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10 Organizational Culture

Learning Outcomes

After reading this chapter, you should be able to:

1. Discuss the dimensions and types of organizational culture.

2. Understand the competing values framework and how it can help leaders negotiate various cultural contexts.

3. Explain the importance of diversity and of understanding international perspectives.

4. Discuss leadership strategies and initiatives for fostering inclusiveness within organizations.

5. Identify cross-cultural frameworks and explain cultural differences and cultural divides.

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“Organizations are recognizing the need to focus on culture and dramatically improve employee engagement as they face a looming crisis in . . . retention” (Schatsky & Schwartz, 2015). Their efforts appear to be achieving gains: A 2018 Gallup poll found that about one third (34%) of U.S. employees feel engaged in their jobs, up from 31.5% in 2014. The least engaged group, at 16.5%, has reached its lowest level since Gallup began reporting on engage- ment in 2000. The remaining 49.5% of workers falls under the “not engaged” group—not unhappy, but not mentally and emotionally connected to their work. According to the poll, this group “will show up to . . . but will quickly leave their company for a slightly better offer” (Harter, 2018).

Examples of firms that are succeeding in attracting and retaining employees (Bersin, 2015) are those that are paying particular attention to the organizational culture they foster. Firms such as HubSpot, a 1,000-employee, New England technology firm, offers free books and education to staff and uploads their board meeting notes and culture manifesto online. Weg- mans, the retail grocery chain, changed its business goals and values to create jobs and career

development for employees; some of their main values include caring and making a difference (“Wegmans,” 2015). NetFlix’s culture manifesto states “freedom with responsibility.” Similar strategies are being employed by Quicken Loans, Google, RW Baird, Zappos, and Salesforce to name a few.

So what does “culture” mean exactly? It has multiple meanings. At a macro level it includes international, national, regional, or societal dimensions. It also relates to ethnic and occupational cultures that exist globally in private, public, nonprofit, and government arenas. Subcultures are also found in occupational groups within organiza- tions; and microcultures exist within occupations inside and outside organi-

zations (Schein, 2010).

If we understand the dynamics of culture, we are less likely to be puzzled, irritated, or anxious when we encounter the unfamiliar and seemingly irrational behavior of people in organiza- tions, and we will have a deeper understanding not only of why various groups of people or organizations can be so different but also why it is so hard to change them. Even more importantly, the more we understand about culture, the more we understand ourselves and recognize some of the forces acting within us that define who we are. We will then understand that our personality and character reflect the groups that socialized us and the groups with which we identify and to which we want to belong. Culture is not only all around us but within us as well (Schein, 2010).

In this chapter, we focus on organizational culture before examining how culture more generally—in terms of countries, nationalities, ethnicities, and so on—can have broad impli- cations for leadership efficacy and success. Although the first two chapters laid the foundation

James A. Parcell/The Washington Post via Getty Images Some of Wegmans main values include caring and making a difference.

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Section 10.1 Leading and Influencing Organizational Culture

for understanding the nature of leadership, these final three chapters show how leaders influence and shape organizations to achieve goals through communication, strategy, and teamwork. We begin this discussion with organizational culture because it shares a mutually dependent relationship with these three dimensions: An organization’s culture affects how people communicate, how strategy is developed and implemented, and how people work in teams. Culture can also be defined in terms of these three dimensions. It is arguably the most important internal organizational dimension.

This chapter also covers what is perhaps the more common usage of culture—international cultures—and how different cultures and globalization present opportunities and challenges for leadership. Because organizational and national cultures are influenced by global trends— for example, technology innovations, mergers and acquisitions, influx of international work- ers, and a mix of diverse values—leaders and followers must be able to accommodate such changes in their organizations and teams. Understanding culture has a substantial payoff for everyone.

10.1 Leading and Influencing Organizational Culture The online shoe and apparel shop Zappos! has a commitment to fun and “a little weirdness” that is apparent to any visitor to the company’s several blogs (Hsieh, 2009; Miller, 2014). It has been called “the humble overachiever.” Online videos cover topics that seem unrelated to apparel—how to pitch a tent, how to listen, and so on—and also give visitors a glimpse inside the office: cubicles decked out with colorful memorabilia and shiny artifacts, as well as casually clad employees who engage in staring contests and goofy on-camera interviews. As the Zappos website shows, this isn’t forced, and the company isn’t led by an eccentric who is preoccupied with making employees perform strange tasks. The idea behind Zappos’ “family culture” is that encouraging employees to have fun and laugh at work allows them to enjoy their work, be themselves, and perhaps be a little creative, innovative, and unconventional in the process.

Wolske, “culture evangelist” for a department within Zappos, emphasizes the importance of culture in defining a company through “attitudes, values, and behaviors” (“Ten Core Values,” 2014). Wolske explains Zappos’ 10 core values:

1. “Deliver ‘WOW’ through service,” which involves exceeding expectations. 2. “Embrace and drive change when there’s a clear reason why” emphasizes

adaptation and innovation. 3. “Create fun—and a little weirdness” aims to ensure that employees are not

overworked, and stay creative. 4. “Be adventurous, creative, and open-minded.” 5. “Pursue growth and learning”—important for new ideas. 6. “Build open and honest relationships with communication,” focuses on

behavior and listening skills. 7. Continuing with communication, the seventh core value is “build a positive

team and family spirit.” 8. The last three core values are, “do more with less; realize there’s always

room for improvement; be passionate and determined, and be humble” (“Ten Core Values,” 2014).

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These core values allow for continuous innovation, improvement, new ideas, happy and cre- ative employees, satisfied customers, and good teamwork.

Zappos is one example of what leadership experts call a strong—and perhaps unique— organizational culture. In this context, culture refers to organizational members’ shared meaning of values, beliefs, and assumptions about how things are done and what behaviors are acceptable (Connors & Smith, 2000; Schein, 2010).

Schneider (1987) and Schneider, Goldstein, and Smith (1995) argue that “the people make the place.” People create and influence organizational culture, structure, and processes. Schnei- der and his colleagues also argued, using the ASA (Attraction-Selection-Attrition) framework, that new organizational members are attracted to organizations based on their personality characteristics. Individuals then select organizations—or jobs in organization—that fit their personalities and stay with them, or leave organizations where they feel they do not fit. As noted earlier, companies needing talent appear to be trying to attract and retain employees based on their values and preferences.

In a larger sense, culture is both a “here and now” dynamic phenomenon and a coercive back- ground structure that influences us in multiple ways. Culture is constantly reenacted and created by our interactions with others and it is shaped by our own behavior. When we are influential in shaping the behavior and values of others, we think of that as “leadership” and are creating the conditions for new culture formation. At the same time, culture implies sta- bility and rigidity in the sense that how we are supposed to perceive, feel, and act in a given society, organization, or occupation has been taught to us by our various socialization experi- ences and becomes prescribed as a way to maintain the “social order” (Schein, 2010).

Culture has also been characterized as the personality and chemistry of an organization. You get a sense of an organization’s culture and how it feels when you walk into a building or facil- ity. It may feel rigid and formal or casual and friendly. People may be approachable or distant with each other.

A leading scholar on culture, Edgar Schein at MIT, wrote that culture serves two important functions in organizations: First, culture creates internal unity, integrating members so they can better work together to achieve common goals. This refers not only to how well indi- viduals get along with one another, but also to how in sync their behaviors and goals are. Culture ties things and people together through shared values and norms. In this sense, cul- ture creates stability and predictability inside people’s thinking (their shared mind-sets) and between internal organizational systems (vision, mission, strategy, and values). Second, cul- ture helps an organization adapt to and integrate with its external environment by adopting the right values to respond to external threats and opportunities (Schein, 2010).

A strong culture, then, can make a difference in how successful an organization can be, and it is an effective leader who builds and promotes a purposive, cohesive culture. Creating and shaping effective cultures is a significant leadership responsibility and challenge, especially since lead- ership values and culture predict organizational performance. Chuang (2013) believes that all of these aspects help to create a “blended organizational culture.” Organizations whose found- ers and leaders conscientiously guide and deliberately manage cultural values outperform sim- ilar organizations that do not (Kotter & Heskett, 1992). Rosenthal and Masarech (2003) argue that a high-performance culture supports an organization’s success, and that the culture needs

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Visible

1. Artifacts: dress, ceremonies, office design, slogans.

Invisible

2. Expressed values: “We value customer feedback,” “Quality is our number 1 concern.”

3. Underlying assumptions and deep beliefs: “We will earn your respect.”

Culture that can be seen at the surface level

Deeper values and shared understandings held by organization members

Section 10.1 Leading and Influencing Organizational Culture

to have three components: a clear corporate mission, shared organizational values, and an envi- ronment that promotes employee ownership over financial and cultural success.

Dimensions of Organizational Culture Understanding organizational culture can be helped by comparing it to an iceberg, as shown in Figure 10.1, with visible and invisible layers. The first visible layer of an organization’s culture, which Edgar Schein (2010) called cultural artifacts, are what you physically see and hear upon entering the headquarters of a company: the physical layout, the ways people dress and act, tangible symbols such as pictures on the walls, and the interior decoration. Visible cultural layers also include the atmosphere the people create, which in turn reflects the com- pany’s values. For example, Google’s visible culture looks and feels like a relaxed college cam- pus, and Google’s values include “You can be serious without a suit” (“Ten things we know to be true,” n.d.). Google employees receive 12 weeks of fully paid maternity leave; gourmet chefs, who provide on-site healthy, free lunches, snacks, and dinners; free on-site doctors at company headquarters; and free massages throughout the day (“Benefits,” n.d.).

At a deeper, invisible level are the expressed values and beliefs of the company. These consciously held convictions are not readily observable but can be understood when professionals and fol- lowers describe what they do and why. For example, evidence suggests that soldiers gener- ally commit to the U.S. Army because of its values—that is, loyalty, duty, and selfless service

Figure 10.1: Organizational culture dimensions

Visible

1. Artifacts: dress, ceremonies, office design, slogans.

Invisible

2. Expressed values: “We value customer feedback,” “Quality is our number 1 concern.”

3. Underlying assumptions and deep beliefs: “We will earn your respect.”

Culture that can be seen at the surface level

Deeper values and shared understandings held by organization members

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Section 10.1 Leading and Influencing Organizational Culture

(Crandall, 2007). Although soldiers join up for a number of reasons (e.g., to earn money for col- lege, change one’s image, and so on), most do so for intrinsic reasons—a motivation to serve, a desire to find racially unbiased opportunities, or some ideal. Crandall wrote that the positive association a soldier has for the values system carries over to commitment to the institution.

This is consistent with business sector findings that the congruence of member values with the overall organization’s values contributes to commitment to the organization (2007). Values run deep in organizations and can significantly influence commitment to the organization for those members who stay over time. Two studies (Clugston, Howell, & Dorfman, 2000; Wasti, 1999) showed that individual differences in cultural values (e.g., collectivism and power distance— discussed later in this chapter) were positively correlated with normative commitment to the organization; and normative commitment correlates positively with desired outcome variables such as performance. Johnson-Murray (2012) found that there is a relationship between work value and normative commitment. Similarly, Amos and Weathington (2010) found that perceived congruence of employee-organizational values is related to commitment to the organization.

As we will discuss in the following sections, organizational culture can also be described in terms of its stability, achievement dimension, team relatedness, people orientation, outcome, attention to detail, innovativeness, and tendency to take risks (Chatman & Jehn, 1994; O’Reilly, Chatman, & Caldwell, 1991). Armenakis, Brown, and Mehta (2011) summarizes past studies about “cultural typologies” that include mechanistic/organic, adaptive/unadaptive, participative level, ethical /unethical, responsibilities (economic, legal, moral, and philanthropic), as well as others. See “Take the Lead: Leading and Influencing Organizational Culture” to apply concepts.

