THE CULTURAL IMPLICATIONS FOR MULTINATIONAL CORPORATIONS OF DIFFERENT APPROACHES TO EMPLOYEE VOICE

Contents

EXECUTIVE SUMMARY.............................................................................................................2

INTRODUCTION.......................................................................................................................3

DISCUSSION..................................................................................................................................3

Culture and Employee voice............................................................................................................3

Direct voice..............................................................................................................................5

Indirect voice...........................................................................................................................5

Comparison of different nations Culture and its Impact.................................................................5

Approaches to resolve cultural differences......................................................................................7

Conclusion.......................................................................................................................................8

References....................................................................................................................................9

EXECUTIVE SUMMARY

All major MNC‘s working across globe have lot of challenges

in their day to day operations one among them being adapt ting the HRM practices they follow

to the country they work in . Communication is a important factor in every organization. This

greatly affects the way companies do business and creates value. Different methods and practices

are followed by the organizations depending upon the country of origin of the organization and

the type of business they are in. This essay critically explains the different approaches and

followed by organizations to employee’s voice and compares their advantages and disadvantages

of the different ideologies.

INTRODUCTION

In today’s global market, MNC’s plays a vital role. To make the business success and

lead the market MNC’s are made and business transformation is done worldwide. In which the

different countries follows different cultures in their country “Culture is the characteristics and

knowledge of a particular group of people, defined by everything from language, religion,

cuisines, social habits and art” by Kim Ann Zimmermann (2015). People communicate with each

other by different cultural background. Employee voice is the factor which influences the

organizational life through direct or indirect methods which plays an important role in

organizational communication. Computer mediated communication has become very common in

workplace it’s through email, mobile phones and MSN which facilitate communication makes

work easier. Some people choose face to face communication pattern, it helps to have

relationship with other people directly and some will communicate indirect voice including work

council and some unions. And also through collective bargaining, people contact each other and

change ideas and thoughts with each other freely.

Employee voice plays an important role in the organization in which the environment is

more sympathetic to trade unions, employee rights and supported by new legal regulations

(Ewing 2003). Will discuss more about the cultural implications towards employee voice in

MNC’s.

DISCUSSION

Culture and Employee voice

Organization culture is the personality of the organization, which comprised of the

assumptions, values, norms and tangible signs of the organizational members and their behaviors

(Hobfoll, 2001). When the members of the organization working together, they come to sense

the particular culture of an organization. Large organization will follow different culture than the

small organization. Culture plays a vital role in the modern environment, especially in

international business among companies. Different culture represents different thoughts, values

and way of thinking in an organization.

In modern organizations, people work together in the same country may come from

different places even different countries. In which communication between them is of great

important to the development of company. MNC’s need to appreciate cultural differences and

manager want to know how organization culture will affect the organization structure. It can be

rectified by proper training and communication.

Employee voice refers to the participation of employees in influencing corporate decision

making. It is also defined by culture on nation and organizational level. Employees are given a

voice through informal and formal means to minimize conflict, improve communication and

encourage staff relation through motivation and fair treatment. Employee participation is a form

of empowerment and motivation that leads to increased productivity and retention.

The term ‘employee voice’ provides a useful way to examine both its purpose and

practice, which allowed transferring union and non-union, individual and collective. The purpose

of the voice as the articulation of individual dissatisfaction overlapped with notions of employee

contribution through communication channels (Jeffrey and Linn, 2001).

Employee voice is attained through both direct and indirect voice in which they were

as follows:

Direct voice

Indirect voice

Difference between Direct and indirect voice

Direct voice Indirect voice

Unitarist paradigm

Individualism

Union suppression/ substitution

Example US, UK and India.

Pluralist paradigm

Collectivism

Union acceptance

Example Germany, Netherland and

Scandinavia

Direct voice

Unitarist paradigm is followed in direct voice, it is meant by labor and management

follows the common interests. In which it the management choice or idea they consider the

employee ideas or thoughts. Employee faithfulness will be there and conflict will not arise.

Cooperation among the employees will be there. Management will question the need for trade

union. Individualism is meant by this refers to which the people see themselves as being part of a

group or individual. Example of direct voice is USA, UK and Australia.

Indirect voice

Pluralist paradigm is followed in indirect voice, it is meant by conflict interest of labor

and management. Employee will question for the sole right to manage. Emphasis on resolving

conflict, in which joint approach to resolve conflict is most beneficial. Without the collective

representation, work force is open to exploitation. Example of indirect voice is Norway and

Japan.HR

Comparison of different nations Culture and its Impact

Different countries follow different HRM practices in general. For example the USA , the

India and the UK generally favour direct mechanism , Where as Western Europe prefer indirect ,

as there is a generally a high degree of national system regulation in relation to Industrial

relations (Looise and Drucker 2002).

American culture is highly individualistic which is self focused. It is goal oriented, ambitious

and competitive. Readiness to change and they will try new things. They will be future oriented

and they believe that present ways of doing things are to be replaced by better way. And they are

risk takers and low uncertainty avoidance. Thus they are hostile to trade and prefer the direct

form of employee voice. Their approach assumes that anything restricting management (laws

and trade unione ) has a negative effect on organizations. They claim government policy and

even the views of their employees can impede the success of an organization (Ferner et al,

2005). They believe the organization must remain market driven and focused on company

strategy.

Japanese Culture is collectivism which has a strong sense of community, and they were

competitive and ambitious. Employee will accept hardship without complaints and strong sense

of duty and obligation is followed. They prefer consensus over conflict.

