Human Resource Management - Ethnic and Cultural Diversity in the Workplace.

University Degree Business and Administrative studies

Human Resource Management

Ethnic and Cultural Diversity

in the Workplace

Group Report

Executive Summary

Globalisation and internationalisation of markets and economies has made diversity management critical for an organisation to obtain competitive advantage. Diversity management is the process of creating an environment that empowers all employees to perform and contribute to the goals of the organisation. It capitalises on such differences as race, religion, gender and age of employees.

Diversity management is a component of the organisation’s human resource strategy, and encourages acceptance of other cultures and values, and reduces the barriers of ethnocentrism — the assumption that one’s own culture knows best. Diversity management is also an additional opportunity of meeting stakeholder interests, including customers and shareholders. As its workforce grows more diverse, an organisation must make regular audits of its cultural values and diversity strategy and allow for modifications to its human resource systems to reflect a balanced diversity strategy. Selection of an external auditor should recognise employees’ cultural sensitivities, and not reflect the dominant management culture or ethnicity.

An organisation that does not manage diversity can face conflicts, miscommunication and low job satisfaction among its staff and potentially incur losses from discrimination lawsuits, high employee turnover, absenteeism, sabotage and theft, and loss of customer confidence.

As revealed in the WGA Ltd. case study more than AUD$50,000 in turnover costs per employee were incurred due to the absence of a diversity management policy. WGA Ltd. did not establish a strategic human resource management plan to manage diversity in advance of its Hong Kong expansion and as a consequence was crippled by high employee turnover.

Successful organisations recognise the importance of human-capital investments and allocate substantial resources in managing these intangible assets. Performance appraisals and rewards are required to encourage behaviour that supports diversity, and human resource strategy should include policies to prevent discrimination and include cross-cultural training. Cross-cultural training programs have, as an example, improved the effectiveness of expatriate managers by providing knowledge and understanding of how to operate in a particular geographical market, and to be prepared to work across a range of cross-cultural encounters and organisational boundaries.

Diversity management requires commitment from the organisation’s management team. Managers must recognise that labor relations vary significantly from country to country and that the strategies used to motivate workers in one country are sometimes ineffective or irrelevant in another country. Cultural differences in styles of work and the structuring of work tasks must also be considered. For example, Chinese workers traditionally adopt a less formalized approach and job tasks are less precisely written and described, whereas employees from the United States are more likely to require formalised task assignment and structure, regular exchange of ideas and colleague interaction within the work environment.

By establishing human resource policies and practices that recognise diversity, the organisation will realize the benefits of a shared culture, job satisfaction and improved communication. This should be seen as an opportunity for competitive advantage rather than an obstacle to conducting business, allowing organisations to reduce costs, improve productivity and create long-term business opportunities.

Appendix I: Case Study – WGA Ltd., Hong Kong

Managing Diversity: How misinterpreting culture can send employees packing

The owners of WGA Ltd., a Hong Kong-based web developer, have faced many obstacles in the eight years of doing business, but few have been ...

This is a preview of the whole essay

Appendix I: Case Study – WGA Ltd., Hong Kong

Managing Diversity: How misinterpreting culture can send employees packing

The owners of WGA Ltd., a Hong Kong-based web developer, have faced many obstacles in the eight years of doing business, but few have been as difficult to solve as workforce diversity.

After launching operations in Malaysia in 1996 and acquiring key online accounts for Malaysia Airlines, Sega and the Hard Rock Café, the company decided to expand to Hong Kong and Tokyo.

By the December 2000 the company was employing over 50 full and part-time designers, programmers and project managers between three offices. The tide that had swept many American dotcoms under had yet to reach the shores of Hong Kong, considered its central sales office. According to its managing director, the company was still receiving weekly calls from potential investors.

In January 2001 the company won a HKD$600,000 contract to develop a working prototype of a children’s web site. Recognising a need for additional creative direction, the company hired a writer and designer from Canada experienced in developing multimedia content for children. He joined a multinational team of four designers, two programmers and three project managers in the Hong Kong office, and was be responsible for providing creative strategy and direction on current and future projects.

WGA Ltd.’s offices were modest. Employees were arranged in teams and seated at two work pods in an open-concept layout no bigger than some Western living rooms. Two of the company's owners, both from Britain, sat directly across from each other at one "pod". Joining them at the pod were four other men: two local Chinese programmers, a young designer from Burma and a Thai/British project manager in his mid 20s.

Seated at the second pod was the company's senior project manager, a 29-year-old British man and close friend of the managing director, a British-Chinese designer in her early 30s, the company's Hong Kong-born senior designer, a young local Chinese female designer, and a third, local Chinese project manager in her early 20s.

Cliques existed among the employee ranks, with the local Chinese workers always leaving for and returning from lunch as a group. Similar cliques had formed within the Western ranks, most notably between the two male project managers and owners. Morale among non-managerial staff had been inconsistent since the office was opened in 1998, and average staff turnover was two employees per year, considered average by Hong Kong standards. The locals typically kept to their clique and, unless asked, rarely shared personal information with foreign staff.

The owners would dominate the conversation in the office and openly discuss the affairs of the business, client grievances and their personal social experiences across their pod. The owners had collegial relationship and played off each other's strengths and weaknesses. Their loud, vocal displays and outbursts of energy and enthusiasm were in sharp contrast to the subdued work styles of the local staff, although it is presumed that much of this energy was driven by their roles as business developers. The sales and marketing officer was prone to making bold comments about the managing director's sex life, and would have similarly risqué exchanges with the company's lead female designer. Outside the office he was known as a very charismatic representative of the company, but his interaction with office personnel was less effective. When employees were out of the office, he would make derogatory statements about the local workforce and their lack of commitment and trust, seemingly out of frustration.

