A Cross-Cultural Perspective On Managing

Diversity

International Human Resource ManagementIBUS 618.02

March 12, 2005

Khemais BoujemaAzza HararahMichel 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:– 0-14 yrs: 18 %– 15-64 yrs: 66.3 %– 64+ yrs: 15.74 %

• Pop. growth rate: 0.29 %• Fertility rate: 1.66

United States

• Area: 9,631,418 sq km• Population: 293,027,571

= 83 per sq mi

• Age structure:– 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 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

US:

40 – 91 – 62 – 46 – 29

World Average:

55 – 43 – 50 – 64 – 45

Managing Diversity and the Transition from HRM to

IHRMLiterature 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 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 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:

• 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 host-country

“Bridging the Gap”United States & United Kingdom

Practical Issues & Implications – Everyday Life

Reality Check

Highest number of failed int’l 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

HR Magazine December 2004

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• Don’t do it/Reconsider

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• 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 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 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

AstraZeneca’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

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 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 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

• AstraZeneca and Pfizer are excellent benchmarks on how diversity can be well-managed

The End

Thank you all! ;-)

Questions ?