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Business Studies Department

Academic Year:

Table of Contents

Outcome Topic Page No.

1 Introduction to Diversity 2

Culture, Cross-Cultural Communication and

2 09

3 Challenges and Strategies in Managing Diversity 19

4 Cultural factors effecting organisation 25

Equal Employment Opportunity & Affirmative

5 31

Internationalization process and Managing of

6 employees 39
in a global market

7 Organizational Structure for Global Operations 44

Case Studies 48

Chapter – 1
Introduction to Diversity
What is Globalization
Since the early 1980s, academics and practitioners have noted the globalization of
markets. Powerful forces, such as technological improvements in communication, transport, and
travel, seem to have opened doors to almost everyone everywhere. These forces, coupled with
government initiatives to create cooperative agreements have resulted in national economies that
are increasingly entwined. Indeed, globalization has become the corporate buzzword of today.
In response to this new orientation, many businesses are requiring their workers to be globally
aware and culturally sensitive. This means that businesses may be cognizant of diversity world-
wide. Diversity awareness is a matter that has consequences, potentially beneficial or adverse, in
terms of business effectiveness, ethical practices and public relations value.

What is Diversity
Diversity in organizations means having different types of people from different races,
backgrounds, personalities, countries or cultures, working together for a common purpose. It
refers to the human qualities which are different in different people or groups. Understanding
diversity will lead to recognizing that each individual is unique, and the differences they show
should be respected and accepted by all. Diversity means many things to a lot of different people
but it can be differences related to age, gender, race, ethnicity, religion, tribe, language etc. Of
these diversities, gender has become a major issue in almost every country. After gender,
however, diversity concerns become more disparate.
In the advanced, industrialized countries of Europe and North America, immigration,
ethnicity and age are all issues that receive much scrutiny. Social class, however, is a relatively
big issue in England and the Netherlands, but not in other Western countries.
Similar differences are seen in Asia and the Pacific Islands (Oceania). In India, gender,
social class and religion are prominent issues. In China, it is gender, language and ethnicity.
Religion is unimportant in Japan; however, gender and nationality are extremely important. In
Thailand, religious and ethnic differences are ambiguous; the main diversity issue is the role of
women in industry. In Malaysia and Indonesia, however, religious and race issues dominate
despite similar compositions of ethnic minorities. In Thailand, the ethnic Chinese are
assimilated into Thai society, unlike in Malaysia and Indonesia. In part, this is because the
ethnic Chinese share the same religion (Buddhism) as those in Thailand not Islam as in Malaysia
and Singapore.

Africa is the most diverse continent on earth, yet ‘diversity’ receives little attention. In
addition to being ‘home’ to a number of races (white, black, Pygmy, Khoisan and Asians),
Africa’s geography encompasses such a wide range of geographical features that many cultures,
linguistic groups (more language than any other continent) and ethnic groups have developed
and thrived. In addition, colonization by various European countries has meant that there is a
mix of indigenous and European traditions. In Africa, race and ethnic differences often pale in
comparison to tribal differences. Tribalism is not a problem in Indonesia, however, despite there
being 360 different tribes.
Differences between people influence how they behave, feel, do and are perceived. Of
course these differences also influence the way people work. Taking these differences into
account helps organizations to make optimal use of all capacities and capabilities in their
workforce, and thus has a positive influence on both the quality and amount of work that gets
done. This is the basic goal of Diversity Management.

Examples of diversity characteristics are:

cognitive style;
disability (mental, learning, physical);
economic background;
education; ethnicity;
gender identity;

Diversity and Business

Diversity is found in competitors, customers and markets, vendors, the labor market and
human resources. Businesses need to be proactive when it comes to diversity if they are to
leverage and capitalize on differences. In particular, businesses need to understand that their
customers’ wants and needs may be different. Likewise, acknowledging differences is likely to
result in better communication with customers.
Nations in North America and Europe, for example, are basically old, white rich, well
educated and barely maintaining themselves in terms of numbers. By comparison, populations
in the southern Hemisphere are mostly young, non-white, poor, less educated and account for
98% of the world’s population growth. Women, minorities and immigrants will be the majority
of new hires in the US (and elsewhere in the world) in the coming decades. They also represent
a substantial consumer and business market. How organizations acknowledge diversity issues
and understand the implications for their workplace and market place will give them an edge on
their competition in an increasingly competitive business climate.

Why do we have diversity?

 Immigration and migration.
 Political reform and upheaval.
 National Economic crises and reforms
 Improvements in technology
 Increases in Transnational mergers, Joint Ventures, foreign investments etc.
 Changing social trends

Why do we need to understand Global Diversity?

 Growth expansion opportunities will increasingly come from different parts of the world.
 Businesses will increasingly hire or manage a globally diverse workforce both
domestically and abroad.
 Competition now transcends national boundaries.

Objectives of diversity management:

 Improving the efficiency of HRM functions;
 Fostering superior decision-making, problem-solving, creativity, and innovation; key
factors in the creation of knowledge companies;
 Developing cross-cultural capabilities that facilitate operations in culturally complex
environments at home and abroad; and
 Implementing new product/service developments and new sales/marketing strategies for
diverse customer bases.

Types of Diversity
 Social Category Diversity: This type of diversity results from the differences in
demographic characteristics such as age, gender, race, etc.
 Informational Diversity: This results from diversity arising due to different educational
backgrounds, knowledge, experiences, tenures and functional background.
 Value Diversity: This type of diversity arises because of differences in beliefs, attitudes
and personalities.

Dimensions of Diversity
According to Gardenswartz there are four layers of factors which comprise the dimensions of
diversity and they are discussed layer wise below.
1st Layer: Core
 Personality. This factor is at the core of diversity. All individuals have their own unique
personality which makes them different from others.

2nd Layer: Internal Dimensions

 Gender. Ones gender contributes to differences in all aspects of life especially in work
 Nationality. The country of ones origin has a big impact on the way we behave thereby
making us different form people of other countries.
 Ethnicity. Ethnic group refers to a group of people whose members identify with each
other, through a common heritage, common language, and even common ancestry. Like
for example in USA there are people from different ethnic groups like the Europeans,
Africans, Asians, Latino’s, etc., and people belonging to these groups are different when
compared to others.
 Social class background. Social scientists have divided society into various classes
based on position in society, status, power and money. These classes are Upper Class,
Middle Class and Lower Class. People belonging to these classes are different from
 Age. People belonging to different age groups show variations in their behavior. The
same person shows different behavior in different age groups.
 Mental & Physical Capability. People of different mental & physical capabilities
also show variations in their behavior thus making them different.
 Religion. People belonging to different faiths obviously tend to be different.

3rd Layer: External Dimensions

 Geographic location. People belonging to different geographic locations like deserts,
mountain, sea coasts, islands, etc., have differences in various aspects of their life.
 Income. Income differences also make people different. People with high salaries are
different when compared with people with low incomes.

 Personal habits & Appearance. Each individual has habits which are different when
compared with others. We also appear different when compared to others hence this
factor also contributes making us different.
 Educational background. A person with post graduate degree is different from that of a
person with a certificate.
 Work experience. A person with 20 years of experience has big variations in all aspects
when compared with a person with 2 years of experience.
 Paternal status. The status of parents also plays an important role in making us different.
 Marital status. Individuals who are married are different from those who are not

4th Layer: Organizational Dimensions (Outer Circle)

 Functional level. Managers differ when compared to a worker because they are in
different levels of an organization.
 Work content. Employees who have interesting and challenging work show differences
when compared with those who have boring and routine work.
 Work location. A person working in the factory floor will be different from one who is
working in an office.
 Type of employment. An employee who is on permanent roll will show differences
when compared with one who is temporary.

Among the above given dimension the core (1st layer) and the internal layer (2nd layer)
dimensions cannot be altered because they are intrinsic and inborn. The factors in other layers
(3rd and 4th) are learned and external in nature and these can lead to changes in our attitudes,
behavior, or thinking. It is important to understand how these dimensions affect performance,
motivation and interaction with others. An organization's procedure or practice that might cause
problems to some dimensions of diversity should be examined and removed.
Managing Diversity
Managing diversity is defined as ‘planning and implementing organizational systems and
practices to manage people so that the advantages of diversity are maximized and disadvantages
are minimized'(according to Taylor Cox in "Cultural Diversity in Organizations). In other words
Management of Diversity is a strategy to promote the perception, acknowledgement and
implementation of diversity in organizations and institutions. This has become very important in

today’s Multinational Companies because of globalization, increase competition and the
multicultural nature of the work force.
What is Managing Diversity About?
 Corporations that encourage and nurture diversity among their employees.
 Understanding differences and developing a framework for transferring knowledge more
quickly and effectively.
 Using differences to gain a competitive advantage by giving better service to customers.
 Leveraging products and markets
 Ensuring that Individuals of different backgrounds are able to contribute fully to the
organization’s success.
 Aligning corporate culture to be flexible and adaptable with multiple cultures and
growing global work force, workplace and market realities.
Importance of Effective Diversity Management
Effective Diversity management helps in
 Improving reputation of the organization. If in an organization employees from
different groups who work with equality and respect then that organization will be well
respected by the society.
 Attracting the best talent. If an organization recruits from different groups or countries
then it is possible to have the best talented people from these groups or countries, which
will benefit the organization immensely.
 Saving of time and money in recruitment. If an organization recruits from different
groups of people then they can finish the process faster because they will have wider
choice and this will save the organization lots of time and money.
 Promoting creativity. When an organization has people from diverse cultures it
encourages creativity. When people from different backgrounds meet and exchange
thoughts and experiences it will lead to new thinking which leads to creativity.
 People from different cultures, groups or countries will have different, unique
experiences and this will contribute to producing better solutions to problems.

