Hofstede’s Culture, Dimensions And Decision Making Process

Abstract

The organizational culture influences the decisional process significantly. Culture have a lot of aspects but in this report we just analyze the relationship between G. Hofstede’s dimensions of the cultures – power distance, individualism/collectivism, uncertainty avoidance, masculinity/feminity, and long term oriented approach (Geert-hofstede,2009) – and the steps of the decisional process -problem recognition, information search, Constructing alternatives, selecting and implementation of the chosen alternative (Nancy J.Adler with Alidson Gundersen, 2008)

We understand that in the globalization market, the influence of culture on decision-making styles and processes become more and more important. During 8 years of experience in many international companies I realized many situations and issues that could be resolved in better way if managers understand about the culture.

Problem Recognition.

In the organization with high level of power distance we observed that usually the process of problem recognition is longer than in culture with lower power distance score. It is because of the actual issue should be escalated through many levels before finally be recognized as a problem. It is actually happened in many Russian and Vietnamese companies that I have worked before, when the issue escalated to director’s level became very serious and take big impact to the company’s business. So in these cultures in order to have good problem recognition process, company should establish the good system of information management to ensure the information about any big issue should come to decision’s level in appropriate time.

In the organizations with a culture with high level of uncertainty avoidance, top management manifests a special trust in planning and hardly accepts the idea of existing of an unexpected decisional problem, the awareness being sometimes delayed, even late. There are also neglected the signals concerning certain dissonances, there is a focus on formal reports, usually financial- accountant ones, with historical information. In the organizations with a culture tolerant to uncertainty, the acceptance of the dissonances is much easier, this wouldn’t be seen as a situation with no exit, but, on the contrary, as a conjuncture which provokes creativity.

One of the major dimension affect to the problem recognition is masculinity/feminity. In the feminity culture, the approach to problem recognition is more subjective while in masculinity culture it is more objective. Western approach is based on the concrete evidence of the problem it mean that some time they realize about the problem only after it happen but feminity culture’s approach base more on the sense of the people . It have disadvantage because some time their thinking about the problem is not correct but their advantage is they usually can foresee the problem before western counterparts. Another finding related to this dimension is Western managers believe strongly in self-determination and perceive problem situations as something they can control and should resolve. However, managers in many other countries, Vietnam and Malaysia among them, are resigned to problem situations or waiting for a solution from other people. (Deresky H., 2006)

Another dimension affect the process is individualist/collectivist, we observed that American managers may identify the problem long before their Asian counterpart (Indo, Thai, Malay, Vietnam…) would choose to define the situation as a problem. In my experience It can be explained because Asian culture is more collectivist that why when one person realize a problem, they should convince other people in group to agree with him, and the process of getting agreement usually take time.

Information Search

In our observation we see that the culture with more short term oriented and more individualistic usually gather information base on the fact of situation, while other cultures are likely more intuitive. They are more frequently gather ideas from the past and future in their attempt to understand the situation. It helps them to have full picture of the problem but it also take more time. In my previous company we have board of director which includes American and Vietnamese, the conflict in the planning process happen quite often while American director just take information in the current report from his direct subordinate while other directors were looking for more complex information from other department, report from the past and market forecast. In some cases in order to fit with the change of the problem we need to limit the time of information collection so I think in this step it is crucial for the manager to define the acceptable level of information he need to make a decision timely.

Moreover with culture characterized with high level of Uncertainty avoidance, searching for information also limited because people there are more conservative and in our finding these people are easier to see and understand what they were familiar with. In my experience when I was working in a Russian company, most of managers always look into certain predefined range of KPI like revenue, benefit, market share etc to evaluate the business performance and they did not care much about other factors as customer behavior, market trend, sales force etc. So some time their information did not describe full picture of the problem and poorly effect to the step of constructing alternatives.

Constructing alternatives.

In this step we will look into 3 of the five dimensions identified by G.Hofstede, such as: long/short power distance, uncertainty avoidance, long/short term orientation.

