Introduction
The observed trend in businesses today is that most businesses are turning to be multinationals. Globalization is today not a speculation but a reality as global market is opening and allowing companies to do business across the globe. As companies are turning to be global and venturing in other markets, certain challenges are experienced. One of the major challenges to working globally is cultural differences. Companies that venture into other culturally different countries must be able to address the cultural difference by coming up with strategies that ensure cultural harmony. Although other cultural issues are equally important, managing human resource in a cultural diverse environment is very challenging. Culture has very entrenched effect to how people conduct themselves, personal relation, values and other aspects of life.
To strike a balance between culture difference and diversity to company production is the major challenge that faces international companies’ management. Riordan Manufacturing scenario is an example of dilemma faced by companies that venture in a culturally different environment. The paper reviews the challenges that Riordan would face in the new environment and develop a strategy that Riordan would use to cope with the situation.
Overview of Riordan scenario
Riordan Manufacturing, initially basing its operations in United States, has ventured in international market. In the recent past, the company made plans to open operations in Hangzhoua province in China. Hangzhoua have shown great opportunities for that manufacturing company that the company wants to expand its operations in the country. After survey of the best area for expansion in China, the company has zeroed down to the same area of its initial investment, Hangzhoua.
Riordan chief executive officer is pleased with possibility of Riordan expansion in China as well as other international market. A production facility, fitting to Riordan requirement is already identified and purchased. Other requirements for the new facility such licensing and quality of the facility are already verified. Riordan is ready for operation except personnel management plan.
Personnel management is a major challenge for Riordan Manufacturing Company in this area. Hangzhoua province has very high competition for skilled labor. The province has many other companies that make skilled Chinese workers to be limited for the company. Although Chinese workers are limited, Riordan has an alternative: it can supplement the limited Chinese workers with workers from other area. Koreans, Pakistanis and Indians are available and could be incorporated in the workforce. Although this seems to be a solution to limited Chinese workers, it poses another challenge to the company. The workers from the different cultures have to work together leading to cross-cultural management challenge.
Riordan chief executive officer wants the cultural issues that would affect the corporation to be addressed. In one perspective, the CEO wants a culturally sensitive approach that would allow the Chinese, Pakistanis, Koreans, Indians and Americans to work together. On the other perspective, chief executive officer want the approach adopted to address not only the installation process but also long-term relation of cross-cultural workers in the corporation.
Situation analysis
Riordan is venturing into a different culture that the culture of its parent branch. As an American company, the Riordan Manufacturing adopts an American culture. In the new venture in China, the company will have to accommodate the diverse cultures in its approach to personnel management. Chinese, Koreans, Pakistani and Indians have quite different cultures. In addition, the culturally different groups of people have great cultural differences from Americans. For these groups to work together there will be a need for individual culture to be considered (Zigang & Fan, 2004, p 82). A part from this, there is need for modalities on how the different culturally different groups would work together to be considered.
Hangzhoua province where the company wants to locate its operations is based in china. Since, this is a Chinese province; there is likelihood for the majority of the workers to come from Chinese culture. Due to lack of sufficient Chinese worker, the company wants to supplement the Chinese workers with Indian, Pakistani, and Korean workers. Working with an individual culture would have been relatively easier but with addition of other cultural differences, the management will have to explore cross-cultural management strategies.
Chinese, Pakistani, Indians, Koreans and American have divergent cultures. Chinese and Koreans share some values and culture due to their origin. Indians and Pakistani on the other hands have great differences. Most Pakistanis are Muslim by religion and their culture is greatly influenced by their religion. On the other hand, most Indians are Hindu with a different culture to the Pakistani. In comparison, Chinese and Americans culture is different.
