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Application of Theories to Analyse and Solve Organizational Issues

Introduction

Nowadays, the concept of Globalization exists in the mind frame of most organizations, which shapes their business strategies and policies. Organizations rate globalization as one of their major concerns, as it introduces cut-throat competition for limited resources and customers across the globe. It is a vast field, capable of devastating effects to organizations that unable to adapt and respond to the rapidly changing business environment. Companies are going international into unchartered places in the hopes of expanding, growing, and minimizing the threat of competition from within their local markets. As crisis and change are demanding rapid integration into new markets, companies has to manage a workforce which can be different in various aspects from the home country. This workforce can be challenging to manage and may require different motivational strategies and incentive schemes to keep employees motivated and to create a sense of belongingness in the employees. Hence, this may require different role of leadership to keep the employees motivated and involved in order to retain them. And national cultural differences can be one of the reasons to demand changing role of leadership. Organizations opt for globalizing their operations to achieve competitive edge over their competitors but this is possible under certain scenarios, such as when firms are able to understand and acknowledge the difference in market structures across various countries, appreciate the value derived through global economies of scale and transport technology and knowledge across countries (Gupta and Govindarajan, 2001). Thus, it is of utmost importance that organizations modify their outlook towards a more global perspective to achieve global competitiveness.

This essay analyzes the issue which Haier faced when it started its operation in Pakistan. This issue has been seen by using learning experiences from my Master class, the analytical skills I developed, and learning how theories can be applied in solving real life issues in their real life settings.

Case of Haier Pakistan

Haier is one of the top brands of white goods across the globe and in China, arguably, the most valued brand (www.haier.com). Company’s global presence and its expansion plans can be witnessed through its 29 manufacturing plants across different continents, 8 research and development centers, and 119 trading companies all over the globe across the world (www.haier.com). Around 60,000 employees in different countries (www.haier.com) is another factor offering strengths the idea of his strong global presence.

Zhang (CEO)’s guided famous brand strategy through its various stages, Haier’ brand value reached 80.3 billion RMB. Main products of the company are television, air conditioner, mobile phones, computers, water heater, refrigerator, and home appliance integration (www.haier.com). Haier, in 2008, was chosen as amongst the top 10 global brands of China (www.haier.com). Wall street journal, in July 2008, ranked first regarding leadership in Chinese companies (www.haier.com). And recent ranking by Euromonitor, Haier remained at the top in the world market of white goods. Innovation, employees’ motivation and quality culture though unique strategies of promotion (based upon excellence, not appearance), flexibility, branding, knowledge sharing and using local employees in its global operations have been the success factors (www.haier.com).

Innovation, productivity and efficiency can be credited to its Overall Every Control (OEC) and reliance on influence rather than on profits (www.haier.com). Further, the culture of the organization based on involving employees and creating sense of belongingness has helped the way to manage and share knowledge, resulting in gaining and sustaining competitive advantage (www.haier.com). Seen, in this way, its culture has become its competitive advantage.

However, when company started its production in Pakistan, faced various challenges. One of the main issues has been high turn-over of the employees. To understand the reasons for this issue, I have tried to apply Hofstede (1980) model of national culture to understand the effect of national culture in this regard and ineffective management of the employees with different cultural orientation. In fact, various learning practices and theories taught in Master class have enabled me to apply certain theories to analyze the issue.

My Learning during Master Degree

First of all, I have learnt to read and analyze various theories and empirical studies. Further, various course and teaching practices have helped me, to some extent, to apply theoretical knowledge in real life situation.

Working on various projects has been significant in various ways for me. It made me learn to work and coordinate in the group. Working on overcoming on issues during various phases of the projects has given me confidence to complete the work well in time and in better quality in any prevailing conditions. Discussions and debates have made me more extrovert and have crafted in me the confidence of working as team, a team of diversified people coming from different ethnic origins, distinct study and experience back ground, different courtiers and different cultures. In the given scenario of the globalization at many levels, this experience will prove vital for my national and international environment while taking my future professional objectives and assignments. In fact, these valuable experiences would prove a source of completing my future professional assignments. Though many areas such as lean decisions, marketing communication, and cross cultural management have been my area interest, my focus has been on cross cultural management by understanding various relevant theories including Hofstede Model.

Hofstede Model

The recent development of culture support theories have shown that culture values are an important element that affects organisations . The comparison between different countries was made by identifying and classifying culture or patterns of values. Values are the essence of "mental programming", the formation of the preferred and desirable with the structure of standards where existing structure or behaviour can be put side by side and analysed, and direct individuals on the way they feel, think or act in specific situations and circumstance .

Hofstede research shows that cultural values can be presented in five dimensions (Figure 2). The 5D (Five Dimensions) model is a research-based model that sheds light on intercultural differences. The 5D reflects the common issues in the individual country's culture, and consist of different areas of human behaviour.

