The Use Of Power Distance Index Business Essay

Professor Geert Hofstede who is a professor at the Maastricht University developed cultural difference which will be explained in this essay. Hofstede was quoted as saying ” Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster”. (Geert Hofstede, Cultural Dimensions 2009).

The following are Hofstede’s five cultural Dimensions (Geert Hofstede,What are Hofstede’s five cultural dimensions 2009):

Power Distance Index (PDI) that is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders. Power and inequality, of course, are extremely fundamental facts of any society and anybody with some international experience will be aware that ‘all societies are unequal, but some are more unequal than others’.

Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to which individuals are inte-grated into groups. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family. On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families (with uncles, aunts and grandparents) which continue protecting them in exchange for unquestioning loyalty. The word ‘collectivism’ in this sense has no political meaning: it refers to the group, not to the state. Again, the issue addressed by this dimension is an extremely fundamental one, regarding all societies in the world.

 

Masculinity (MAS) versus its opposite, femininity refers to the distribution of roles

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between the genders which is another fundamental issue for any society to which a

range of solutions are found. The IBM studies revealed that (a) women’s values differ less among societies than men’s values; (b) men’s values from one country to another contain a dimension from very assertive and competitive and maximally different from women’s values on the one side, to modest and caring and similar to women’s values on the other. The assertive pole has been called ‘masculine’ and the modest, caring pole ‘feminine’. The women in feminine countries have the same modest, caring values as the men; in the masculine countries they are somewhat assertive and competitive, but not as much as the men, so that these countries show a gap between men’s values and women’s values.

 

Uncertainty Avoidance Index (UAI) deals with a society’s tolerance for uncertainty and ambiguity; it ultimately refers to man’s search for Truth. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising, different from usual. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; ‘there can only be one Truth and we have it’. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. The opposite type, uncertainty accepting cultures, are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions.

Long-Term Orientation (LTO) versus short-term orientation: this fifth dimension was found in a study among students in 23 countries around the world, using a questionnaire designed by Chinese scholars It can be said to deal with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one’s ‘face’. Both the positively and the negatively rated values of this dimension are found in the teachings of Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the dimension also applies to countries without a Confucian heritage.

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The Argument

Some may say that Hofstede’s cultural consequence is irrelevant in today’s global world due to the fact that these cultural differences describe averages or tendencies and not the characteristics of individuals. It is safe to say that he’s cultural consequences are based on assumptions and general opinions. For example a Japanese person can have a very low level ‘uncertainty avoidance’ compared to a Filipino person even though their national cultures point strongly in a different direction. Hofstede’s work has also been criticized by researchers who think that he identifies cultures with nations based on the supposition that within each nation there is a uniform national culture when clearly this is not the case, a suggestion explicitly denied by Hofstede himself in chapter 1 of ‘Cultures and Organisations’. According to Hofstede the point about culture is precisely its resilience to change in spite of all this flux (Hofstede, Geert (July 1978).

In my opinion Hofstede’s cultural consequence is still relevant in today’s global world or at least establishes a framework for businesses and managers to operate within.

An international manager according to Hofstede must decide on the proper managerial style and the appropriate behavior to accommodate these cultural conditions. A manager must address motivation, leadership and organizational structure. Motivating subordinates to achieve company objectives is one of the most important responsibilities of a manager. Although individuals from different countries value different things, some generalizations can be made. For example, people in the United States are more individualistic and are motivated by monetary rewards. The extent to which a country promotes individualism or collectivism is relevant when considering motivational techniques. In contrast to the individualism in the United States, Japan is a highly collective society and its people are committed to group accomplishment. Individuals strive to receive recognition from their work group rather than monetary rewards (Hofstede G et al, 2004:128).

Uncertainty avoidance and masculinity/ femininity also influence motivational

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technique. Societies with weak uncertainty avoidance and highly masculine characteristics tend to take more risks and are motivated by trying to fulfill their need for achievement. In these societies a manager should provide challenging tasks and relatively high level goals. In contrast, societies with strong uncertainty avoidance and feminine characteristics find an environment that is structured, well defined, and secure to be highly rewarding. A manager who reduces ambiguity and uncertainty in working conditions may be highly regarded in this type of society. For Example, worker self management will not work well in this type of cultural condition, as in ‘Yugoslavia’, for example (Abbass F. Alkafaji 2009:75-76).

