Cultural Diversity in Multinational Companies

Cultural diversity involves respect and acceptance (Armstrong & Société Radio-Canada, 2017). In multi-national companies, this means that each and every individual in the company should understand that every person is unique and they should also be able to recognize individual differences (Sharma, Singh & Pathak, 2018). In an organization, people come from different and diverse cultures, origins, and ways of life. Diversity of culture makes a country a place that is very interesting to live. Multinational companies have their main focus on having a gain of market share as well as earning profits (Armstrong & Société Radio-Canada, 2017).

Literature Review

In multinational companies, diversity in culture hugely affects the company’s culture. As a result, majority of managers and employees need management skills across cultures. Despite the fact that diversity intensifies potential performance, it also greatly increases the complexity of operations members must cope with for the team to attain its full capacity. Multicultural companies have therefore the capacity to realize productivity and performance than homogeneous teams. However, they also risk incurring higher losses due to faulty process (Minkov, 2012). Cultural diversity has both beneficial and drawback effects on an organization’s productivity. Managers in such multinational organizations need to adopt integration in managing cultural diversity by ensuring that teams learn to apply diversity in a healthy way that promotes performance (Gesteland, 2013). Cultural diversity in multi-national companies can be improved in various ways thus enabling the organisations to be more productive.

Theories of Cultural Diversity

The differences existing between thinking and social action among members of different countries can be attributed to “mental programs” that have been developed and nurtured in early childhood as well as reinforced in schools and organizations (Piepenburg, 2011; Hofstede, 1998). According to Hofstede (1998), these mental programs have a component of a country’s culture and are clearly revealed in the diverse values that predominantly exist among individuals from different nationalities. Therefore, individuals think, feel and potentially act in a way that they have acquired and learned throughout their lifetime (Piepenburg, 2011; Hofstede, 1998). Let us review some of the theories of cultural diversity.

Hofstede’s Theory

Hofstede developed a five main dimensions model which revealed country cultures and their differences through statistical analysis and theoretical reasoning (Piepenburg, 2011). Those dimensions reflect the basic challenges that societies have to deal with but for which solutions vary. The five dimensions include:

Power distance refers to extent in which the less powerful individuals of institutions and organizations admit and anticipate that power is unequally distributed (Piepenburg, 2011). The fundamental problem involved in this dimension is the scale of individual’s inequality that underlies the operation of each certain community (Hofstede, 1998).

Uncertainty avoidance is the degree to which society’s culture aligns its members in feeling either at ease or troubled in unstructured situations (Piepenburg, 2011). Cultures that have high degree of avoidance to uncertain situations manage situations through rules and order by seeking a collective truth to which they associate expectations with a certain degree of security (Gesteland, 2013). Low scoring cultures, on the other hand, enjoy recent events and initiatives and thus their members have an informal perspective and they admit change and risks (Minkov, 2012).

Masculinity versus femininity refers to how different societies perceive the different roles performed by men and women (Piepenburg, 2011). Emphasis on performance and success is attributed to men whereas for women it is based on modesty, sensitivity and quality of life. With the current trend in global business management, a balance must be attained so that women fit in workplaces that are deemed to be male dominated (Piepenburg, K. (2011; Hofstede, 1998). In such scenarios there must be cooperation from different cultures to ensure high performance of the team members within the organization (Deresky & Christopher, 2011).

Individualism versus collectivism refers to strength of mutual bonds between members within a particular society (Piepenburg, K. (2011). Some cultures advocate for collectivism which enhances group cohesion leading to respect and loyalty among members within the society (Hofstede, 1998). According to Deresky and Christopher (2011), managers in multinational corporations must factor the aspect of individualism and collectivism from different cultures to ensure a conducive working environment has been created and enhanced in the organization.

Hall’s Theory

Hall’s theory applies the concept of cultural categorization as either high context or low context (Hall, Slack, & Grossberg, 2016). In his theory, Hall defined culture as people’s way of life and the sum of acquired and learned behavioral patterns, perspectives, attitudes, thinking and material things. He explained context as the surrounding information that is associated to an event and the meaning of that event (Minkov, 2012). He adopted a comparison scale of high or low context cultures to shed light on the fundamental diversities encountered in communication styles and cultural issues. According to Hall, in high context (HC) cultures, communication is direct and internal meaning is usually engraved deep in the information being present (Hall, Slack, & Grossberg, 2016). Therefore, not everything is explicitly spoken or written. For foreigners in that kind of a culture, individuals need to explain to them the intended hidden meaning (Minkov, 2012). On the other hand, low context (LC) culture, the meaning of the information is explicitly presented through the language. As a result, people communicating would expect explanations when something remains unclear (Hall, Slack, & Grossberg, 2016). To strike a balance between the two types of cultures in a multinational organization, managers need to be aware of the nature of the cultures and their expectations. This would reduce misunderstanding in the workplace (Deresky & Christopher, 2011; Gesteland, 2013).