The initial challenge for Riordan is workers recruitment. The Chinese are the majority in the province. With this majority, it will be expected that Chinese workers will constitute the majority of the workers. Recruitment of majority of workers from other cultural groups other than the dominant cultural group may lead to public outcry that may lead to negative publicity (Zigang & Fan, 2004, p 83). On the other hand, the dominant cultural group may fail to offer the required expertise. In this situation, Riordan will be required to consider workers from other cultural groups. Leadership is another challenge for Riordan.
The long-term dilemma for the company will include the criteria that will be used to offer individuals leadership position in the culturally diverse environment. The management will be in a dilemma on whether to use merit as the only consideration for promotion or whether the cultural element will be considered. The other challenge to this scenario will be communication. For the diverse workers to be work together there will be need for communication.
Stakeholders’ perspectives
Riordan Manufacturing was founded by Riordan, who in the company’s chief executive officer. Riordan Manufacturing investment in international market is motivated by success in the local market and interest to become and international company. For this reason, the main reason for Riordan to invest in China is to increase its production, increase profitability and expand to other international market. Use of the multicultural work force is a necessity. From experience in Riordan past investment in Hangzhoua the company had problems in filling vacant positions from Chinese workers. The viable solution to this problem for the new venture will be to make use of available workers from other cultures. Unlike the previous facility, the new facility will have diverse workforce with diverse values and expectation.
A management dilemma is how the diverse workforce will work together without affecting the productivity of the company. The company management wants to be more proactive to the challenge by having an approach that preempt the anticipated problems and offer solutions. Unlike in the previous investment, the management intends to offer cafeteria and performance-based incentive among other things. As the company’s policy is success for year, the management needs an approach that will have not only short-term success but also long-term success to the company.
Problem statement
Riordan Manufacturing has a challenge on how to manage the current issue. The intended expansion of operation means that company will invest more in the Chinese market. For the expansion to be termed as successful there must be equivalent increase in investment. As the scenario clearly states, the workforce market is highly competitive. For this reason, the company must be able to recruit potential workers and manage the workforce for long-term reasons.
Statement
To develop a long-term cross-cultural management approach for Riordan Manufacturing.
End State Vision
Riordan Manufacturing has more than short-terms goals for the expansion. The expansion requires workers for it to be able to start, but above this, the workers must be able to work in harmony. Riordan is relatively new in china. The intended expansion is the first major expansion by the company and will be a litmus test for possible investment in the area. A globalization in becoming a reality, the main trend of most companies is toward becoming multinationals (Fontaine, 2007, p 126). Success in this expansion will be very important to Riordan Manufacturing in its plan for future investment in other parts of the globe. Lessons learnt on cross-cultural personnel management in this expansion will enable the company to be able to deal with cross-cultural issues in other parts of the world.
Solution
Cultural difference
There are very significant cultural differences between the anticipated workforces. China has been in an economical change that has allowed individual involvement in business. The change from a state driven economy to a more liberal economy has allowed foreign investment in the country. The changes have not only allowed foreign business but also led to entry of non-Chinese workers in the economy.
Despite of these changes, Chinese culture continues to dominate in most workplaces. Success of foreign investors in china highly depends on their ability to adapt to the cultural changes (Zigang & Fan, 2004, p 85). In Riordan’s situation, the challenge goes beyond accommodating the Chinese culture in the workplace but also looking into ways through which Indians, Pakistani, Korean and American cultures will be accommodated to allow smooth running of the corporation.
China is in a process of economic integration with other countries. The integration has led china to look for alternative to previous managerial system. Two managerial systems are influential to Chinese managerial system: command managerial system and Chinese traditional culture. The command system borrowed from the Soviet Union became very influential to Chinese management in later days. The traditional Chinese cultures have found their way into Chinese management system with most management approaches incorporating Chinese traditional values (Mead, 2005, p 214). Traditional Chinese culture gives a lot of emphasis on the stability of the society through people relationship and family grouping. The values are very relevant to Chinese and are passed down to Chinese managers.
