The Hofstede Studies

The Dutch management scholar Geert Hofstede conducted studies in 40 countries and
drew some conclusions about the relationship between national character and employee
motivation. He concluded that people vary a great deal, and those variations seriously
challenge the rules of effective managerial practice based on Western theories and
peoples. Hofstede cites four dimensions he feels describe important aspects of a national
culture.
. !ndividualism versus collectivism measures an individual"s relationship with other
people and the degree to which the desire for personal freedom is played off against the
need for social ties.
#. $ower distance evaluates the way a particular society handles ine%uality among people.
&n one end of the scale are countries and people that play down e%uality as much as
possible. 't the other end are cultures that accept and support large imbalance in power,
status, and wealth.
(. )ncertainty avoidance measures how a society deals with the uncertainty of the future.
' wea* uncertainty avoidance society is one that does not feel threatened by the
uncertainty of the future, but is generally tolerant and secure. ' strong uncertainty
avoidance culture, on the other hand tries to overcome future uncertainties by developing
legal, technological and religious institutions that create security and avoid ris*.
4. +asculinity versus femininity refers to the rigidity of se, roles. Hofstede defines a
society as masculine if there are e,tensive divisions of social roles by se, and as feminine
if these divisions are relatively small. 'nother way of loo*ing at it is that masculinity
versus femininity refers to differences in approaches to the %uantity versus %uality of life-
+asculine refers to a national orientation towards assertiveness and ac%uisition of money
and material goods, while feminine refers to an orientation towards caring for others and
the %uality of life.
!n light of the differences he found between nations. Hofstede feels that it is unrealistic to
e,pect any single management approach to be applicable worldwide.
'pplying .apanese 'pproaches 'broad-
While Hofstede has e,pressed serious doubts about applying 'merican/Western
management practices in other countries, some observers have become very e,cited about
the effectiveness of .apanese practices. The study of 0.apanese management1 en2oyed
significant popularity in the 340s.
William G &uchi is among those who have studied .apanese business in the hope that it
might provide solutions to some 'merican problems.
These differences in organi5ational characteristics are associated with differences in
managerial behavior. 6aturally, there are wide variations in how individual .apanese
managers act, yet there are a number of ways in which the average .apanese manager
appears to differ from the average 'merican manager. &verall, .apanese managers seem
to be more concerned with the longer term implications of their decisions and actions and
more willing to ma*e current scarifies for future benefits. They are also more li*ely to
encourage subordinates to participate in decision ma*ing and to welcome and
ac*nowledge suggestions from subordinates. $artly because of this participation, they are
less li*ely to ma*e %uic*, unilateral decisions. !n addition, communication between
managers and subordinates is more indirect and subtle than in the )nited 7tates.
+anagers try hard to avoid embarrassing co8wor*ers in public or in private. They get to
*now their co8wor*ers well as individuals and show concern for their welfare outside the
wor*place.
The interpretations of &uchi and others offered valuable insights into what many
.apanese managers were doing on a day8to8day basis. +ore recently, some observers
have come to the conclusion that what was initially interpreted as a management style
uni%ue to the .apanese culture is also successfully used by managers in many other
countries. .apanese management may more usefully be interpreted as a way of managing
that is widely applicable in many perhaps all, countries, industries and companies 9 a
0global management1 style.
Culture Supporting Social Activism & Managing
Diversity
Ta*ing a high profile in the community is a better mar*eting effort than trying to
outspend the competition asserts 'nita :oddic*. Toward this end, The ;ody 7hop has
ta*en on an aggressive role espousing social activism. &ur business is about two things-
social change and action and s*in care, said :oddic*. 7ocial change and action come
first.
<ssentially, :oddic* believes in applying morality to business, ! believe %uite
passionately that there is a better way, she said. ! thin* you can rewrite the boo* on
business. ! thin* you can trade ethically= be committed to social responsibility, global
responsibility, empower your employees without being afraid of them. ! thin* you can
really rewrite the boo*. That is the vision, and the vision is absolutely clear. :oddic* has
thus humani5ed business. !t"s creating a new business paradigm, she said. !t"s showing
that business can have a human face, and God help us if we don"t try. !ts" showing that
empowering employees is the *ey to *eeping them, and that you empower them by
creating a better educational system. !t"s showing that you forsa*e your values at the cost
of forsa*ing your wor*force. !t"s paying attention to the aesthetics of business. !t"s all
that. !t"s trying in every way you can. >ou may not get there, but you try to ma*e the
2ourney an honorable one.