Rules to be followed while managing diversity

Rule number 1:‘Treat others as you want to be treated’.
This is a very old saying which goes to show that if you expect others to respect you, you should
respect others first.

Rule number 2 :'Treat others as they want to be treated’.
This rule tries to tell us that we have to treat different people in different ways. We cannot have
the same office rules in USA and in Oman.

Consequences of Ignoring Diversity:

 Ignoring diversity issues costs time, money and efficiency.
 Some of the consequences can include unhealthy tensions between people of differing
gender, race, ethnicity, age, abilities etc.,
 It causes loss of productivity because of increased conflict.
 Ignoring diversity causes inability to attract and retain talented people of all kinds.
 It causes inability to retain diverse people, resulting in loss of investments in recruitment
and training.
 Ignoring diversity issues can attract legal action, sometimes.

Channels in diversity management

 There are two distinct but connected channels in diversity management, which lead to
superior company performance.
 The first channel focuses on how to tap into the benefits that flow from effectively
managing diversity.
 The second channel focuses on corrective strategies to address ineffective diversity
management, which imposes costs.
 Effective diversity management leads to improved individual and organizational
performance. This is due to the powerful effects of diversity on problem-solving,
decision-making, innovation and creativity.

Chapter 2
Culture, Cross-Cultural Communication and Diversity
Culture refers to a set of attitudes, values, goals, norms, and ritual practices shared by the
members of a community or a group. Culture also comprises of a pattern of human knowledge,
belief, and behavior. Culture gives an identity to group of people or Society. In simpler terms
culture refers to what all a society does and believes in. Different societies have different types
of cultures which influence the organizations and their work cultures. As a student of diversity
management, it is very important to understand the culture of people before we understand

Importance of Culture:
 Culture can greatly influence a country’s laws, because laws are often based on the
culture. Laws are often based on our belief of what is right and wrong and this is defined
by the culture.
 If education is valued by culture, then society will give importance to education.So
culture also affects education.
 Cultures and economic systems are closely related. Countries with dominant cultures tend
to be economically strong.
 Organizational Culture contributes significantly toitssuccess or failure. Organization
culture comprises of elements like Unity, Loyalty, Healthy Competition, Direction and
 Study of the culture is important as it often determines the effectiveness of various HRM
practices. Practices found to be effective in one culture may not be effective in a different
Example: U.S. Companies rely heavily on individual performance appraisal and rewards
are tied to individual performance. In Japan, groups are given more importance and
individual based evaluation and incentives are not very effective for improving

Types of Culture:
Concrete expressions: dress code, architecture, food, language, Transportation, political
system, legal system; language, art, music.

Recognized behaviors: rituals and practices
Artifacts: working hours, business meetings, social events, rituals
Explicit beliefs and values: social roles and duties
Underlying assumptions: unconscious perceptions, thoughts, feelings
Cultural forms: nature of time and space

Ways in which cultures vary

1. Perceptions of time
2. Perceptions of space
3. Individualism versus collectivism
4. High context versus low context
5. Importance of hierarchy
6. Importance and rigidity of gender roles
7. Nature of change
8. Nature of authority
9. Humans’ relationship to the natural world

Three cultural characteristics that impact professional communication

1. Collectivistic vs. Individualistic
2. High Context vs. Low Context
3. Hierarchical Leadership vs. Non- Hierarchical Leadership
Context: the whole situation, background, or environment connected to an event, a situation, or
an individual.

Cultural factors influencing Organizations

Companies that enter global markets or recruit from different countries must know that
those markets/countries are not similar to that of their home country. Countries differ along a
number of dimensions that make them friendly or not for investment or for recruitment and these
dimensions play an important role in the economic feasibility of any decision related to this.
Hofstede’s Cultural Dimensions
Geert Hofstede identified six dimensions on which various cultures could be classified.
These dimensions help in characterizing the cultures and help us understand how these cultures

1st Dimension: Individualism – Collectivism. It describes the strength of the relation between an
individual and other individuals in the society - the degree to which people act as individuals
rather than as members of a group. Example: In individualist cultures, such as United States,
Britain and Netherlands, people are expected to look after their own interests and the interests of
their immediate families. The individual is expected to stand on his/ her own feet rather than be
protected by the group. In collectivist cultures such as in Asia, Africa, Latin Americas and the
Middle East, people are expected to look after the interest of the larger community, which is
expected to protect people when they are in trouble.

2nd Dimension: Power distance. It refers to how a culture deals with hierarchical power
relationships- particularly the unequal distribution of power. It describes the degree of inequality
among people that is considered to be normal. Cultures with small power distance, such as those
of belonging to Europe like Denmark, Austria or England seek to eliminate inequality in power
and wealth as much as possible whereas, countries with large power distances such as those
belonging to Latin America, Asia like India and Philippines, seek to maintain those differences.
For example, in Mexico and Japan individuals are addressed by their titles (Senor Ahmed or
Ahmed san, etc.), failure to do this may lead to misunderstandings. People from United States or
Europe however, often believe in minimizing power distances by using first names. This is
perfectly normal and advisable in the United States; it can be offensive and a sign of disrespect
in other cultures. Differences in power distance often results in miscommunication and conflicts.

3rd Dimension: Uncertainty avoidance: It describes how cultures seek to deal with the fact that
‘future is not perfectly predictable’. It measures a society’s tolerance for uncertainty and
ambiguity. How people prefer structured over unstructured situations.In China, Singapore and
Jamaica there is low uncertainty avoidance. They socialize more and individuals accept
uncertainty and take each day as it comes. People from such cultures found to be easy going and
flexible regarding different views. People in Japan, Eastern Europe and Latin America seek
security through technology, law and religion because of their high uncertainty avoidance.

4th Dimension: Masculinity – Femininity. In ‘masculine’ culture as those of Germany and Japan
what are considered traditionally masculine values such as showing off, achieving something
visible, making money – permeate the society. These societies stress assertiveness, performance,
success and competition. ‘Feminine’ cultures such as those of Sweden and Norway, promote
values that are traditionally regarded as ‘feminine’ such as putting relationships before money,

helping others, preserving environment etc. These cultures stress service, care for the weak and

5th Dimension: Long term - Short term orientation. Cultures high on the long-term orientation
focus on the future and hold certain values in the present that will not provide an immediate
benefit, such as saving, persistence and adaptation. Whereas the short term orientated society’s
value the past and the present, including steadiness, respect for tradition, preservation of one’s
face, reciprocation and fulfilling social obligations. Hofstede found that many far-eastern
countries such as Japan and China have a long term orientation. Short term orientations on the
other hand are found in United States, Russia and West Africa.

6th Dimension: Indulgence – Restraint. Societies with a high rate of indulgence

allow hedonistic behaviors: people can freely satisfy their basic needs and desires. On the
opposite side, restraint defines societies with strict social norms, where gratification of drives are
suppressed and regulated.Indulgence is highest in Europe, North America and certain Latin
American countries, whereas restrain is mostly seen in Middle East and East Asia.
These six dimensions help us understand the potential problems of managing employees
from different cultures. However, it is important to note that these differences have profound
influence on whether a company chooses to enter a given country. One important finding of
Hofstede’s research was the impact of culture on country’s economic health. He found that
countries with individualist cultures were wealthier. Collectivist cultures with high power
distance were all poor. Cultures seem to affect a country’s economy through their promotion of
individual work ethics and aids individuals to increase their human capital.

Cross-Cultural Communication
Cross-cultural study refers to the study of different cultures and how they interact with
each other. These studies gained importance after 1930’s when George P Murdock, an
anthropologist, who did extensive work on different cultures and made a comparative analysis
which became a part of social sciences. One of the important areas of cross-cultural studies is
the field of cross-cultural communication which tries to establish and understand how people
from different cultures/countries communicate with each other. It also attempts to produce some
guidelines which may help people from different cultures to better communicate with each other.
Cultures provide people with ways of thinking, ways of seeing, hearing, and interpreting
the world. The same words can mean different things to people from different cultures, or same
thing can have different names in different cultures, even when they talk the "same" language.
Imagine the differences people will have if they have different languages? Cross-cultural
communication is a combination of many fields like anthropology, cultural studies, psychology
and communication. This field gained a lot of importance since 1970’s and 1980’s because of
globalization and the need for cross cultural awareness and cross cultural training. For example,
recently an initiative was launched in UAE to teach Chinese to Emiratis because of the increased
economic and tourist linkages with China. This initiative led to some changes in dealing with
Chinese tourists like providing them with warm drinking water because most Chinese people
only drink warm boiled water, even in hot weather. This led to more satisfied tourists and better
relations. This shows that awareness of cross-cultural communication helps us not only to focus
on understanding languages but also helps us in understanding various cultural aspects. This will
make us more flexible and open in our attitude and behavior.

