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 Transition from HRM to IHRM (Khemais) Bridging the Gap Practical Issues and Implications (Azza) Case Study: Pfizer and AstraZeneca Recap (Michel)

Country Profiles: UK and US

Country Profiles: UK and US

United Kingdom Area: 244,820 sq km Population: 60,270,708 = 646 per sq mi Age structure:

United States 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 Ethnic groups: White: 92.1 % Black: 2 % Asian: 4 % Other: 1.9 % Religions: Anglican / Roman Catholic: 66.4 % Muslim: 2.5 % Presbyterian: 1.3 % Methodist: 1.3 % Sikh, Hindu, Jewish: 2.2 % Other / None: 26.3 % United States Ethnic groups: White: 77.1 % Black: 12.9 % Asian: 4.2 % Native: 1.8 % Other: 4 % Religions: Protestant: 52 % Roman Catholic: 24 % Mormon: 2 % Jewish, Muslim: 1 % each Other: 10 % None: 10 %

Country Profiles: UK and US

United Kingdom GDP: $ 1.66 trillion (2003) GDP real growth rate: 2.2 % GDP per capita: $ 27,700 Pop. below poverty line: 17 % Household income: Lowest 10 %: 2.3 % Highest 10 %: 27.7 % United States GDP: $ 10.99 trillion (2003) GDP real growth rate: 3.1 % GDP per capita: $ 37,800 Pop. below poverty line: 12 % Household income: Lowest 10 %: 1.8 % Highest 10 %: 30.5 %

Country Profiles: UK and US

United Kingdom Labor force: 29.6 million Labor force by occupation: Agriculture: 1 % Industry: 25 % Services: 74 % Unemployment rate: 5 % (2003)

United States Labor force: 147.4 million Labor force by occupation: Agriculture: 0.7 % Industry: 22.7 % Services: 76.7 % Unemployment rate: 6 % (2003)

Geert Hofstede Cultural Dimensions

Power Distance (PDI): degree of equality / inequality between people in the countrys 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
US: 40 91 62 46 29 World Average: 55 43 50 64 45

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 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 phenomenonit involves supervising or coordinating the differences of individuals with diverse backgrounds to ensure that the organizations 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 to IHRM. International HRM involves: The need for a broader perspective More involvement in employees personal lives Risk exposure Broader external influences

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 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 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 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 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 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 Life

Reality Check

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

English-to-English Dictionary
Now What Did You Really Say

British 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

Americans Say
Vacation National Holiday To put out for discussion To table To go after something To strike out To visit Disaster Dont do it/Reconsider

HR Magazine December 2004

Communications Styles

AMERICANS
Loud and clear Speak ones 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 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 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 ones 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 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 & AstraZeneca

AstraZeneca (U.K.)
Workforce in over 25 countries Over 50,000 employees

Company Awards
46th best company to work for (2002) One of the 'Best Places to Work (2003 ) 5th 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"

International assignments are encouraged
Project work that requires traveling Taking assignments overseas 6 months 2 years

AstraZenecas 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

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 employees Majority works outside U.S.

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 HBCUs

Relocation programs
Cross cultural counseling & language assistance Focus on the spouse Package deals

Recap
Managing diversity is supervising and coordinating peoples differences to give the organization a competitive advantage The existing IHRM literature is not keeping pace with the change in the international business environment Todays 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 AstraZeneca and Pfizer are excellent benchmarks on how diversity can be well-managed

The End

Thank you all! ;-) Questions ?