Managing Director Manners Europe Essay Sample
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Managing Director Manners Europe Essay Sample
International human resource management practices play an important role in multinational corporations in terms of increased productivity, performance improvement and survival of the organization. Although HRM across nations can be beneficial to organizations, problems such as cultural differences and managerial style are bound to occur, which hinders the operations of the organization. This paper examines the recognized issues currently faced in Manners Europe, issues like culture, recruitment and HR Planning, communication, motivation and managerial style, and contemporary theories are being applied to analyse the issues in place.
Strategies such as cross-cultural training, attractive incentives like holiday trips for local employees, new reward system, employment of Dutch employee, implementation of trainee program, expatriate training, mechanisms for effective communication, more participative management style, strengthening M. B. O strategy and transparent decision making process are recommended to John on how issues should be addressed.
This would prepare John and other American managers prior to their arrival in the Netherlands and to conclude, an overall understanding of the host-country environment, culture, laws, and ethical behaviour of employees should be taken into consideration before planning on expanding overseas. Introduction Due to market globalization, organizations are searching for ways to be highly competitive in the market. One possible way for organizations to achieve this strategy is to adopt a multinational way of doing business.
This is beneficial to companies because it allows them benefit from economies of scale, allows for creation of wealth and jobs worldwide (George, 2012). Although there are benefits for multinational companies, problems like language and cultural barriers, rules and regulations of the host country, communication, etc. can disrupt multinational operations (Jager, 2011). Nonetheless, it is not the problem that matters, but how multinational organizations manage these problems and still succeed internationally. Manners Europe is a subsidiary of a large United States corporation.
Majority of annual sales from the company originate from manufacturing wholesale, and retail activities in the United States which involves lumber and forest-related products. The Managing Director and Director of Finance, John Wilman and Tom Steiger are faced with difficulties adapting and understanding the way business is run in the Netherlands. The main purpose of this report is to identify the main problems John Wilman is facing in his role as Managing Director of Manners Europe, with provision of recommendation at the end of the report as to how these problems should be addressed in the future.
Culture Culture is divided into macro (national culture) and micro (organizational culture). “Hofstede in his classic quote viewed culture as the collective programming of the mind that distinguishes the members of one group or category of people from another” (Hofstede, 2001 p. 9). His definition is applicable to both national and organizational culture. National Culture National culture consists of underlying value systems, particularly specific to a society or group whereby individuals are motivated to behave in certain ways (Hofstede, 2001).
Hofstede in his study identified five major cultural dimensions; 1) Power Distance is the extent whereby individuals in an organization and institution accept that power is distributed unequally. 2) Uncertainty avoidance is a situation whereby individuals in an organization are threatened by the occurrence of uncertainties and ambiguous situations and strive to avoid these uncertainties by imposing and relying on established rules and social norms so that the operations of the organization are not be affected.
3) individualism/collectivism where individualistic organizations are interested on task achievement and recognition of personal values at the expense of interpersonal relationships, and collectivist culture, where individuals are less differentiated from others, and tend to pursue group goals rather than individual goals. 4) Masculinity/Femininity- in a masculine environment, men are tough, competitive and more focused on material possessions and success while women are soft, modest, maintain personal relationships and are concerned with the quality of life.
5) Long-term/Short-term orientation- companies work towards building strong positions in their markets, and managers are given considerably good amount of time and resources to deliver their own contributions whereas in short-term oriented companies, control systems focuses on past performances and managers are constantly judged based on this. The diagram below clearly shows the comparison of Hofstede’s national culture between Netherlands and the US. [pic 1] (Source: http://www. geert-hofstede. com) The diagram shows that there’s a huge difference between both countries in terms of masculinity and femininity.
This significant difference is evident in the case where it was difficult getting an employee to work overtime on the weekend because he had to leave for a tennis lesson with his wife, who wouldn’t go without him. Such an attitude from the case would be difficult to relate to, from the perspective of the American directors, because in America, achievement comes first before social life and managers are more interested in getting the job done on time. This difference in culture should not lead to lack of motivation or continuity for John, but an understanding and appreciation of different cultures should be considered.
According to Hall’s study, USA in this context is considered to be a high-context country where Tom was only concerned about getting the job done. There should be a creation of work life balance for Dutch employees. Organisational Culture Organisational culture represents values, norms and attitudes of organisational members and how achievements are made. Organisational culture is defined by Drennan (1992) as how things are done around here, which implies having a clear understanding of the organization as a whole.