Effective cross-cultural communication means maximizing that knowledge to

Minimize misunderstanding, being able to recognize cultural variables and understanding
how those variables influence business. Differences in communication styles and norms arise
from and are reflected in cultural beliefs, values, and experiences.

Why the Company Need Cross-Cultural Competence

1. Cross-Cultural Communication Blunders

Cross-cultural communication misunderstandings happen all the time. Unfortunately there isn’t a
way to avoid them. But with the right procedures and adequate skills you can limit these
misunderstandings from becoming international business blunders.
2. Cultural Perceptions
Good cross-cultural skills often rely on our ability to identify how and when our differences in
perception impact effective communication.
3. Cross-Cultural Differences
It’s not always easy for professionals to put aside their own cultural assumptions and barriers to
cross-cultural communication in the work environment. Strong cultural awareness makes it
easier to anticipate and see how cultural differences can jeopardize international business

Cross-Cultural Communication Basics

1. Mindset In Cross-Cultural Communication

Some people seem to find it easy to adopt a mindset where it’s easy to cultivate good cross
cultural practices and engage with other cultures. But a good cross-cultural mindset is also
acquired through a mixture of experience and personal commitment to make the changes needed.
2. Trust In Cross-Cultural Communication
First by stopping to lose trust through unintentional cross-cultural misunderstandings and then by
becoming aware of the cultural differences in building trust and adapting communication as
3. Empathy In Cross-Cultural Communication
Mastering and improving your empathy skills plays a critical role in international business
success. Without a minimum level of understanding of another person’s point of view you
cannot build trust and create relationships with your international clients. And these relationships
are critical in international business.
4. Cultural Generalizations, Prejudices & Stereotypes
Cultural generalization is another helpful tool. Broad characterizations can be useful as a
general guide to anticipating and discussing cultural reactions, attitudes, and behaviors in a
neutral way.
A stereotype is an exaggerated belief, image or distorted truth about a person or group — a
generalization that allows for little or no individual differences or social variation. Stereotypes
are based on images in mass media, or reputations passed on by parents, peers and other
members of society. Stereotypes can be positive or negative.
5. Culture & Political Correctness
Culture is a particular form or stage of civilization, as that of a certain nation or period,
thebehaviors and beliefs characteristic of a particular social, ethnic, or age group and
the quality in a person or society that arises from a concern for what is regarded as excellent in
arts,letters, manners, scholarly pursuits, etc.,
Political correctness is the avoidance, often considered as taken to extremes, of forms of
expression or action that are perceived to exclude, marginalize, or insult groups of people who
are socially disadvantaged or discriminated against.

Aspects of Cross-cultural communication
The important components/aspects of cross-cultural communication are discussed below,
1. High and low context cultures: Anthropologist Edward T. Hall’s theory of high-and
low-context culture helps us better understand the powerful effect of culture on
High Context Culture
 A key factor in his theory is context. This relates to the framework, background, and
surrounding circumstances in which communication or an event takes place.
 People in High-context cultures (Middle East, Asia, Africa, and South America)
emphasize interpersonal relationships. According to Hall, these cultures are collectivist,
preferring group harmony and consensus to individual achievement.
 Words are not so important as context, which can include the speaker’s voice, facial
expression, gestures, and even the person’s family history and status.
 High-context communication tends to be more indirect and more formal.

Low-context cultures
 (North America and much of Western Europe) Low-context cultures are logical,
individualistic, and action-oriented.
 People from low-context cultures value logic, facts, and directness. Solving a problem
means taking all the facts and evaluating one after another.
 Decisions are based on fact rather than intuition. Discussions end with actions.
 Communicators are expected to be straightforward, concise, and efficient in telling what
action is expected. To be absolutely clear, they strive to use precise words and intend
them to be taken literally.
 Low-context cultures reach formal contracts after thorough negotiations. This is very
different from communicators in high-context cultures who depend less on language
precision and legal documents.

2. Non-verbal communication:
This type of communication involves gestures, eye contact, facial expressions, body language
and the use of space around us. Experts name this as Kinesics to mean communicating through
body movement.
Eye contactis a key factor in non-verbal communication between two individuals and greatly
differs in meaning between cultures. In the Americas and Western Europe eye contact conveys

interest and honesty. People who avoid eye contact when speaking are viewed in a negative,
light, withholding information and lacking in general confidence. However, in the Middle East,
Africa, and especially Asia, eye contact is seen as disrespectful and even challenging one’s
authority. People who make eye contact, but only briefly, are seen as respectful and courteous.

Facial expressionsare their own language by comparison, and universal throughout all
cultures and can communicate ten basic classes of meaning. Gesturescan be made into various
categories but three are most important.
1. sign language (such as the “Thumbs Up” which is one of the most recognized
symbols in the world, waving hand to say for "hello" and "goodbye"). A single
emblematic gesture can have a very different significance in different cultural
contexts, ranging from complimentary to highly offensive.
2. Beat gestures comprising those gestures used spontaneously when we speak to
emphasize certain words or phrases. Eg: making a circle with ones hand for
instance in the Americas means ok; in Japan the same gesture is used to indicate
money, and in France it conveys worthlessness).
3. The last category of gestures is known as iconic gestures or Body language is the
way we carry ourselves and appear to other people. On this the individual has
very little to no control (such as happiness-smile; or sadness- tears, or boredom-
yawn, or clenching fists-anger).Such gestures that are used along with speech tend
to be universal. For example, one describing that he/she is feeling cold can
accompany his/her verbal description with a visual one.
The last Non-Verbal type of communication deals with communication through the space around
us, or Proxemics. This deals with how cultures arrange their space on a large scale, such as
buildings and parks, how we arrange our space inside buildings, such as the placement of our
desks, chairs and plants, how close people sit to one another and office space are all examples.

3. Verbal Communication and Written Communication: This is relatively easy to learn

and understand. The only problem is the way and tone in which verbal and written
communication is delivered. This is called as paralanguage wherein the differences in
the volume and tone of the voice, rate or speed of speech and the emphasis on words,
give different meanings.

Successful Cross-cultural communication techniques
Before we establish communication with people of other culture it is advisable to learn all about
that culture by experiencing it directly or through internet, television, newspapers, etc.
Multinational companies also train their employees to understand different cultures. The
following techniques will help us in establishing successful cross-cultural communication.
 Knowledge: Gather all information about the person and the culture he/she belongs to.
Information about the dominant values, norms and certain do’s and don’ts will be of great
benefit. This will lead to identifying potential problems in communication and effective
ways to overcome these problems.
 Patience & Tolerance: These are of very high importance because initially all of us will
find it difficult to adjust to other people. Hence being patient and developing the ability to
forgive and be tolerant of others will make you an effective communicator.
 Opening and Closing Conversations: Different cultures may have different customs
around who addresses whom when and how, and who has the right, or even the duty, to
speak first, and what is the proper way to conclude a conversation. Think about it: do
you think starting a conversation without saying “Assalamualaikum” is proper? Likewise
closing a conversation without saying “Masalam” or “good bye” might be considered as
not nice.
 Interrupting during conversations: In some cultures, it is fine to be more interactive
and participate in a conversation with more force (which may lead interruptions), and in
others, it is more important to listen thoroughly and without comment, without immediate
response, lest a response be taken as a challenge or a humiliation.
 Use of Silence: In some forms of communication, silence is to be expected before a
response, as a sign of thoughtfulness and deference to the original speaker, yet at other
times, silence may be experienced as a sign of hostility. In the West, twenty seconds of
silence during a meeting is an extraordinarily long time, and people will feel
uncomfortable with that. Someone invariably will break in to end the uncomfortable
silence. But the same customs around silence are not universal, in Japan silence for long
time during a conversation is very common, this implies that the person is thinking
deeply and seriously about the issue at hand, which is well respected.
 Use of Humor: In the West, people often try to build immediate rapport through humor,
but of course, this is not universally seen to be appropriate in all contexts. The use of
laughter can be experienced as a sign of disrespect by some, and so it is important to
understand that this is another area where misunderstandings can be very likely to occur.

 Slow and Simple: Do not hurry while communicating with people of other cultures and
also use as simple language as possible because this will give you and them sufficient
time to respond and take care of any problems.
 Use of intermediaries or translators: Many a time it might be suitable to use someone
who is familiar with both cultures to play the role of an intermediary for some important
meetings. These people will help in recognizing any cross-cultural issues and make the
whole process as trouble free as possible.