In organizations with a culture characterized by big uncertainty avoidance it is identified a small number of alternatives, generally predefined, in the moment of elaboration the planning. New information/alternatives is treated superficially. On the contrary, in organizations with a tolerant culture to uncertainty it is paid attention to all information, including the one obtained on an informal way, and are considered and analyzed all possible alternatives. In my company now we are facing the problem with the conflict between different management style Russian and Vietnamese which have very big different in uncertainty avoidance score. In our network planning process Russian managers usually use standard and pre-defined model that they already successful implemented in Russia and do not care much about the local factors of Vietnam as geography, population density, weather etc. In reality these factors in Vietnam are much different than in Russia and can affect strongly to the network’s quality. We usually should spend a lot of time just for discussing about factors that need to take into the consideration of the planning process.

In organizations characterized by cultures with long power distance, this activity is the privilege of the general manager/leader. In cultures with sort distance towards power, in order to elaborate the decisional alternatives, consideration the subordinate’s suggestions are taken. My company characterized by Vietnames-Russian culture with long power distance usually shows the same situation, managers in certain level are the ones who forming the alternatives. But in our fast growing business I see the trend of moving to lower power distance because I see more and more cases that managers encourage their staffs to propose solution and take subordinate’s suggestions into their consideration.

People from more long term oriented cultures tent to have more new alternatives than the people in short term oriented cultures. For example all people over the world can realize the problem of running out of nature resource (oil, gas …) in near future and the long term oriented people as Japan are care more about next generation, and they are the first one who introduced hybrid car to the world.

Selecting one alternative.

Who make the decision in the company?

First we must have a discussion concerning the criteria taken into consideration to differentiate the alternatives. Thus, in an organization with a culture characterized by individualism, only single manager make decision. In North America the expression “the buck stop here ” reflect the belief that ultimately a single person hold responsibility for a particular decision. In other collective culture as Japan, Vietnam, groups make decisions; they would find it inconvenient for an individual to make a decision prior to consulting his colleagues and gain their agreement. The collective approach usually give more efficient result but it take more time and some time not clear about the responsibility if the decision is failed. (Ohbuchi, Fukushima, & Tedeschi, 1999), (Nancy J.Adler with alidson Gundersen, 2008)

In organizations with a culture typically masculine it is noticed a strong orientation towards results, towards settled objectives achievement mainly the financial parameters, while in organizations with a culture typically feminine it is privileged the maintenance of a good organizational climate, of an environment which encourages cooperation.

Still in the sphere of objectives, it can be made a distinction between organizations with a culture characterized by risk avoidance and organizations with a culture characterized by low uncertainty avoidance. Thus, the first ones have standards, norms, rules, clear, firm procedures for all activities, actions, missions. In organizations with a culture characterized by tolerance towards risk the criteria for appreciation of decisional variants are flexible, dynamic, and circumstantial.

Another variable that affects the consideration of alternatives solutions is Power distance. In big power distance culture, only senior executive make important decisions, the lower level staff hold the responsibility to implement it. Many surveys show that Indian managers prefer more directive style and up to 85 percent of them believe they work better under supervision (Nancy J.Adler with Alidson Gundersen, 2008).In contrast, in lower power distance culture, the employees/managers are expected to make their own decision in daily operation and even they take the responsibilities of allocating and scheduling tasks as well as allocating rewards among employees. In my experience, the disadvantage of the big power distance culture in decision making is people are not encouraged to make decisions; they usually wait for the command from the higher level manager and if the senior manager have not enough time or knowledge the final decision usually inefficient or even failed.

From my point, the step of choosing alternatives is the most important step in decision making process, so managers should understand deeply about the culture variable and implement the most appropriate approach to it.

The implementation of an alternative.

In an organization with a culture with short distance towards power the implementation of a decision turns into an active process, with many negotiated actions. The co-operation model is more suitable for this type of culture. In organizations with a culture with high power distance it is applied the imposing model. In many companies that require the creativity such as software comp., designing comp. etc. we see many changes can be occurred during the implementation step. But in manufacturing industry usually imposing model is used to make sure the output will be exactly as manager’s desire.

In another point collectivist type organizations also take big implication to the decision implementation step. From one side it enhance the efficiency of the decision by creating and following a common vision, according to the values of the group but from the other side it can make people to be undecisive and do not take their own interest in doing their own work. Many issues related to project implementation in my company now are the result of this kind of behavior; if the task is settled for a group, some members in group usually think that there are some one else will take care about their part so at the end the project finished with a lot of missed parts or even fail.

