Executive Summary This assignment focuses on International Human Resource Management and its implications with regards to cross-cultural

diversity. This is evaluated through the hypothetical company Transtec which is a UK based travel agent that is planning to set up a branch in Saudi Arabia with a diversified team. The main objective of this assignment is to understand the cultural differences that exist between the base country United Kingdom and the host nation Saudi Arabia. This has been accomplished through the evaluation of the Hoftsede model. Furthermore the assignment also focuses on the customs, rituals, traditions and business etiquette of Saudi Arabia for a better understanding of the host nation. The benefits of a multicultural and multinational work-team along with its communication barriers are analyzed by interviewing the members of the group. As well as identifying training methods to build up effective communication throughout the company. Finally it can be assumed that, the core to success of a multi-cultural team operating in a foreign country is to respect, understand and adapt to cultural changes. Cultural Differences according to Hofstedes Model When an organisation decides to operate in another country different from its base and initiate international business, it is mandatory that the organisation understands the culture of the host country and is knowledgeable about its culture, tradition and customs. This is to help the organisation make the right and correct decision, operate efficiently and above all be ensure both short and long-term success. When analysing the cultures of various countries, organisations usually refer to different kinds of model. One of the major models that are quite well renowned is of Geert Hofstede. According to Hofstede, Culture is more often a source of conflict than of synergy and cultural differences are a nuisance at its best and often a form of disaster (Geert Hofstede iTim, 2009). In his study, Hofstede focused on understanding the cultural values, traditions, beliefs and even customs of individuals at their workplace and how it affects them. His in-depth study of cultures, has led to the development and identification of five major dimensions that help oraganisions to understand and differentiate the two countries and their culture. The five dimensions are- Power Distance Index (PDI), Indivudualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI) and Long-Term Orientation. Based on these five dimensions, Geert Hofstede scored around 56 countries. In the table below, the scores of United Kingdom and Saudi Arabia are shown to help in contrasting and analysing both the cultures (Geert Hofstede iTim, 2009). Country PDI IDV MAS UAI LTO United Kingdom 35 89 66 35 25 Saudi Arabia 80 38 53 68 (Table from Geert Hoftsede iTim, 2009) The above chart can also be illustrated in the form of a graph which is shown below. Once individual graphs are plotted out, a graph to compare the numbers can also be drawn as done below. (Geert Hofstede iTim, 2009) From both the table and charts, the culture of both United Kingdom and Saudi Arabia can be easily analysed and evaluated based on Hofstede Model. The power distance index of United Kingdom is extremely low compared to Saudi Arabia. The low power distance index of United Kingdom (35) shows that the culture in Great Britain emphasises more on the importance of equality and opportunity. The employees and managers in various businesses tend to treat each other more as equals regardless of their hierarchical

positions. The employees are more comfortable, assertive and have the level of freedom to evaluate the decisions being made by the higher officials. Hence, the relationship between the managers and employees tend to be more challenging and the managers tend to follow a more democratic and consultative management style (InternationalBusinessCentre.org, 2008 & Geert Hofstede iTim, 2009) On the other hand, the power distance index of Saudi Arabia is fairly high (80) which indicate that within the society and culture the inequality of wealth and power exists. In Saudi Arabia, a caste system is followed since inequality of both power and wealth is growing over the years. The relationship between the employer and employee tends to be less endearing. Employees tend to be highly intimidated and afraid of their senior managers and officials. The bosses tend to be paternalistic and highly autocratic, which occurs due to the existence of power and hierarchical positions within the organisation (InternationalBusinessCentre.org, 2007 & Geert Hofstede iTim, 2009). Following the power distance index, we have to compare the level of individualism in both United Kingdom and Saudi Arabia. It can be seen that individualism in United Kingdom (89) is far greater than in Saudi Arabia (38). This mean that in United Kingdom, due to the high levels of competition individuals is more concerned with their well-being and progress and focus more on their rights. In the business environment, they tend to be more cut-throat and self-centered and tend to be in constant seek of personal benefits. In simple term, they are highly career orientated (InternationalBusinessCentre.org, 2008 &Geert Hofstede iTim, 2009) Saudi Arabia is a culture bending towards collectivism where people tend to be more family orientated. They usually tend to take the responsibility of their family and its members and focus and give priority to their relationships and fulfill their respective duties with full commitment and loyalty (InternationalBusinessCentre.org, 2007 &Geert Hofstede iTim, 2009). According to Hofstedes model on culture, in terms of masculinity, United Kingdom has a score of 66 and Saudi Arabia has a score of 53. This simply points out that both Saudi Arabia and United Kingdome are maledominated countries where men dominate a significant portion of the society and have most power. In cultures where the masculine index is high individuals tend to value money, prestige, reputation, fame, promotions and the drive to perform and do something big more than support and cooperation, relationships (personal as well as business), security and proper home. The female sex is also undermined in these societies and is not given as much importance and priority as the men resulting in severe gender discrimination. When in reality, gender discrimination should not exist and both the males and females should be treated equally. This is one major similarity that exists between both United Kingdom and Saudi Arabia (InternationalBusinessCentre.org, 2007-2008 & Geert Hofstede iTim, 2009). Benefits and Features of Cross-Cultural Team It is a competitive reality that todays global businesses cross both borders and culture. As a result, people from all sorts of ethnic, educational, and socioeconomic backgrounds form the new generation workforce. This combination of skills and talents promotes new ways of thinking and executing. Accordingly, the corporate culture is shifting, evolving, and improving. In tune with the time firms grip with the underlying attitudes, beliefs, and expectations of its personnel and provide the thought leadership needed to ascertain success in the new age. A diversified workforce brings many commercial advantages. For example, we find that middle-