'ccording to :oddic*, it is important that stores adhere closely to the values articulated
even if it means altering plans. ;ecause of the company"s environmental policy, in
&regon, The ;ody 7hop had to forego the use of a seemingly brilliant ingredient a plant
called 0meadow foam1 which seemed promising in 7hampoo but was an endangered
species.
:oddic*"s social activism and environmental consciousness have been securely woven
into the very fabric of the organi5ation. To her business 0relationships1 are what are
important they are what has been going on for centuries. !t is 2ust buying and selling with
an added bit for me, which is the magical area where people come together 9 that is, the
shop, said :oddic*. !t is trading and ma*ing your product so glorious that people don"t
mind buying it from you at a profit. Their reaction is, ! love that, ?an ! buy that@ >ou
want them to find what you are doing so wonderful that they are happy to pay your profit.
7i, 'rguments for +anaging ?ultural Diversity-
?ost 'rgument- 's organi5ations become more diverse, the cost of a poor 2ob in
integrating wor*ers will increase. Those who handle this well will thus create cost
advantages over those who do not.
:esources 'c%uisition 'rgument-
?ompanies develop reputations on favorability as prospective employers for women and
ethnic minorities. Those with the best reputations for managing diversity will win the
competition for the best personnel. 's the labor pool shrin*s and changes composition,
this edge will become increasingly important.
+ar*eting 'rgument- Aor multinational organi5ations, the insight and cultural sensitivity
that members with roots in other countries bring to the mar*eting effort should improve
these efforts in important ways. The same rationale applies to mar*eting to
subpopulations within domestic operators.
?reativity 'rgument- Diversity of perspectives and less, emphasis on conformity to
norms of the past Bwhich characteri5e the modern approach to management of diversityC
should improve the level of creativity.
$roblem solving 'rgument- Heterogeneity in decision and problem solving groups
potentially produces better decisions through a wider range of perspectives and more
thorough critical analysis of issues.
7ystem Ale,ibility 'rgument- 'n implication of the multicultural model for managing
diversity is that the system will become less determinant, less standardi5ed and therefore
more fluid. The increased fluidity should create greater fle,ibility to react to
environmental changes Bi.e. reactions should be faster and at less costC.
A Case of Levi Strauss
0;ill1 wor*ed in a nine person group at Devi 7trauss in 7an Arancisco. ;ill had been
diagnosed with '!D7, but he had not told any of his co8wor*ers. 'fter he was
hospitali5ed for the first time, however, he decided to discuss his condition with his
manager, and the manager e,plained the situation to ;ill"s co8wor*ers.
!t was fortunate that ;ill was wor*ing for a company li*e Devi, recogni5ed time and
again for its commitment to diversity and non8discrimination. !n fact, several years
earlier, even before ;ill"s diagnosis, the company had already conducted mandatory
'!D7 education. 'fter his diagnosis, the training was conducted again, this time to deal
not with hypotheticals but with the real life situation.
The initial step of this training involved communication. The wor*ers met with a
facilitator and shared their reactions to the news. ' pregnant woman was concerned about
her baby. 'nother man was angry= he felt that ;ill had an obligation to inform his co8
wor*ers when he was diagnosed, since there was much contact between them 9 for
e,ample, they might have shared the same glass at parties. &verall, the e,perience proved
cleansing for the group, because they all were encouraged to share their feelings, without
fear of being silenced or critici5ed. 'fter the group wor*ed through the concerns of the
members, the meetings stopped, although the one co8wor*er who was angered by not
being informed earlier was referred for individual counseling and H!E testing.
The ne,t step was for the wor*ers to determine how to redistribute the wor*load. The
group supported ;ill by enabling him to remain productive for as long as he could. The
rest of the group too* on e,tra wor*, and shifted assignments to allow him to wor* at
home when it became. 'ccording to >vonne <llison87andler, corporate manager for
health promotion, they wor*ed with him all the way until the day he died, and went to the
funeral together as a departmentF !t was such an incredible process to observe, and it
spo*e to the power of dealing with this stuff up front.