Chapter 3
Challenges and Strategies in Managing Diversity

Some of the challenges have already been discussed in chapter one, and in this chapter we will
focus our discussion on the best practices and certain solutions which can be used by managers
in multinational organizations to control and manage employees from diverse backgrounds.
Best practices in Manage Diversity in an Organization
Diversity can be managed in an organization by taking following steps:

 Embrace Diversity: Successfully valuing diversity starts with accepting the principle of
multiculturalism. Accept the value of diversity for its own sake not simply because you
have to. The acceptance must be reflected in actions and words. This will overcome
resistance to change easily.
 Recruit Broadly: When you have job openings, work to get a diverse applicant pool.
Avoid relying on referrals from current employees, since this tends to produce candidates
similar to existing work force. An exception is that if the present workforce is fairly
diversified then there is no harm in accepting referrals from current employees.
 Select Fairly: Make sure your selection process does not discriminate. Particularly ensure
that selection tests are job related. Use panel interviews for avoiding biases.
 Provide Orientation and Training: Making the transition from outsider to insider can be
particularly difficult for non-traditional employees.
 Sensitize all Employees: Encourage all employees to embrace diversity. Provide diversity
training to help all employees see the value in diversity. This will reduce the conflicts in
an organization.
 Strive to be Flexible: Part of valuing diversity is recognizing that different groups have
different needs and values. Be flexible in accommodating employee requests.
 Seek to Motivate Individually: A manager or the superior must be aware of the back
ground, cultures, and values of employees. The motivation factors for a full time working
mother to support her two young children are different from the needs of a young, single,
part-time employee or an older employee who is working to supplement his or her
retirement income.
 Reinforce Employee Differences: Encourage employees to embrace and value diverse
views. Create traditions and ceremonies that promote diversity. Celebrate diversity by
accentuating its positive aspects. But also be prepared to deal with the challenges of

diversity such as mistrust, miscommunication, and lack of cohesiveness, attitudinal
differences and stress.
 Involve all when Designing the Program: Involve as many employees from every level in
the organization as you can when designing a diversity initiative. This gets people talking
about the program and promotes ownership and buy-in. This will increase the group
cohesion also.
 Think “global” but act “local”. This will ensure a global plan, common to all branches or
divisions but the emphasis will also be on local issues. This will ensure the best of both
 Exact job descriptions and job specifications will make the job suitable and interesting
to different types of workers such as people with disabilities, women or people from a
minority group. It is essential to maintain the interest of all employees to work effectively
in a diverse work environment.
 Retention might be a problem for members belonging to small groups or groups in a
minority. Hence it is a big challenge for the HR department to retain these employees
through special motivational and retention schemes. Along with exposing employees to
special motivational and retention schemes it would also be useful if the organization
adopts a policy which shows willingness to change institutional practices that cause
barriers to different groups.
 Partnership should be developed with different communities so as to encourage diversity.
 Leadership which is friendly and can obtain “buy in” should be developed.

Managing Diversity in Arab Countries

Overview of Diversity Policies in the Context of Work

Diversity refers to the variety or multiplicity of demographic features that characterize a
company’s workforce, particularly in terms of race, sex, culture, national origin, handicap, age
and religion.

a. Title VII of the 1964 Civil rights Act

The section of the U.S. act that says an employer cannot discriminate on the basis of race, color,
religion, sex, or national origin with respect to employment

b. Equal Employment Opportunity Commission (EEOC)
This U.S. commission, created by Title VII, is empowered to investigate job discrimination
complaints and sue on behalf of complainants.

The Importance of Managing Diversity in Human Resource Management

Two main approach to diversity:

a. The equality approach
Equality promoters propose treating individuals according to merit rather than group
b. The business case approach
Business case supporters focus on managing a diverse workforce equitably by valuing their

The Context of Diversity in Arab Countries

The three links:

a. There are disadvantaged groups in Arab countries such as migrants, women, and disabled
people, among others.
b. Diversity in Arab countries can be used to empower ethnic minorities and women and
eliminate discrimination against them.
c. There is a growing demand in Arab organizations for more focus on merit than on other
aspects such as wastain the selection and promotion of candidates.

Diversity in Practice
Four Types of Diversity in Arab World
1. Religious Diversity
2. Gender Diversity
3. Disability and Diversity
4. The International Workforce and Ethnic Diversity

Required Tools for Managing Diversity

First, managers must understand discrimination and its consequences.

Second, managers and associates must recognize their own cultural biases and prejudices.
Diversity is not about differences among groups, but rather about differences among individuals.
Each individual is unique and does not represent or speak for a particular group.
Third, Organizations need to develop, implement, and maintain ongoing training because a one-
day session of training will not change people's behaviors.
Fourth, Managers must also understand that fairness is not necessarily equality.
Finally, managers must be willing to change the organization if necessary.
Managers should expect change to be slow, while at the same time encouraging change.
Another vital requirement when dealing with diversity is promoting a “safe” place for associates
to communicate. Social gatherings and business meetings, where every member must listen and
have the chance to speak, are good ways to create dialogues.
Managers should implement policies such as mentoring programs to provide associates access to
information and opportunities. Also, associates should never be denied necessary, constructive,
critical feedback for learning about mistakes and successes.

The qualities an effective manager or leader should exhibit:

A leader is expected to have the following qualities:
Was fair and respectful toward others.
Had high personal standards.

Believed in my abilities and potential.

Helped me believe in myself.
Encouraged and stretched me.
Led by example.
Mentored and coached.
Asked for and appreciated different points of view.
Criticized objectively.
Had integrity; was honorable.

Helped me solve my own problems.
Had a vision.
Developed a trusting environment.


1. Make time to talk privately with each of your employees on a regular basis. For example,
if you have 10 employees, provide each with 30 minutes every two weeks where they have the
opportunity to share with you whatever they wish. They can ask any questions, give you ideas,
and you have the opportunity to get to know them personally and coach and counsel them as

2. Ask your staff, individually, how they would prefer to be managed and how they would
prefer to be rewarded. Often we assume money is what everyone wants. This is not necessarily
true. Using learning assessments such as the Personal Profile or other tools to better understand
communication styles and ingredients for the most motivating environments for different styles
can be very helpful for both you and the employee. When you ask an employee how he or she
wishes to be rewarded, you may discover personal interests, and professional aspirations that you
can be supportive of. For example, perhaps one employee might be most motivated by having
the company pay part of his or her child's tuition. A child-free person may be most appreciative
if the company provided additional vacation time so that she or he could visit a favorite place.

3. Take your staff to lunch every now and then, just to chat. The more actions you take to
demonstrate sincere interest in the individual, the more likely your staff will want to "go the
extra mile." The challenge is to be able to make the time. However, once you do, you will more
likely see the real person, instead of just their "packaging." Their differences will then be an
asset instead of a barrier.

How does workplace diversity fit into the wider organization?

Workplace diversity principles should be integrated with and underpin all aspects of human
resource management, such as planning, selection and recruitment, performance appraisal,
training and development, occupational health and safety and workplace relations.

Checklist to follow Management of Diversity in a Unit
Answers to the following questions will show us how much importance an organization
gives to management of diversity.

1. Do you test your assumptions before acting on them?

2. Do you believe there is only one right way of doing things, or that there are a number of valid
ways that accomplish the same goal? Do you convey that idea to staff?
3. Do you have honest and frank relationship with each staff member you supervise? Are you
comfortable with each of them? Do you know what motivates them, what their goals are, how
they like to be recognized?
4. Are you able to give negative feedback to someone who is culturally different from you?
5. When you have open positions, do you insist on a diverse screening committee and made
additional efforts to ensure that a diverse pool of candidates has applied?
6. When you hire a new employee, do you explain his job responsibilities and expectations
clearly and orient him to the campus and department culture and unwritten rules?
7. Do you continuously examine your unit’s existing policies, practices and procedures to ensure
that they do not differentially impact different groups? When they have a differential impact, do
you change them?
8. Are you willing to listen to constructive feedback from your staff about ways to improve the
work environment? Do you implement staff suggestions and acknowledge their contributions?


Chapter 4
Factors Affecting Cross-Cultural Business Communication

Culture encompasses the set of beliefs, moral values, traditions, language, and laws (or
rules of behavior) held in common by a nation, a community, or other defined group of people.
Culturally determined characteristics include: the language spoken at home; religious
observances; customs (including marriage customs that often accompany religious and other
beliefs); acceptable gender roles and occupations; dietary practices; intellectual, artistic, and
leisure-time pursuits; and other aspects of behavior.
Business is not conducted in an identical fashion from culture to culture. Consequently,
business relations are enhanced when managerial, sales, and technical personnel are trained to be
aware of areas likely to create communication difficulties and conflict across cultures. Similarly,
international communication is strengthened when businesspeople can anticipate areas of
commonality. Finally, business in general is enhanced when people from different cultures find
new approaches to old problems, creating solutions by combining cultural perspectives and
learning to see issues from the viewpoint of others.

Importance of Culture:
1. Culture can greatly affect country’s laws, because laws are often based on the culture. Laws
are often the codification of right and wrong as defined by the culture.
2. Culture also affects education, because if education is greatly valued by culture, then members
of the community will also give importance to education.
3. Cultures and economic systems are closely interwoven
4. Culture also affects human capital. The reason why the culture is important to HRM is that it
often determines the effectiveness of various HRM practices. Practices found to be effective in
the Unites States may not be effective in a culture that has different beliefs and values.