Cultural Relativism Theory

This theory proposes a neutral vantage point that a certain culture has no ultimate ground for judging another culture’s activities as either noble or low (Minkov, 2012). Nevertheless, every given culture can adopt such judgement only to its own activities since its members are both the verdict and the jury (Hall, Slack, & Grossberg, 2016). Cultural relativism in itself entails deferring judgement when dealing with societies or groups different from one’s culture (Piepenburg, 2011; Minkov, 2012). In managing cultural diversity in multinational companies, team members must by all means avoid giving judgmental statements and opinions concerning another member of a different culture. Therefore, for high performance in multinational organizations, team members must have concrete information of the nature of cultural diversities existing between societies, their background before judgement or taking certain actions (Deresky & Christopher, 2011).

Organisational Examples

Multinational corporations such as Coca Cola, Barclays, Facebook, Apple, Isuzu, and Toyota among others have existed in the global market for long. Given that the organisations have their operations across different nationalities with diverse cultures, challenges associated with such cultures are needless to say encountered. How managers solve those differences play a vital role in determining the future of the corporations. Applying the theories discussed above, such companies must ensure a conducive environment is created within the workplace. Evaluating Hofstede’s dimension on Individualism and Collectivism, for example, organisations whose team members consists of Asian cultures work collectively as a team towards attaining a major goal. This culture is therefore necessary for promoting economy growth in Eastern countries (Scarborough, 2016). Effective management of individuals from different cultural background provides a competitive advantage for the organisation.

Table showing Cultural and International: Competitive Advantage for some culture profiles

Weak power distance

Accepting responsibility

Strong power distance

Discipline

Collectivism

Engagement for co-workers

Individualism

Mobility of management

Femininity

Personal service

Production to customer satisfaction

Agriculture

Biochemistry

Masculinity

Mass production

Efficiency

Heavy industry

Chemical industry

Weak uncertainty avoidance

Basic innovations

Strong uncertainty avoidance

Precision

Table 1 (Richwien, 2002)

Managing Cultural Diversity in Organisations

Discussion

Succeeding in the business market of globalization leads to many organizations changing towards becoming multinational corporations so as to achieve the edge of competition, gain labor, skills, improve technology or even increase the market share (Kühlmann & Heinz, 2017). Cultural diversity helps country gain strength and being enhanced hence being capable of competing in global economy. Multicultural environments are strategic tasks that are important because they make a link between different attitudes of work and different cultural practices (Sharma, Singh & Pathak, 2018). However, multinational companies experience a lot of challenge due to the differences in work values, behaviors, attitudes, as well as culture (Varner & Beamer, 2011). The issues resulting from cultural diversity may lead to factual troubles resulting to clashes in the work environment. In globalized work, this case is very common (Sharma, Singh & Pathak, 2018).

A workforce that is diverse poses great challenges in matters pertaining region, communication as well as customs (Kühlmann & Heinz, 2017). When found in such a situation, the company should not only accept these differences but also embrace them fully in the entire operations of the business (Minkov, 2012). This is very useful in making the business successful. Research has shown that creating an environment that is conducive to everyone and that enables them to make a contribution as well as being effective may result from mapping out the meaning of the differences in the ways in which people carry themselves in workplaces and also their motivations and sensitivities (Sharma, Singh & Pathak, 2018; Varner & Beamer, 2011).

Everyone has a role of promoting diversity in the workplace and this requires a lot of efforts. Development and implementation of diversity training programs in the company can help promote cultural diversity (Minkov, 2012). The Wells Fargo Company has a very detailed and strict approach of prompting cultural diversity in the workplace and the whole community (Armstrong & Société Radio-Canada, 2017). This company has claims of living by a philosophy which states that promotion and embrace of cultures in the company leads to equipping the company better to anticipate customer needs from all cultures and backgrounds. It is very essential to create opportunities for the employees so as to get an understanding of the perspectives as well as the ways of life (Minkov, 2012). This will happen if there is need of building a healthy working environment as well as open-mindedness in contribution towards getting a big picture (Varner & Beamer, 2011).

Promoting an open communication is another way of improving cultural diversity in multinational companies (Kühlmann & Heinz, 2017). While managing workers coming from different areas and with different cultures, companies that are successful have come to a realization that good and effective communication is very important. Research has shown that, many failures in the workplace are caused by communication that is not effective. In multinational companies, communication level that exists is a very good determinant of the life or death of the business (Sharma, Singh & Pathak, 2018). A good example is when you have company branches in different parts of the world say in United States, Europe and in Africa (Kühlmann & Heinz, 2017). A very good communication system will be needed in communicating tasks as well as the progress. Such situations may experience a lot of miscommunications and roadblocks especially where there is a language barrier) (Minkov, 2012). At this time when there are problems of this kind in a business, tasks are not efficiently and effectively accomplished (Sharma, Singh & Pathak, 2018). To counter such problems, the use of technology can be a good alternative in helping combat issues of linguistics among the employees (Varner & Beamer, 2011). Most people lack fluency in multiple languages. Technology has however solved this problem using an app that is highly developed in providing very fast translation (Armstrong & Société Radio-Canada, 2017). The interpreters come from wide range of fields including tourism, medicine, accounting, law among others. Embracing such technology is very important in business since it helps ensure that communication is flowing in a smooth manner between the company branches (Deresky & Christopher, 2011). Over half of those people who speak English language have got to learn it as a second language. Therefore, promotion of an open communication in the entire business practices have to be more prioritized (Sharma, Singh & Pathak, 2018).