Take the Lead Leading and Influencing Organizational Culture You’ve recently purchased a company specializing in call center activities. You saw a limited supply of call centers that could deliver a quality service at a competitive price in the marketplace and a call center organization that was severely mismanaged. You will assume the role of president and CEO.

Part of the organization’s mismanagement was in their value proposition to their clients (both current clients as well as future prospects). In other words, they failed to differentiate themselves from their competitors in the value they offered prospective clients. (Why would a client choose them versus another call center?) Furthermore, you believe that while the potential for success is tremendous, the business will likely fail if you cannot align internal customers (i.e., employees) around a central theme of customer service.

Leading and influencing the organization’s culture is imperative for you in this new venture. Keeping in mind your role as a leader, consider the following:

1. As the president and CEO, how will you accurately identify the current culture in place within the organization?

2. Is identifying the current culture in place a worthwhile activity? 3. What actions will you take to modify the culture? 4. Who will you look to ally with in order to effectively change the organization’s culture?

See the appendix for possible answers.

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Section 10.1 Leading and Influencing Organizational Culture

Organizational Cultures Not all organizational cultures are created and led equally. As noted earlier, the quality and the implementation of organizational culture can affect performance. However, just as differ- ent types of leadership can be effective in different types of situations, different types of orga- nizational culture can also work well, depending on the situational context. We will examine what differentiates a high-performance culture from a low-performance culture, and we will also take a look at four different approaches to organizational culture, based on the compet- ing values framework discussed in Chapter 1.

High-Performance Versus Low Performance Cultures can be characterized as either high-performance or low performance, depending on their ability to achieve goals, grow, and bring out the best in their members. As seen in Table 10.1, the two can be described in opposition to each other.

A high-performance organizational culture possesses several characteristics. It possesses a clear vision, mission, and strategy; it is characterized by a strong culture and internal unity; and it focuses on excellence, achievement, and adaptability.

Clear Vision, Mission, and Strategy Vision, mission, and strategy—and how to create them—are discussed in greater detail in the next chapter, so for now, simply know that a high-performance culture knows exactly where it is going and how it will get there. One empirical study showed that, among other shared qualities, the highest-performing companies all publicly displayed and affirmed their mis- sion and value statements, showing both clarity in and commitment to their aims, and their business and work processes and procedures were consistent with their mission and values

Table 10.1: High-performance versus low-performance cultures

High-performance culture Low-performance culture

Clear vision, mission, and strategy (strategic systems)

Unclear vision, mission, and strategy

Strong culture, internal unity, and values based on commitment and trust

Low cultural strength and polarized subcultures

Focus on excellence, achievement, and adaptability to the external environment

Insular and resistant to change

Risk aware Risk averse

Free-flowing information, even with bad news Information bottlenecks

Cross-boundary collaboration Emphasis on turf, status, and bureaucracy

Unclear roles and responsibilities Energized roles and accountability

Source: Based on Corporate Services Generaux. Retrieved from http://www.scribd.com/doc/15931514/Low-vs-High-Performance- Culture-FCC

http://www.scribd.com/doc/15931514/Low-vs-High-Performance-Culture-FCC

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Section 10.1 Leading and Influencing Organizational Culture

(Fisher, 2000). Having such clarity helps an organization recognize external opportunities and exploit them.

A low-performance culture, on the other hand, lacks vision, mission, and strategy. This is evi- dent when leaders and officers of an organization cannot identify or agree on a clear vision, mission, and strategy, which inevitably results in the other symptoms of a low-performance culture. Without consensus on these dimensions, alignment of projects and work tasks is hap- hazard and misguided.

A high-performance culture also excels in systems thinking (Senge, 1990; Sterman, 2001), which involves understanding the relationships among the parts of an organization in the larger system (the entire organization) to determine the root cause and effects of prob- lems, and to discover new opportunities. Martinez-Moyano and Richardson (2013) modified Sterman’s five-step system dynamics modeling process (2001) to come up with six steps: problem identification; system conceptualization; model formulation; model testing and evaluation; model use, implementation, and dissemination; and design of learning strategy /infrastructure. Another way of putting this is thinking outside the box, seeing the big picture, and understanding that the whole is equal to and can exceed the sum of its parts. As referred to in a previous chapter, Apple® founder and CEO Steve Jobs’s visit to the Xerox Corporation in 1979—before the development of the Mac—illustrates this leadership capability. On his visit, Jobs was shown an early personal computer called the Alto, which employed a mouse and an exciting new “graphic interface technology software,” an application designed to make the user’s interaction as simple and efficient as possible (Stephanidis & Savidis, 2001). He, being the visionary that he was, saw what few technologists would see—an opportunity to turn an insight from an existing technology into a new industry. With this bigger picture in mind, Jobs raced back to Apple and began work on the Macintosh, which in 1984 became the first mass- produced personal computer that used a mouse and the type of software Jobs saw at Xerox. Similarly, when Bill Gates saw the Macintosh prototype operating, he, like Jobs, also saw a bigger picture of what that type of software on a consumer laptop could be. Gates had his first vision of the user-friendly Windows software operating system—now a global standard for individuals and corporations (Cringely, 1996).

Strong Culture and Internal Unity High-performance best exhibits how culture can function and benefit an organization, as identified by Edgar Stein: High-performance cultures create internal unity and adapt well to their external environments. Internal unity, also known as internal behavioral consistency, can be seen in how the airline industry responded after the Germanwings tragedy in the French Alps where one pilot locked himself in the cockpit while the other pilot stepped out. The pilot then intentionally crashed the plane into a mountainside as the other pilot desper- ately tried to break through the locked cockpit door. In reaction to this event, many airlines worldwide have started to require that two crew members need to be in the cockpit at all times in order to avoid another event like this. Air Canada, Westjet, Norwegian Air Shuttle, major German airlines, Virgin, as well as other have been changing their policies (“Airlines across the world,” 2015).

Another example of a high-performance culture is Amway and its strategy in China. When the government in China outlawed direct selling, Amway had two options: “pull up stakes, or. . . find a new way to sell” (DeVos, 2014, p. 184). Amway chose to work with the Chinese

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Section 10.1 Leading and Influencing Organizational Culture

government and “revised its sales model five times to meet changing regulations.” DeVos, president of Amway, says that “today China is our biggest market, accounting for more than a third of Amway’s sales” (DeVos, 2014, p. 184). With Amway’s adaptability to the external environment, they were able to keep their high-performance and remain successful in a for- eign market.

High-performance cultures are also built on communication, commitment, and trust. Leaders and followers at these companies actively listen to each other and to customers, suppliers, and vendors (Fisher, 2000); high-performance cultures are often grounded in socially respon- sible principles that have the interests of followers, clients, shareholders, and stakeholders in mind. Leaders cultivate responsive and respectful relationships with their employees with- out micromanaging them. Lawler’s (2003) specific suggestions illustrate the ingredients for developing commitment and trust among followers to achieve high-performance goals:

• Treat employees with dignity and respect. • Grant employees enough autonomy to excel and contribute. • Cultivate a relationship with employees based on mutual respect and

interdependency. • Initiate unique one-to-one relationships with top performers. • Give increased responsibility to the best employees. • Implement mentor programs. • Celebrate employee achievements. • Hold managers at every level responsible for the growth and development of the

people who report to them. • Use the full range of rewards and punishment to enforce high-performance

standards. • Encourage employees to use their own initiative and creativity in performing their jobs. • Set reasonable and clear performance standards for all employees.

Low-performance organizations have weak cultures, or low cultural strength, meaning that followers are not aligned with the values and ways of doing things in their organizations. This may result from poorly defined or communicated visions and strategies by leaders, or because followers have not accepted the leader’s vision (Lussier & Achua, 2007). As a result, there is little commitment to or identification with the leader’s strategies and plans. Follow- ers may also show lack of concern for and even alienation from the organization. It is not uncommon for talented performers to start leaving companies when this symptom persists.

Low-performance cultures are also prone to polarized subcultures, which are divisions within an organization that tend to form when there is avoidance of or lack of alignment and con- sensus around a common organizational strategy. In-groups and out-groups form and affili- ate around self-interests (Tajfel, Billig, Bundy, & Flament, 1971). Personal “fiefdoms” can also result at the top of the organization, where higher-level managers compete for power and influence. Without an overarching goal and strategy, such groups become politically charged and interactions result in conflict, gossip, and misinformation.

Creating and aligning the dominant organizational culture with subcultures is a challenging leadership responsibility that takes initiative, expertise, and courage (David, 2005). Leaders can take concrete actions to align subcultures with the dominant organizational culture by first being honest and open with teams and followers. Secretive, noncommunicative leaders

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Section 10.1 Leading and Influencing Organizational Culture

create doubt in the minds of others, which often leads to unproductive subcultures. Second, leaders who challenge and offer creative assignments to high performers increase the likeli- hood of strengthening the larger organizational culture. Third, leaders who show interest and who value constant learning and continuous improvement through both intrinsic and extrinsic rewards encourage effort and productivity in followers, which in turn enhances the overall organization. At the same time, leaders who acknowledge quality failure (i.e., failure resulting from credible efforts to experiment for the benefit of the organization) encourage entrepreneurial risk taking in both subcultures and the larger culture. Finally, leaders with strong organizational cultures can encourage the development of functional subcultures whose work can contribute to the overall performance of the organization (Alexander, n.d.; Boisnier & Chatman, 2002).

Robertson (n.d.) describes organizational subcultures as having “its own unique set of char- acteristics making it distinguishable from the other subcultures, but together, they still oper- ate as a whole striving for the same overall goals.” Organizational subcultures can be based on many things, such as profession, task, ethnicity, age, sex, and departments, to name a few.

Focus on Excellence, Achievement, and Adaptability The Apollo 13 mission exemplifies a focus on excellence and adaptability. The 1970 lunar landing mission had to be aborted en route due to loss of cryogenic oxygen in the service module and consequent loss of capability to generate electrical power, provide oxygen, and produce water (Smithsonian, n.d.). The crew had to use the lunar module’s resources as a “lifeboat” during the return trip to Earth in order to save its batteries, and needed oxygen for the duration of the flight. In spite of limited power, loss of cabin heat, shortage of potable water, and the need to modify the carbon dioxide removal system, the crew was able to return safely to Earth (Lovell, n.d.). “Apollo 13 has been written into the history books as the mission that was the ‘successful failure,’” wrote Torrance (2006). “I disagree. I think the Apollo 13 mis- sion was the complete opposite. If I wrote the Apollo 13 chapter of the history book, I would state the Apollo 13 mission was NASA’s great ‘failed success.’”

Fisher’s study (2000) showed that high-performance cultures value adaptability, resilience, and responsiveness to productive change—what Edgar Schein might have also termed “adapt- ing well to external environments.” At Microsoft® and Nike, leaders work with committed fol- lowers to consistently meet the high volatility and changing market demands of national and global customers. Their product lines change, adapt, and even create customer demand.