Six fundamental patterns of cultural differences -- ways in which cultures, as a whole, tend to
vary from one another -- are described below.

1. Different Communication Styles

The way people communicate varies widely between, and even within, cultures. One aspect of
communication style is language usage. Across cultures, some words and phrases are used in

different ways. For example, even in countries that share the English language, the meaning of
"yes" varies from "maybe, I'll consider it" to "definitely so," with many shades in between.

2. Different Attitudes toward Conflict

Some cultures view conflict as a positive thing, while others view it as something to be avoided.
In the U.S., conflict is not usually desirable; but people often are encouraged to deal directly with
conflicts that do arise. In fact, face-to-face meetings customarily are recommended as the way to
work through whatever problems exist. In contrast, in many Eastern countries, open conflict is
experienced as embarrassing or demeaning; as a rule, differences are best worked out quietly. A
written exchange might be the favored means to address the conflict.

3. Different Approaches to Completing Tasks

From culture to culture, there are different ways that people move toward completing tasks.
Some reasons include different access to resources; different judgments of the rewards associated
with task completion, different notions of time, and varied ideas about how relationship-building
and task-oriented work should go together.

4. Different Decision-Making Styles

The roles individuals play in decision-making vary widely from culture to culture. For example,
in the U.S., decisions are frequently delegated -- that is, an official assigns responsibility for a
particular matter to a subordinate. In many Southern European and Latin American countries,
there is a strong value placed on holding decision-making responsibilities oneself. When
decisions are made by groups of people, majority rule is a common approach in the U.S.; in
Japan consensus is the preferred mode.

5. Different Attitudes toward Disclosure

In some cultures, it is not appropriate to be frank about emotions, about the reasons behind a
conflict or a misunderstanding, or about personal information. Keep this in mind when you are in
a dialogue or when you are working with others. When you are dealing with a conflict, be
mindful that people may differ in what they feel comfortable revealing. Questions that may seem
natural to you -- What was the conflict about? What was your role in the conflict? What was the
sequence of events? -- may seem intrusive to others.

6. Different Approaches to Knowing
Notable differences occur among cultural groups when it comes to the ways people come to
know things. European cultures tend to consider information acquired through cognitive means,
such as counting and measuring, more valid than other ways of coming to know things. Compare
that to African cultures' preference for affective ways of knowing, including symbolic imagery
and rhythm. Recent popular works demonstrate that our own society is paying more attention to
previously overlooked ways of knowing. Indeed, these different approaches to knowing could
affect ways of analyzing a community problem or finding ways to resolve it. Some members of
your group may want to do library research to understand a shared problem better and identify
possible solutions. Others may prefer to visit places and people who have experienced challenges
like the ones you are facing, and get a feeling for what has worked elsewhere.

Suggested guidelines to help with cross cultural understanding.

These are the main elements to contrast and compare between your cultural value-set and other

1. Be aware of differing communication styles: do you favour direct or indirect communication?

Being able to say ‘no' in your culture means you have a direct way of communicating. Some
cultures have many ways to say ‘yes,' most of them meaning ‘no'!
2. Be aware of differing social values, status symbols and how to demonstrate them: is your
culture more egalitarian than hierarchical? In power-based, hierarchical cultures every degree of
‘superiority' needs to be recognised and respected.
3. Be aware of decision making customs: not all people like to make decisions quickly and
efficiently. Group-minded consensus decisions take time to arrive at.
4. Be aware of concepts of time: not all people see time as money or as a commodity. Time can
be regarded as either fixed or fluid.
5. Be aware of silences, body language and personal space: people from different cultures have
different ‘comfort zones'. Learn the basic differences in the way people supplement their words
with body movement.
6. Be aware of acceptance (or not) of strangers: different cultures have differing attitudes
towards outsiders, some are openly hostile, some maintain a detached aloofness, and others are
friendly and cooperative toward strangers.
7. Be aware of cultural ‘contexts': people from cultures called ‘high-context cultures' (Far
Eastern, Arab) rely far less on verbal communication and more on the context of nonverbal
actions and environmental settings to convey meaning. People from ‘low-context cultures' such
as the USA and Northern European cultures rely more on direct, verbal communication to
convey meaning; what they say is what they mean.
8. Be aware of different etiquette rules or manners: what is polite in one culture may be
considered rude in another; watch and learn. If in doubt, ask.
9. Be aware that political correctness, morality and ethical behaviour differs around the world:
for many cultures ‘corruption' is a way of life and those who are used to it often are suspicious of
those who don't practice it. They cannot understand what you are ‘getting out of it' and that there
must be another different agenda.
10. Be aware of language barriers: English is the most prevalent international language, but it's a
mistake to believe there is no difference between English/American English and the international
English spoken by foreigners. You cannot assume that everyone understands English as spoken
but native speakers.

The 5 Essential Elements of Effective Cross Culture Communication

1. Questions: be courageous and ask incisive questions. Why courageous? Because many people
feel stupid when they need to ask questions - as though they were not clever enough to
understand. Courageous because many people are wary of being politically incorrect; they feel
inhibited about asking the kind of questions that could be interpreted wrongly. Take courage and
ask because only questioning will drive understanding to help to make connections and forge
good working relationships. In reality you are testing your understanding.

2. Attention: give full attention with all your senses. Be alert to the nuances of verbal and non-
verbal communication which have vast and varied differences across cultures. Listen with your
eyes and hear with your heart.

3. Clarification: check for understanding by summarizing what you think you have heard or
understood, even at the risk of someone being affronted (or thinking you're stupid). Remaining
silent and being faced with the consequences of being misinformed or uninformed is worse. If
necessary, consult other people for clarification. Most people are only too pleased to help when
someone shows a genuine interest to learn.

4. Limitations: openly acknowledge your relative ignorance or limitations about other people's
beliefs, values and cultural norms and explain how this might make you appear clumsy in your
communication. If you don't, you're either hoping that your ignorance doesn't exist or it won't be
noticed! Experience dictates that neither will be the case. Most people will accept and respond to
your discomfort with consideration and respect and will use the situation to illustrate something
about their culture.

5. Value: recognise that diversity is a source of abundance and a cause for celebration. To create
synergy and value from cross-cultural interactions is the approach of all effective intercultural

Factors Affecting Cross-Cultural Business Communication

1. Language
This is the method of human communication, either spoken or written, consisting of the use of
words in a structured and conventional way.
Language failures between cultures typically fall into three categories:
1) gross translation problems;
2) subtle distinctions from language to language; and 3) culturally-based variations among
speakers of the same language.

2. Environment and Technology. The ways in which people use the resources available to
them may vary considerably from culture to culture. Culturally-ingrained biases regarding
the natural and technological environment can create communication barriers.
Environment: The surroundings or conditions in which a person, animal, or plant lives or
operate or the natural world as a whole or in a particular geographical area especially as
affected by human activity.

Selection in the United States, Canada, and much of northern Europe—all nations with
comparatively weak concepts of familial relationships and kinship ties.

In these cultures, nepotism is seen as subjective and likely to protect less qualified workers
through familial intervention.
By contrast, it would seem anywhere from mildly to highly inappropriate to suggest to
members of many Arabic, central African, Latin American, or southern European cultures to skip
over hiring relatives to hire a stranger.
For people in these cultures, nepotism both fulfills personal obligations and ensures a
predictable level of trust and accountability. The fact that a stranger appears to be better qualified
based on a superior resume and a relatively brief interview would not necessarily affect that

4. Conceptions of Authority. Different cultures often view the distribution of authority in their
society differently. Geert Hofstede, the Dutch international business researcher, has called this
dimension of cultural variation "power distance," defining this as "the extent to which a society
accepts the fact that power in institutions and organizations is distributed unequally."
Authority: a person or organization having power or control in a particular, typically political
or administrative, sphere and the power or right to give orders, make decisions, and enforce
Views of authority in a given society affects communication in the business environment
significantly, since it shapes the view of how a message will be received based on the relative
status or rank of the message's sender to its receiver.
In other words, conceptions of authority influence the forms that managerial and other
business communications take.

5. Nonverbal Communication. Among the most markedly varying dimensions of intercultural

communication is nonverbal behavior. Knowledge of a culture conveyed through what a person
says represents only a portion of what that
person has communicated. Indeed, body language, clothing choices, eye contact, touching
behavior, and conceptions of personal space all communicate information, no matter what the
culture. A prudent business person will take the time to learn what the prevailing attitudes are in
such areas before conducting businesses in an unfamiliar culture (or with a representative of that

Chapter 5
Equal Employment Opportunity & Affirmative Action

Equal employment opportunity requires that all individuals be treated equally with regard
to all employment actions including interviewing and selection, promotion and reclassification,
disciplinary actions, separations, layoffs, and retirement. Each individual has the right to be
evaluated on the basis of his or her qualifications free of discrimination and stereotypical
Affirmative action goes further than equal employment opportunity. It affirms that
organizations and individuals in organizations will seek to overcome the effects of past
discrimination against groups such as women and minorities, disabled persons, and veterans by
making a positive and continuous effort in their recruitment, employment, retention, and
Affirmative action requires federal contractors as employers to take steps to recruit, employ,
train, and promote qualified women, minorities, and disabled persons when they are
underrepresented in the workforce. Outreach in the form of publicizing job vacancies in media
targeting underrepresented groups or contacting these populations directly are examples of "good
faith" affirmative action efforts.
Affirmative action is not intended to encourage the hiring of any candidate who is less than
qualified. One standard should be applied to all qualified candidates.