Organizational culture is influenced by belief, values and attitudes which certify that organizations are unique in their own way. Power culture is believed to be common in American companies, as managers are more dictatorial whereas in Europe, flexibility is encouraged. As seen from the case, John exercises complete freedom over site selection and personal matters, together with greater authority over capital expenditure, which significantly clashes with Dutch ‘person culture’ which is more flexible as Dutch employees can decide on their own work allocation.
Recruitment and HR Planning Recruitment as defined by Edwards (2006), is a decision making process whereby organizations research on what they need in a candidate and impose techniques on how to attract the most equipped candidate for the job. Regardless of the fact that Manners Europe is an American Company, its policy is still in place, where employees and managers are recruited from their country-of-origin (Netherlands), where the stores are located.
However, only 10% of the Dutch aggressively sought employment with the United States because they saw US companies to be too heartless, too demanding and requiring too much hard work. Newspaper ads for instance, for clerks or cashiers went unanswered. Recruitment was of great concern to John Wilman because of the issue that unemployment rate in the Netherlands was at a low rate with an average of 2% across the country. Most problems organizations encounter in terms of recruiting the right candidate is the issue of human resource planning (Kwiatkowski, 2003).
HR Planning of an organization involves the strategies and routines undertaken by the company in order to be better prepared in the analysis and development of its human resources and this depends on the extent to which the organisation invests its attention and effort in understanding these strategies and routines (Doving, 2010). There was no evidence of adequate human resource planning in Manners Europe. They lacked proper recruitment strategy which led to the current problems. It was difficult for Manners to find the desired candidate for the job, as there was no supply of generally educated B. As in Netherland compared to North America.
Even though this was the case, some candidates who had higher status degree refused supervisor’s positions, because they felt it was beneath them. This proved complicating for John, because although others had business school diplomas, it was difficult judging the qualitative level of the degree they possessed. Recruiting from America doesn’t only contradict the company’s policy but also very expensive as the estimated cost is about three times as high as recruiting from Netherlands due to the additional benefits of working abroad such as bonuses, travel expenses, cost of living expenses, accommodation bills as well as basic salary.
Also, hiring an experienced candidate from other firms was subject to uncertainties, because of the Dutch law that prohibits negativity about an employee or former member. Companies can easily hire an unprofessional based on this law, because it is difficult to dictate the right candidate for the role. Government regulations state that companies should not fire any employee with more than two month’s seniority, unless there’s a clear proof of fault (theft).
As a result of these, John had to offer employees to sign a six month contract; this approach can however lead to lack of job security for employees. The fact Manners Europe heavily depends on John Wilman is quite worrying because John himself has no understanding of the Dutch culture and the case signifies that he is struggling to find an experienced employee. Communication Schramm’s definition of communication states that information is of no use if the person receiving the information cannot understand the information and give feedback.
Encoding helps in converting the thought into content. As the information reaches the recipient, it is the responsibility of the recipient to understand what the speaker intends to convey. Encoding and decoding are however believed to be important factors that contribute to an effective communication. Feedback must be received from the recipient to the sender before communication can be complete (Schramm, 1954). This method of communication can be difficult for organizations, especially when found in countries that speak different languages.
Other barriers to effective communication like structure of the firm as a whole, lack of feedback, emotions, stress, family problems and poor questioning technique should also be taken into consideration. Hall contributed to the study of culture; he contrasted the differences between high and low-context societies. In high-context societies, communication is done indirectly including the use of non-verbal communication whereas in low-context societies, communication is done directly (verbal or written), with an addition of detailed precise information (French, 2010).
Hall’s study is evident in the case where an employee refused working on a Saturday and only gave reasons that he won’t be in the city. This was perhaps not new to John as he already knew the employee goes horse-riding every Saturdays. As America is considered to be a high-context country, the meaning behind the employee’s response was naturally perceived as an excuse for his normal Saturday activity. Furthermore, there were no right mechanisms in place for managers and employees to have the right flow of communication. Motivation
Motivation is the desire or zeal an individual has to get the work done. Absence of motivation in an organization can lead to underperformance and loss of productive resources for the organization. For this reason, organizations tend to use incentives and rewards to attract and retain employees. Maslow believes there’s an active drive towards health, growth and actualization of the human potential (Adair, 2009). Maslow’s hierarchy of needs is categorized below: [pic 2] The satisfaction of physiological needs encourages employees to work and be motivated at the workplace (Maslow, 1987).
Safety needs becomes predominant once there are satisfactions of physiological needs. Maslow describes safety needs as protection, security, stability, etc. and most individuals tend to be satisfied in their safety needs due to the peaceful and stable society they live in (Maslow, 1943). An individual would feel alone if the need for love and belonging are not satisfied. Individuals want to be involved with close family and friends to be assured of being loved and accepted.