Microsoft, for example, continues to generate new editions of Windows that have more ver- satile and updated functions. Nike keeps introducing variations on models and styles of shoes that attract different customers. Leaders who create high-performance cultures emphasize and focus on excellence, not settling for mediocrity of product or service. Followers are trained to use “zero defects” benchmarks, which admits that defects are “inevitable” and takes steps to eliminate these defects through quality management, preventive actions, and corrective actions (Paraschivescu, 2014). Note that too strong an emphasis on zero defects can lead to cover-ups of problems in the short term that create larger problems in the long term; rather, an error-management approach reinforces learning from errors to prevent their recurrence. So it may be helpful to approach product and service creation with zero-defects foresight and error-management patience and follow-through (Haselton, 2006). The Six Sigma website also believes that an emphasis on zero defects can lead to increased time and expenses to try and

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Section 10.1 Leading and Influencing Organizational Culture

find a “perfect process” that most likely does not exist. Additionally, an increase in checkpoints to eliminate defects also leads to an increase in costs (“The Concept of Zero Defects,” n.d.).

In contrast, low-performance cultures tend to be insular and resistant to change. The country club style discussed in Chapter 1 can develop, where leaders focus more on interacting with colleagues than on directing strategically. Leaders and followers also can avoid mobilizing resources to meet external competitive needs. This sort of complacent attitude and lack of responsible planning and foresight could be seen in the American automobile industry prior to the 1980s and into the 1990s. The cultures of the “Big Three” (General Motors, FordTM, and Chrysler—now Daimler Chrysler) seemed like country clubs. In the 1980s, leaders refused to adapt to the oil crisis and develop more efficient four-cylinder cars. As a result, American car companies lost market share when Japanese four-cylinder cars from Toyota and Honda arrived. In the 1990s, the Big Three overinvested in gas-guzzling SUVs, still depending on con- sumers’ consistent use of oil (Gordon, 2005). Later, “due to a ‘perfect storm’ of poor business decisions, rising health-care costs and strong foreign competition” they again lost market share, laid off employees, and GM had to be bailed out a decade afterward” (Gordon, 2005).

A similar phenomenon appeared to be happening in the United States in 2011 as China gained a head-start in “green,” or environmentally friendly, technology research, development, and manufacturing (Stavins, 2011). For example, one notable research report stated that “China is prevailing in the global race for green jobs in sectors from solar panels to advanced light- ing, and appears to be on an unstoppable upward path” (Feldman, 2010). China’s government invested over $34.6 billion in 2009 in its low-carbon economy—double the amount spent for this type of energy by the United States, and more than any other country. China is now the headquarters for six of the largest renewable-energy employers (Feldman, 2010).

In contrast, government leaders in the United States were only speaking of becoming a global leader in this industry at the time, rather than actively investing. Fast forward to 2015 and we see a number of electric cars being sold and several manufactured in the United States, the top brands being Tesla Model S, Nissan LEAF, and BMW i3. Other brands include Ford, Chevrolet, and Cadillac (Shahan, 2015). There are signs of a general cultural move toward more efficient and clean energy saving cars; however, U.S. consumers are not likely to change auto buying habits unless gaso- line prices “increase to $4.50–$5.50 per gallon, and battery technology will have to improve significantly, provid- ing increased range at decreased costs (Lee & Lovellette, 2011).

Symptoms of low-performance cultures serve as indicators for leaders and fol- lowers to beware of cultures in trouble. However, as noted earlier, effective leadership can make all the difference in how organizational culture mani- fests itself. A dominant characteristic of strong, high-performance cultures is that they are created and led by effec- tive leaders whose values match exter- nal environmental needs and demands.

iStock Editorial/Thinkstock The United States market is beginning to make up ground in the fledgling electric car market.

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Section 10.2 Competing Values Framework: A Cultural Perspective

10.2 Competing Values Framework: A Cultural Perspective

The Competing Values Framework (CVF) is useful for classifying different cultures (Cameron, Quinn, DeGraff, & Thakor, 2009; Kotter & Heskett, 1992) according to external and internal environmental “fit.”

Studies show that the fit is related to performance (Apfelthaler, Muller, & Rehder, 2002): An organization that is able to identify whether it should be more internally or externally focused, or more stable or more flexible, based on its external environment is more likely to perform more effectively. Leaders are responsible for deciding what major values are needed to fit with the right organizational vision, strategy, and external environment. These values represent what is important to the organization. Founders are the first to define an organi- zation’s cultural values, which evolve over time depending on other leaders, environments they must manage, and internal teams who are hired and integrated into the cultures. Orga- nizations in the same industry often share similar values, because they work in similar envi- ronments (Chatman & Jehn, 1994). For example, in turbulent and changing market-oriented environments—such as California’s Silicon Valley, where major global technology companies reside and compete—a more adaptive culture is a better fit for matching customer demands, because creativity is a key value (Deshpande, Rohit, & Farley, 2004; “Explaining Silicon Val- ley’s Success,” 2014).

With this perspective in mind, we address the key question of leading different cultures: “What types of cultures and supporting organizational values are best suited to different environ- ments in order to achieve high-performance?” The CVF suggests that there are four culture types that leaders can use to align their strategies to the environment. Figure 10.2 illustrates a model showing the four different cultural types (Hooijberg & Petrock, 1993; McDonald & Gandz, 1992; Quinn, 1988).

We focus here on two dimensions of the CVF: (1) the horizontal axis, the degree of flexibility and stability required by the external environment, and (2) the vertical axis, the degree to which the leader’s strategic focus is external or internal. The four cultural types are adaptive, achievement, clan, and bureaucratic. These four types are not mutually exclusive; an organi- zation can have values that fit into more than one category, or even in all. High-performance, strong cultures tend to fit more in one cultural category.

Different Types of Cultures Different types of cultures suit individual interests and needs. You may find that your inter- ests and skills are best suited for a clan culture, which would suggest, referring to Figure 10.2, that a collaborative, agreeable culture, where supervisors and managers value fairness and cooperation and equity, would be more motivating for you. Some human resources posi- tions, depending on the organization and industry, may be good career or position options for those who have a clan culture preference. On the other hand, you may prefer an achieve- ment culture, where the supervisors and managers value and reward aggressive, competitive, and perfectionist behaviors. In that case, a sales position in a highly competitive, fast-moving organization or industry may be a good fit. If a bureaucratic culture is preferable, then you value efficiency, order, formality, and routine. “Backroom” operations positions in IT or other technical types of jobs and careers may be more suitable for you. Opposite the values of the

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Flexibility

Stability

External Focus

Internal Focus

Clan Culture

Values: Agreeableness Consideration Cooperativeness Fairness Equality

Bureaucratic Culture

Values: Efficiency Rationality Order Obedience Formality

Achievement Culture

Values: Initiative Aggressiveness Diligence Perfection Competitiveness

Adaptive Culture

Values: Entrepreneurship Risk taking Adventure Creativity Responsiveness

Section 10.2 Competing Values Framework: A Cultural Perspective

bureaucratic culture are the values of an adaptive culture. Flexibility, insight, and innova- tion are values that characterize adaptability cultures. You can see in Figure 10.2 the types of values you might prefer in that setting.

Adaptive Culture Corporate cultures have been characterized in broader terms as either adaptive or unadap- tive (Kotter & Heskett, 1992). Adaptive culture, in the upper right of Figure 10.2, is open to and embraces external change and is characterized by flexibility. Leaders and followers in adaptive cultures care about customers and the internal alignment of people with pro- cesses to meet external demands; they value quick and decisive responses, risk taking, cre- ativity, and innovation, while keeping the best interests and integrity of the organization in mind. This type of culture is also supportive of followers, and leaders tend to give followers more autonomy—and leeway to fail—to meet customer needs. Although there is not a best “one size fits all” organizational culture and leadership style that works optimally in all situ- ations, researchers agree that adaptive organizational cultures tend to be more effective, and most organizations are being pressured by external forces to adopt such cultures to survive. Leaders in unadaptive cultures are not open to change and sometimes serve their own self- interests; their values can, in fact, impede true change if self-interests dominate.

Figure 10.2: Four cultures

Source: Based on Quinn, R. (1988). Beyond rational management: Mastering the paradoxes and competing demands of high- performance. San Francisco, CA: Jossey-Bass; Hooijbert, R., & Petrock, F. (1993). On cultural change: Using the competing values framework to help leaders execute a transformational strategy. Human Resource Management, 32(1), 29–50; McDonald, P., & Gandz, J. (1992). Getting value from shared values. Organizational Dynamics, 21(3), 64–76; and Daft, R. (2011) The leadership experience (5th ed.). Mason, OH: South-Western, Cengage Learning.

Flexibility

Stability

External Focus

Internal Focus

Clan Culture

Values: Agreeableness Consideration Cooperativeness Fairness Equality

Bureaucratic Culture

Values: Efficiency Rationality Order Obedience Formality

Achievement Culture

Values: Initiative Aggressiveness Diligence Perfection Competitiveness

Adaptive Culture

Values: Entrepreneurship Risk taking Adventure Creativity Responsiveness

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In contrast, an example of an adaptive culture is the giant enterprise-software company Oracle. Vivek Marla, vice president and leader of Oracle Solution Services India—a highly vis- ible global consulting group with the company—reflected on his 20 years at Oracle:

I like Oracle’s penchant to be in the leading edge of technology and products. I enjoy the dynamism that exists at Oracle. While its long-term strategy is very clear and strong, tactically it is very adaptable to change based on business needs.

I thrive in this change. I also enjoy the diversity of opportu- nities that Oracle provides to its employees. Most importantly, I enjoy the people I work with, no matter which country I am working in. (Sreenivasan, 2009)

In 2014, Oracle leveraged Australia and New Zealand’s innovative prac- tices by introducing cloud computing, which is scalable and flexible (Ebbeck, 2014). Oracle has adopted cloud com- puting as a reaction to the world tech- nological environment making the push toward this type of technology.

Clan Culture Clan culture, in the upper left box of Figure 10.2, emphasizes cooperation, consideration, fair- ness, and teamwork. These are internally focused cultures that stress flexibility. Leaders believe that organizational success in such environments, given customers’ needs, is best achieved through internal employee relationships. These cultures respond to externally dynamic envi- ronments by emphasizing follower empowerment, shared responsibilities, and team synergy. These are by no means country club cultures where productivity is ignored in favor of rela- tionships. Instead, followers are treated like owners and given discretion to implement the organization’s mission and goals. Reflecting back on the CVF discussion, clan cultures may not work well in environments that require aggressive, competitive, external-oriented strategies.

Zappos, is an example of a clan culture. The company’s website includes a “family culture” blog, accentuating the tight-knit relationships and atmosphere valued at the company. The company uses a model of loyalty business and relationship marketing, which depend on emotional con- nections with customers and a cohesive culture in the company. The company’s rapid growth is attributed to repeat customers through word of mouth (Hsieh, 2006). The Zappos website states that the key to their success is their culture that focuses on service, which has led them to have fast growth. This growth has also been sparked by repeat customers and word of mouth.

Achievement Culture Leaders develop achievement cultures, in the lower right box of Figure 10.2, to respond to stable, external environmental opportunities and threats. Achievement cultures generally

ASSOCIATED PRESS/The Christian Science Monitor/Ann Hermes Oracle is a good example of an adaptive business culture.

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function in mature external markets competing for market share. Leaders take a strategic external focus because they are alert to competitors seeking market share and profitabil- ity. The mature and saturated state of the consumer markets these firms operate in makes for very intense competition. Reflecting back on the CVF, achievement cultures would not necessarily work in environments that require more cohesive, cooperative, and considerate internal strategies, where people are not required to compete head-to-head with one another.