An example of national system represents itself in the development of European Work Council

Directive .EWCD the directive was established by the European union in 1994. It requires that

companies with over 1000 employees operating in two or more member states must establish a

European work council EWC (Dundon et al, 2004). The aim of EWC’s is to improve workers

information and consultation rights and achieve synergies between European Subsidies .

Therefore if an MNC decides to embrace the borders of Europe they have statuory requirement

to establish a EWC(Lucas et al 2006).

European countries are more predisposed to towards the indirect form of employee voice

mechanisms and have more trade unions also German law dictates that Union functions for

collective bargaining are exercised in areas such as salary negotiations and job security

(Brewster 2002).

Germany has its own form of work councils supplementing the EWC’s in general called the

system of co-determination , where by employees have some role in the management of the

organization. (CIPD 2010). This kind of strong institutional arrangements and legislative

underpinning remain something of a tough thing to break for MNC’s. This is generally because

not only do MNC’s have to adhere to the legislative requirements of the EWCD, but they also

have to comply with the statutory requirements of national works councils which are also

protected by German law.

China being a manufacturing hub and the country known for its iron curtains for media has been

criticized for following poor labor laws and Hr practices by various forums. Foxconn a major

vendor for majority of Electronic industry across the world has been criticized for its labor laws

Apple once a major partner was forced to distance itself from the company after Foxconn’s

business came under scrutiny for lot of issues like poor working conditions and ethical issues.

Approaches to resolve cultural differences

There are four types of approaches in which they were as follows

Ethnocentric: Ethnocentric approach is generally adopted by headquarters by sending

employees from the home or parent countries to the host country. In which a team is sent

from home country to help setting up a new plant.

(Brewster, 2002), has opined that the USA being the world’s most successful economy

their organizational practices should be adopted to ensure survival and success

(Ethnocentric)

Polycentric: Polycentric approach involves hiring and promoting employees who are

citizens of the host countries that the subsidiary is operated. Each overseas subsidiary is

treated as autonomous unit which is managed locally.

Regiocentric: Regiocentric approach involves hiring and promoting employees who are

citizens of host countries that the subsidiary is operated. Culture adaptation is not the

problem. Staffs and decision controlled within the organization but presided over by top

management at the centre.

Geocentric: Geocentric approach is used when the companies adopt the transnational

orientation. Mix of home country and parent country managers run the overseas

susbidaries.

Thus MNC’s preferences of approaches to employee’s voice depends on various factors

like the country of origin of the organization ,the country they are operating and the type of

business they are involved in. The major one of influence being the country of origin.

Because many companies believe that MNC generally being large and their culture management

techniques which are already been established and proved to be successful can simply be

transferred to foreign environments. This clearly not the case which often leads to lot tension

within the work environment.

Conclusion

Thus different countries USA, JAPAN, Germany China provided a good example of how

employees voice can cause conflict and tension, as they are on different points on he spectrum in

terms of employees participation and the type of employee voice mechanism they apply.

USA is more towards the direct form of employee voice because they feel if employee is

efficiently managed they do not need a third party to intervene (Royle 2002 as cited in Lucas

et al 2006). This is more applicable to flat organizations which are goal oriented.

Countries like Japan and Germany favor the indirect form of employee voice and the

employee having roles in management of organization through channels such as work

councils and EWCS, it shows that the management is held answerable to indirect form

of voice more transparently than in the direct form or representations .

There has been a general trend to move form collective to individual voices , reflecting

the predominant trajectory of management practices towards convergence within the

liberal market model (as cited in Brewster et al 2007:1252).

Though collective voice remains more significant in Europe and a mix of both the type of

employee voice could complement each other would help an organization working around the

world more effectively. But by looking at the empirical evidence it could be suggested that the

MNC’s generally do not embrace the laws in the host country and rather try do the same they

follow in their home country in amore disguised manner .

References

1.Brewster, C., (2002) ‘Transfer of HRM Practices Around the World’ Human Resource Manager Across Countries: the cultural dimension, Athens October 17, 2002, Available at: www.mbc.aueb.gr/hrm/hrconference/Brewster_paper.pdf (Accessed 4 April 2011)

2.Brewster, C., Croucher, R., Wood G., and Brookes, M., (2007) ‘Collective and Individual Voice: Convergence in Europe’ Journal of Human Resource Management 18(7) pp. 1246-1262

3.Brewster, C., Sparrow, P., and Vernon , G., (2007) International Human Resource Management, 2nd edn. London: CIPD

4.Ferner A., Almond P., Colling T., and Edwards T., (2005) ‘Policies on union representation in US multinationals in the UK’ British Journal of Industrial Relations 43,(4) pp. 703-728.

5.Looise Kees, J., & Drucker, M., (2002) ‘Employee Participation in Multinational Enterprises, The effects of Globalisation on Dutch Works Councils, Journal of Employee Relations 24(1) pp.29-52

6. Dundon, T., Wilkinson A., Marchington M., and Ackers, P., (2004) ‘The Meanings and Purpose of Employee Voice’ International Journal of Human Resource Management 15(6) pp.1149-1170

7. Lucas, R., Lupton, B., and Mathieson, H., (2006) Human Resource Management in an International Context. London: CIPD

8. Chartered Institute of Personnel and Development (2010) Factsheet Employee Voice,

Available at: http://www.cipd.co.uk/hr-resources/factsheets/employee-voice.aspx#link_2

(Accessed 4 April 2011)