Cultural Analysis and its Impact on IHRM

Abstract

The major purpose of the presented research is the reviling of cultural differences in international human resource management of American and Japanese automobile manufacturing companies. The aims of the current work are precise studying of the goals, strategies, and initiatives of Ford and Toyota, reviling and describing of similarities and differences between them which may concern employee training and managerial development. The analysis is performed on the background of the Hofstede Model because it enables an effective depiction of the cultural differences in managerial styles, organizational performance, training, and career promotion. The research reviled that American and Japanese organizational cultures differ greatly in terms of individualism, masculinity, uncertainty avoidance, and orientation on long-term achievements when the differences in the power of distance are insignificant. The study is limited only by two automobile manufacturing companies. Thus, it is proposed to include a greater number of international corporations for more precise investigation of cultural differences. This paper depicts the cultural differences between human resource practices of Ford and Toyota on the background of Hofstede model with the application of real-life experience of employees of these companies, real figures, and strategies for the first time. It can be valuable for workers, human resource managers, and leaders of who work with the American and Japanese companies for better understanding of their cultures and building successful business relationships.

Cultural Differences between the Human Resource Practices of Ford and Toyota

With the development of global corporations, more attention is paid to the international human resource practices which may differ for the representatives of various locations. The current work will study these differences on the example of American and Japanese working cultures with an emphasis on training and management development. These countries were chosen because their representatives have numerous distinct features in the behavior. These differences will be examined on the examples of the automobile manufacturing companies Ford and Toyota. These organizations are represented worldwide and offer automobiles of the similar segment. The understanding of similarities and differences in international human resource management of these companies will provide the understanding of distinct between the American and Japanese cultures.

The Framework

The current work will provide the analysis of human resource practices in the USA and Japan by using the framework of Hofstede Model. This model was chosen because it precisely depicts the cultural differences in hiring, training and working styles in different countries and regions. These differences are based on the diversities in social thinking and acting. The major dimensions in differentiating of working style are power distance, individualism or collectivism, masculinity or feminity, uncertainty avoidance, and long-term or short-term orientation (Shi and Wang 2011). The power of distance refers to the extent to which less powerful employees accept and expect the distribution of power inside the company (Mooij and Hofstede 2010), i.e. social handling of the existing inequality. In large power distance organizations employees accept the existing hierarchical order, while in low power distance institutions employees struggle for equal distribution of power. The individualism or collectivism is connected with the extent of taking care about oneself or the whole staff, and the determination of self-image inside the working community as “we” or “I” (Mooij and Hofstede 2010, p. 89). In collectivistic cultures the one’s identity is the community. They are characterized by high-context indirect style of communication (Mooij and Hofstede 2010). Individualistic cultures are more self-oriented with explicit direct verbal communication (Mooij and Hofstede 2010). The masculine organizational cultures are more oriented on success and achievements, when feministic make emphasis on the quality of work and caring others. The orientation is represented by the extent of personal feeling of threatening by ambiguity and uncertainty. The organizational cultures with strong uncertainty avoidance, unlike those who have low rate of avoidance, usually have clear rules and strict formalization (Mooij and Hofstede 2010). They are less open to changes and innovative approaches. The additional attention should be payed to the orientation of working cultures that is the extent of reflecting the pragmatic perspectives directed on future and short-term points of views (Mooij and Hofstede 2010). The long-term orientation is characterized by “”perseverance, ordering relationships by status, thrift, and having sense of shame”, and investments in future (Mooij and Hofstede 2010, p. 89), while short-term orientation can be explained by individual’s steadiness, and respect to traditions (Mooij and Hofstede 2010).

Differences between the American and Japanese Organizational Cultures on the Background of the Hofstede Model

The information for this section was taken from the official web-site of Hofstede Model. This grants the impartial assessment and determination of differences between the cultures of these two countries which may be connected with the international human resource management. The comparison is visualized on the Figure 1 (Geert Hofstede 2016).