Chinese workers are likely to be the majority of the workers in the company. Although some of the workers might start their career at Riordan, most of the workers are likely to be derived from other companies. Due to this, cross-cultural management in those other companies will be important to management issues in the corporation. Most of the workers taken in the company will have Chinese management system and will expect similar approach in their new place of work.
China political, social and economic environment
The political, social and economic environment is very important to Riordan cross-cultural management approach (Leung & Tjosvoid, 2003, p 171). China has been in an economic explosion that has seen the country’s economy grow at an exceptional rate. In consequence, to the economic growth, many investors have been attracted to china where they seek to exploit the benefits of the growing economy. The economic changes in China were made possible by drastic economic reforms made in 1970’s. Although the economic changes have been fast, political and cultural changes are very slow.
The Chinese government has taken great steps towards free-market economy. Despite of there, the political system continues to protect state-owned firms as well as local Chinese firms from competition. In addition, the Chinese government is very much concerned with Chinese interest as compared to interests of foreign investors or foreign workers. Despite of this Chinese government have been allowing foreign investment through multinational.
Doing business in China in quite challenging to multinationals. Apart from government regulations that favor local or state-owned companies, multinational companies are faced with other challenges. Finding qualifies workers in China is a major challenge to multinational companies that want to invest in China. Competition for workforce and lack of enough qualified workers make staffing to be a major challenge. With this reason, multinational companies must invest a lot of money to train workers. Apart from difficulty in finding qualified workers and cost of training the workers, maintaining the workers is another major challenge (Leung & Tjosvoid, 2003, p 131).
Chinese workers tend to leave a multinational company to other companies after training. These challenges, together with lack of enough model companies to emulate will be major challenge to Riordan Manufacturing when managing cross-cultural issue in the company.
Recruitment for new Workers
Recruitment is one of the most important issues in cross-cultural management (Leung & Tjosvoid, 2003, p 71). When recruiting the workers, Riordan Manufacturing should consider the cultural differences of potential workers. Riordan manufacturing requires skilled workers for them to be able to be competitive. However, skilled workers among the Chinese workers are limited. Skilled workers however can be found from Korean and Indian workers, who are more skilled. Offering skilled workers positions to foreign workers while Chinese workers offer other services is one option. However, this approach might be faced with many difficulties.
Chinese have very strong nationalistic believes, offering all high positions to foreign workers will attract criticism from public. The other potential approach to recruitment will be to recruit workers across cultural differences and then train them.
Recruiting the workers across cultural difference with aim of training them for the company is the best approach. This approach will allow the company to lower the standard requirement for recruitment. This will allow the manufacturing company to be able to get the required workers. Training process will lead to various advantages. The workers across the different cultural difference will be able to be customized to the company’s standards and requirement (Fontaine, 2007, p 129). The process will also offer a good opportunity for initial integration of the cross-cultural workers.
Motivation in the cross-cultural environment
Worker in the organization will constitute individuals from different cultural background that would affect their perception of motivations. As observed from experience, Hangzhoua province is competitive for workers. There is a tendency for workers leaving from one organization to another after serving for a short period. As getting qualified workers in the province in hard and the cost of training is high, there will be need for motivating the workers (Zigang & Fan, 2004, p 83). Motivation will not only lead to higher productivity but also it will raise the average stay of the workers in the organization.
Motivation is very important to performance of human resource. In fact, motivation is used as an important element in managing modern organization (Mead, 2005, p 115). Although motivation is observed in different people across cultural difference, motivation in a cross cultural environment is challenging. There are differences in motivation across cultural differences; the things that motivate people are culturally based (Mead, 2005, p 123).
Taking this consideration, motivation in a culturally diverse environment has to consider the motivation elements of the cultural groups that constitute the workers. Since addressing all motivational elements in all cultural groups is not possible, the management should be able to come into a balance to the motivation elements that are applicable across the cultural differences (Fontaine, 2007, p 132). In Riordan situation, what could be motivating to Chinese may be very different to that which is motivating to Indians. The same may be observed on other cultural groups, calling for a balance to motivating factors.