aged people are effective in call centre roles, because their experience enables them to handle difficult situations and provide mentoring for younger employees (GlobalSpec, 2009) A diversified work force has many benefits within an organisation. To begin with, the final results of such a work force are always better. This is because employees are more sensitive to each others emotionsand feelings as they come from different backgrounds. Thus, the sensitivity causes employee morale to increase and also decreases employee turnover. Another advantage of this issue is that interpersonal conflicts between employees decrease because since they are from different cultures and respect each others feeling. It can also be said that the creativity as well as productivity of individuals increases. This is due to the fact that everybody wants to prove something to the management and prove that they are better than the rest with the hope of positioning him or herself in a respectable position within the organisation. As from the managements point of view a diversified work force is also beneficial as the recruitment process becomes easier. Since the barriers of employment are removed they can hire an employee befitting the job description and from any cultural or social background. It is mostly seen that international businesses follow this new culture of a diversified workforce and this has proved to be beneficial for the organisation as their customer relations increases. This is due to the fact that a diverse work force can better meet the requirements and needs of the customers coming for business with the organisation from various cultures. This also increases the firms brand identity. Thus, it is clear that a diverse work force has its benefits. A failure to outweigh the advantages over the minor disadvantages which can be the issue of sensitivity and respect for the member from a different culture can lead to a disaster. If the disadvantage can be overcome the corporate culture within the organisation can be improved thus leading to a productive work force and greater returns (Innovation Zen, 2006). As for Saudi Arabia a diversified workforce is still a new concept. Until the December of 2005 it was an epic tale, after that the King Fahad successfully entered into the club of World Trade Organisation (WTO) which opened many new opportunities for his kingdom. Ever since the culture of a diversified workforce grew in Saudi Arabia and many new multinational organisations are setting up their businesses as well as many qualified Saudi nationals are also recruited in other parts of the world. Still a very conservative point of view is seen in the Saudi organisational culture. Since businesses usually were only limited in the family now a diversified work force is creating a cultural gap between generations. Although they are open minded to changes and welcome anything new that will flourish their business.

Customs and Traditions of Saudi Arabia Since Transtec has decided to set up in Saudi Arabia, it is important for us to understand their traditions and customs. Saudi Arabia is the home to all the Muslims since this is the country where the religion originated from. Hence, the fact that Islam will have an influence on the business life in Saudi Arabia is quite obvious. The Saudi Arabians believe that whatever happens has been willed by God whether it is good or bad for the business. In this part of the world, religion has a greater priority than business since