The power of distance in the USA is lower than in Japan. That means that Japanese society is more hierarchical and employees in this country are more conscious about their social and working positions. However, like Americans Japanese still believe that every person can reach anything if he or she would work hard.

The Americans are characterized by high individualism (twice higher than in Japan), i.e. they supposed to look mostly on their own achievements than the team progress (Geert Hofstede 2016). High individualism and low power of distance provides the understanding that this society makes the significant emphasis on the equal rights of all its members. The information between employees and employers (or unacquainted individuals who do business) is frequently shared by means of direct, informal and participative communication. In the business environment these individuals are self-reliant and initiative. The hiring, promotion and decision making are usually made on the background of business merit and clear evidence of personal abilities. Unlike Americans, Japanese are more oriented on harmony inside the staff and inhibition of emotional expressions and personal opinions for avoidance of losing face. They are more collectivistic with strong loyalty to their companies and family relationships.

The observed masculinity in the American society is lower than in Japanese, but still relatively above average. Thus, it is still driven to success and reaching of the set targets with the emphasis on the personal achievements based on strive to be the best of all with the open reflection of the individual’s success. The high rate of masculinity in Japanese society with the middle rate of collectivism serves as the base for the severe competition between groups and cultures (Geert Hofstede 2016). These workaholic people are driven to excellence and perfection in the material production, service and presentation (Geert Hofstede 2016).

The uncertainty avoidance in the USA is almost twice lower than in Japan. The below average rate of this indicator reflects the free acceptance of the new ideas and opinions of others. This culture is not characterized by strict regulations of all aspects of organizational performance. In contrary, Japanese try to organize their work and live with maximum predictability and preparation for different uncertain situations. The organizational culture is highly formalized and regulated. Thus, the adaptation to changes is low.

The major distinction between the American and Japanese organizational cultures lies in the orientation. The employees in the USA tend to orient on the short-term targets with issuance of the quarterly financial statements of the organizational performance. They usually strive to quick results. Japanese, in contrary, orient on reaching of long-term goals that is reflected in high investment in research and development technologies, high rates of own capital, and priority to steady growth instead of short-term profit raise.

Differences in International Human Resource Management of American Ford and Japanese Toyota

In this section the major emphasis will be made on training and management development in the American and Japanese automobile manufacturing companies. These fields can be attributed to the international human resource management (IHRM), i.e. management of human resources in different locations all over the world with the purpose to make the organization successful globally (Randall, Pawan and Florkowski 2002). In IHRM training and managerial development should prepare employees to operate in overseas offices and cooperate with multinational enterprise units (Randall, Pawan and Florkowski 2002).

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In both companies the consciousness of employees concerning their working positions inside the big international company is based on the clear organizational structure that is understandable to every worker, because they have definite hierarchies. Ford’s hierarchy represents the top-down structure with regional geographical divisions (the Americas, Europe & Middle East & Africa, and Asia Pacific) (Smithson 2015). It is divided on functional groups each of which is headed by a Vice President (Smithson 2015). They are shown on the Figure 2 (Cogmap 2016). Toyota also has strict hierarchy with the top-down structure. This company has the greater number of geographical divisions (North America, Europe, China, Asia & Oceania, Middle East & Africa, & Latin America). This hierarchy is visualized on the Figure 3 (Toyota Global 2012a).

Employees of both companies believe in their ability to move up the career ladder and obtain more power inside their companies. As per reviews of the employees, in Ford, it is reflected by support of the ongoing education and personal development, ability to explore numerous jobs in different locations during searching of the individual vocation, and career development opportunities (Glassdoor 2016a). The company opened various educational training centers all over the world (for example, Ford Resource and Engagement Center located in South Africa) (Business wire 2016). The employees have notices the easy accessibility and communication with the company’s leadership team (Glassdoor 2016a). The Toyota’s workers also noticed the endless opportunities of the professional growth, special training, attractive reward system, and “large earning possibilities” (Glassdoor 2016b). Toyota have made the significant steps in the improvement of the professionalism of its employees in 2015: establishment of the on-the-job training for the reinforcement of culture of learning and teaching, setting up international training exercises, and reinforcement of collaboration between IHR and candidates in executive positions outside the boarders of Japan (Toyota Motor Corporation 2016). Moreover, the workers made emphasis on the respectful treatment from the side of their employer (Indeed 2016).