Figure 1 Hofstede’s Five Cultural Dimensions .

Power Distance (PDI) is the degree of acceptance and expectations of the less powerful individual in society, the unequal distribution of power. The main issue here is how society deals with inequalities. People in societies where there is a large difference in power distribution accept a hierarchical order where everybody has a place and does not need explanations. On the other hand, in societies with a low Power Distance, people work hard to keep the distribution of power equal.

Individualism vs. Collectivism (IDV): collectivism is where people belong to groups, for example, families, clans or organisations, and is taken care of by relatives or members of that group in exchange for loyalty. Individualism is the behaviour of people looking after themselves and their immediate family only. This defines society's self-image in terms of "I" or "WE.”

Masculinity vs. Femininity (MAS): the prevailing feminine values in society are compassion for others and concern for quality of life. With masculinity, the dominant values are achievement and success. The masculine side of this dimension symbolizes the inclination in society to strive always to better you, accomplishments, heroism, assertiveness and material rewards for positive achievements. They represent a competitive nature. Femininity, however, stands for more attitudes that are cooperative, modesty, concern for the weak and the quality of life. They are defined as consensus oriented.

Uncertainty Avoidance (UAI): UAI is defined by the extent to which people are threatened by uncertainty and ambiguity, and try to take avoiding action... The main issue here is the way a society deals with the uncertainty of the future; should it be controlled or just allowed to happen? Countries where avoidance is practised, try to keep a rigid codes of belief and behaviour, and tend not to accept unconventional behaviours and ideas. Countries with confidence about the future have a more relaxed attitude; for them, practice is more important than principles.

Long-Term vs. Short-Term Orientation (LTO): a society with a short-term orientation tends to be more stable and steady; it cares more for traditions, has very little tendency to save for the future and concentrates on quick results. Whereas with a long-term oriented society, the tendency is to adapt traditions according to changing situations, it tends to plan and save, invest and thrive.

Problems at Haier Pakistan

According to Tulgan (2001) cut-throat competition of the current era is “war for talent” and, therefore, organizations focus on retaining talent constantly, resulting in enhanced expectations of the employees from the management about the development and promotions. Current knowledge based era, in fact, force the organization to manage knowledge. And according to Nonaka and Takeuchi (1995), one way to manage knowledge is to identify and retain the best people. Hay (2002) argues that best people leave the organization when they feel that their professional interests are not accommodated, resulting in job dissatisfaction and loss of talent and knowledge for the organization. Hay (2002) further suggest that because organizations working patterns are changing, diversity in work force is increasing and organizations are engaging in a variety of network of relations and expanding the business across the world, the focus of leadership is distracted because of their multi-dimensional engagements, leaving a space for poor relationships with the employees.

The problem was employees leaving due to dissatisfaction from the work environment. Pakistani culture, according to Hofstede (1980), has collectivist and power-distance dimensions. Pakistani working in Hair had intrinsic feeling of relationship and to know their counterpart with whom they are working. However, it looked that Chinese focus has been more task oriented. This cultural difference has been found as one of the reasons for the reasons of employee dissatisfaction. This work environment made them feel isolated and dissatisfied. Furthermore, overall Hair culture is more suitable to knowledge sharing and has less hierarchies (Easterby-Smith et, 2008), but power-distance culture of Pakistan seem to have influenced the employees working in Haier Pakistan. People belonging to such cultures need centralization, directions form bosses instead of participation and involvement in decision making. Employees were not able to wipe out cultural barriers and waited for instructions from Chinese bosses. This brought down their performances and hence lack of incentives and no expected rise in salaries, resulting in dissatisfaction and departs from Haier. This suggests that national culture affects the performance of employees and same incentives scheme and promotional plan are difficult to work in different regions and countries (Van Wijk et al., 2008). The solution to such problem can be found through the application of some leadership and motivation theories. Therefore, next section reviews various leadership theories and how their application could have helped the Haier to overcome cultural barriers.

Recommendations: Application of leadership and motivation theories.

Green Man Theories

These theories believe that leaders, born with innate qualities, are extraordinary people, meant to lead. According to Bolden (2003: 6),

“The use of the term 'man' was intentional since until the latter part of the twentieth century leadership was thought of as a concept which is primarily male, military and Western. This led to the next school of Trait Theories”

Trait Theories

These theories, in fact, focus on various traits which make a good leader. These theorists bring together various positive and virtuous human attributes to highlight good leaders. This list of features of leadership contains all features from ambition to zest for life. According to Bolden (2003: 7),

“The problem with the trait approach lies in the fact that almost as many traits as studies undertaken were identified. After several years of such research, it became apparent that no consistent traits could be identified. Although some traits were found in a considerable number of studies, the results”

Behaviorist Theories

These theories, on the other hand, focus on the actions and activities of the leaders rather than qualities of the leaders. Various leadership styles have been studied and have got much attention of the practicing managers.