;ill"s e,perience reflects the company"s culture and philosophy. Devi 7trauss is
committed to its people. We have a vision in human resources that employees" lives are
2ust as important as the %uality of the product.
The challenge for Devi 7trauss lay in reviving the loyalty and trust that had been
damaged. To this end, a group of e,ecutives met off8site to discuss the conflict between
economic realities and historical paternalism. They then moved on to consider what
values could be preserved, and what else Devi 7trauss should for. The result- a new
mission statement, accompanied by the Devi 7trauss 'spiration 7tatement, to guide the
company and its managers and employees-
+anagement support has proved crucial to the success of the new Devi 7trauss
philosophy, for it has emphasi5ed to employees that their wor* is not 2ust getting pants
out of the door, that it also includes the articulated values. +anagement"s wal*ing the tal*
sends the message to employees to ta*e ownership themselves. To create an environment
that supports teamwor* and trust, you can"t 2ust tal* about it, said Thompson.
Aundamentally, it re%uires a personal commitment. ;ob Haas can"t do it by himself. The
e,ecutives can"t do it by themselves. <ach employee has to step up and put a sta*e in the
ground.
The culture at Devi 7trauss that values e%uality and non8discrimination e,tends beyond
the employees to community sta*eholders as well. Aor e,ample, in 33, when the
company learned that the ;oy 7couts" parent organi5ation e,cludes homose,uals and
re%uires its members to recite an oath to God, Devi 7trauss discontinued its support, even
though it had given G#00,000 to local scouts during the previous five years.
:epresentatives unsuccessfully attempted to organi5e a boycott in ?alifornia, but Devi
7trauss remained committed to its corporate policy and values.
With regard to its relationship with employees, Devi 7trauss maintains numerous
programs that facilitate diversity in the wor*place. Aor e,ample, it is one of the few
companies that offer fle,ible wor*ing arrangements to accommodate employees with
family responsibilities. !n addition, it has a widely recogni5ed policy of offering medical
coverage to employees" se,ual partners, regardless of their gender. While many
employers offer medical coverage to employees" heterose,ual partners, few recogni5e
homose,ual $artners.
The result at Devi 7trauss is a multicultural environment that values its employees.
'ccording to Haas, often in companies there is a gap between the articulated values and
what the wor*ing environment is actually li*e. The more you can narrow that gap, said
Haas, the more people"s energies can be released toward company purposes. Devi 7trauss
has already ta*en great strides toward narrowing the gap, and more can be anticipated in
the future.
CE of !""# and $eyond
These are unprecedented times for corporate !ndiaHhigh volatility in global mar*ets,
li%uidity s%uee5e, fluctuating input costs, impending general elections. There were
slowdowns earlier too, but the degree of volatility and potential for structural change
posed by this crisis is such that it could well call for the playboo* to be written afresh.
'nd to compound the challenge, most !ndian companies are e,pected to manage not 2ust
for survival Bshort run earnings sustainabilityC, but also to continue building growth
platforms. How are !ndian ?<&s gearing up@
The ?hinese use two brush stro*es to write the word Icrisis." &ne brush stro*e stands for
danger= the other for opportunity. The message being that in a crisis, be aware of the
danger, but recognise the opportunity.
!ndian ?<&s seem to get this. !n our survey, they recognise that in the ne,t J years, the
global and local macroeconomic situation will be the top two forces impacting their
business.
Director finance, 6'D?& put it, 0across the board1, and most certainly in metals, the
turnaround will happen only when the stimulus pac*age tric*les down and impacts the
li%uidity position and spending habits of the 'mericans1 or, for those more concerned
with local demand. Growth will be slower than historical average in the ne,t few
%uarters, and we need to plan for this well in advance.
'long with the uncertain macro bac*drop, !ndian ?<&s are also sei5ed with two other
ma2or concerns H increasing the scope and intensity of competitive challenge, and
availability of talent.
'll is not doom and gloom though. !n spite of these challenges, more than eight out of
every ten ?<&s were optimistic about business prospects over the ne,t three years.
7ome are still in the Ifiring on all cylinders" mode, others are more mindful of balancing
different priorities for the short8term with long8term imperatives. +arico plans to
continue to tighten their belt, but continue to invest in innovation K talent for driving
future growth.