Ford’s training and management development has more individualistic character than Japanese. It is more emphasized on the individual development and personal opinions of employees (Glassdoor 2016a). They can openly discuss the training and working issues with their managers. Ford is the individualistic company by it’s nature, as Henry Ford formed this organization with the understanding that “aid man to help themselves” (Rupert 1995, p. 118). That means that each worker is considered as separate individual from the first minute of employment who has the possibilities for his own personal development (Glassdoor 2016a). In contrary, the Japanese system makes the stress on the “family environment” (Indeed 2016). Building “a homelike atmosphere at work that is warm and friendly” is among the major principles of the company (Toyota Global 2012b). It has established various initiatives for improvement the employees’ confidence, enthusiasm, vigor, loyalty and pride to the company, and promote strong teamwork relationships. The team-building trainings facilitate the constant improvement of the organizational performance and development of new ideas. One of the major principles of IHRM in this company is “nurturing teamwork that aims to ensure the fulfillment of individual roles and optimization of the whole” (Toyota Motor Corporation 2016). Even the competition inside the company has the collaborative character. During the “We Love Toyota” Campaign, the teams which represent different divisions and overseas units compete with each other (Toyota Motor Corporation 2016). However, both companies have strong masculine character and oriented on reaching of set targets, notwithstanding the fact that Ford makes the emphasis on personal achievements and Toyota on collective progress.

Ford has more mobile employment strategy that is oriented on coverage of the current needs of the company. It has hires and allocates the workforce according to the demand on it in some particular locations. The changes in the allocation which were performed in 2013-2014 can be seen on Figure 3 (Ford Motor Company 2015). Moreover, the employees have noticed that the managers pay their attention and implement the proposed initiatives (Glassdoor 2016a). Toyota is more oriented on strict planning of the hiring and management development initiatives. It can be seen on the stable promotion of localization of management at overseas affiliates in the Table 1 (Toyota Motor Corporation 2016). Moreover the company has adopted the universal global vision based on guiding principles and special long-term management plan till 2020 (Toyota Global 2012c).

Unlike Ford, Toyota is a long-term oriented company. As it is shown on the organizational structure, it has more research and development divisions. When Ford has invested $ 6.7 billion in research and development in 2015 (Ford 2015), Toyota has invested more than $ 9.1 billion (Casey and Hackett 2014). Moreover, the employees of Ford has noticed that this company makes the emphasis on immediate achievements in their career promotion (Glassdoor 2016a), when Toyota’s workers noticed that they are expected to provide high results in the long-term perspective (Glassdoor 2016b).

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Conclusion

To summarize, the current work provides the description of the differences in the American and Japanese international human research managerial practices. The emphasis was made on training and management development. They were studied on the examples of automobile manufacturing companies Ford and Toyota which are represented in different continents all over the world. The cultural differences in the organizational culture were studied by using the Hofstede model, because it is oriented on the depiction of the distinct features of the employees from different locations. The used framework is based on the following dimensions: power distance, individualism, masculinity, uncertainty avoidance, and orientation. The American and Japanese international human resource practices have insignificant differences in power of distance and enormous discrepancies in individualism, masculinity, uncertainty avoidance and long term orientation. This is also reflected in the work of companies. Both companies have strict top-down hierarchical structures with the definite position of each worker in them. Ford’s employees and company’s strategies are more oriented on the personal professional development of each individual, adaptation ti the changes and orientation on the short-term targets, while Toyota’s staff I oriented on building of friendly collaborative environment where teams’ results value higher than the individual performance. It is more oriented on the long-term goals through building of the universal plans on the long-term perspective.