Rogers, Meehan, and Tanner (2006) believe that there are two key factors to have a winning (or achievement culture): high-performance values and behaviors and unique personality and soul. The high-performance values and behaviors include high aspirations and a desire to win; external focus; think like owners; bias to action; individuals who team; and passion and energy. Rogers et al.’s (2006) argument is that all of these factors need to be present in order to keep a winning culture. The opposite of clan cultures, achievement cultures foster compe- tition among employees, departments, and other work units. Companies takes a competitive as well as an adaptive strategic and cultural stance against other external organizations in achieving organizational goals. For example, previous GE CEO Jeff Immelt, the successor to star Jack Welch, continued to ignite the competitiveness of that company’s culture by moving people and things around to further advance growth and profitability. This quote explains Immelt’s cultural leadership at GE:

So how, exactly, do you make a culture as ingrained as GE’s sizzle with bold thinking and creative energy? To start, you banish some long-cherished tradi- tions and beliefs. Immelt has welcomed outsiders into the highest ranks, even making one, Sir William M. Castell, a vice-chairman. That’s a serious break with GE’s promote-from-within past. He is pushing hard for a more global workforce that reflects the communities in which GE operates. Immelt is also encouraging his homegrown managers to become experts in their industries rather than just experts in managing. Instead of relying on execs who barely had time to position a family photo on their desk before moving on to the next executive assignment, he’s diversifying the top ranks and urging his lieutenants to stay put and make a difference where they are (Brady, 2005). Before Immelt, Welch encouraged employee competition through a “forced rank” system, letting the bottom 10% go, which takes the focus off of collaboration. Instead, employees may spend their time trying to “outshine” other employees. On the other hand, PepsiCo has been successful in using competition to help with collaboration. Their secret is to rank how well employees work with others (DuBois, 2012).

Bureaucratic Culture Bureaucratic cultures, in the lower left box of Figure 10.2, have an internal, stable focus and are the opposite of adaptive cultures in value orientation. Leaders in bureaucratic cultures focus on internal environments and value stability, status, order, and efficiency. They empha- size rational and formal methods, relying on rules and procedures in the internal culture. Employees who fit with this type of culture enjoy predictability over change, regularity over chaos, and obedience over autonomous decision making. In the past, particularly the 1950s, insurance companies, hospitals, banks, and the automotive and other industries enjoyed the safety and security of bureaucratic cultures. This type of external environment has given way to economic, social, and political turbulence and radical change.

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The term bureaucracy has unfortunately taken on negative connotations in recent times; it has come to mean slow, stodgy, ineffective, and riddled with red tape. However, parts of all organi- zations have to be bureaucratic: They need rules, organization, regimentation, and efficiency. Systems that deal with data, accounting, and information processing are in part bureaucratic. Insurance companies, hospitals, accounting firms, and postal services are examples of orga- nizations that rely on accurate and detailed business-processing systems and methods that could be considered bureaucratic. One employee has described the highly successful and profitable Metropolitan Life Insurance Company as having “stable company performance,” but also issues that are typical for large companies such as “bureaucracy,” “lack of autonomy and independence,” and “authoritative leadership” (“MetLife,” 2014).

The effectiveness of each of the four culture types depends on different environmental con- ditions and leadership strategic orientations. The emphasis on particular cultural values depends on an organization’s strategic focus and on the level of environmental stability and flexibility, its industry, and the responsibility that strategic leaders take to ensure that organi- zations balance cultural values with competitiveness. Leaders must also create the fit between strategy and culture and be ready, able, and willing to change values and cultures that may have worked in the past but are no longer effective. In situations where leaders find that they must change external strategies to compete in external environments, a shift in organizational culture can be significant. In some instances employees may leave an organization that must, for example, shift strategies and make an internal change from a bureaucratic to an achieve- ment culture. In such instances, training, coaching, and other types of reorientation programs are offered to help employees adapt and adjust to such cultural changes. In the last section, we examine what concrete actions a leader can take to shape the culture of his or her company.

Leading and Shaping Culture Shaping, changing, and aligning culture with strategy are, as we have noted, among the most challenging tasks of leaders—but also arguably among the most important. Scholars often point to how company founders set the tone for their companies and how that can affect a start-up’s success. Founders influence the formation of the culture’s values and beliefs by hiring and socializing (i.e., influencing, teaching) followers who think and feel like they do. Edgar Schein wrote that “founders not only choose the basic mission and the environmental context in which the new group will operate, but they choose the group members and bias the original responses that the group makes in its efforts to succeed in its environment and to integrate itself” (Schein, 2004, p. 226).

Walmart founder Sam Walton, for example, worked to create a unique culture of equality, encouragement, high-performance, and customer service centered on 10 rules (Abraham, Kathawala, & Heron, 1988; Walton & Huey, 1992).

Sam Walton’s Ten Rules:

Rule 1: Commit to your business. “If you love your work, you will be out there every day trying to it the best you possibly can, and pretty soon everybody around you will catch the passion from you—like a fever,” Walton said.

Rule 2: Share your profits with all your associates (employees). Walton advocated treating his employees like partners, which he believed would increase performance.

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Rule 3: Motivate your partners (i.e., employees). Money and ownership alone are not enough, Walton said.

Rule 4: Communicate everything you possibly can to your partners. “The more they know, the more they will understand. The more they understand, the more they will care. Once they care, there is no stopping them,” Walton said.

Rule 5: Appreciate everything your associates do for the business. Walton said that a pay- check and a stock option only buys “one kind of loyalty.”

Rule 6: Celebrate your successes. Walton encouraged showing enthusiasm and also finding the humor in one’s failures.

Rule 7: Listen to everyone in your company. Walton believed this empowered associates and forced “good ideas to bubble up.”

Rule 8: Exceed your customers’ expectations. Walton was adamant about the company motto, “Satisfaction Guaranteed.” The company should put the customer first and avoid making excuses for mistakes.

Rule 9: Control your expenses better than your competition. For Walton, running an effi- cient operation could sometimes make up for mistakes made.

Rule 10: Swim upstream (be different).

Walton died in 1992, and although times have changed since he founded Walmart, his legacy and business philosophy remain robust. The company is adapting to the new global competi- tive environments in which it has entered.

Southwest’s Herb Kelleher provides another exam- ple. Although Kelleher is not the original founder of Southwest, he was the founder’s attorney and is credited with taking the airline to the level it is at today. Kelleher was once asked who comes first— customers, shareholders, or employees? He replied, “Employees come first; and if employees are treated right, they treat the outside world right, the out- side world uses the company’s product again, and that makes the shareholders happy” (Morrison, 2003). Kelleher saw Southwest as an upside-down pyramid: The top level managers were at the bot- tom, and employees were the heroes on the front line, because they were “the ones that make things happen” (Lee, 1994). Kelleher said that the com- pany “hired for attitude, enthusiasm, and sense of humor,” and that many applicants were made to take personality tests. When a vice president once admitted to Kelleher that she had interviewed 34 candidates for a ramp-agent position, Kelleher told her to interview 134 people if that was what it took to find the person with the right attitude (Abraham, Kathawala, & Heron, 1988). The com- pany continues to hold a reputation for high spirits and hard work. Freiberg and Freiberg noted that at “Southwest Airlines there exists a spirit of liberty and freedom that encourages people to use their

ASSOCIATED PRESS/PR NewsFoto/Southwest Airlines Southwest Airlines cofounder Herb Kelleher believes employees come first and if they are treated right, they treat the outside world right. The outside world will then use the company’s product again.

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imagination, express their individuality, and exercise leadership” (1996). This is the nature of a high-performance clan and achievement culture that follows the example and role model of a transformational, charismatic founding leader.

So how does a leader go about creating, building, and maintaining a high-performance culture? The next sections identify the primary and secondary actions a leader can take.

Primary Actions Primary leadership cultural actions (Schein, 1992) aim to build a culture from start-up time to the next phase. Leaders seek to align the culture by identifying a vision, mission, values, and strategy with a team or teams, and then working with followers to plan and implement business processes (i.e., sales, marketing, research, and development of the organization). This requires defining a clear vision, mission, and values statements upon which strategy and structure are based. Considerable leadership involvement, influence, and communication are required to ensure that an effective culture is maintained. Leaders use their authority and charisma to influence, motivate, and direct all of these dimensions. Most U.S. presidents and global leaders weigh in on articulating, influencing, and directing major international and national economic and political policies in their administrations. They use the power of their positions, their physical presence and speaking at public events, and their strategic intelli- gence at cabinet meetings to ensure that the policy implementation processes run as planned.

Secondary Actions Secondary leadership cultural actions (also called symbolic leadership cultural actions) are behaviors, signals, and events that leaders and organizations create and enact to instill and reinforce desired cultural values. Symbolic actions include leadership role modeling, organi- zational ceremonies, artifacts (tangible and intangible symbols), and new-member socializa- tion processes.

The leader as cultural role model is one of the most important symbolic influencers of culture and follower behaviors. Most people remember a coach, teacher, or leader who influenced them as a role model. Members of a top-level team and employees learn by observing how leaders act, think, reward, and disapprove of ideas, policies, actions, and practices. The leader as role model follows the saying, “Action speaks louder than words.” People learn quickly whether or not their leaders actually follow the values they proclaim for the rest of the orga- nization (Ready, 2004). Sam Walton practiced what he preached: He made his presence felt in the stores, using MBWA (management by walking around). Of course he did more than just walk around; he engaged associates and customers, discovered what worked and didn’t, and used that information in developing strategy and best practices.

Ceremonies, or planned activities and events, are also strong shapers of cultures. Ceremonies are used to recognize, honor, and remember people in organizations. Such events reinforce cultural values, create an emotional bond among people and across formal boundaries, and communicate who and what is valued in organizations. High schools and colleges have meet- ings of national honor societies and graduations. Mary Kay®, among the largest direct sellers of skin-care and color cosmetics in the United States, started a ceremony of awarding pink Cadillacs for outstanding sales results. The pink Cadillac became an internationally known symbol that enshrined the memory of Mary Kay Ash and her company.

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Stories are narratives based on actual people and events that endure and are repeatedly told by followers. Stories are one of the oldest and most powerful ways of instilling and reinforc- ing cultural values in an organization. Although some stories are embellished beyond facts, it is the shared energy and enjoyment of recalling such narratives that bonds people. Every professional, amateur, and educational sports team perpetuates stories of their heroes. The famous, ongoing rivalry in the National Basketball Association between the Boston Celtics and Los Angeles Lakers is one example. Films of the 1982–1987 championship playoffs that pitted Celtics star Larry Bird against Magic Johnson of the Lakers still inspire competitive memories within and between those teams and basketball fans. Now stories of basketball legends Kobe Bryant of the Lakers, Tim Duncan of the San Antonio Spurs, and LeBron James of the Cleveland Cavaliers are added to their organizational memories and cultures.

Symbols are objects, events, or acts that represent a shared meaning among others; they are also important shapers of cultural values that, in turn, influence bonding among followers and contribute to their identification with an organization (Ornstein, 1986). They “reinforce and increase the impact of your company values” (Schleckser, 2015). Symbols do not have value right away, but they build value over time (Schleckser, 2015). Symbols can be a number of objects, events, or acts. Buildings, trophies, company picnics, even ceremonies are symbols. One com- mon example is a metal or ribbon for U.S. military service (Schleckser, 2015). Another example is the FedEx logo, where the space between the ‘e’ and ‘x’ looks like an arrow moving forward, reinforcing their goal of moving toward a connected world (“About FedEx,” n.d.).

Cultures are kept alive by methods of introducing and indoctrinating new members into an organization. Organizations select and adapt newcomers into their cultures through social- ization, a process in which individuals learn the expected values, norms, skills, and behav- iors of an organization (Van Maanen, 1976). This process begins when the person is selected. University and college fraternities, sororities, honor societies, religious institutions, sports teams, and other organizations also have their methods and ceremonies of introducing new- comers into their memberships. Zappos has a very stringent hiring process. As CEO Tony Hsieh stated, “We’ve actually said no to a lot of very talented people that we know can make an immediate impact on our top or bottom line. But because we felt they weren’t culture fits, we were willing to sacrifice the short term benefits in order to protect our culture (and there- fore our brand) for the long term” (2009). Those who are accepted into the 4-week Zappos training program are offered $2,000 (plus what they earned during the 4 weeks) to quit. Hsieh said, “We want to make sure that employees are here for more than just a paycheck. We want employees that believe in our long-term vision and want to be a part of our culture. As it turns out, on average, less than 1% of people end up taking the offer” (2009).