This is why Hofstede’s cultural consequence is still relevant in today’s global world because managers can use he’s framework in their business or rather that he’s framework still relates to today’s business environment. Hofstede’s work was not designed to prescribe motivational techniques, leadership styles, and organizational structures for every organization in a given society. Instead it is a format or base that can be used to understand various cultures and to implement or learn managerial techniques that will work in different cultures. National cultural differences are relevant to the practicing manager. A multinational manager must use different managerial techniques within different cultures and adjust to the structure of the society. There may be hundreds of adjustments to be made, but in the long run a better understanding of the different culture will be gained ((Abbass F. Alkafaji 2009:75).

According to Hofstede , culture is a shared belief within a country or community where a person lives. Culture is learned and cannot be inherited. It reflects the ability of humans to feel, communicate and learn. If we agree that culture is learned then it will affect the personality at the individual level. Therefore, culture imposes rules, values and practices for societies. Hofstede also argued that at the human nature level, traits inherited in human genes determine human physical and basic psychological functions. The culture level is created in the social environment and is not inherited from human genes. Culture is a collective phenomenon because it is at least partly shared with people who live or lived within the same social environment, which is where it was learned. This belief is acknowledged even in today’s global world (John D. Haynes 2008:3).

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The Application

With the rise in global business, many people are working with, or managing, individuals and groups from cultures other than their own. Hofstede is keen to emphasise that the “dimensions” are not a prescription or formula but merely a concept or framework. They equip us with an analytical tool to help us understand intercultural differences. For example, the practical experience of many multinationals in building international teams can be explained in terms of Hofstede’s framework.

Knowing about such differences can help to avoid conflict in international management. Hofstede’s framework shows that it is not safe to assume that apparently similar countries in the same region, for example Holland and Belgium, or Austria and Hungary, have similar cultures.

The cultural dimensions also provide us with a convenient shorthand term to illustrate a characteristic of a particular organisation or country. For example if someone refers to a country as having a `high feminine index’ it suggests that people in that country characteristically value having a good working relationship with their supervisor and with their co-workers, living somewhere they and their family want to live and having job security (Culture Consequence in Practice 2010).

Hofstede’s theory has been extensively validated, although the point needs to be made that cultures change and specific country examples which Hofstede has used in the past may not be valid today.

The framework has been used by other researchers to determine the suitability of certain management techniques for various countries or to make comparisons between countries to understand cultural differences in various areas of management. Mo Yuet-Ha used Hofstede’s framework to assess the cultural differences and similarities between East Asian countries

. The findings were then used to underpin the understanding of competency-based behaviours in these countries.

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Hofstede’s original research focused on middle class workers. Other writers have extended his work by looking at different groups of workers and different countries. Michael Bond took Hofstede’s work into Hong Kong and Taiwan by using a Chinese Values Module devised by Chinese social scientists to test whether Hofstede’s work was conditioned by his Western outlook and methods. The cultural dimensions were confirmed, except that of uncertainty avoidance, which may be a theory applicable only to the West. (Other researchers have also cast doubt on this dimension, suggesting that it may have been merely a product of the time at which Hofstede did his original research and may not be as relevant today.) Bond’s work led to the discovery of a fifth dimension, long-term/short-term orientation. This dimension measures the extent to which a country takes a long or short term view of life. The long term orientation of Confucian dynamism and thrift correlated strongly with economic growth.

Fons Trompenaars, another noted writer on cultural diversity, has carried out work which shows how national culture influences corporate culture. For Trompenaars, the major types of culture – the Family (a power-oriented culture), the Eiffel Tower (a role-oriented culture), the Guided Missile  (a project-oriented culture) and the Incubator (a fulfilment-oriented culture) – are comparable with Hofstede’s model. Hofstede himself has also extended his work into this area by collaborating with Henry Mintzberg linking Mintzberg’s five organisational structures with his own cultural dimensions. This link is intended to show that some organisational structures fit better in some national cultures that in others (Hofstede G 2001:158-159).

One example of cultural differences in business is between the Middle Eastern countries and the Western countries, especially the United States.

 

When negotiating in Western countries, the objective is to work toward a target of mutual understanding and agreement and ‘shake-hands’ when that agreement is reached – a cultural signal of the end of negotiations and the start of ‘working together’.