Finally, we will analyze, briefly, the impact of national culture upon decisional processes in organizations from a certain national spirit. More studies have shown that, in a certain measure, the decisional practices vary from one country to another. The national cultural factors can influence the attitude towards risk of the deciders, the centralization/decentralization of the decisional processes, the configuration of group decisions, the speed of adoption of the decisions etc.

In these conditions, for example in a country like India, where the power distance and the risks avoidance are high, the decisions are the tasks almost exclusively of top-management, which will prefer, most of the time, the decisional solutions less risky. On the contrary, in a country like Sweden, characterized by a very low level of the two factors, managers won’t hesitate to assume the risks and to encourage the employees’ participation in adopting the decisions, moreover to those that are in their interest. In another plan, a country like Egypt, where there are a few temporal compulsions, managers will assign more time for a decision than their counterpart in the North-American, for example, where the decisional speed is often considered a determinant of organizational performance. In Italy, where the tradition is highly valued, managers prefer already tested decisional solutions. In France and Germany, top-managers adapt the decisional style to the respectively culture. Thus, in France, the autocrat approaches are quite frequent, and risk assumption in decisional processes is made with certain moderation. In the German space, the decisional practices are also a reflection of national culture. These are characterized by: the preoccupation for structure, order; clear delimitation of the responsibilities of each decider; the existence of some norms, clear, precise rules for decisional processes within the organization.

In Japan there is a specific modality of adopting a decision, called ringisei,(Bernard S.Silberman, 1973) this is basically an approach of the decision by consensus. Concretely, it is done as follows: an employee finds a resolving solution for a major problem of the organization and tells it to his direct boss; this organizes a meeting in which he presents the problem and the proposed decisional variant; if the members of the organizational subdivision considers that the proposing deserves to be taken into consideration, the boss informs the department manager starting the process of obtaining the consensus within the organization; it is obtained first the consensus of the people in the department directly and indirectly implicated in solving the approached problem, then demarches the action of getting the consensus at the level of the whole organization; for this, the department manager, initiator, organizes a meeting with the representatives of the other implicated departments, where it is presented the decisional variant which is in the stage of proposal and it is done a deep exchange of information upon it (if there are needed more information, there are more meetings); when it is considered that all the necessary information is gathered, a group of specialists from the starting section writes a document in which presents the decisional variant that has been outlined, asking for the approval of all managers at medium and low level implicated; the document is handed to the superior manager of the organization which gives the final, official approval of the decision; it takes place the registration of the decision and proceeding to its implementation. It is well-known as bottom-up decision-making process used in most Japanese companies.

Another important variable in companies’ overall approach to decision making is autocratic versus participative leadership. In other words, who has the authority to make what kinds of decisions? A country’s orientation – weather is individualistic or collectivist – influences the level at which decisions are made. In many countries with hierarchical cultures – Germany, Russia and India among others – authorization for actions has to be passed upwards through echelons of management before final decision can be made. Most employees in these countries simply expect the autocrat – the boss – to do most of the decision making and will not be comfortable otherwise. Even in China, which is a highly collectivist society, employees expect autocratic leadership because their value system presuppose the superior to be automatically the most wise. In comparisons, decision-making authority in Sweden is much decentralized.

Arab managers have long traditions of consultative decision making, supported by the Koran and the sayings of Muhammad. However, such consultation occurs more on a person to person basis than during group meetings and thus diffuses potential opposition. Although business in the Middle East tends to be transacted in a highly personalized manner, the final decisions are made by the top leaders, who feel that they must impose their will for the company to be successful.

Conclusions

In present conditions, marked by the effects of globalization, top-managers are, more often, in the situation to collaborate with subordinates from other cultures. In these situations, they must know the possibility of appearing of some differences among subordinates during the decisional processes in which they are implicated, differences inducted by cultural factors. The leader/manager, must build in this case, a common space, accepting and integrating elements of cultural diversity in the philosophy and the practice of adopting a decision from the organization’s perspective.