thank you all! ; -) Questions ?