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Chapter Two
Environmental Context:
32 Part One Environmental and Organizational Context
individuals. As Friedman declares, “In Globalization 1.0 there was a ticket agent. In Glob-alization 2.0 the e-ticket replaced the ticket agent. In GlobGlob-alization 3.0 you are your own ticket agent.”2
The implications of this globalization for organizational behavior are profound and direct.3As the head of Brunswick Corporation declared, “Financial resources are not the problem. We have the money, products, and position to be a dominant global player.
What we lack are the human resources. We just don’t have enough people with needed global leadership capabilities.”4GE’s Jack Welch, arguably the best-known corporate leader in modern times, stated before leaving GE: “The Jack Welch of the future cannot be like me. I spent my entire career in the United States. The next head of General Elec-tric will be somebody who spent time in Bombay, in Hong Kong, in Buenos Aires. We have to send our best and brightest overseas and make sure they have the training that will allow them to be the global leaders who will make GE flourish in the future.”5The accompanying OB in Action: Managing the Global Workforce indicates that the new globalization context has changed the way global, transnational leaders strategize, organize, and manage.
Although there is a trend toward similar clothes, entertainment, and material posses-sions, and even general recognition that English is the international business language, there are still important differences in the ways in which people think and behave around the world.6In other words, cultures around the world impact the organizational behavior of managers and employees quite differently. For example, a recent study found that cultural differences (by country, race/ethnicity, and religion) affected the attitudes and behaviors of managers toward profit and other related business concerns.7
In understanding and applying organizational behavior concepts in other countries around the world, one must be aware of the similarities and differences. For example, a research study conducted by Welsh, Luthans, and Sommer found that U.S.-based extrinsic rewards and behavioral management approaches significantly improved the productivity of workers in a Russian factory, but a participative technique did not.8A follow-up critique concluded:
What this study shows is that there are both potential benefits and problems associated with transporting U.S.-based human resource management theories and techniques to other cultures. On the one hand, the findings confirmed that the use of valued extrinsic rewards and improved behavioral management techniques may have a considerable impact on productivity among Russian workers in ways that are similar to American workers. On the other hand, par-ticipation had a counterproductive effect on Russian workers’ performance.9
Another example would be that in some countries managers prefer to use—and may be more effective with—an autocratic leadership style rather than the typical U.S. manager’s leadership style. Germany is a visible example. Typical U.S. managers who are transferred to Germany may find their leadership style to be too participative. German subordinates may expect them to make more decisions and to consult with them less. Research on obe-dience to authority found that a higher percentage of Germans were obedient than were their U.S. counterparts.10Similarly, a U.S. manager in Japan who decides to set up a performance-based incentive system that gives a weekly bonus to the best worker in each work group may be making a mistake. Japanese workers do not like to be singled out for individual attention and go against the group’s norms and values. Perhaps this impact of similarities and differences across cultures was best stated by the cofounder of Honda Motor, T. Fujisawa, when he stated: “Japanese and American management is 95 percent the same, and differs in all important aspects.”11
The global context is now an accepted reality, but its impact on the study and applica-tion of organizaapplica-tional behavior will increase into the future. The problem is that the
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increasingly frequent intercultural encounters cannot be solved by just simple guidelines (e.g., when dealing with Spaniards, be aware that they tend to be late, or when the Japanese say “yes” they may mean “no”). Nardon and Steers recently summarized some of the reasons for the complexity of cross-cultural management:
1. People are influenced by multiple cultures—national, regional, organizational, func-tional, and professional.
2. Even though people are from the same country, they still have different beliefs, values, and behaviors.
3. Counterparts from other cultures are becoming savvy in how to deal with foreigners and thus may not be typical of their own culture.
4. Because of the complexity of culture, simplistic categorizations may initially be helpful, but turn out to be poor predictors of behavior.12
Because of this complexity and the fact that managers today often deal with several cul-tures at a time in their current role, they must have ready access to cross-cultural training
OB in Action: Managing the Global Workforce
The war for talent never ends. Middle managers in China? Good luck finding them, let alone keeping them.