Related to the socialization process is the concept of cultural strength, or the extent to which followers agree on the importance of values and methods of getting work done in the orga- nization (Sorensen, 2002). Organizations benefit when members adopt and support the val- ues of their institutions. When there is consensus and congruence on organizational values, members are more likely to be motivated in attaining organizational goals. Zappos has high cultural strength. The company has a strong set of values used for selecting, rewarding, and retaining high performers. That company also has high value congruency, the fit between the organization’s and followers’ values.

Taken together, these leadership and organizational factors help define and sustain cul- tures and are important to the morale and performance of organizations. Culture, as noted earlier, is one of the most important dimensions of an organization, because it embodies

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leadership values and serves to align an organization with its external environment through specific strategies while integrating people inside the organization. This can be done through communication—the topic of our next section. The two are interrelated: Commu- nication is necessary to convey culture, but it can only take place if the culture allows for it to occur freely and openly. Leadership communication, in particular, is a primary means of influencing followers and stakeholders for goal attainment. In the next section we present guidelines for effective communication that leaders, followers, and anyone in a leadership position can use.

10.3 Leading Cross-Cultural, Internationally Diverse Workforces

In addition to developing organizational culture and communicating strategically, leaders in public and private sector organizations must also ensure that organization members from different cultures, backgrounds, races, and experiences work cohesively together to achieve organizational goals. This requires that leaders understand what makes individuals different from one another and how those differences become relevant in the workplace. Leadership

skills and experience in managing vari- ous types of people and operations are particularly in demand today (Pitts, 2007), due to changing demographics and perspectives as well as the rise of globalization. Leaders are now often called to actively promote workforce diversity, which refers to the variety of people within an employee base and can include background, education, language skills, personality, sexual ori- entation, and work roles, among other characteristics.

For organizational leaders, diversity— once implying separateness—now intentionally emphasizes inclusion. The United States has traditionally been considered a “melting pot,” in

which a multitude of cultures meld together to create one. However, one of the implications of a melting pot is the suggestion that to get ahead in America, individuals from different cultures have to lose or disguise their identities, accents, traditions, and values in order to assimilate, or integrate, into mainstream American culture (Lussier & Achua, 2016).

Although this viewpoint still has value, more contemporary thinking includes the descrip- tion of the United States as a “salad bowl”—a multicultural society in which being different is seen not as a liability but as a potential asset. People from different cultural backgrounds can be effectively assimilated into American culture and contribute their talents. Music, sports, entertainment, fashion, and other business and social domains illustrate how

Cultura Limited/Cultura Limited/Superstock Diversity can serve as a marketing advantage if a company’s workforce reflects and relates to the diversity of its customers.

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different professionals’ cultural styles and ideas add value, creativity, and richness to their organizations and society. Leaders’ responsibility in this new reality is to be inclusive. As Reeves wrote:

Inclusiveness is about an inviting environment for talent from all back- grounds as well as the equal opportunity for each person to succeed in a way that works for them. Inclusiveness makes room, not for different people to take a shot at the same definition of success, but for different people to actu- ally create different definitions of success. (Fujimoto & Charmine, 2010, p. 20)

With this in mind, we will argue that inclusiveness is a leader’s imperative—and can result in success stories for the self, followers, and organizations. We begin by exploring the factors affecting diversity today, before discussing the advantages of inclusiveness, leaders’ roles in managing workforce diversity, and the subtleties of multiculturalism in the workplace.

Changing Workforce Demographics and Perspectives Why should leaders and followers include people who are different than they are? Two major reasons: First, the U.S. population is changing, which affects workforce demograph- ics. Second, globalization, or the increasing integration of regional and national economies, is changing the way the world does business. “Business as usual” is not a long-term option anymore.

The Bureau of Labor Statistics describes the U.S. workforce—generally those between the ages of 25 to 64—as “in the midst of a sweeping demographic transformation.” The nonprofit projects that the white portion of the working-age population will decline from 82% to 63% from 1980 to 2020, while the ethnic-minority portion of the workforce will double to almost 40%. Specifically, the Hispanic/Latino working-age population is projected to almost triple to 17%. White men born in the United States are now less than half of the workforce (The National Center for Public Policy and Higher Education, 2008; Weiss, 2009).

The working-age population is also getting older. The number of workers 55 years and older will account for 25% of the U.S. workforce in 2020 and is expected to increase by 80% to over 33 million between 2004 and 2020 (“Administration on Aging,” 2010; Hayutin, Beals, & Borges, 2013). Finally, more women are entering the workplace. Women with children under 6 years of age are the most rapidly increasing segment of the workforce. By 2020, 28% of women age 65 to 74 are projected to be working, an increase from 15% in 2000. Also 35% of men age 65 to 74 will still be employed, an increase from 25% in 2000 (Hayutin, Beals, & Borges, 2013). Leaders must recognize these various demographic shifts and ensure that their approaches and policies do not marginalize the average worker.

The second factor, globalization, can be seen as the metaphorical shrinking of the world and erasure of borders, in large part due to advances in technology and travel. The result is a mix- ing of cultures, business practices, and people in workforces. Many people are now generally more conscious of the world as a whole, and foods and products from various countries can be found in your local store. Companies are now able to conduct business on a global scale, employing people all over the world through outsourcing and recruiting talent. Professionals can fly from country to country for meetings or simply hold video conference calls. The U.S. workforce is affected at all levels, as people of different educational backgrounds, generations,

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Traditional Inclusive

Diversity

Race

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Section 10.3 Leading Cross-Cultural, Internationally Diverse Workforces

and cultures interact. For example, an increasing number of CEOs are from countries other than the one where their company is headquartered (Justin, 2004). As one researcher said, “More than ever, people have to interact and communicate with others who come from diverse backgrounds” (”Encyclopedia of Management”, n.d.).

Perspectives on diversity are also changing, and leaders must recognize this to remain current and relevant. Based on reputable surveys, some of the top companies that demonstrate a commitment to contemporary diversity include Novartis Pharmaceuticals Corporation, for its diversity-management progress; MasterCard Worldwide for inclusive culture; Sodexo for mentoring; EY for diversity councils; Merck for employee resource groups; Wyndham Worldwide for supplier diversity; and Accenture for global diversity (Diversity Inc., 2014). Black Enterprise ranked the following companies among 40 selected as having the best diversity program: Aflac Inc., Allstate Insurance Co., American Express Co., Aramark, AT&T Inc., Bank of America Corp., Coca Cola®, Comcast Corp., and Consolidated Edison Inc. (Mays, 2015).

The traditional diversity model in Figure 10.3 shows how the company defined diversity in terms of race, gender, age, disability, lifestyle, and pay level before its cultural transforma- tion. The inclusive model reflects the actual changes in contemporary workforces that view diversity more broadly to encompass differences in personality, nationality, position, military experience, work style, language, parental background and influences, income, competency, and function.

Figure 10.3: Traditional versus contemporary diversity perspectives

Traditional Inclusive

Diversity

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Source: From Oshiotse, A., & O’Leary, R. (2007). Corning creates an inclusive culture to drive technology innovation and performance. Global Business and Organizational Excellence, 26(3) 12. Reprinted by permission.

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Companies that value and recognize diversity as a competitive advantage encourage indi- viduals to be open to and respectful of others’ differences as a starting point for innovation and performance; this philosophy is a key part of a diverse organizational culture. A broader perspective of inclusiveness opens individuals to both social and professional relationships, eliminates any feelings of marginalization, and engages the full talents and capabilities of followers—just some of the advantages of diversity.

The Value of Diversity Diversity is not simply a requirement of the times; it also comes with some distinct advan- tages. According to researchers, diversity (1) creates a socially responsible culture and cli- mate and enhances an organization’s reputation; (2) helps recruit and retain talented people; (3) can enhance performance; (4) can provide creative marketing advantages and improve problem-solving and decision-making capability; and (5) can produce cost savings.

Creating a Socially Responsible Culture and Enhancing Reputation Leaders who demonstrate that they value diversity and inclusion send a message about the culture, values, and reputation of the organization; namely, that fairness counts, the organi- zation respects every individual regardless of differences, and the organization goes beyond the letter of the law in valuing its workforce. Robertson and Park’s (2006) study of 100 firms showed a positive relationship between diversity reputation and book-to-market equity. They concluded that “Our analyses suggest that economic benefits generated from diversity reputation may primarily derive from capital rather than product markets. Further, firm per- formance declines with increases in the representation of racial minorities in leadership up to a point, beyond which further increases in diversity are associated with increases in per- formance” (Roberson & Park, p. 3). Although diversity does not solve all problems for firms or promise effectiveness, we can say that diversity can count in many ways for firms, including performance. Eisenhart (2014) states that diversity, especially leadership diversity, creates a competitive advantage. Eisenhart (2014) cites several studies that have shown that having women on corporate boards or executive committees results in a higher return on equity, sales, invested capital, and return on equity.

Helping Recruit and Retain Talented People Talented people are attracted to companies that have the best reputations for valuing their employees. Fortune magazine publishes an annual list of the 100 best companies to work for. Human resources recruiters also focus on diversity when recruiting. There is some evidence that minority job seekers tend to look for companies with a proven diversity record. Many companies have been actively seeing out diversity. An example is AT&T, whose goal is to “have the best talent at the table from every background,” according to the executive director of Global AT&T College Recruiting, Rick Gomez (Salemi, 2014). Other companies, such as Accen- ture and Bank of America are also seeking out diversity for recruitment through partnerships with colleges (Salemi, 2014).

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Enhancing Performance Based on the research of MIT Professor Thomas Kochan, a firm’s performance can be enhanced when the firm integrates diversity with its strategy, cultivates an organizational culture that supports inclusiveness, and provides needed training (Dubrin, 2010; Hansen, 2003); and, as previously stated, Eisenhart (2014) summarized several studies that show that having women on corporate boards or executive committees results in a higher return on equity, sales, invested capital, and return on equity.

Company employees not only work together better but also are better equipped to tap into one another’s strengths. Training of the entire workforce is needed to introduce and explain the advantages of inclusive policies and programs. For many older and even younger employees, learning to work with people who are different from them can be challenging. Organization-wide diversity and inclusion training programs also send the message that the leaders and culture support these policies and programs.

Providing a Creative Marketing Advantage Diversity can serve as a marketing advantage if a company’s workforce reflects and relates to the diversity of its customers. Multicultural workforces and decision makers can understand the needs, tastes, and buying habits of a matching multicultural customer base (Yu, 2002). Lauri (2012) believes that there are many benefits to diversity including “improved market- ing and customer service through better understanding and accommodation of diverse cus- tomer groups and their needs,” as well as “improved employee creativity,” among others. For instance, Maria Elena Lagomasino, an asset manager with Cuban roots and a long career in private banking, has designed her firm’s website (http://www.genspring.com) to translate flawlessly into Spanish, which is bound to appeal to a Hispanic clientele. Increased market share, productivity, and innovation are a result of having an inclusive, globally diverse cultural workforce.

Producing Cost Savings Organizations that value employees and treat them fairly and inclusively can experience lower levels of job dissatisfaction, absenteeism, and turnover, especially among minority members who have problems fitting into exclusive, closed cultures.