 

In Middle Eastern countries much negotiation takes place leading into the ‘agreement’, signified by shaking hands. However, the deal is not complete in the

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Middle Eastern culture. In fact, it is a cultural sign that ‘serious’ negotiations are just beginning.

 

Imagine the problems this creates when each party in a negotiation is operating under diametrically opposed ‘rules and conventions.’

 

This is just one example why it is critical to understand other cultures you may be doing business with – whether on a vacation in a foreign country, or negotiating a multi-million dollar deal for your company (Hofstede G 2001:165).

When business consultants and professionals in the field of workplace learning and development discovered Hofstede’s dimensions, applications began to emerge in many areas. The following are merely a few examples of how the field has translated the abstract theory into a series of concrete approaches. The materials in italics provide examples of how the dimensions can be used in each of these areas.

Orientation and Training

1. New Employee Orientation: Offering an overview of cultural differences and how they may influence communications and other transactions between various parts of the global organizat ion. Learners can be provided with their own cultural preferences, and these can be compared to country scores or to actual scores of coworkers. Learners can then, through exercises, learn how business practices might differ between such coworkers and be provided with a common Language with which to frame the dialogue on cultural diversity.

2. Multicultural Workplaces: Providing models and examples of the specific influence of culture on transactions within multicultural work environments. Using dimension scores from each employee, discussions can take place on how each of their preferences can be taken into account in workplace situations specific to their work.

3. Relocation Training: Providing employees who are relocating internationally with an understanding of their own cultural preferences and those of the country of

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assignment so that they will be able to operate effectively, productively, and maintain a sense of balance. Individual dimensional scores of relocating employees can be compared to country scores; these are lenses through which the employee’s actual business responsibilities can be focused.

4. Developing Nuanced Global Business Practices: For example, developing communication protocols across countries. Who gets copied on emails, how fast a response is expected, and how much content to include-these communication areas tend to align with the Hofstede dimensions. For example, in high power distance environments, employees tend to copy their supervisors on most emails-which is often misunderstood by low power distance colleagues.

Leadership Training and Development

1. Models of Leadership: Providing an understanding of how leadership practices and expectations may differ internationally and how to express the specific leadership practices of organizations in ways that can be understood by various constituencies. Providing learners with various models of leadership as obtained through a study of the dimensions and other sources will allow for sophistication in how leadership is both exemplified and accepted. “Good” leadership behavior in one culture may be considered rather poor behavior in another. So how can global leadership be developed?

2. Management Practices: Offering an understanding of the influence of culture on management practices worldwide within and between companies. Both compensation and benefit practices differ considerably across cultures, often on the individual-group dimension. What may be considered appropriate CEO compensation in a high individualistic culture may be considered larceny in a high group-oriented country.

3. Communicating Across Geographic and Institutional Boundaries: Understanding the role of leadership in translating and communicating both within and between local subsidiaries and between the corporate entity and its local subsidiaries. The study of dimensional differences can help global leaders both create and interpret policies at both local and corporate levels with a higher chance of success across company and geographic boundaries.

4. Global Teams: Learning how to lead global teams and measure obstacles and

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progress. Team members can discuss how their preferences influence their work on the team and how each person can help reach the team’s objectives. They can discuss why some members of teams would prefer for the team to perform like a leaderless jazz band (high individuality) and others like an orchestra with a conductor (group orientation and high power distance).3 Differences in cultural preferences can be leveraged to improve creativity and work effectiveness.

5. Development of Global Competencies: Understanding how cultural dimensions interact with global competencies. The dimensions mediate how competencies are both interpreted and rewarded (Examples of Hofstede’s Practical Applications: 2010).

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Conclusion

In conclusion Hofstede’s culture consequence is relevant in today’s global environment as it still has a major impact on businesses today. Global companies experience change on an ever more frequent basis and in their global operations must navigate the cultural impact of change projects. Hofstede’s dimensions offer guidelines for localizing a culturally acceptable approach to corporate activities.

Hofstede’s study was groundbreaking in other ways as well. Survey research had been used before, in fields such as sociology, political science, and business studies, but had not been significantly employed in cross-cultural comparisons, certainly not across a large number of countries. It is no exaggeration to say that Hofstede helped to create the field of comparative intercultural research. From its original publication date in 1980, Culture’s Consequences sold steadily over a twenty-year period. In 1988, citations referencing Culture’s Consequences jumped. From that time, Hofstede’s influence has grown steadily.

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