Take away 3 points
- Introducing change to an international business is a complex process further complicated by cultural implications.
- Various elements of local cultures will influence various drivers of change within the organisation to varying degrees
- The change process has greater changes of success if the change model applied is culturally fit
Change is an inherent element of the everyday functioning of any organisation. It is widely agreed that companies must constantly adapt to new conditions and innovate in order to stay competitive and survive. At the same time, the business environment is becoming increasingly complex as companies grow internationally and enter new, culturally diverse markets. Success in implementing innovation is now dependent not only on the ability to implement change within the organisation but also to understand how decision-makers and employees approach and apply change locally. OviDrive offers an international network of consultants based across Europe, Asia-Pacific, the Americas, and Africa offering knowledge and expertise on how to successfully design, implement and communicate change within an organisation internationally and across cultures.
Change management in multinational organisations
There is a large number of studies available on change management within organisation and a widely accepted consensus that change is no straightforward process, burdened with risk, and likely to fail. Numerous studies continue to report that the failure rate of organisational change efforts may be as high as 70 percent. Although it is difficult to track down the research that would ultimately confirm that number, it is nevertheless commonly understood that failure to innovate is not only costly but also hinders competitiveness and business growth. This is coupled with more recent research results suggesting that change patterns are culturally dependent and that the skills and methods applied must take into consideration local cultural conditions as they significantly impact how business is done, what is valued in organisations, how people are led, and how employees relate to the organisation. Understanding these cross-cultural differences and making use of that understanding can be expected to lead to better outcomes in multinational organisations.
Understanding the cultural context
It is a common understanding that cultures are different. It is much less understood how these differences work and how they influence business practices. A number of studies give us insight into cultural differences prevalent in the corporate world. One of the most wide spread and most cited is the model developed by Geert Hofstede resulting from his initial global study of IBM managers that was later replicated and extended to include 76 nations compared on six dimensions. The six dimensions proposed by Hofstede are the following :
- Power Distance (PDI): This dimension expresses the degree to which the less powerful members of a society accept and expect that power is distributed unequally. The fundamental issue here is how a society handles inequalities among people. A higher degree of the Index indicates that hierarchy is clearly established and executed, without doubt or reason. A lower degree of the Index signifies that people question authority and attempt to distribute power.
- Individualism/Collectivism (IDV): The high side of this dimension, called Individualism, can be defined as a preference for a loosely-knit social framework in which individuals are expected to take care of only themselves and their immediate families. Its opposite, Collectivism, represents a preference for a tightly-knit framework in society in which individuals can expect their relatives or members of a particular in-group to look after them in exchange for unquestioning loyalty.
- Masculinity/ Femininity (MAS): The Masculinity side of this dimension represents a preference in society for achievement, heroism, assertiveness, and material rewards for success. Society at large is more competitive. Its opposite, Femininity, stands for a preference for cooperation, modesty, caring for the weak and quality of life. Society at large is more consensus-oriented. In the business context Masculinity versus Femininity is sometimes also related to as “tough versus tender” cultures.
- Uncertainty Avoidance (UAI): The Uncertainty Avoidance dimension expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity. The fundamental issue here is how a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? Countries exhibiting strong UAI maintain rigid codes of belief and behaviour, and are intolerant of unorthodox behaviour and ideas. Weak UAI societies maintain a more relaxed attitude in which practice counts more than principles.
- Long-/ Short- Term Orientation (LTO): Societies who score low on this dimension prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future.
- Indulgence/Restraint (IVR): Indulgence stands for a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun. Restraint stands for a society that suppresses gratification of needs and regulates it by means of strict social norms.
Another model is proposed by Erin Meyer, a professor of international business at INSEAD, who maps cultural differences on eight dimensions based on linear scales :
1. Communicating: from Low-context to High-context
Low-context: Good communication is precise, simple, and clear. Messages are expressed and understood at face value. Examples include the USA, Netherlands, Australia and Germany.
High-context: Good communication is sophisticated, nuanced, and layered. Messages are both spoken and read between the lines. Examples include Japan, Korea, Saudi Arabia.
2. Evaluating: from Direct feedback to Indirect feedback
Direct feedback: Negative feedback is provided frankly, bluntly, and honestly without being softened by positive feedback. Examples include Russia, Israel and Netherlands.
Indirect feedback: Negative feedback is provided softly, subtly, and diplomatically while given within positive feedback. Examples of cultures in which indirect feedback is preferred include Japan, China or Indonesia.
3. Persuading: from Specific to Holistic
Specific: Individuals are trained to begin with a fact, statement, or opinion before adding concepts to back up or explain the conclusion as necessary. Examples of cultures include France, Italy, Russia or Spain.
Holistic: Individuals are trained to first develop the theory or complex concept before presenting a fact, statement, or opinion. This approach is preferred in Australia, Canada and the US.
4. Leading: from Egalitarian to Hierarchical
Egalitarian: The best boss is a facilitator among equals. Organisational structure is flat. Examples of Egalitarian cultures include Denmark, Netherlands or Sweden.
Hierarchical: The best boss is a strong director who leads from the front. Organisational structure is multilayered and fixed. Examples of Hierarchical cultures include Japan, Korea, India or China.
5. Deciding: from Consensual to Top-down
Consensual: Decisions are made in groups through unanimous agreement. Consensual cultures are, for example, Japan, Sweden or Netherlands.