Absenteeism and turnover often result in a less productive workforce and divert resources by demanding a continual retraining of employees. Also, many large, notable firms have paid costly settlements and judgments for discrimination against women, minorities, age groups, and people with physical disabilities in policies, practices, and behaviors. These firms include FedEx, Mitsubishi, EMC Corporation, eBayTM, Bayer, and Abercrombie and Fitch, to name only a few. Despite the benefits listed here, an inclusive diversity program is only beneficial if it is effectively managed. Increased conflict among members, especially in teams, can occur when people are not collaboratively led and integrated (Klein & Harrison, 2007). Even those leaders who have put a program in place to support diversity can inadvertently allow biases to uncon- sciously shape behavior. Therefore, it is important not only to have a program in place, but it must be managed and grown, and employees need to be informed (Groysberg & Connolly, 2013).

http://www.genspring.com

http://www.genspring.com/

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Section 10.4 Inclusiveness: Leaders’ Moral and Legal Imperative

10.4 Inclusiveness: Leaders’ Moral and Legal Imperative As we have seen, there are some compelling reasons for inclusiveness: It acknowledges the reality of our world, it can give an organization a creative and financial advantage, and it is a moral obligation for leaders interested in fairness and social responsibility. Inclusive- ness is also a legal issue. The law forbids discrimination, or actions, treatment, or consid- eration toward others based on class or category rather than individual merit. Numerous executive orders and regulatory guidelines require that all people be given an equal opportu- nity to be employed, regardless of age, race, gender, disability, sexual orientation, and other classifications.

In a perfect world, societies and organizations would be inclusive and diverse. However, that is not the case, and the fact that such laws are required is proof that discrimination and inequality persist, even outside the United States. Discrimination is often a result of ethno- centrism, prejudice, and stereotypes. Ethnocentrism is the belief that one’s group or culture is inherently superior to other groups and cultures. This belief leads to close-mindedness and homogeneous cultures with the same values, beliefs, norms, expected behaviors, and other characteristics. Such mind-sets and cultures exclude others who are different. Prejudice is a preconceived opinion or adverse feeling that is not based on reason or experience.

Prejudices often lead to stereotypes, which are oversimplified, irrational generalizations about groups or classes of people that are often negative and usually untrue. When follow- ers and leaders act and communicate from their prejudices and stereotypes about particular individuals or groups, discrimination occurs.

Scholars and practitioners agree that overcoming negative stereotyping and discrimination in the workplace must start at the top with leaders’ incorporating inclusive policies in the mission, values, strategy, and culture of the organization (Hansen, 2003). Presidents and CEOs must champion and model the cause and value of inclusiveness in the organization ( Meisinger, 2008). They too must be mindful of subtle prejudicial stereotyping and its destructive effects in their own thinking and perception as well as that of other organizational members. Like most people, leaders are not uniformly inclusive or culturally aware, and arriving at such an awareness can take time.

Stages of Intercultural Awareness: Toward Inclusive Leadership Leaders differ in their awareness, cultural intelligence, and sensitivity to diversity. Milton Bennett’s framework stages of intercultural awareness (2006) shows six stages on a con- tinuum of individual awareness and actions toward cultural diversity. Figure 10.4 illustrates one version of that framework. The continuum moves from the first stage, where leaders— and followers—are resistant and defensive about diversity, to the last stage, where they are aware and fully accepting of people with differences. At the first stage, individuals have a low awareness of cultural differences and feel threatened by and isolated from minorities and international people who are different from them. An “us versus them” ethnocentric attitude predominates and culturally different people are seen as a problem to be avoided. Leaders offer little to no help in developing a culture or programs to integrate people with differences into the organization.

256

Et hn

or el

at iv

High Awareness

Level

Low Awareness

Level

Integration Adopts multicultural worldview. Able to deal with cultural differences. Adapts inclusive thinking and behaviors.

Adaptation Accepts cultural differences from others’ perspectice Able to change behavior to communicate with others.

Acceptance Develops curiosity and respect, not agreement, toward cultural differences. Accepts one’s culture as one among many.

Minimizing Differences Perceives own culture as universal. Trivializes and/or romaticizes cultural differences. Emphaisizes similarities among everyone.

Resistance Avoids and resists other cultural differences. Feels threatenend and isolates self with ‘us’ vs. ‘them’ critical attitude.

Et hn

oc en

tri c

Section 10.4 Inclusiveness: Leaders’ Moral and Legal Imperative

At the second stage, people start to minimize differences and begin to see similarities in oth- ers. Their own culture is still viewed as the most important, and culturally different people are viewed in a romantic, trivialized light. Leaders still do not take action to actively integrate and welcome members who are culturally different.

At the third stage, individuals accept differences in others and believe that their culture is not unique or different. They show curiosity and respect toward but not agreement with all cultural differences. Leaders at this stage recognize that people from minorities, people of different races and genders, and people with disabilities have a place in and role to play in organizations. Talented minority employees may be sought out. Diversity training programs begin to evolve (Daft, 2011).

At the fourth stage, individuals change from an ethnocentric to an ethnorelative mind-set and way of thinking. They understand that their culture and worldview is not the only one, or even the best one, and they feel comfortable relating to different people from their perspec- tives and ways of thinking. Leaders commit to inclusiveness programs and actively recruit minorities, building programs to help people adapt to their working environment.

Figure 10.4: Leadership stages of intercultural and diversity awareness

Et hn

or el

at iv

High Awareness

Level

Low Awareness

Level

Integration Adopts multicultural worldview. Able to deal with cultural differences. Adapts inclusive thinking and behaviors.

Adaptation Accepts cultural differences from others’ perspectice Able to change behavior to communicate with others.

Acceptance Develops curiosity and respect, not agreement, toward cultural differences. Accepts one’s culture as one among many.

Minimizing Differences Perceives own culture as universal. Trivializes and/or romaticizes cultural differences. Emphaisizes similarities among everyone.

Resistance Avoids and resists other cultural differences. Feels threatenend and isolates self with ‘us’ vs. ‘them’ critical attitude.

Et hn

oc en

tri c

Source: Based on Bennett, M. (1986). A developmental approach to training for intercultural sensitivity. International Journal of Intercultural Relations, 10(2), 196.

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At the fifth stage, the contemporary inclusive leader emerges. Women, people from ethnic minorities, and people from different cultures take leadership roles, becoming leaders and board members. The fifth stage is a worthy goal toward which many organizations are striv- ing but at which they have not yet arrived.

Leadership Initiatives for Achieving Inclusiveness Inclusiveness begins with the leader, who leads by example by treating others inclusively and cultivating a culture supportive of diversity. Top-level leaders must be committed to inclusion policies and practices, embedding them in the mission, values, and strategies of the organiza- tion. Leaders must, for example, actually use inclusive terms and language in mission, values, and policy statements. Otherwise, such initiatives become superficial and ineffective (Camp- bell, 2003); that is, employees notice that leaders who do not “walk the talk” and say what they mean are not serious about such programs as inclusiveness. Other necessary ingredients to achieving full organizational inclusiveness include implanting a diversity-supportive cul- ture and diversity awareness training for employees and leadership education (“Diversity or Diversion?” 2002).

Concrete initiatives for achieving inclusiveness include the following:

1. Holding managers accountable (Dubrin, 2010). Inclusiveness policies that are not specific and cannot be rewarded, or have rewards held back, do not get imple- mented. Walmart holds managers accountable for meeting specific, measurable diversity objectives and goals. Their bonuses are reduced if such goals are not met. The company recently hired a global chief diversity officer, who will join the execu- tive team.

2. Including diversity among organizational leaders. Mary Barra at General Motors, whom we discussed in a previous chapter, continues to take steps to change the culture of that company (Most Powerful Women in Business, 2014). She changed the 10-page dress code at GM to simply state “dress appropri- ately,” shocking many of the employees who have been at the company for years (Colvin, 2014).

3. Measuring diversity in department and business-unit goals and objectives. Walmart, again, is among the companies that includes measurable diversity targets in its goals and objectives for managers.

4. Creating minority recruitment, retention, and mentoring programs. DiversityInc is an organization that annually recognizes firms in a “Top 50 Companies for Diversity” (DiversityInc, 2011). The firms recognized must have one or more of the program elements of minority recruitment, retention, and mentoring programs, as well as some of the other inclusion factors we have discussed. Some of those companies include AT&T, Verizon, Allstate, and PricewaterhouseCoopers. Kraft Foods, one of the top 10 companies in this list, hosts 10 employee resource groups that focus primar- ily on recruitment, mentoring, and marketing. Based on their most recent figures, the company has 60% of its employees, and 70% of managers, participating in the mentoring program.

5. Implementing organization-wide diversity-awareness training programs. Leaders must introduce and integrate inclusiveness training and initiatives throughout the organization in order for cross-cultural integration to succeed. All 50 companies on the

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DiversityInc list have diversity aware- ness training and mentoring programs.

Inclusiveness, however, is not neces- sarily a clear-cut subject. A leader must make strategic decisions based on fairness, social responsibility, legal obligations, and practicality. Dubrin (2010) noted that a leader who chooses to hire five developmentally disabled unemployed people “would be acting in a socially responsible manner because hiring these people would transfer responsibility for their economic welfare from the state or private charity to the employer.” How- ever, he also noted that “some would argue that unless hiring these peo- ple is cost effective, the company is neglecting its responsibility to share- holders.” (p. 450)

Cultura Limited/Cultura Limited/Superstock Because workforces are becoming global, under- standing teams and individuals with different national values requires multicultural leadership competencies.

Take the Lead Leading Diverse Workforces You are the leader of an IT department in a global organization. With offices on every continent reporting to you, you are challenged to get work accomplished synchronously regardless of a reporting group’s geographic location.

In addition to time-zone challenges, you also have to bridge the many cultural gaps present in your internationally diverse workforce. Although you believe you have a good relationship with your leadership team in place in each location, you’ve just been presented with a new project that will task the organization like never before. The board of directors and the organization as a whole are looking at you and your department to lead them with technology support to increase efficiencies into the future.

Consider your role as a leader of this cross-cultural, internationally diverse workforce in answering the following:

1. How will you ensure that your message is being delivered effectively across the entire department?

2. What will you do to offset any cultural insensitivities that may arise? 3. How can you leverage the diverse workforce you lead in this new initiative? 4. How will you avoid a “one size fits all” approach to leading?

See page the appendix for possible answers.

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Section 10.5 Cross-Cultural Value Differences and Diversity

10.5 Cross-Cultural Value Differences and Diversity It has already been suggested that understanding different cultures is an important aspect of organizational diversity and inclusiveness. Workforces are becoming more global in mem- bership and assignments, so leaders must be able to understand how culture affects the fol- lowers’ motivations and habits as well as what multicultural leadership competencies are required to influence and motivate these followers.

National culture is based on values and norms (social rules and guidelines) that influence and guide people to control their behavior. Values influence our ethics (what we think is right and wrong), our decisions, and the behaviors we consider appropriate. Values also influence rela- tionships between leaders and followers, because relationships are based on shared values. Values also influence and define the norms that stipulate acceptable behaviors for achieving organizational goals, and they affect the way individuals interact as leaders and followers.

Researchers have spent considerable time identifying the various value orientations of differ- ent cultures, to understand how to best influence and motivate multicultural followers.