!t is easy to achieve short8term margin improvement by reducing long term e,penditure,
but it can impact the growth momentum which is very difficult to recoup.
However, there"s a %ualitative difference in the framing that ?<&s are placing around this
ambition 9 value delivery. 6ew product introductions are critical, not 2ust to ensure
freshness but also to *eep enhancing the Ivalue" that you provide to consumers. !n
tougher times, that"s really important.
'lso, investing for growth is far more targeted. ?<&, Auture Generali says while they
have pruned down some of our e,pansion plans for the bac*8office they are going ahead
with their original aggressive ramp8up for the customer8facing field force.
!nterestingly, among sources of revenue growth, ?<&s rated ac%uiring new consumers as
the preferred route- a natural choice for many low8penetration categories in this billionL
population.
't the same time, some sectors li*e financial services that are more directly impacted by
the global crisis are already tightening belts. !t"s now bac* to the 33J8334 action
agenda- sweating fi,ed assets, optimising distribution , rationalising product portfolio,
hard nosed people productivity, s%uee5ing value out of every rupee etc. to position the
organisation for the bounce bac* post this interim stutter in the economy.
While reducing the cost base is an obvious preparation to manage operating leverage in
case demand deteriorates further, the other aspect enhancing the talent base is about
having ade%uate capability to manage the tumultuous times. +any of the managers today
haven"t been through a significant downturn. <nhancing their s*ill8set is important in
order to prepare for the future which might turn out to be different from e,pectations.
6ot building the platform to continually attract and retain top %uality talent and not
possessing the agility to respond to the dynamic mar*et conditions Bincluding the
li%uidity crunchC are the *ey ris*s facing !ndia !nc. over the new few years.
Given the real and increasingly certain nature of these ris*s, most !ndian ?<&s have
firmly grounded their business plans in reality . <ven while planning the growth agenda,
?<&s continue to e,plore opportunities to immunise their businesses from any sudden
shoc*s arising out of the global macroeconomic crises.
Diversifying into new mar*ets, driving down supplier costs and integrating overlapping
systems/functions are the most important tools in the Irecession proofing" tool*it of the
?<&s. &ne ?<& e,plains 0!t is not about today or the future, it is about today '6D the
future1.
7o the good news is, !ndia !nc continues to maintain its overall tone of optimism, albeit
cautiously. While ?<&s today are certainly more guarded in their approach than they
were even a %uarter ago, the fact remains that most !ndian companies seem to be
relatively less impacted as compared to their counterparts in the Western world. While
some of it is industry specific and relative degree of financial and mar*et e,posure to the
Western mar*ets, the rest seems to be derived from the high salience of domestic
consumption for !ndia.
&verall, corporate !ndia seems to be coping with this suddenly receding economy,
2udiciously balancing sustenance for now and investing for growth.
Typical patterns and %rere&uisites of a successful leader
Telling- Deaders identify problems, consider options, choose one solution and tell their
followers what to do. Deaders may consider members" views but members don"t
participate directly in decision ma*ing leaders of this style may even use coercion.
$ersuading- Deaders ma*e decisions and try to persuade group members to accept them.
They point out that they have considered the organi5ation goals and the interests of group
members. They even point out how members will benefit from carrying out the decision.
?onsulting- Group members have opportunities to influence the decision ma*ing from
the beginning. Deaders present problems and relevant bac*ground information. Deaders
invite the group to suggest alternative action. Deaders then select the, most promising
solution.
$articipating- Deaders participate as members in the discussion and agree in advance to
carry out whatever decision the group ma*es.
Delegating- Deaders define the boundaries within which to solve problems or accomplish
tas*s. Then they turn it over to the group to wor* out solutions or to implement the tas*s.
;asic *nowledge and information that managers as a leader must have to function
effectively or need to use in ma*ing decisions and ta*ing action-
?ommand of ;asic Aacts- 7uccessful managers BleaderC *now what"s what in their
organi5ation. They have a command of such basic facts as goals and plans Blong ands
short termC product *nowledge, who"s who in the organi5ation, the roles and relationships
between departments, their, own 2ob and what"s e,pected of them. !f they don"t have all
this information at hard, they *now where to get it when they need it.