Assembly line workers in Central Europe? They’re well-educated and hardworking: Trouble is, every company wants them. The cubicle warriors of Bangalore? They get the job done—if they stick around. For corporations, managing this widely scattered, talented, restive, multi-cultural workforce has never been harder. This Special Report, written to coincide with the 2008 World Eco-nomic Forum in Davos, Switzerland, brings readers to the front lines of the struggle. It delves into IBM’s effort to reinvent the way it gets tasks done around the world, follows a Nokia manager as he recruits a workforce from scratch in Transylvania, meets a restless generation of IT workers in India, and hears from the corporate road warriors who never, ever stop traveling.
These and other stories make a simple but powerful point: The old way of managing across borders is fading fast. In the first half of the twentieth century, the glob-alization of business was based on the British colonial model. Headquarters, functions, and capital were in one place, with managers dispatched to run regional opera-tions like colonies. In the second half of the 1900s, com-panies adopted the multinational model, replicating their home country operations in other places where they did business. Country units rarely dealt with other divisions in other markets.
Today, global corporations are transforming them-selves into “transnationals,” moving work to the places with the talent to handle the job and the time to do it at the right cost. The threat of a U.S. recession only makes such efforts at lowering expenses and grabbing the best
talent even more urgent. William J. Amelio, the CEO of Lenovo, the world’s third-largest computer maker, calls his global workforce strategy “worldsourcing.” Lenovo has executive offices in five cities worldwide and orga-nizes its workforce around hubs of expertise, such as hardware designers in Japan and marketers in India.
“You operate as if there’s just one time zone,” Amelio says. “And you’re always on.”
If anything, companies are devising new strategies to reach global scale faster. To retain workers in China, for example, PepsiCo’s snacks unit funneled nearly 300 extra people into its talent assessment program last year and promoted three times as many managers as it did in 2006. In mid-2007 storage equipment maker EMC started a global innovation network for research and development workers at six labs around the globe. EMC set up a wiki Web site for scientists and engineers to develop technologies and product concepts together.
Moving people across borders and ensuring that workers’ visas and permits are compliant with local immigration rules are also vital to the tasks of globaliza-tion. Deloitte principal Robin I. Lissak has a client, a CEO of a large multinational, who was told he could quintu-ple his business in Dubai if he quickly moved 2,000 work-ers there from India. But like half of the companies in Deloitte’s 2007 Global Mobility Survey, the CEO simply wasn’t set up to do it. “You’re not just moving people from the U.S. to the rest of the world anymore,” says Lis-sak. “You’re sending people from all continents to all continents.” The companies that play this global, mobile game best will emerge the winners.
34 Part One Environmental and Organizational Context
tools,13but more importantly, develop learning skills that will on-the-spot compensate for cultural knowledge gaps.14In other words, today’s organizational leaders must develop and use a “global mindset.”
Although there are many meanings, a conference dedicated to global mindset derived the following comprehensive definition: “a set of individual attributes that enable an indi-vidual to influence indiindi-viduals, groups, and organizations from diverse social/cultural/
institutional systems.”15Those with such a global mindset are able to view and evaluate a cultural event or interaction through a broad array of potential categories and quickly rec-ognize nuances (e.g., nonverbals) that differentiate cultural groups. An example would be an encounter with a smiling business person from Thailand:
To an outsider, such Thai smiles are not readily transparent. However, an outsider with a global mindset would have the wherewithal to develop strategies to such nuances, demonstrat-ing a keen awareness and understanddemonstrat-ing of cultural differences, and know how to act accord-ingly. Once encoded into the individual’s global mindset, this information could be readily accessed when dealing with different cultural groups in which nonverbal expressions carry greater weight when interpreting how people are thinking, feeling, and ultimately behaving. 16 Such global mindset development is needed for effectively dealing with the complex cul-tural context facing the study and application of organizational behavior.