We will examine the dimensions elucidated by Geert Hofstede’s work and the GLOBE study before singling out some key competencies for leading a multicultural group. Leaders—as well as followers—can use these dimensions as a starting point for understanding others. An individual who struggles when working alone may be from a collectivist society in which group and team work is more motivating. Another individual who acts overly aggressive and assertive when problem solving or communicating may simply be acting out typical behavior in his or her culture. As you read, consider how your national or cultural values influence your attitudes and behaviors. At the same time, however, these studies are generalizations rather than rules. Not every individual follows his or her described cultural values. Fiske (2002) noted that “value trumping” must also be kept in mind—that is, individuals in specific con- texts may use values that differ from those in their country cultures.

Hofstede’s Five Cultural Dimensions Geert Hofstede’s (1980, 2001) pioneering study on national cultural values of over 100,000 IBM employees in over 50 countries is useful for understanding individual cultural differences across countries. Each of Hofstede’s five cultural dimensions defines, in part, an individual’s identity through his or her national country values and norms. The dimensions should be viewed on a continuum: individualism and collectivism, high and low uncertainty avoidance, high and low power distance, long-term and short-term time orientation, and masculinity and femininity.

Individualism and Collectivism This dimension refers to the way members of a society view themselves and their values. A person from a society that is high in individualism relies on independence of the self, not a group or collective, as his or her primary reference. These members are motivated by indi- vidual incentives. Members from a collectivist society, on the other hand, see themselves as

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Section 10.5 Cross-Cultural Value Differences and Diversity

part of a group, extended family, ethnic group, or organization. Their primary values are ori- ented toward a group perspective and they are motivated by group incentives. Canada, the United States, and Great Britain are individualistic cultures; Mexico, Greece and Japan are collectivistic cultures.

Japan’s national culture may be moving from collectivism to individualism because of a declin- ing economy and the need for self-reliance. Many of Japan’s corporate practices have changed. Lifetime employment has given way to corporate layoffs and job insecurity (Lussier & Achua, 2007; Pothukuchi, Damanpour, & Choi, 2002). It is also interesting to note that Americans are described as individualistic with values based on independence, “rugged individualism,” and self-reliance, but they rank among the top charitable givers in the world. As stated earlier, these classifications depend on the specific context and particular characteristics and experi- ences of individuals and groups.

High and Low Uncertainty Avoidance People in cultures with high uncertainty avoidance do not tolerate risk easily, tend to avoid the unknown, and are content with predictability and certainty. Generally, managers in Japan, Argentina, Italy, and Israel prefer predictable, structured work situations.

People from cultures with low uncertainty avoidance are comfortable with and tolerate unpredictability, ambiguity, and the unknown. Managers from the United States, Australia, and Canada accept and even seek risk and uncertainty at work and in their personal lives. These managers also tend to be more risk oriented and less interested in controlling work products and outcomes.

High and Low Power Distance This dimension measures how a person views authority, status, and power, which can affect communication and decision making between leaders and followers. A person with an orien- tation toward high power distance generally sees the boss, supervisor, or person in charge as having more authority and usually shows more deference. Leaders, managers, and followers in cultures with high power distance (Mexico, Japan, Spain, and France) do not treat each other as equals. Hierarchy and top-down authority count. In cultures with low power dis- tance (Germany, the United States, and Ireland), the opposite is true: Leaders and managers are treated as equals by followers and employees. Participative decision making in and by groups is a common practice. Followers with a low power distance generally take directions from leaders when they think or have evidence that the leader is right in his or her decisions and directions.

Long-Term and Short-Term Time Orientation People from cultures that have a long-term or future time orientation value investments and savings and persistence in goal achievement. They are less motivated by short-term rewards and immediate results. They can delay gratification and are satisfied when their investments promise good returns. Asian countries have generally adopted this orientation. Their high rates of per capita savings have reflected such a view. A short-term time orientation, on the other hand, values personal happiness and stability in the present. Quick gratification is

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important for those with this orientation. For example, to offer a long-term reward for a task to be completed in a day, week, or shorter time frame would not be motivating for a follower from a culture that has a short-term time orientation. The United States and European coun- tries have historically had this time orientation, as is reflected in their habits of saving less and spending more.

Masculinity and Femininity This dimension, which in today’s terms is somewhat stereotypical, shows an orientation that pursues material assets versus personal social connections. Masculinity describes the stereotypical cultural values that emphasize a quest for money and material objects. Values based on assertiveness and competitiveness reflect this orientation. Japan and Italy are high on masculinity. Feminin- ity, another stereotypical dimension, is at the other end of this continuum and is based on values that emphasize developing and nurturing personal relationships and an enriching quality of life. Sweden and Denmark are high on this dimension.

GLOBE Study The Global Leadership and Organizational Behavior Effectiveness, or GLOBE, study ( Dorfman, Hanges, & Brodbeck, 2004; House et al., 2004; “Leader Effectiveness and Culture,” 2014) frames cultural values somewhat differently. This is an important continuing study because of its breadth and depth relating to global cultures on leadership. The GLOBE study researchers (House et al., 2004) surveyed 17,000 people in 62 societies and came up with six dimensions— in contrast to Hofstede’s five—which they referred to as “culturally endorsed leadership the- ory dimensions,” or CLT dimensions.

3.5.1 Charismatic/value-based leadership reflects the ability to inspire, motivate, and expect high-performance results from others on strong core beliefs and values.

3.5.2 Team-oriented leadership emphasizes effective team building and execution of a common goal among team members.

3.5.3 Participative leadership reflects managers’ involving others in making and imple- menting decisions.

3.5.4 Humane-oriented leadership reflects supportive and considerate leadership, including compassion and generosity.

3.5.5 Autonomous leadership refers to independent and individualistic leadership. 3.5.6 Self-protective leadership ensures the safety and security of the individual. It is self-

centered, face saving, status oriented, and procedural in its approach.

XiXinXing/Thinkstock Leaders, managers, and followers in high power- distance cultures like Japan do not treat each other as equals. People with higher position power expect to be shown deference and respect.

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The GLOBE project team then identified leadership behavioral profiles for 10 regional clus- ters of countries using the six dimensions (see Table 10.2). Each cluster possesses a high, moderate, or low perceived value for each of the six leadership dimensions.

People from Eastern European countries generally view an effective leader as one who is highly autonomous (independent, individualistic, and unique) and self-protective (somewhat self- serving), and moderately charismatic/value based (visionary, inspirational, trustworthy, deci- sive, and performance driven), team oriented (collaborative, diplomatic, and administratively competent), and humane oriented (considerate and supportive of others’ needs). Leaders are valued lower on being participative (involving others in making and enacting decisions).

People from Latin American countries, by contrast, value highly charismatic/value-based leadership that is also highly team-oriented and self-protective and moderately participative and humane oriented. Independence and individualism are of lower value in these countries.

Latin European countries desire leadership behaviors that are charismatic/value based, par- ticipative, status oriented and procedural, and collaborative with teams. Leaders who are independent and consideration oriented are valued less.

Table 10.2: Regional culture clusters: Desired leadership behaviors

Charismatic/ value based

Team oriented Participative

Humane oriented Autonomous

Self- protective

Eastern Europe

Moderate Moderate Lower Moderate High High

Latin America

High High Moderate Moderate Lower High

Latin Europe

High Moderate Moderate Lower Lower Moderate

Confucian Asia

Moderate High Lower Moderate Moderate High

Nordic Europe

High Moderate High Lower Moderate Lower

Anglo High Moderate High High Moderate Lower

Sub-Saharan Africa

Moderate Moderate Moderate High Lower Moderate

Southern Asia

Moderate Moderate Lower Moderate Moderate High

Germanic Europe

Moderate Moderate Moderate Moderate High Lower

Middle East

Lower Lower Lower Moderate Moderate High

Source: Adapted from House, R., Hanges, R., Javidan, P., Dorfman, M., Gupta, T. W., & Gupta, V. (Eds.). (2004). Culture, leadership, and organizations: The GLOBE study of 62 societies. Thousand Oaks, CA: Sage; and Northouse, P. (2010). Leadership: Theory and practice (5th ed.). Thousand Oaks, CA: Sage.

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Section 10.5 Cross-Cultural Value Differences and Diversity

The Confucian Asian country cluster prefers leaders who are self-protective and status oriented, while also being team and humane oriented. Leadership behaviors that are char- ismatic/value based, considerate of others, and independent are less valued. Participative leadership is perceived as less important in these countries’ cultures.

Nordic European cultures see the ideal leader as charismatic/values based (inspirational and visionary) and participative, while being moderately team oriented and independent. Com- passionate, status and procedurally oriented leadership is valued less.

Anglo countries (including the United States) value leadership that is charismatic/values based, highly participative, and considerate of others. People from these cultures report that team oriented and autonomous leadership is moderately important. Autocratic and self- protective leadership behaviors are least valued.

Sub-Saharan African respondents reported that desired leadership is first and foremost car- ing, considerate, compassionate, and generous, followed by charismatic/values based, team oriented, participative, and at the same time status and procedurally oriented. The least desired leadership behavior from this sample is self-protective—that is, self-centered, face saving, status oriented, and procedural.

Southern Asian countries report similar results to the Confucian Asian cluster with regard to what is desired in an ideal leadership profile: self-protective, humane, team oriented, and charismatic/values based behavior. These countries do value charismatic/values based lead- ership, but not as much as the other dimensions. Although these countries value less autono- mous leadership, they believe this style is more effective than shared, collaborative leadership.

Germanic European countries desire leadership that is highly independent while also being charismatic/value based, participatory team oriented, and considerate of others. They value less leaders who are status conscious, procedurally oriented, and concerned about saving face.

The Middle Eastern country cluster views the ideal leader differently than the other regions. In the Middle East, the desired leadership profile is self-protective—that is, an emphasis is placed on status and procedure. Independent and humane leadership are also valued, but less than the self-protective approach. Less important are charismatic/values based, participa- tory, and team-oriented leadership behaviors. It is interesting to note these reported results include the countries of Turkey, Kuwait, Morocco, and Qatar. After the populist uprisings and overthrow of the Egyptian and Tunisian presidents, as well as revolts against the leadership in Yemen, Bahrain, Libya, Syria, and Jordan, the next GLOBE survey may alter the results for this country cluster, especially if it expands the sample to those countries that overthrew their leadership.

The GLOBE researchers also produced a list of 22 universally endorsed leadership attributes: trustworthy, foresight, intelligent, positive, confidence builder, effective bargainer, honest, just, plans ahead, dynamic, motivational, decisive, coordinative, excellence oriented, win- win problem solver, communicative, team builder, dependable, encouraging, motive arouser, informed, and administratively skilled. The list suggests that these leadership characteristics work well across different cultures and societal values. A portrait of an exceptional leader from this same study is one who has integrity, is charismatic and value based, and is compe- tent on interpersonal skills (Dorfman et al., 2004; Northouse, 2010). The same study listed

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the following leadership characteristics as universally undesirable: egocentric, dictatorial, asocial, irritable, ruthless, loner, and noncooperative.

We have discussed most of these leadership traits, personality characteristics, and styles already. It may be helpful to refer back to the previous two chapters to get a sense of how your own cultural values support these different styles. How do your leadership style and characteristics, based on the assessments you have taken so far, compare to the characteris- tics desired most and least in this study?

Cultural Intelligence and Cultural Sensitivity The last set of important multicultural leadership characteristics are cultural intelligence and cultural sensitivity. Cultural intelligence (CQ) is a person’s ability to interpret (reason and observe) another’s unfamiliar and ambiguous gestures and situations and to respond appro- priately (Earley & Mosakowski, 2004). Liao (2015) describes cultural intelligence as having three main aspects: cultural knowledge, cross-cultural skills, and cultural metacognition. Cultural knowledge involves content and process in relation to other cultures. Cross-cultural skills involve relational, tolerance of uncertainty, adaptability, empathy, and perceptual acu- ity. Cultural metacognition involves control over thinking and learning through observation, analysis, and reflection.