The desire for strength, achievement, independence and freedom relates to self-esteem needs, while reputation, status, recognition and appreciation relate to esteem needs of others (Finsterwalder, 2010). Self-actualization involves the need to be fully creative and achieve one’s potential to the greatest extent possible. In relating the pyramid to the case, social needs are applied first by employees in Netherlands, before esteem needs, which clearly prove the feminine culture of the Dutch compared to the US.
Salary increases contributed to the problems at Manners Europe, where Tom refused to listen to the advice of the director of administration and chief accountant and gave accountant A only the mandatory cost-of-living increase and transferred the remainder to accountant B’s raise because in his view, an employee who works hard is worth any increased pay, and accountant B deserves the increase more regardless of age, education, marital status and financial need of accountant A. John’s initial plan to implement the M. B.
O (Management by objectives) system to motivate people by aligning the company’s objectives to their remuneration equally failed. The study of expectancy theory helps managers understand how people are motivated in an environment and not specifying a particular factor to motivate them. John did not take the expectancy theory into consideration. However, it is evident that employees in Netherland do not regard reward (i. e. Bonus) to be a motivating factor, whereas in the US, financial reward encourages employees to work hard.
They argue that if they give 100% of their time, they should be paid 100% as an exchange, rather than a bonus. This clearly shows that not every individual is motivated by the same factor (i. e. bonus) in a multinational working environment. The assumption that people make conscious choices and have some control over their work environment does not suit high PD culture like America. It is important to note that motivation is subject to culture but in Manners Europe, John failed to relate bonus to the feminine culture. Also, employees claim it’s against Dutch customs to work overtime.
In feminine cultures like Europe, shorter/more convenient working hours are valued more, which makes financial motivation less appealing. Also, tax in the Netherland is much higher compared to the US, incremental tax rate discourages incentives. Even the high tax on increased payment whereby an individual may take home 20% of an increase is not considered a significant incentive to the Dutch. Managerial Style Douglas McGregor (1969) looks at the impact of manager’s assumptions on their managerial style using theories X and theory Y.
Under theory X, managers assume that employees are lazy and do not want to work. Due to employees’ passive nature and resistant to organizational needs, they are being directed, controlled and in some cases threatened with punishment. Under theory Y, managers assume that employees get satisfaction from working (Dessler, 2011). He believes that the potential for development, motivation and capacity for assuming responsibility towards organizational goals are all present in individuals.
An application of theory Y is evident in the case of Manners Europe, where Belgian employees made complaints about the autocratic practices of the German General Manager. This clearly shows that Belgian employees are given opportunities to utter their opinions in the organization. Management style in the US and Netherland are completely different, where America has a more formal approach and Netherlands informal. Organizations and managers in America are heavily reliant on teams to complete tasks and projects and achieve objectives, whereas European approach centres on the social value of management for the welfare of its people.
According to Adair, individual, task and group issues should be taken into consideration by the manager when deciding on an action, but this was not the case in Manners Europe, where John made decisions that employees should work over a religious holiday for half the day without informing the employees beforehand about his decisions. He sent a memo to the headquarters staff saying that as long as the store employees had to work, it would be good for everyone to come in to work for half the day, even though most businesses were closed, but he didn’t ask the employees in advance about their thoughts regarding working on a religious day.
It is obvious from the case that John’s management style is not suitable for Dutch culture; he needs to find a managerial style that suits Manners Europe. Training Although training is needed in organizations to refresh skills of employees and keep employees updated on new ideas, training can be time consuming and very costly for organizations. Miscommunication and cultural misunderstanding were amongst issues that occurred at Manners Europe and this was due to lack of cross-national training in the company, which concludes the disapproval amongst some employees at Manners Europe.
Supervisors were in the position to recruit employees internally with adequate training but this was not the case for Manners Europe, because supervisors had no supervisory experience, which further made it complicating recruiting and training employees. This clearly shows that the level of education and training in Netherlands and America are completely different, where in Netherlands, at least every member of the workforce has compulsory vocation training with state involvement, in addition to the primary education of eight years (Brewster, et al.
, 2011), whereas in America the emphasis is more on good college and university systems which provides pool of managerial potentials thereby reducing training requirements in senior management and administration (Goergen, et al. , 2009a). This might ascertain the reasons why the training and educational skills in Netherland is low, compared to America where there are more competitive labour force. No proper training strategy in place for Manners to have adequate skills. Training should be made to prepare employees for the specified position.