Globalization has created challenges related to workforce management.
Globalization has created logistical, economic, social and legal differences across countries that have to be dealt with. But these differences can often be defined in specific terms and can be weighed when formulating business strategy. Different beliefs, values and priorities are extraordinarily difficult to define tangibly. People react to how they are recruited, developed and managed based on what they view as appropriate. And cultural differences have perhaps the greatest impact on how employees react to the way in which performance is defined and rewarded.
Fons Trompenaars and I have a book in press with Routledge/Taylor-Francis entitled “Rewarding Performance Globally: Reconciling The Global-Local Dilemma.”
In writing that book we called on the large body of research that has been done on cross-cultural differences, principally by Fons, Hofstede and the GLOBE project. The biggest challenge in managing performance and rewards across cultures is determining what the differences are and how to respond to them. In a collectivist culture like the one that prevails in much of Asia the response to individual rewards based on individual performance is less likely to be viewed as appropriate than it would be in an individualistic culture such as the one prevailing in the United States. So utilizing a global strategy without consideration of cultural differences may be received very differently in different cultures. Hiring a friend or relative in the US is typically resisted, referred to as nepotism. But in Latin cultures this may be the preferred strategy.
One of the difficulties with applying the research is that much of it is categorized by country (Japanese employees would accept A while US employees would prefer B). In today’s turbulent world there are significant cultural differences within countries as well as across countries. This presents management with a dilemma when formulating workforce management strategies.
- Does the organization customize strategies by region?
- By country?
- By provinces or states within countries?
Since many of today’s national borders are the result of decisions made after wars were over or as the result of aggregations such as the EU how cultural data should be clustered is problematic. Do the typical employees in Southern Italy differ culturally from the Northern Italy employees, and if so, does the employer vary strategy intra-country to reflect the differences? Is a single strategy for the EU wise or are there so many cultural variations that this is shortsighted? In theory the cultural definition models used by Hofstede and Trompenaars could be administered at the individual or sub-culture level, but this would present an employer with an even more complex challenge. In countries like the US, where employment law can impede treating employees differently, the default might be to use one strategy for the country. In other countries this may not be effective.
We certainly did not resolve these questions when using the research to write the book. The best we can do is to raise awareness that cultural differences may result in different reactions to any strategy. Trompenaars speaks of the 3 R’s of cross-cultural management:
- Recognize differences when they exist
- Respect the rights of others to view things differently
- Reconcile the differences as much as they can be
It may be most effective to vary strategy when distinct cultural profiles exist… whether that be at the regional, national or local levels. But the differences must be accepted by those the organization wishes to attract, retain and motivate. And the organization must be comfortable explaining the reasons for the differences to employees, as well as regulators.