Riordan has a long-term plan for its investment in Hangzhoua as well as other international investment. Human resource is one of the most important resources that can allow Riordan to be successful in its international. To motivate the workers in the cross-cultural environment, Riordan have to study the motivation elements in the cultural diverse environment (Leung & Tjosvoid, 2003, p 145). Riordan wants to use performance-based incentive as their prime motivation strategy. Although this is a good approach, it can be affected by diverse cultural motivation elements.
Chinese, Korean, Pakistani and Indians have some common cultural elements that can be used for motivation. Although these cultural group view work as a necessity, they strongly value society and view work environment as part of the larger society. High values for society make these cultural groups to view work as a family and other workers as members of the larger family. The unity and stability of the family is extended to the workplace. With these views in mind, individual motivation techniques may not be effective in Asian culture. Instead of offering performance-based incentive to an individual, it will be proper for Riordan Manufacturing to motivate workers as a group other than at individual level.
The Marlow’s hierarchy of needs will be an important element but it should be viewed from group level other than on the individual level (Leung & Tjosvoid, 2003, p 146). The psychological needs of the workers constitute the basic thing that can be met by a good earning. For this reason, Riordan should provide the employee with a good remuneration for the services provided. Riordan should evaluate the average remuneration that is offered by the other firm and provide remunerations that are closer to this. Besides the psychological needs, Asian workers have strong socials needs.
For social needs, Riordan should offer the cultural diverse workers a platform to fulfill their social needs (Leung & Tjosvoid, 2003, p 76). The workers should be organized into work team. The teams will allow the team members to develop strong social identity and royalty that will be very important for their social needs. Group reward should be offered instead of individual rewards will be more appropriate in this culturally diverse environment.
Group rewards will encourage royalty to group and combined efforts of the groups toward success. As, Asian value stability, a sense of stable work environment will be motivating for the workers. Long-term employment contracts will be very important as a motivating factor to the workers. Assurance of stable job will encourage Chinese workers to commit themselves to the company.
Leadership
Leadership will be a challenge for Riordan Manufacturing in the culturally diverse environment (Mead, 2005, p 93). Chinese, Pakistanis, Indians and Koreans have some great differences to leadership. China has had a centralized leadership since Chinese kingdom to centralized government. India, on the other hands, is a democracy and elements that are more democratic are found to Indians leadership.
While royalty to the leader is important to Chinese and Koreans, Indian and Pakistanis would prefer a more democratic leadership. Indians and Pakistani workers would prefer participative leadership approach while Chinese workers would prefer the leader to make most of the decision. Despite of this, a compromise in leadership approach is necessary for Riordan’s success. Both transformational and translational leadership will be appropriate in this situation.
Conclusion
As globalization is becoming a reality and most companies are turning to multinational, cross-cultural management is becoming very important for management. Most companies today are seeking to invest in culturally different environments. This trend poses a challenge on how to manage the culturally diverse human resources. Riordan Manufacturing scenario is a good example of the challenges in cross-cultural management.
Managing a workforce that comprise Chinese, Pakistani, Indian, Korean and American workers is a challenge to Riordan. In this scenario, the first important element to cross cultural management will be recruitment. Riordan should not use merit as the only criterion for recruitment but should also consider cultural differences. To keep the workers in the company will require motivation. Work teams and group reward will be important for motivation, above good remuneration for service offered.
Reference List
Fontaine, R. (2007). Cross cultural management: six perspectives Cross Cultural Management: An International Journal, 5(3), 125-135. Web.
Leung, K. & Tjosvoid, D. (2003). Cross-cultural management: foundation and future. New York: Ashgate Publishing, Ltd.
Mead, R. (2005). International Management: cross-cultural dimensions. New York: Wiley-Blackwell.
Zigang, Z. & Fan, P. (2004). Cross-cultural Challenges when Doing Business in China. Singapore Management Review, 26(2), 81-90. Web.