:elevant $rofessional Mnowledge- This %uality includes technical *nowledge, Be.g.
production, technologyC +ar*eting techni%ues, engineering *nowledge, relevant
legislation, sources of finance and *nowledge of basic bac*ground management
principles and theirs Be.g. planning organi5ation and controlC.
7pecial 7*ills K 'ttributes that directly affect behavior and performance-
?ontinuing 7ensitivity to <vents- 7uccessful manager"s sensitivity to events enables them
to tune into what is going on around them. They open themselves up to hard information,
Bsuch as figures and factsC and to soft information Bsuch as the feelings of othersC
+anagers with this sensitivity respond appropriately to situations as they arise.
$ro8active !nclination to :espond $urposefully to <vents- <ffective managers have goals
to achieve rather than merely responding to demand. They plan carefully in advance, but
they also respond to emergencies. When ma*ing such responses, effective managers
consider long term aims and goals. Dess successful managers respond to pressures in
relatively uncritical ways.
This ability also includes %ualities such as seeing a 2ob through, being dedicated, having a
sense of mission and ta*ing responsibility for things that happen rather than passing the
buc*.
+ental 'gility K ?reativity- +ental agility includes the ability to grasp problems
%uic*ly, to thin* of several things at once to switch rapidly from one situation to another,
to see %uic*ly the whole situation Brather than ponderously plough through all its
componentsC and to thin* on one"s facts. ;ecause of the hectic nature of managerial
wor*, successful managers must posses these abilities.
?reativity means the ability to come up with new responses and to recogni5e useful
approaches. !t involves not only having fresh ideas, but also the ability to recogni5e good
ideas when they come from other sources.
7olving 'nalytical $roblem- Decision/.udgment +a*ing 7*ills- +anagers concern
themselves with decision ma*ing. Therefore, they must develop 2udgment ma*ing s*ills,
including the ability to cope with uncertainty. They also need to stri*e a balance between
allowing sub2ective feelings to guide them without completely throwing out ob2ective
logic.
7ocial s*ills K 'bilities- +anagers need inter personal s*ills to communicate, delegate,
negotiate, resolve conflict, persuade, sell use and respond to authority and power.
Make Nepotism Work for You
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Without nepotism H which literally means giving preference or patronage to relatives H
family businesses canNt survive. >et promoting family members over other %ualified
employees often leads to resentment or, worse, prompts valuable non8family employees
to leave the company.
!tNs a tough balancing act- how to successfully train and promote the ne,t generation
without alienating other employees. !t ta*es a real commitment to maintain employee
morale and also ensure that chosen family members get the e,perience and training
re%uired to 2ustify their succession when the time comes.
'e&uire Heirs to (or) utside the *amily +usiness
6early a third of chosen family successors have no full8time wor* e,perience outside of
the family business. :e%uiring the heir apparent to wor* outside the family business
ensures relevant e,perience in an environment without built8in advantages. >our
company also benefits from the family memberNs *nowledge of other business practices.
'nd youNll discover whether your chosen successor really has what it ta*es H before you
hand over the company.
&nce he or she is ready, hire the family member on at an appropriate level. &ther
employees, especially those in senior positions, may still feel resentful if the family
member is brought directly into a top leadership role.
%romote *amily Mem$ers from (ithin
When family successors are already employed in8house, you should ta*e steps to ensure
fairness and, even more important, the appearance of fairness as they wor* their way up.
!tNs critical to treat family the same as everyone else in hiring, evaluating and promoting-
7tart family members in 2obs theyNre %ualified for, not senior management
positions.
$ay family members the same salaries non8relatives would receive in the same
positions.
<valuate family members with the same criteria used for other employees.
DonNt force family members on your managers. Give your managers the same
freedom to promote, transfer and fire Onepotism hiresO they have with other
employees.
!f nepotism is allowed for your family, it should also be allowed for all
employees. ?onsider an employee referral program that rewards employees for
recommending those ultimately hired, including %ualified friends and relatives.
+erit and nepotism are not mutually e,clusive. Aollowing these steps should promote
fairness and help family members earn respect within your company. !t should also
minimi5e perceived unfairness when the chosen family member finally ta*es the helm.
'nd remember- ideally, the chosen heir is also the person most %ualified to run the
business.