Top-down: Decisions are made by individuals, usually the boss. Top-down cultures include China, Nigeria, India or Russia.
6. Trusting: from Task-based to Relationship-based
Task-based: Work relationships are based on practicality of the situation, and are built and dropped easily. Importance is put on performance and the delivered results. Examples include US, Denmark and Netherlands.
Relationship-based: Trust is built through joint activities, work relationships are built slowly over time. Importance is put on the relationship, rather than performance. Examples include China, India or Nigeria.
7. Disagreeing: from Confrontational to Avoiding confrontation
Confrontational: Disagreement and debate are positive for the team or organisation. Open confrontation is appropriate and will not negatively impact the relationship. Examples include Israel, France or Germany.
Avoiding confrontation: Disagreement and debate are negative for the team or organisation. Open confrontation is inappropriate and will break group harmony or negatively impact the relationship. Examples include Indonesia, Japan or Thailand.
8. Scheduling: from Linear-time to Flexible-time
Linear-time: Focus is on the deadline and sticking to the schedule. Emphasis is on promptness and good organisation. Examples include Germany, Japan or Switzerland.
Flexible-time: Tasks can be changed as opportunities arise. Many things can be dealt with at once, and interruptions are acceptable. Examples include India, Nigeria or Saudi Arabia.
These models give significant insight into how relationships will be organised in various professional settings in different cultures. This is particularly important when introducing innovation, as there is usually a high level of resistance to change. Therefore, the change process, as well as its communication, must be handled with care. Experts in cross- cultural management warn from falling into the trap of stereotyping based on results of studies, such as the ones cited above, and underline the necessity of applying a holistic approach in dealing with teams across national and cultural boundaries [2,3].
Applying cross- cultural expertise in the change management model
Managing change in an organisation operating internationally requires careful consideration of the complex environment of cultural nuances. Management methods and techniques are not generally cross-culturally transferable and their cultural fit needs to be determined before introducing new solutions to an organisation. A study of a survey of 146 companies in 27 countries, revealed which dimensions of the Hofstede model influence which of the six drivers of change defined earlier and how :
- Turbulence refers to the characteristics of the change process, including the overall scope of the change taking place, its pace, and the risks and obstacles encountered along the way. Change agents can expect increased resistance to change as well as its slower pace in cultures scoring high on Uncertainty Avoidance. This dimension also affects the amount of change taking place in an organisation. The higher the score, the lower the amount of change that the organisation is able to absorb.
- Resources refer to the capabilities and skills of the team managing the change process and whether it has the systems and processes needed to achieve their objectives. Cultures scoring low on Individualism are likely to have more efficient work processes in place, however they are also likely to be process- bound and have higher demand for staffing which will influence the need for resources.
- Aligned direction refers to the quality of communication with employees and their understanding of the need and process of change. Cultures scoring high on Uncertainty Avoidance are likely to have higher demand for information. The level of Power Distance and Individualism affects how communication is organised during the change process.
- Change leadership refers to the quality of support and engagement with employees throughout the change process. Power Distance and Individualism impact the perceived level of support from organisational leadership. Also, Masculinity moderates the level of support expected by the employees and delivered by the supervisors.
- Work roles refer to employee involvement in planning and implementing change, and the extent to which people are held accountable, have role clarity, and clear, measurable targets. The level of individual involvement is higher in cultures low on Power Distance and high on Individualism.
- Emotional energy refers to the emotions experienced by the employees involved in or affected by the change process, and their approval or disapproval of the innovation. The level of Masculinity and Uncertainty Avoidance moderates the kind and level of emotions experienced by those involved in change.
These findings are coherent with another study conducted in the USA the Baltic States and South America. The study explored whether there are differences in the perceived availability of change skills within organisations and if the perceived significance of specific organisational change skills will be different depending on the region. Authors found that there are significant differences in how communication and change leadership is perceived and managed in the different countries . Therefore, change managers must adjust how they organise the change process, as well as accommodate the skills and resources to local environments.
Change in an organisation is a complex process that requires significant experience and expertise. When change is implemented in a multinational organisation a careful examination and consideration of local cultural environments must be applied in order for the process to be successful. Different organisations will have different needs in different global locations in addressing the challenges they are facing when introducing innovation. OviDrive’s global team of experts can help businesses avoid mistakes and adjust the process to achieve the best cultural fit of the change model applied in the organisation.
- Somerville, Karen, Inta Cinite, and Carlos Largacha-Martínez. "Organisational Change Skills: An Empirical Cross-National Study." Open Journal of Business and Management 9, no. 02 (2021): 894.
- Jacobs, Gabriele, Arjen Van Witteloostuijn, and Jochen Christe‐Zeyse. "A theoretical framework of organisational change." Journal of organisational change management (2013).
- Kirsch, Christina, John Chelliah, and Warren Parry. "Drivers of change: a contemporary model." Journal of Business Strategy (2011).
- Hofstede, Geert, G. J. Hofstede, and M. Minkov. "Cultures and organisations: Software of the mind." (2014).
- Meyer, Erin. The culture map: Breaking through the invisible boundaries of global business. Public Affairs, 2014.
- Meyer, E. "Map Out Cultural Conflicts on Your Team." Retrieved from hbr. org/2014/09/predict-cultural-conflicts-on-your-team (2014).