Performance Management in Cross Cultural backgrounds
Defined as a “social heritage of a group (organized community or society)”, culture plays a vital role in any organization. Multinational and international companies are the most challenging environments, when talking about various cultural dimensions grouped up together. It is very important to analyze the impact of these cultural dimensions on Performance Management in organizations.
As the same Business Dictionary states,
”culture is a pattern of responses discovered, developed, or invented during the group’s history of handling problems which arise from interactions among its members, and between them and their environment.”
Each culture of the world has its perceptions, beliefs, values and characteristics. Concepts such as creativity, engagement, authority, accountability, bureaucracy are dealt in different ways according to different cultural perspectives. Managing human resources in an organization becomes not only challenging, but also critically important, especially when it comes to multinational and international companies.
Of course, this stays true not only for personnel members, but also managers and shareholders. When one wants to link branch offices in different countries, there must not be any sort of differences regarding the nature of organizational culture, goals, industry scenarios, resources, market characteristics.
As an example, think about the company’s main headquarters, located in the country of origin and then think about its different branches of the corporate entity in other locations – these must share the same values, goals, characteristics and so forth, in order for it to be congruous. This business environment is called cross cultural environment.
Since Performance Management has become the central concept of nowadays’ business productivity, entrepreneurs, professionals and analysts share a connection via the innovative tools and techniques that they use, which are meant to improve not only organizational productivity, but also operational, personal and individual growth.
Cascading Performance Management, starting with the individual level and going up to the organizational one, focuses on re-establishing the organizational culture and values of a company. In other words, Performance Management creates and measures the context for performance. As a result, human resource management is the most challenging and critical aspect when dealing with improving performance.
Today’s globalization tendency that brings about the integration of local and national perspectives into building economic, financial, trading and communication connections, became more and more popular among business environments. Geert Hofstede, in his study – Cultures and Organizations: Software of the Mind, demonstrates how organizational values are influenced by culture. Furthermore, he has identified five dimensions of culture that usually involve critical challenges when it comes to establishing organizational values:
- Small vs. large power distance (PD): this dimension deals with presenting the ways society handles inequalities and the extent to which less powerful members of organizations and institutions (e.g. family) accept and understand that power is frequently distributed unequally.
- Individualism vs. collectivism (IDV): this dimension refers to behavior among and towards communities. It is about the degree of individuals’ integration into groups or communities.
- Masculinity vs. femininity (MAS): displays the distribution of roles and behaviors according to gender.
- Weak vs. strong uncertainty avoidance (UA): usually, this dimension deals with the need for structure, that is to say, cultures with low uncertainty avoidance tend to accept risks and change and prefer flexible rules.
- Long vs. short term orientation (LTO): this dimension clumps up the differences between the long-term values of a society and the short term ones. Cultures with long-term values and traditions place their focus on family, discipline and moral values, established by social institutions.
In order to address all the challenges and risks that may occur as a consequence of the above-mentioned cultural dimensions, several performance management objectives can be established.
First of all, build a high performance culture, for both individuals and teams and take personal responsibility for improving the business’ processes on a continuous basis. Secondly, raise competences by upgrading skills, which are achieved by attaining superior standards of work performance. Finally, boost the performance levels of your employees by encouraging employee empowerment and motivation through the implementation of an effective rewards system.