Recommendations

Fostering a strong relationship among the workers is important way of promoting cultural diversity in any organization (Sharma, Singh & Pathak, 2018). There are number of various through which managers can promote close relationships with the entire team. Among them is team building which is an aspect that is often overlooked in the world of business. Building relationships that are meaningful among the employees is very important. This helps in keeping every person engaged in his or her work as well as doing group tasks in an efficient manner (Deresky, & Christopher, 2011). Multinational companies face a disadvantage since they cannot host functions such as team building events and monthly happy hour (Kühlmann & Heinz, 2017). Team building can be done using innovative games that are found online. For example, ozone play is an app providing a very unique experience of mobile gaming. Here, the players go into a competition for cash. Another popular team building tool is video games (Scarborough, 2016). These gaming sessions help in building camaraderie as well as boosting interoffice rapport. International relationships that are forged is wined by everyone who is in the multinational world of business. From a perspective of philosophy, people coming together from backgrounds that are completely different to work aiming at achieving similar goals makes human beings grow together as collective race (Armstrong & Société Radio-Canada, 2017). This leads to promoting a communication that is meaningful and also integration of cultures at large.

In addition, every person in the workplace should be committed in boosting his or her own competency of culture. Cross-cultural communications are skills in a workplace that are invaluable. Development of better understanding in different cultures as well as perspectives may help in improving communication and avoiding misunderstandings. Educating oneself is also important (NEVCO Education (Firm) & Kanopy (Firm), 2017). One should get knowledge about different traditions, cultures, as well as approaches towards working and being updated with international politics and global events. It is good to take time to know colleagues that are from different backgrounds and cultures, being open to opportunities of travel especially to overseas. This will help in gaining cultural appreciations, sensitivity as well as get new friends through a common ground (NEVCO Education (Firm) & Kanopy (Firm). (2017).

Seeking actively for new ideas and perspectives has proved to be a strategy of improving cultural diversity. People from backgrounds and cultures that are different may be having an approach that is different when dealing with business issues (Kühlmann & Heinz, 2017). Colleagues may be offering valuable insights that are acquired through life experiences that are diverse. Creation of a workplace that has different perspectives that are embraced and valued can help in fostering business relationships that are productive (Armstrong & Société Radio-Canada, 2017). Whether being a director, a manager or even having junior roles, seeking actively for ideas, advice as well as expertise from colleagues improves communication and also fosters a much inclusive culture of company. This will help the company retain talent that is diverse as well as making the workplace an option that is attractive for global job seekers (Kühlmann & Heinz, 2017).

Conclusion

A golden rule in managing cultural diversity in multinational companies is treating other people in the way one would want to be treated. This aspect would be play as contributing factor towards solving cultural diversity issues in the workplace. Since cultural diversity explains why different people act in certain ways, it would be healthier to educate the entire team about appreciating their colleagues’ culture. Understanding and respect for each other is a critical player in ensuring the workplace is conducive for employees.

References

Armstrong, P., & Société Radio-Canada. (2017). Diversity in the workplace.

Deresky, H., & Christopher, E. (2011). International Management. Melbourne: P.Ed Australia.

Gesteland, R. R. (2013). Cross-cultural business behavior: A guide for global management. Copenhagen: Copenhagen Business School Press.

Hall, S., Slack, J. D., & Grossberg, L. (2016). Cultural studies 1983: A theoretical history.

Hofstede, G. (1998). Masculinity and femininity: The taboo dimension of national cultures. Thousand Oaks, Calif: Sage Publications.

Kühlmann, T. M., & Heinz, R. (2017). Managing cultural diversity in small and medium-sized organizations: A guideline for practitioners.

Minkov, M. (2012). Cross-cultural analysis: The science and art of comparing the world's modern societies and their cultures. Thousand Oaks, Calif: SAGE.

NEVCO Education (Firm),, & Kanopy (Firm). (2017). Cultural Diversity in the Workplace.

Piepenburg, K. (2011). Critical analysis of Hofstede's model of cultural dimensions: To what extent are his findings reliable, valid and applicable to organisations in the 21st century?. München: GRIN Verlag GmbH.

Richwien, M. (2002). Cross-Cultural Differences-Japanese and German Management Styles from the German Perspective: Hofstede's Dimensions applied on German and Japanese Managers' Leadership Styles.

Scarborough, N. M. (2016). Essentials of entrepreneurship and small business management. Pearson.

Sharma, N., Singh, V. K., & Pathak, S. (2018). Management techniques for a diverse and cross- cultural workforce.

Varner, I. I., & Beamer, L. (2011). Intercultural communication in the global workplace. Boston, [Mass.: McGraw-Hill.