Similar to emotional intelligence, CQ involves being able to see differences in nonverbal and verbal language, physical behaviors, attitudes, and ways of doing things that are particular to certain cultures. For example, a Middle Easterner is a guest at a business dinner in the United States. The discussion turns to politics, with very divisive opinions being expressed. The guest picks up cues that one of the executives is very uncomfortable with the topic. The guest is also sensitive about some of the issues. One of the executives turns to the guest and asks for her “honest” opinion. She very calmly and appropriately suggests that there are dif- ferent views on this complex subject and that she would feel more comfortable passing on the conversational offer this time. A sigh of relief is felt and the discussion changes. Cultural intel- ligence enables a person to pick up verbal and nonverbal cues when interpreting situations and then quickly adapt, as did the guest in the example.

Cultural intelligence has three facets or components: First, the cognitive component (head) is the ability to observe, listen, and pick up factual clues about relevant behaviors, such as sharp differences of opinion as in the example just given, deadlines, and the ways people greet and address each other. The physical component (body) relates to actions, body language, speech, gestures, habits, and expressions. In some Middle Eastern Islamic cultures, a male guest does not touch women, even to shake hands. In a French social situation, on the other hand, you may be kissed on the cheek by a host when entering or leaving that person’s house. In a Japanese setting, you may slightly bow to greet a new executive or professional, but not shake hands.

The third component of cultural intelligence is the emotional/motivational (heart) compo- nent, which involves having self-confidence and courage to keep trying and not give up when you make cultural mistakes. Adapting to new settings is important and can be trying. Gaining cultural intelligence requires time but also preparation—reading and understanding differ- ent cultural habits and values, attending different cultural events, and getting to know people from different cultures. Having an open mind and heart also helps with the adaptation process.

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Cultural sensitivity is another important multicultural leadership characteristic involving the ability to be patient, adaptable, flexible, and willing to listen and learn (Dubrin, 2010). Both cultural sensitivity and intelligence require gaining an under- standing of different country cultural values (as discussed earlier). See Assessment 10.1, Cross-Cultural Skills and Attitudes.

When a person is thrown into an inter- national assignment to either lead or work with others on a project, with all the time pressures and distrac- tions that accompany work deadlines, not being prepared to work with team members from one or more different cultures can be challenging. Studies on expatriate assign- ment failure rates indicate that a large number do not succeed as planned. For example, Haile, Jones, and Emmanuel (2010) concluded:

There are many issues that lead to failure in international assignments. Some of the reasons for international assignments ending in failure include the ongoing lack of training, family problems, culture shock, relieving a difficult employee, stressing on technical qualifications and lack of cross cultural training. Many expatriates are also reluctant to take long-term assignments. Concerns over spousal employment and disruptions to children’s schooling, political insecu- rity and individual danger have intensified. Managers of multinational corpo- rations (MNCs) must not only train the expatriates, but also their families in native languages, social behaviors, and cultural norms to prevent culture shock and promote a smooth transition to the new country. (2010, p. 10)

Flirt/Flirt/Superstock Cultural intelligence is a person’s ability to interpret another’s culturally unfamiliar and ambiguous ges- tures and respond appropriately.

Assessment 10.1: Cross-Cultural Skills and Attitudes

Instructions Listed here are various skills and attitudes that various employers and cross-cultural experts think are important for relating effectively to coworkers in a culturally diverse environment. Indicate whether or not each statement applies to you.

Applies to Me Now

Not There Yet

1. I have spent some time in another country. 2. At least one of my friends is deaf or blind or uses

a wheelchair.

(continued)

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Section 10.5 Cross-Cultural Value Differences and Diversity

Cultural sensitivity as a competency involves taking a deep breath and not seeing the world and others from only your point of view and values or assuming that you and your world- view are superior to theirs (ethnocentricity). Even though globalization and electronic news sources covering the same or similar stories are creating common understanding among peo- ples, cultural value differences still persist.

Developing a tolerance for cultural differences requires a learned sensitivity. Your culture, language, ways of communicating, work-product expectations, and deadlines are not the only, or sometimes the most important, ones when working on a global team. Although English is still the common language for doing business globally, it is necessary for multicultural leaders

Assessment 10.1: Cross-Cultural Skills and Attitudes (continued)

3. Currency from other countries is as real as currency from my own country.

4. I can read in a language other than my own. 5. I can speak in a language other than my own. 6. I can write in a language other than my own. 7. I can understand people speaking in a language

other than my own. 8. I use my second language regularly. 9. My friends include people of races different from

my own. 10. My friends include people of different ages. 11. I feel (or would feel) comfortable having a friend

with a sexual orientation different from mine. 12. My attitude is that although another culture

may be very different from mine, that culture is equally good.

13. I would be willing to (or already do) hang art from different countries in my home.

14. I would accept (or have already accepted) a work assignment of more than several months in another country.

15. I have a passport.

Answering “Applies to Me Now” to 10 or more of the items indicates that you are likely to succeed in an internationally and culturally diverse work environment.

Answering “Not There Yet” to 10 or more items indicates that you need to develop more awareness and skills to adapt in different cultural settings. Experience in cross-cultural environments and with people not like yourself is also important. Source: Dubrin, A. (2010). Leadership. Mason, OH: South-Western, Cengage Learning. Copyright 2010. Reproduced by permission.

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Summary & Resources

and followers to develop sensitivity toward language nuances and differences, work habits, and work roles. For example, nonnative English-speaking professionals may need more time to fully understand subtle meanings. Some cultures do not reward employees for working on weekends and holidays. Finally, in some countries, women may not have the same privi- leges or status as in most Western countries: An American female manager or supervisor on assignment might find that a local team of male members has difficulty accepting her author- ity, and might have to react with tolerance and sensitivity (Dubrin, 2010).

Robert Lewis offered an important question that leaders can ask when confronted with a situation where cultures may collide: “My job requires that I manage your performance. Your job is to meet or exceed performance standards. How can I help you do that?” (Lewis, 2000, p. 24). The question reflects flexibility and sensitivity while remaining aligned to one’s profes- sional identify and organizational priorities.

Summary & Resources

Chapter Summary This chapter defined culture as the shared meaning of values, beliefs, and assumptions about how things are done and what behaviors are acceptable (Connors & Smith, 2000; Schein, 1993, 2010), and it argued that culture is the most important internal organizational dimension. When culture is effective, the organization stands to be effective.

Schneider, Goldstein, and Smith (1995) argued that “the people make the place.” People, including leaders, are responsible for helping define and align the strategy, structure, pro- cesses, and culture of an organization in order to effectively respond to the environment. Founders first launch cultures based on their values, but leaders must later identify values and cultures that effectively connect their organizations to changing environments, markets, and customers through specific strategies, policies, and procedures—which are shaped by the organization’s culture. It is helpful, for both leader and follower efficacy and effective- ness, to be cognizant of the differences between high-performance and low-performance cultures—and leadership—as well as the differences between achievement, bureaucratic, clan, and adaptive cultures.

The people of an organization should reflect the diversity of the markets it serves. Diver- sity is an essential part of organizational cultures in this century. Becoming an effective leader involves gaining an awareness of your attitudes and differences and the ability to work with people different from yourself in the workplace. Leaders who cannot understand cultural differences in people cannot lead or manage them. Traditional differences in the workforce—that is, race, gender (socially constructed attributes for men and women), sex (biological and physiological characteristics of men and women), age, and disability—are now compounded by other factors: nationality, language, personality, work style, genera- tion, competency, and pay level, to name a few. Leaders’ visions, missions, values, employ- ment tactics, and training programs must include diversity in order to secure a competitive advantage.

As an emerging or experienced leader, concepts in this chapter are designed to help you “read” and understand before leading organizational cultures in which you already or will work both locally and internationally.

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Summary & Resources

Web Resources

Managing Across Cultures

http://video.foxbusiness.com/v/3895436/managing-across-cultures/ Intercultural consultant Michael Schell talks about understanding cultural differences in business.

What Makes a Great Leadership Team?

http://gmj.gallup.com/content/113338/what-makes-great-leadership-team.aspx A strengths assessment test offers some insights.

Executive Team Leadership Effectiveness

http://www.learningcenter.net/library/leadership.shtml Use this assessment to identify your personal strengths and weaknesses as a team leader.

Build a Tower, Build a Team

http://www.youtube.com/watch?v=H0_yKBitO8M Autodesk’s Tom Wujec presents some interesting findings on team building with marshmal- lows and spaghetti.

Critical Thinking Questions

1. You are invited to give a talk on issues companies are experiencing recruiting and retaining new employees (high potential candidates) and why organizational cul- ture matters in this process. Use this chapter and other sources to outline your main points.

2. Describe the type of organizational culture in this chapter in which you would best and least effectively work and why.

3. Explain what businesses can do in their selection processes to promote diversity and inclusion when nonqualified or ineligible diverse candidates are denied orga- nizational participation. (This is a problem when managing and balancing diversity inclusion and legal compliance.)

4. Select a leader (in government, business, private or public sector) in the news whose actions, words, and record demonstrate cultural intelligence and sensitivity; then select a leader who does not demonstrate these characteristics. Explain your insights from this comparison.

5. Explain how results in the GLOBE study can be helpful in understanding leadership. 6. Describe your cross-cultural skills and attitudes. Describe any issues you might

experience in leading a cross-culturally diverse team.

http://video.foxbusiness.com/v/3895436/managing-across-cultures

http://gmj.gallup.com/content/113338/what-makes-great-leadership-team.aspx

http://www.learningcenter.net/library/leadership.shtml

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Summary & Resources

achievement culture A type of culture that responds to stable, external environmental opportunities and threats and generally functions in mature markets.

adaptive culture A type of culture that is open to and embraces external change and is characterized by flexibility.

bureaucratic culture A type of culture that focuses on internal environments; values stability, status, order, and efficiency; and emphasizes rational and formal methods, relying on rules and procedures.

clan culture A type of culture that empha- sizes cooperation, consideration, fairness, and teamwork; an internally focused culture that stresses flexibility.

competing values framework Used for classifying different cultures.

cultural intelligence (CQ) A person’s ability to interpret (reason and observe) another’s unfamiliar and ambiguous gestures and situations and to respond appropriately.

cultural sensitivity A person’s ability to be patient, adaptable, flexible, and willing to listen and learn in multicultural settings.

cultural strength The extent to which fol- lowers agree on the importance of values and methods of getting work done in an organization.

discrimination Actions, treatment, or consideration toward others based on class or category rather than individual merit.

diversity Understanding that each individual is unique. Encompasses accep- tance and respect. Involves recognizing our individual differences, including the dimen- sions of race, ethnicity, gender, sexual orien- tation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies.

ethnocentrism The belief that one’s group or culture is inherently superior to other groups and cultures.

Hofstede’s five cultural dimensions Framework for understanding cross- cultural communication, it describes the relationships between a society’s culture based on the values of its members. The cultural dimensions are individualism and collectivism, high and low uncertainty avoidance, high and low power distance, long-term and short-term time orientation, masculinity versus femininity.

inclusiveness An open environment that includes people from a variety of back- grounds; not limited to a few certain people. Provides each person an equal opportunity to succeed in a way that works for them.

organizational culture Any activity that requires employees to work differently.

prejudice A preconceived opinion or adverse feeling that is not based on reason or experience.

stages of intercultural awareness Milton Bennett’s Developmental Model of Intercul- tural Sensitivity.

value congruency The fit between the organization’s and followers’ values.

Key Terms