Situational Leadership

These theories are based on the concept that leaders should be able to handle the situation. They should have ability to understand the situation and must have flexibility to control the situation. Their style can be autocratic or participative depending upon the situation.

Contingency Theory

Isaac (2001) suggests that

“This is a refinement of the situational viewpoint and focuses on identifying the situational variables which best predict the most appropriate or effective leadership style to fit the particular circumstances”.

Transactional Theory

This theory concentrate on the significance of the relations among followers and leaders, emphasizing on the shared advantages which can be result of “contract” using which leaders act and deliver things including recognition or rewards to acknowledge the loyalty and commitment of the followers.

Transformational Theory

The key concept of this theory is change and the role of leadership is to discern, envision and implement the transformation of organizational performance.

Use of Leadership Theory in Haeir

According to Isaac et al., (2001), leaders should have a vision how to use best use the organizational resources including financial and human resources while making discernment about the future and predicting competitors and market situations. In order to reach these ends, they should be able to satisfy and motivate employees and make them work willingly for the organizational cause. This view of Isaac that leaders need to instill motivation among employees is important and can play vital role in making the organization a great success. Working 8 hrs is not sufficient, working 8 hrs with the aim to make the business success is necessary. This means that more participative leadership style is significant so that every employee knows the strategic intents and working hard towards achieving the organizational intents. This theory helps the leaders to make strategic intent of the organization as intent of individuals and this helps them to be more involved and flexible. This involvement and flexibility creates a sense of belongingness among employees, and results in overcoming any issues of dissatisfaction (Isaac et al., 2001).

Theories of Motivation

To motivate employees various theories of motivation have been discussed in the literature (Isaac et al., 2001). The early theories of motivation were based on simple concepts. One such simplistic concept was to motivate employees using a behavioural account based on carrot and stick approach. This approach can be found in the study of Taylor (1911 cited by Issac, 2001) and this theory suggests that pay employees for the good work and penalize them for their substandard performances. Another concept was the notion that satisfied worker is a good worker which has been also criticised (Perrow, 1972). However, current literature does not believe this simplicity and go further to observe and study behaviours of employees. Katzell and Thompson (1990) suggest that

“Major theories of motivation are classified as those dealing either with exogenous causes, or with endogenous processes”

Certain theories relate motivation to the extrinsic phenomena such as rewards and incentives including promotions, bonuses and raises.

There exist theories which suggest that motivation is related to intrinsic functions, which in fact influence and shape the behaviors of the employees. For instance, Steers et al., (2004) suggest that it is the enjoyment at work that makes the employee motivated. They further suggest this is the acknowledgement of the performance and respect that makes the employees motivated. Expectancy-valence theory, in fact, is based on these intrinsic factors (see Weiner, 1990). In fact, the purpose of these theorists is to suggest which theory work better in the given situation.

Application of Motivational Theory in Haier Case

As discussed earlier, it is the role of the leader to get best out of the employees by keeping them motivated. Further, as discussed earlier that leaders must be able to act differently in different situation because in the life of the business, internal and external factors are changing. To cope up these changes, leaders cannot have a standard scientific format to deal with all the situations. The same is with the people. Every person has, if not unique, a different nature. Hence all the employees cannot be dealt through using one theory, based on intrinsic or extrinsic factors. Leaders, therefore, play the role in Haier to understand the nature of the employees and act accordingly to motivate them. Further, even a single human being cannot be expected to behave in the same way every time because his/her life is also changing and his demands or needs can be different at different times (Ofori and Toor, 2009). So to keep the employees motivated, leadership role is crucial. Sometimes extrinsic rewards will work and on other occasions, intrinsic rewards will help in this regard.

Conclusion

Nowadays, the concept of Globalization exists in the mind frame of most organizations, which shapes their business strategies and policies. Organizations rate globalization as one of their major concerns, as it introduces cut-throat competition for limited resources and customers across the globe. Haier is one of the top brands of white goods across the globe and in China, arguably, the most valued brand. When company started its operations in Pakistan, company faced high employee turnover rates.

By applying Hofstede Model of Culture which has been part of my learning during MBA, I have been able to somehow offer some analysis of the reasons of the issue. The analysis reveals that same policies and strategies of keeping employees motivated through same leadership style is difficult to work. Employees can have different demands and require different environment, which suits them and which helps them to feel comfortable and satisfied. And in this regard, I have offered my recommendations to apply different theories, a part of my learning in Master, to overcome such issues. Hence, I suggest that there is a strong relationship between theory and practice and my MBA class learning taught me how to use theories to analyse the real life situation and how to handle issues using different theoretical concepts.

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