Hofstede Theory of Cultural Differences
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As we know that today we are living in an era of globalization and culture has a very significant impact on the organization in which operates. That's why so many researchers have placed too much importance to create a good relationship between the practices and culture of an organization in which it operates, but on the other hand according to the Earley (1994), if management practices are not according to the needs and demands of their employees so then the following problems will arise such as de motivation, low productivity and high turnover. So in order to overcome such problems, a very serious attention much is given to improve the culture of an organization as it ultimately effects the development and effectiveness of HRM strategies and policies. For better understanding of the effect of national cultures on development and effectiveness of HRM strategies, firstly the concept of culture must be clearly understood.
"A pattern of basic assumptions - invented, discovered, or developed by a given group as it learns to cope with its problems of external adaption and internal integration - that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems."
Brewster et al (2008), p.14-15
This definition of culture basically defines that culture is a set of believes, norms and values that people acquire and share with others. The basic feature of culture is that, culture is adaptive. It is helpful for those people who are coming or joining a new place and easily come to know about the existing problems in an organization. Another definition for a culture is:
"the core of culture is composed of explicit and tacit assumptions or understandings commonly held by a group of people; a particular configuration of assumptions/understandings is distinctive to the group; these assumptions/understandings serve as guides to acceptable and unacceptable perceptions, thoughts, feelings and behaviours; they are learned and passed to new members of the group through social interaction; culture is dynamic - it changes over time"
(Milliken and Martins, 1989).
This definition by Milliken and Martins basically defines that culture has two characteristics, first is, it's a collective phenomenon, everybody used to share it and secondly it shapes the way people of that culture thinks and respond.
As discussed earlier, this is an era of globalization, every single nation has its own culture, their way of thinking, perceiving, responding is absolutely different from different nations. That is why every culture has its own set of values, beliefs and norms. And it easily be seen by different examples of nations like wise: if we see USA the rate of freedom is very much high over there similarly independence, individualism and level of competition tends to be very high in USA but on the other hand let's take Japan where much importance is given to belongingness, all the work is done on group consensus, seniority is also taken into account and cooperate with each other as much as they can similarly in Arab countries family harmony and parental guidance is high and much of the authority is given to the senior member of the society. In Asian countries like Pakistan, ratio of hospitality is very high, respect for seniors and aged people are also high, mostly a decision is taken by having guidance from a senior member of a family. Most of the cross-cultural researchers like Hodstede and Trompenaars argued that the culture of the society plays a vital role and helps a lot in reshaping the practices of the management. As the society vastly vary in cultures, management has to keep in mind different methods for motivation of the employees from different cultures and sometimes it creates a problem for the management in decision making process.
Hofstede Cultural Dimension:
Now I will explain in detail that how management practices differs when organization operates in diverse cultures. Taking into consideration the work done by Hofstede (1980), where he carried out a research by analysing the questionnaires filled up by IBM employees in 70 countries. He concluded that cultural differences depend on four factors:
Power distance is the extent in which less powerful members of the society or organization enjoys unequal distribution of the power. For instance, Females and Minorities. In organizations where power distance is high, Hierarchy tends to be taller where all major decisions are taken by few members of the top level management and all decision making process is centralised. High power distance also means that low level management cannot challenge the decision taken by upper level management and also it is very difficult to meet them. But on the other hand where power distance is low, decision making process is decentralised, all the big and small decisions are approved by taking help from the low level management. The basic concept over here is the employee empowerment, and these organizations are found with flat hierarchical pyramid. For Instance: Virgin group of companies. Where chairman of the organization have made small departments and they are allowed to take all decisions regarding their department, this helps them out in good decision making skills and also the employee empowerment.
Uncertainty avoidance is the extent to which people feel threatened about a typical situation and have created a set of beliefs in order to avoid these situations. High uncertainty avoidance companies or nations tend to have a strong belief on heir experts and their knowledge and their managers are low risk takers and have a high need for security and these countries are usually developed nations. And countries with low uncertainty avoidance tend to be more risk takers. All activities running in an organization are usually unstructured and there are few written rules, as the managers are willing to accept the risk that is why employee turnover is high in these organizations. From the perspective of HR, all employees are open to accept the new ideas and viewpoints.
Individualism versus Collectivism:
Individualism refers to the extent to which people look after for themselves and their immediate family only. People in individualistic society tend to gain individual rewards and want to take all decisions by themselves. As they are responsible for their decisions only, they also rewarded individually. Countries which are high in individualism tend to be wealthier and developed, where all promotions are made on the basis of market value. But on the other hand, societies with collectivism tend to work in a group and take care for each other in exchange of loyalty. Countries which are high in collectivism tend to be poorer, where individual initiatives are low and promotions are given on the basis of seniority. Hofstede argued that countries like America, Great Britain and Australia tend to be individualistic societies. Where employees are running behind the individual recognition and promotion in an organization is the major motivational force. But countries like China, Japan and Pakistan, tend to be collectivist society, where all decisions are made on group consensus. Everybody take care for each other and employees are more focused towards group recognition. And the most important over here is that, management encourages cooperation and loyalty and they are treated as a family rather than an individual working for the organization. In 1992 Holden mentioned collectivist society as:
"Japanese managers spend up to 30% of their time, in and outside normal office hours, educating their younger colleagues and initiating them in the lore and wisdom of the company, preparing them functionally and psychologically for the operations outside the firm"
(Holden, 1992, p.31)
Masculinity versus Femininity:
A Masculine culture is the one in which basic social values are success, money and things. A country which is high in masculinity, people laid great importance on recognition, advancement, showing off, material achievement and being outward. But on the other hand countries which are high in femininity, tend to be caring and loving. A great importance is laid on cooperation, group decision making, friendly atmosphere and more employee freedom. Organizations which are working in low masculine society, promotions are made on the basis of merits and all employees are treated as a member of one family, but in organization working in high feminine society, rewards are set in such a way so that more and more competition takes place between employees rather than cooperation.
It can easily be concluded that, Hofstede shows that national cultures contain at least four dimensions and every organization has to come up with these dimensions as they are working in diverse cultures. After analysing these dimensions a company can easily operate in diverse cultured society as national culture has a significant impact on the organization. Knowledge of different cultures is very much essential for the organizations which are working as multinationals and also for HR Professionals, as people who are going to hired by the organization have different set of beliefs regarding motivation, loyalty, career development and decision making. So a proper match must be there between the organization practices and the national culture, in this way an organization can easily succeed in a society in which it operates. So that there would be a positive impact of national culture on the development and effectiveness of HRM strategies and policies.