Defining Discrimination:
The courts have ruled that different behaviors by employers and unions are unlawful. These
behaviors are divided into two: ‘’Disparate Treatment’’ and ‘’Disparate impact’’.

‘’Disparate Treatment’:
It includes practices in which an organization treats protected group members less favorably than
others, either openly or covertly. Under this definition, it is unlawful if it applies different
standards to different employees. However, simply prohibiting disparate treatment does not
ensure that all groups will be equally affected. Even though many common jobs requirements
are applied to all groups equally, they may have adverse impact on certain groups. For example
some blacks may be less able to meet educational requirements and less likely to attain a passing
score on employment tests. The definition of discrimination now includes ‘disparate impact’

also. (Any requirement that minorities are less likely to fulfill than others). Permitting such
requirements to exist will leave minorities and others in the same disadvantaged position that
prevailed before. Thus Courts and government agencies have adopted a more strong definition
of discrimination ---‘disparate impact’.

Disparate Impact:
Personnel practices that have a differential effect on certain groups are illegal under the
‘disparate impact’ definition unless the differences are justified as job-related and necessary to
the safe and efficient operation of the business. Under the ‘disparate impact’ definition of
discrimination, whether or not the employer intended to discriminate is irrelevant. Thus, a
personnel decision can on its face, seem neutral. If the results of it are unequal, the employer
must demonstrate that the decision is either work-related or business necessity. In a peculiar
case, the employer used a multi-stage promotion process. Applicant provisionally promoted to
supervisory positions had to pass written test and receive satisfactory performance ratings.
Failure to pass the test precluded an applicant from further consideration, no matter how
outstanding the work record may have been. When black employees failed the test in greater
proportions than whites, the employer applied ‘affirmative action’ program so that the net
outcome of the promotion process ( i.e bottom line figure) was more favorable to Blacks than to

Affirmative Action Measures

Identify and eliminate employment barriers, including unfair discrimination
Create diversity in the workplace based on equal dignity and respect of all people
Make “reasonable accommodation” for people from designated groups in order to ensure that
they enjoy equal opportunities and are equitably represented in the workforce of a designated

Affirmative action
EEO plans often include what many people understand to be “affirmative action strategies”.
People generally use the term affirmative action in one of three ways:
to cover everything to do with equal opportunity plans, as described above.
to describe specific affirmative action strategies to help groups that have been disadvantaged
in the past, such as special training or recruitment programs for disadvantaged groups e.g.
aborigines in Australia, tribal’s in India etc. Such affirmative actions strategies help give
previously disadvantaged groups the skills and confidence to compete on equal terms with
everyone else. They also help ensure that employers get the best performance out of all
employees in their workplace.
to cover programs and strategies aimed at women only in order to correct disadvantages that
women have experienced, and ensuring that they can compete equally for employment, training
and promotion opportunities. An affirmative action program is a structured approach

An affirmative action program involves keeping statistics on the occupations and employment
status of women in the organisation, and using these to redress any imbalance in the profile of
the workforce. It also involves implementing specific affirmative action strategies such as
training or recruitment programs for women, introducing part-time work for women returning
from maternity leave, and reviewing promotion procedures to ensure that all promotions are
based solely on merit.

The following values are especially relevant to the diversity and human resources policies of

Merit-based employment
Non-discrimination and diversity
Fair, flexible, safe and rewarding workplace and
Equity in employment
an employee must treat everyone with respect and courtesy, and without harassment
This generation is marked by the following core values:
Hard Work
Law and Order
Respect for authority
Delayed reward
Duty before pleasure
Adherence to rules

Baby Boomers
The actual “boom” in births in this country is identified by demographers as 1946 through 1964,
but the boomer generation is generally identified as those born between 1940 and 1960. This
group grew up during a time of prosperity (1950s) turned into a time of social upheaval (1960s
and 1970s). This generation is often described as “self-absorbed.” They certainly tout the power
of the individual to accomplish whatever he or she sets out to. They applied their parents’ hard
work ethics more to the benefit of the individual, as opposed to the “company.” This generation
began to experience a transition in the stability of the family, however. Education was seen more
as a birthright than a dream.

This generation is marked by the following core values:

Team orientation
Personal gratification
Health and wellness
Personal growth
Generation X
The emergence of Generation X into the workforce coincided with the identification of
generational differences as important in the workplace.
Born between 1960 and 1980. In terms of workplace attitudes, Generation X is known primarily
as the first generation to enter the workforce after the first wave of corporate downsizing. This
affected Generation X’ers approach to workplace loyalty and contributed to their entrepreneurial
spirit. Where their parents lived to work, Generation X works to live, and work/life balance is
also a hallmark of this generation. Latch-key kids, often the children of divorced parents; change
is more the rule for Generation X’ers than the exception. Unlike their parents who challenged
leaders with intent to replace them, Generation X’erstend to ignore leaders.
Their core values include:
Thinking Globally

Millennial or Generation Y
The newest generation in the workforce, Millennials are those that were born after 1980.
This generation was raised on the internet. Generation X’ersare no strangers to technology, but
Millennials have known nothing but PCs, email, and the internet. They knew what the verb “to
click” meant before they could read. This has made their perspective more global, connected,
and around the clock. Millennials take the Generation X’s work/life balance one step further, to
the point where leisure is actually interwoven with work. They are known for their flexibility,
and they are often at least initially more comfortable with diversity than other generations.
Their core values are being identified as:
Civic duty
Street smarts

Implement the program and communicate and promote the strategies
Managers may need training in their responsibilities or other support mechanisms to help them
feel confident about implementing the strategies.
There can be challenges in implementing a workplace diversity program, including the need to
sustain interest and energy, changes in key employees, changes to the environment and
resistance from managers feeling the pressure of their line responsibilities.
Useful responses include targeted discussions, reviewing the program, ensuring ongoing support
from senior management, establishing a network of diversity 'champions' and publicising success
Monitor progress
Performance indicators are the basis for monitoring the progress of the program. Monitoring
progress regularly will show whether adjustments need to be made to the program to ensure its
relevance and success. Measurements can include changes to the employee profile, particularly
those in the EEO groups. The employee profile could cover employment status, level,
recruitment and retention patterns and take-up of training and flexible working arrangements.
Monitoring can be done by means of staff surveys. Other indicators of corporate health could
include the rate of absenteeism or the number of harassment complaints that relate to diversity.
Methods of monitoring could include progress reports, reports to consultative committees or to
senior management, changes to the employee profile, feedback from staff or interviews with key

Affirmative Action refers to policies promoting education or employment focusing non-

dominant (disadvantaged) minority groups such as people of color.
Diversity Management and Affirmative Action Programs across the World
Managing diversity means maximizing diversity’s potential benefits while minimizing the
potential barriers that can undermine the company’s performance.

Diversity Management Programs:

1. Provide strong leadership
2. Assess the situation
3. Provide training and education
4. Change culture and management system
5. Evaluate the diversity management program


o Staff speaking different languages.
o Resistance to working with members of another ethnic, racial or cultural groups.
o Discriminatory remarks due to differences in accents, ethnics or races.
o Prejudice in promotion, rewards and compensation, performance appraisal as a result of
differences in background or races.

Types of Discrimination in the workplace

‘’Disparate Treatment’:
Disparate treatment, in the employment context, refers to when a person is treated differently
from others. The different treatment is based on one or more of the protected factors and the
different treatment is intentional. This is distinguished from the concept of "adverse impact",
which may be unintentional and applies to a protected group rather than an individual.
For example, disparate treatment occurs when a supervisor allows the majority of his/her
employees to enjoy a particular job benefit but denies a single employee that same benefit.
Disparate Impact:
Disparate impact refers to policies, practices, rules, or other systems that appear to be neutral, but
result in a disproportionate impact on protected groups.
The Law permits unequal impact of personnel decisions, if the practice is –
a. job-related business
b. defendable as BFOQ
c. result of seniority system
d. a preferential quota system designed to overcome past discrimination.