meetings and other important aspects of business are postponed or overlooked for the daily or Friday prayers, Hajj and as well as religious festivals like Eid. One major factor that needs to be understood regarding the business traditions of Saudi Arabia is that they are highly family orientated. The main reasons behind this are because family bonds, relationship, loyalty and respect is preached in Islam and it has been learnt earlier that Islam plays a pivotal role in the business. Hence, as a multinational company our expert HR team has to understand why the relatives of our existing employees are being recommended to us.However, even though family is given importance in business, the hierarchy is still maintained as the oldest members of the family are made the head of the organisations. Earlier in the Hofstede model, it was concluded that that Saudi Arabia is a male-dominated country. Hence in business, women are not valued as highly as men no matter how qualified they maybe.They are given less importance and when female migrant workers tend to work there they have to dress and behave according to their customs. If they fail to do so they are frequently subjected to blatant abuse, such as nonpayment of wages, forced confinement, rape and physical violence (T & C, 2009). In simpler terms, the glass ceiling effect highly exists in Saudi Arabia where women are restricted from advancing in the business world and achieving the equal rights similar to its male counterpart. Since we are planning to initiate our business in Saudi Arabia, it is important for us to understand the importance of compensational benefits and collaborative bargaining in this part of the region. Compensational benefits simply refer to the additional benefits such as retirement plans, health life insurance, vacation, wage programs that are given to the employees for excelling in their work and motivation. This varies from one organisation to another based on their operations and process. In Saudi Arabia, local company Saudi Aramco offers highly competitive compensation and benefit packages such as retirement, savings and insurance plans, educational assistance, annual vacation, specified local allowance amongst emany others (Aramco Sercvices Company, 2006). Whereas, multinational companies like Intel, doing their business in Saudi Arabia, are providing compensations such as commission, base pay, bonuses, stock grants, medical and insurance benefits and even educational benefits. These compensational benefits are extremely important for an organisations success because via these you can connect with your employees and attract new ones while encouraging the existing ones to work harder (Intel Corporation, 2009). Collaborative bargaining in Saudi Arabia does not exist at all. This means that in Saudi Arabia there are no Trade Unions that do not give workers the right to organise, bargain collectively or go on strike. The wages are still fixed and determined by the employers based on the type of work they are involved in as well as the nationality they belong to. Even in big multinational companies, Saudi and Western employees are paid at least 30 to 50 per cent more than workers from other parts of the world (ITUC-CSIIGB, 2007). Other traditions and customs include their mannerism and behavior while doing business which will be further discussed when we try and understand their business culture and etiquette. From what has been discussed so far, it can be understood that when setting up our business in Saudi Arabia, we need to adapt and implement the multi-domestic strategy rather than the global strategy. Global strategy basically refers to treating the entire world as a whole and applying the same strategy all over regardless of the socio-cultural differences whereas multi-domestic strategy is implementing a strategy that is mire responding towards the local needs, values and demands (InternationalBusinessCentre, 2009).

Business Culture and Etiquette of Saudi Arabia It is essential for Transtec doing business in the Kingdom to understand Saudi business culture and etiquette and the personal manner in which they conduct their business. Some basic knowledge of Saudi business culture and respect towards Saudi customs can result in the difference between a successful business deal and a failed negotiation for them. Saudi Arabian business culture revolves mainly around the ethnocentric attitude where managers tend to believe that the best work approaches and practices are those of the home country. On the other hand United Kingdom the headquarters of Transtec tends to be both ethnocentric and geocentric in nature whereby they also focus on using the best approaches and people around the globe. Many other business cultures tend to be polycentric whereby they believe that the best work approaches and practices are of the foreign country (Robbins & Coulter, 2005). Business development and operations are usually carried out around family units with most employees coming from within the extended family. However within the family-based structure, organizations follow tall hierarchical structure rather than flat structure with the majority of the power being held at the top by the senior, usually older family members, as age plays a significant role in the Saudi Arabian culture (SaudiBusinessCulture, 2008). There exists a distinct dichotomy between subordinates and managers within organisations. Those with most authority are permitted to issue complete and specific directives to others Saudi Arabian business culture is highly influenced by the religion Islam. As a result, it is often described as detail orientated, whereby emphasis is placed on ethics and expected social behaviour such as generosity, respect and solidarity.

Cross-Cultural Communication Barriers In the case of Transtec where members are from United Kingdom-the base country, Saudi Arabia -the host nation and from China and India respectively, lack of communication is inevitable. Lack of communication within members is not solely due to lack of spoken dialogue rather it relates to access to information. For example, not giving feedback (negative or