Bonafide Occupational Qualification (BFOQ) :

In employment law, a bona fide occupational qualification (BFOQ) is a quality or an attribute
that employers are allowed to consider when making decisions on the hiring and retention
of employees—qualities that when considered in other contexts would
constitute discrimination and thus in violation of civil rights employment law. Such
qualifications must be listed in the employment offering.
One example of bona fide occupational qualifications are mandatory retirement ages for bus
drivers and airline pilots, for safety reasons. Further, in advertising, a manufacturer of men's
clothing may lawfully advertise for male models. Religious belief may also be considered a
BFOQ; for example, a religious school may lawfully require that members of its faculty be
members of that denomination, and may lawfully bar from employment anyone who is not a

Seniority System- Exception:

To be considered as bonafide, a seniority system must have a non-discriminatory purpose behind
its creation. The Supreme Court ruled that an employer may not be ordered to ignore a seniority
system when making lay offs, even if the effect reduces no. of minorities hired under a Court-
mandated affirmative action plan. Individuals, who can demonstrate, that they have been actual
discrimination victims, may be awarded artificial seniority. Courts are free to award artificial
seniority (seniority that would have been attained by an individual were it not subject to illegal
discrimination) for individual victims of discrimination.

Preferential Quota System- Exception:

In essence, quota system and preferential treatment, set aside a portion of opportunities for
groups who have been discriminated against. The objective is to overcome the long history of
discrimination that has relegated certain groups to a lower economic status. The system does so
by instituting employment preferences for members of such groups. For eg. 20 % of openings
may be set aside for minorities. Minorities who worked harder than many (Whites) in similar
position are looked at with jaundiced eyes because it is believed that they received their positions
because of minority preferences rather than achievement.
The Law permits unequal impact of personnel decisions, if the practice is –
a. job-related business
b. defendable as BFOQ
c. result of seniority system
d. a preferential quota system designed to overcome past discrimination.


Internationalization process and Managing of employees
in a global market

Management of any company that enters into international market are likely to face
challenges from the following dimensions:-
(a) Flow and volume of information: As the operation extends beyond national boundaries,
companies need information in high volume and greater flow. Management should be in a
position to meet this challenge so as to filter the required information for optimum
performance of the organization.
(b) Size: As the operation of firm goes international, it is equally important to increase the size
of the organization to meet the rising demands. Depending upon the expected business, the
company needs to increase the size in terms of its human resources, operations, equipment
(c) Structure: The structure of the organization needs to be redesigned to meet the changing
demands of internationalization. Depending upon various external factors like the nature of
business, autonomy required etc.
(d) Operation modes: Different operational modes need to be adopted depending upon the kind
of business since the international operation will be different from that of domestic operation.
(e) Geographical dispersion: It is another challenge for the management to decide to which all
countries the operation of the company could be extended. Higher geographical dispersion
of the business, greater will be difficulties in controlling business from centralized structure.
(f) Host Country demands: It is equally important to give due considerations to the rules and
regulations prevailing in the countries in which the company wants to extend operation.
Different countries are under varying political set up which will pose a greater challenge for
the management in terms of decision making.
(g) National cultures and languages: Another challenge is the acclimatization of the company’s
operation with the host country culture and languages. Different strategies need to be
adopted for adapting to the local culture.
(h) Control Mechanism: Control mechanism needs to be aligned with the requirement of the
company’s operation in the new environment.

Figure – 1
Demands on Management by International Growth

Flow and volume Size Structure

of Information

Operation Geographical
Modes Management demands dispersion
of Internationalization

Host country National cultures and Control

Demands languages mechanism

Stages of Internationalization
Stage – 1 Domestic operations
Most companies begin by operating within a domestic marketplace. For which a facility is build
up to produce the product or service in a quantity that meet the needs of a small market.
Recruitment, hiring, training is done for individuals drawn from the local market and
determining their rate of pay is relatively easy because it is based on the local labor market. As
the product grows in popularity, the company may choose to build additional facilities in
different part of the country to reduce the costs of transporting the product over large distances.
Where to locate these facilities, the company must consider the factors like:
a. Cultures
b. Work ethics
c. Human capital
d. Local pay rate
e. Labor unions

For example, the U.S. economy has experienced in the last 10 years a movement of jobs from
Northern states (which are characterized by strong unions and high labor cost) to the southern
states (which have lower labor costs and less unionized).

Problems of domestic companies: Even domestic companies face problems with cultural
diversity. For example, in the U.S., the representation of minorities is increasing within the
workforce. These groups come to the workplace with worldviews that differ from those of the
traditional white male. The diversity in single- country organizations is on smaller scale as
compared to diversity of cultures across the states and geographical areas.

Stage – 2 Export operations

Initially by exporting products to other countries and ultimately by building production facilities
in other countries, companies become International. In this stage, products and services are
opened to markets in other countries, but production facilities remain in the parent country.
Problems faced in this stage of International business:
a. Difference in culture
b. Human capital
c. Political system
d. Legal system
e. Economic system

As the country’s culture is different from that of the parent organization, conflicts,
communication problems and morale problems arise. The expatriate managers must be trained to
identify these cultural differences and they must be flexible enough to adapt their styles. A
country’s legal system may also present HRM problems. For eg., France has a relatively high
minimum wage, which makes labor costs go up. In Germany, companies are legally required to
offer employees influence in the management of the firm.

Stage – 3 Subsidiaries or Joint Ventures

At this stage, some operational facilities (e.g., parts assembly) are physically moved to
other countries. However, corporate headquarters in home country has high control over foreign
operations. Joint Venture is a partnership formed by a company in one country with a company
in another country for the purpose of pursuing some mutually desirable business undertaking.
Subsidiary is a company which is completely or partially owned or wholly controlled by another
company that owns more than half of subsidiary’s shares.

Stage – 4 Multi National Operations
Multinational companies develop identical products distributed worldwide. Multi-national
companies are driven to locate facilities in a country as a means of reaching that country’s
markets or lowering production costs and the company must deal with the differences across the
countries. International companies build one or few facilities in another country, they become
multinational when they build facilities in a number of different countries, attempting to
capitalize on (take benefits from) lower production and distribution costs. For eg. Some of the
major Japanese automakers have plants all over the world. They continue to shift their
production from the Japan to Korea or Thailand where the wages are substantially low.

Problems faced by Multi National companies

The HRM problems faced by multinational companies are not only similar to that of
the problems faced by international companies, but only magnified. Instead of considering only
one or two countries’ cultural, human capital, legal and economic systems, the multinational
companies need to address these differences for a large number of countries. This increases the
need to select managers capable of functioning in a variety of settings, give them necessary
training, and provide flexible compensation systems that takes into account the different market
pay rates, tax systems, and cost of living.

Stage – 5 Transnational Operations

Global companies or transnational companies have multiple headquarters spread across the
globe. They compete on state-of-the-art, top quality products and services and do so with the
lowest cost possible. Global companies emphasize flexibility and mass customization of
products to meet the needs of particular clients. Global companies choose to locate a facility
based on the ability to effectively, efficiently and flexibly produce a product or service and
attempt to create synergy through the cultural differences. There is little allegiance to the firm’s
country of origin by its branches in other countries. Transnational operations require large scale
decentralization of decision making. There will be less dominant role by expatriates in
transnational operation as the local branches have to be managed mostly by local managers.
Each business unit across the globe has the freedom to make and implement its own HRM
policies and practices.

Transnational HR system
It has three dimensions
Transnational Scope refers to the fact that HRM decisions must be made from global
perspective, rather than national or regional perspective. So as to make decisions that balances
the need for uniformity.

Transnational representation refers to multi-national composition of a company’s managers.

Transnational processrefers to the extent to which the company’s planning and decision making
process include representation and ideas from a variety of cultures. Diverse viewpoints and
knowledge increases the quality of decision making.

Global Organizations(GO) & Multi-national companies (MNCs) compared

GO: Global companies or transnational companies have multiple headquarters spread across the
globe. They compete on state-of-the-art, top quality products and services and do so with the
lowest cost possible.
MNCs: Multinational companies develop identical products distributed world wide
GO: Global companies emphasize flexibility and mass customization of products to meet the
needs of particular clients.
MNCs: Multi-national companies are driven to locate facilities in a country as a means of
reaching that country’s markets or lowering production costs and the company must deal with
the differences across the countries.
GO: Global companies, on the other hand, choose to locate a facility based on the ability to
effectively, efficiently and flexibly produce a product or service and attempt to create synergy
through the cultural differences.

Organization Structure
Organization is defined by the formal structure, coordination and control systems, and the
organization culture. It’s the formal arrangement of roles, responsibilities and relationships
within an organization. It’s a powerful tool with which to implement strategy.
There are generally two kinds of differentiation in the organizational structure i.e., Vertical
Integration and Horizontal differentiation. Integration deals with the issue of determining where
in the hierarchy, the authority to make decisions stand and Differentiation is the way a company
designs its formal structure to perform the certain functions.
There are basically two issues in Vertical Integration i.e., Centralization and
Centralization is the degree to which high level managers, usually above the country level,
make strategic decisions and pass them over to lower levels for implementation where as in
Decentralization, respective individual units are given authority to take tactical decisions.
While Decisions made at foreign subsidiary level are considered made at HQ are considered
to be centralized.
Differentiation: The Design of the Formal Structure
Following are steps involved in Differentiation.
1. Specify the set of organizational tasks.
2. Divide these tasks into jobs, departments, subsidiaries and divisions to get the work done.
3. Assign authority relationships to get the work done in a way that supports co. strategy.

Organizational Structures
There are certain types of structures that are followed for global operations by various
companies. They are as follows:-
1. Functional Structure
2. International Division Structure
3. Product Division Structure
4. Geographic (Area) Division Structure
5. Matrix Division Structure

1. Functional Structure
 Specialized jobs are grouped according to traditional business functions.
 Ideal for Co. having a narrow product line, sharing similar technology.
 Helps maximize economies of scale
 Highly efficient.


Production Marketing

India USA India USA

2. International division structure.

 Grouping each international business activity into its own division.
 Creates a critical mass of international expertise.
 Creates quick response to environmental changes enabling them to deal with different
 Prevents duplication of activities.
 Often struggles to get resources from domestic divisions.
 This structure is suited for multi-domestic strategies that demand little integration and
standardization between domestic and foreign operations.
 Frustrates its ability to exploit economies of scale.


Industrial Automotive International
Division Division Division

Diesel Electronics Brake

Company Company Company
(France) (France) (Mexico)

3. Product Division Structure

 These are popular among international companies with diverse products.
 Similar products are grouped under one product head e.g. Perfumes and Cosmetics, each
focusing on a single product segment for its global market.
 Suited for a global strategy
 There may be duplicate functions and activities among divisions.
 No formal means by which one product division can learn from another international


Power Systems Industry And

Group Defense Group

Electric Elevatoe Construction

Meter Company
Company Company Products
(Belgium) (Belgium) Company (Italy)

4. Geographic (Area) Division Structure

 These are used when foreign operations are large and not dominated by a single country
or region.
 Useful when managers can gain economies of scale on a regional rather than on global

 Drawback is the potential of duplication of work among areas as the company locates
similar value activities in several places rather than consolidating them in the most
efficient place.


Europe and North America

Latin America and Pacific
Division Division

U.K. Venezuela Italy U.S. Japan Canada

5. Matrix Division Structure

 This tries simultaneously to deal with competing pressures for global integration and
local responsiveness.
 Institutes overlaps among functional and divisional forms.
 Gives functional, product, and geographic groups a common focus.
 It makes each group share responsibility for foreign operations and enables each group
exchange information and resources more willingly.
 Drawbacks- Stop championing their group’s unique needs, and thereby eliminate the
multiple knowledge-generating and decision making relationship that it is supposed to


1. Managing Business Ethics- Straight talk about how to do it right, Linda K. Trevino &
Katherine A Nelson, Wiley
2. Fundamentals of Human Resource Management, Noe, Hollenbeck, gerhart and Wright,
McGraw- Hill/Irwin, 2004.

Case Studies
Case 1: Organisational Structure -Changing the Rules at Cosmo Plastics
When Alice Thornton took over as chief executive officer at Cosmo Plastics, the
company was in trouble. Cosmo had started out as an innovative company, known for creating a
new product just as the popularity of one of the industry’s old standbys was fading, i.e., replacing
yo-yo’s with water guns. In two decades, it had become an established maker of plastics for the
toy industry. Cosmo had grown from a dozen employees to four hundred, and its rules had grown
haphazardly with it. Thornton’s predecessor, Willard P. Blatz, had found the company’s
procedures chaotic and had instituted a uniform set of rules for all employees. Since then, both
research output and manufacturing productivity had steadily declined. When the company’s
board of directors hired Thornton, they emphasized the need to evaluate and revise the
company’s formal procedures in an attempt to reverse the trends.
First, Thornton studied the rules Blatz had implemented. She was impressed to find that
the entire procedures manual was only twenty pages long. It began with the reasonable sentence
"All employees of Cosmo Plastics shall be governed by the following . . ." Thornton had
expected to find evidence that Blatz had been a tyrant who ran the company with an iron fist. But
as she read through the manual, she found nothing to indicate this. In fact, some of the rules were
rather flexible. Employees could punch in anytime between 8:00 and 10:00 a.m. and leave nine
hours later, between 5:00 and 7:00 p.m. Managers were expected to keep monthly notes on the
people working for them and make yearly recommendations to the human resources committee
about raises, bonuses, promotions, and firings. Except for their one-hour lunch break, which they
could take at any time, employees were expected to be in the building at all times.
Puzzled, Thornton went down to the lounge where the research and development people
gathered. She was surprised to find a time clock on the wall. Curious, she fed a time card into it
and was even more flabbergasted when the machine chattered noisily, then spit it out without
registering the time. Apparently R&D was none too pleased with the time clock and had found a
way to rig it. When Thornton looked up in astonishment, only two of the twelve employees who
had been in the room were still there. They said the others had "punched back in" when they saw
the boss coming.
Thornton asked the remaining pair to tell her what was wrong with company rules, and
she got an earful. The researchers, mostly chemists and engineers with advanced graduate

degrees, resented punching a time clock and having their work evaluated once a month, when
they could not reasonably be expected to come up with something new and worth writing about
more than twice a year. Before the implementation of the new rules, they had often gotten
inspiration from going down to the local dime store and picking up five dollars worth of cheap
toys, but now they felt they could make such trips only on their own time. And when a researcher
came up with an innovative idea, it often took months for the proposal to work its way up the
company hierarchy to the attention of someone who could put it into production. In short, all
these sharp minds felt shackled.
Concluding that maybe she had overlooked the rigidity of the rules, Thornton walked
over to the manufacturing building to talk to the production supervisors. They responded to her
questions with one word: anarchy. With employees drifting in between 8:00 and 10:00 and then
starting to drift out again by 11:00 for lunch, the supervisors never knew if they had enough
people to run a particular operation. Employee turnover was high, but not high enough in some
cases; supervisors believed the rules prevented them from firing all but the most incompetent
workers before the end of the yearly evaluation period. The rules were so "humane" that
discipline was impossible to enforce.
By the time Alice Thornton got back to her office, she had a plan. The following week,
she called in all the department managers and asked them to draft formal rules and procedures
for their individual areas. She told them she did not intend to lose control of the company, but
she wanted to see if they could improve productivity and morale by creating formal procedures
for their individual departments.
Case Questions
Do you think Alice Thornton’s proposal to decentralize the rules and procedures of
Cosmo Plastics will work?

Case 2: Communication in Organizations - Heading Off a Permanent Misunderstanding
Mindy Martin was no longer speaking to Al Sharp. She had been wary of him since her
first day at Alton Products; he had always seemeddistant and aloof. She thought at first that he
resented her MBA degree, her fast rise in the company, or her sense of purpose and ambition.
But she was determined to get along with everyone in the office, so she had taken him out to
lunch, praised his work whenever she could, and even kept track of his son’s Little League feats.
But all that ended with the appointment of the new Midwest marketing director. Martin
had had her sights on the job and thought her chances were good. She was competing with three
other managers on her level. Sharp was not in the running because he did not have a graduate
degree, but his voice was thought to carry a lot of weight with the top brass. Martin had less
seniority than any of her competitors, but her division had become the leader in the company,
and upper management had praised her lavishly. She believed that with a good recommendation
from Sharp, she would get the job.
But Walt Murdoch received the promotion and moved to Topeka. Martin was devastated.
It was bad enough that she did not get the promotion, but she could not stand the fact that
Murdoch had been chosen. She and Al Sharp had taken to calling Murdoch "Mr. Intolerable"
because neither of them could stand his pompous arrogance. She felt that his being chosen was
an insult to her; it made her rethink her entire career. When the grapevine confirmed her
suspicion that Al Sharp had strongly influenced the decision, she determined to reduce her
interaction with Sharp to a bare minimum.
Relations in the office were very chilly for almost a month. Sharp soon gave up trying to
get back in Martin’s favor, and they began communicating only in short, unsigned memos.
Finally, William Attridge, their immediate boss, could tolerate the hostility no longer and called
the two in for a meeting. "We’re going to sit here until you two become friends again," he said,
"or at least until I find out what’s bugging you."
Martin resisted for a few minutes, denying that anything had changed in their
relationship, but when she saw that Attridge was serious, she finally said, "Al seems more
interested in dealing with Walter Murdoch." Sharp’s jaw dropped; he sputtered but could not say
anything. Attridge came to the rescue.
"Walter’s been safely kicked upstairs, thanks in part to Al, and neither of you will have to
deal with him in the future. But if you’re upset about that promotion, you should know that Al

had nothing but praise for you and kept pointing out how this division would suffer if we buried
you in Topeka. With your bonuses, you’re still making as much as Murdoch. If your work here
continues to be outstanding, you’ll be headed for a much better place than Topeka."
Embarrassed, Martin looked at Sharp, who shrugged and said, "You want to go get some
Over coffee, Martin told Sharp what she had been thinking for the past month and
apologized for treating him unfairly. Sharp explained that what she saw as aloofness was actually
respect and something akin to fear: He viewed her as brilliant and efficient. Consequently, he
was very cautious, trying not to offend her.
The next day, the office was almost back to normal. But a new ritual had been
established: Martin and Sharp took a coffee break together every day at ten. Soon their teasing
and friendly competition loosened up everyone they worked with.
Case Questions
1. What might have happened had William Attridge not intervened?
2. Are the sources of misunderstanding between Martin and Sharp common or unusual?