positive), informing members of decisions and actions that will affect their roles or failure to properly communicate expectations are all ways in which information can be withheld from members. This will eventually result in an alienated environment for certain members of the group. If group leaders are too selective in providing information, this can cause suspicion and jealousy among members and will eventually result in internal strife instead of cohesion. Lack of communication in all forms is unhealthy as effective communication acts as an essential driver for conducting business. An effective group must be aware of how, what and to whom they are communicating. LanguageBarrier: The differences in language can be a vital aspect that teams may have to consider while dealing with cultural diversity. The inappropriate use of words or emotions concealed behind phrases can send messages that may have an effect on members self- perception, confidence and attitude. Supportive language helps to build interpersonal relationships and boost selfconfidence whereas critical language and tones has the opposite effect (Kwintessential, 2009). For a cross cultural group to be successful it is necessary to establish a common base language be that English/French/Chinese by which all the members of the group will communicate. The group should ensure that all its members are fully conversational in the main language and language tuitions should be seen as a necessity rather than an experience. Stereotyping: Stereotyping causes us to exemplify a person or a group on oversimplified conceptions, beliefs or opinions. Stereotyping is a major barrier to effective communication as it may prevent us from thinking, analyzing and keeping an open mindness to a new situation. In this way one would eliminate the possible areas of learning about the new cultures and possibly dismiss the chances of reducing the differences that are present in diversified culture resulting in complete ineffective communication. Time and space: Time refers to the amount of punctuality that is being maintained. Where in the UK people tend to be very punctual in assigned jobs and responsibilities it is a common practice for people in the Middle East to be a little laid back. It is a normal tendency for people in Saudi Arabia and India to arrive late during a meeting whereas late arrival during meeting or any event can be seen as a great offense for the British people. People in the Middle East also believe doing extended meetings before reaching their verdict whereas in UK it is the complete opposite (Kwintessential, 2009). People in Saudi Arabia and India tend to get really personal while carrying out any assigned responsibilities with others. Based on their personal relationship they tend to do business but on the other hand British people are always very formal and completely impersonal. While dealing with Middle East people it should not be surprising if questions about family and personal lives are brought forward but in UK such gestures can be considered to be very offensive as they only believe in maintaining formal relational ship in their jobs. The differences in views about time and space among these two cultures can be a crucial fact while working together. Maintaining a positive attitude towards these differences and gaining

knowledge and experience by keeping an open mind are absolutely necessary if these barriers are to be avoided in cultural diversity such as in the case of Transtec. Modes of communication: People in UK and Middle East have a complete different conception about the modes that are chosen for communication. In the UK verbal communication is much more emphasized whereas non-verbal communication such facial expression, gestures and postures are given more importance in Saudi Arabia and India (Kwintessential, 2009). While working together in groups these diversified cultures should consider the differences present among their chosen modes of communication in order to avoid misinterpretation. Expatriates and TrainingMethods The reality of today's global marketplace requires companies to relocate staff to foreign locations in order to establish and nurture a business presence abroad for a variety of reasons. The inability to adapt, spouse dissatisfaction, quality of life and poor job performance are some of the major reasons why expatriate relocation assignments fail and so training of expatriates is absolutely mandatory when it comes to dealing with cross-cultural diversity. Cultural training aids the employee better approach and deal with the relocation, reducing the negative consequences of culture gap. Cross-cultural training, in addition, helps the expatriate understand the culture of the target destination and provides them with coping strategies to support them when feeling vulnerable. Although the content of a cross cultural training course will vary from person to person and differ according to the host nation, it will benefit all the participants by highlighting the cross cultural differences that they will face in their new office and/or lifestyle. The methods followed for successful expatriate training can be in the form of seminars, in-house training, presentations, workshops etc. Experts should be appointed for carrying out successful training courses where they should provide guidance in cross-cultural awareness, management techniques, time management, interpersonal and communication skills (Kwintessential, 2009). While dealing with the cultural diversity of Transtec, expatriate training should revolve around giving knowledge about the both the base and host nation which in this case is United Kingdom and Saudi Arabia respectively. This is done, so that employees have thorough idea of the origin of the company as well as the county they will be working in. After completing the expatriates training course in Transtec members should be able to gain knowledge about the cultures of UK and Saudi Arabia which includes history, politics, economy, demographics, etiquettes/manners, and customs. It will also help members gain additional knowledge about entertainment, management structure, space and time about both these countries. Conclusion According to the analysis done in this assignment the HR Team of Transtec needs to focus on the customs and traditions of Saudi Arabia while initiating its business there. It is evident from this assignment that by achieving a cultural balance between both the Arabian and British culture, the company would be able to operate effectively using its maximum potential to achieve success. Since Transtec comprises of a multi-cultural workforce, it is essential for their employees to adapt to the culture and lifestyle of Saudi Arabia in both social

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