Soon after the company hired the Canadian, the owners fired its senior designer, who had established a cohesive relationship with the design team and programmers. The dismissal was conducted after hours, when workers had left the premises. The individual received two week's pay as notice and quickly shown the door. The following morning the owners assured employees that the designer dismissed due to performance, tardiness and inability to lead the design team. They emphasised his termination was unrelated to the new hire. Despite the explanation, several employees displayed their displeasure by being late for work, ignoring work requests, writing subversive comments about executive management into their programming code, and performing non-work activities, notably surfing on the web and checking personal email accounts. Morale among non-managerial employees began to plummet and tensions between the owners and local staff worsened.

Between January 2001 and May 2002, the company fired three employees while six others left the company for other jobs. Midway through the new project, the team lost its lead designer. Although she agreed to work freelance to complete several necessary design elements, her resignation affected project timelines and resulted in a shift of duties to the company's Kuala Lumpur office and its less-experienced design team.

In an effort to address company morale, the owners took turns speaking with employees whose performance was deteriorating. Meetings were held in a small, glass-enclosed cubicle featuring meagre soundproofing. All meetings were observable from outside the cubicle, and a hushed silence would descend on the room whenever an employee was called in to speak with one of the owners.

During this phase, the owners were taking steps to motivate and encourage staff by providing additional days off, additional training and positive feedback, but they were clearly frustrated by the response.

Midway through 2001, the collapse of the dot com industry was finally being felt. A downturn in business brought additional stress into the office environment, and the remaining members of the design team resigned, leaving the company at risk of losing the second design phase of the educational web site, a project worth over HKD$6 million. Although the company succeeded in luring back the primary designers of the prototype site for short-term employment contracts, the client later acknowledged that the initial absence of the original design team provided an opportunity for negotiating a better rate.

Since late 2001, staffing of the Hong Kong office has remained largely male. The organisation has also reduced its numbers in the Hong Kong office, relying on its Malaysia office to provide the majority of project design and programming, and a collection of freelance designers to assist on other projects requiring immediate turnaround. Faced with the potential loss of one its Hong Kong-based project managers, who indicated his desire to return to his native Thailand, the company established an office in Bangkok to maintain his employ.

After landing the PepsiCo account for China in late 2002, the company sent its one of its partners to Shanghai to open a fifth office in the region. The company continues to struggle with staffing issues and its ability to properly grow the business.

ABOUT WGA Ltd.

WGA Ltd. specialises in developing viral online marketing campaigns and providing backend IT solutions for multinationals including Time-Warner, Disney, Sony, Mercedes-Benz and PepsiCo. It has offices in Hong Kong, Kuala Lumpur, Tokyo, Shanghai and Bangkok, and staff number 30 plus across five countries. The company was founded in 1996.

The company relies on a diverse workforce culled from cultures across Asia-Pacific. Members of the production teams discuss projects with teams from the KL office, primarily of Malaysian origin.

Appendix II: Financial Loss Calculations

Appendix III:

Appendix IV: Successful Corporate Diversity Strategies

Qantas

• The airline won millions of dollars of catering contracts by capitalizing on their built-in diversity by using staff to help develop new menus and ways of preparing food targeted at different cultural diets.

The Prestige Group

• Management was able to save its manufacturing business from closing down in 1988 by implementing a range of strategies that capitalized on its diverse workforce which accounted for more than 12 languages. Management sought staff advice on marketing strategies for its countries of distribution, including a survey of cultural sensitivities of potential clients. As a result, export sales grew by 15 per cent in two years.

Corning Inc

• Corning Inc, an industry leader in glass, ceramics and telecommunications materials, successfully changed its corporate culture by adopting such techniques as workshops and seminars to reduce racial and sex discrimination. The company reported a 50% reduction in turnover for female and black employees. Prior to the initiative, the company had reported a good track record of hiring women and black managers, but was having difficulty training and their rate of attrition was ripple the rate for white men.

Appendix V – References

Allen, G. (1991) Valuing cultural diversity: industry woos a new work force, Communication World, May 1991 Vol 8 No. 6

Anti-Discrimination Board [Online], [Accessed 2 April 2004]. Capitalising on the diversity of staff – Examples, Available at www.lawlink.nsw.gov.au/adb.nsf/pages/empegs

Cateora, P.R. (2003). International Marketing, Singapore: McGraw-Hill Company

Carnevale, P. and Stone, S. (1994) Diversity: beyond the golden rule, Training and Development, Oct 1994, Vol. 48, No 10

De Cieri, H. and Karar, R. (2003). Human Resource Management in Australia, Sydney: MacGraw-Hill Australia Pty Ltd.

Gammel, D.C. (2002), Chapter 6: Cross-Cultural Training as a Moderator of Success Factors, [Online], [Accessed 9 April 2004]. Available at www.highcontext.com/Articles/srp/Chapter6Cross-CulturalTra.php

Katz, J.P. and Elsea, S.W. (2002). A Framework for Assessing International Labor Relations: What Every HR Manager Needs to Know, Human Resource Planning, EBSCO Publishing

Leung, A.S.M. (2004). Corporate Restructuring and Career Advancement in Hong Kong, International Journal of Human Resource Management, 15:1 Feb 2004

Pucik, V. and others (2002) Selecting and Developing the Global Versus the Expatriate Manager: A Review of the State-of-the-Art, Human Resource Planning, EBSCO Publishing.

Welch, D.E. and Welch, L.S. (1997). Pre-Expatriation, the role of HR factors in the early stages of internationalization, The International Journal of Human Resource Management, 8:4 Aug 1997

Ethnic and Cultural Diversity in the Workplace Page Of

De Cieri, H. and Karar, R. (2003). Human Resource Management in Australia, Sydney: MacGraw-Hill Australia Pty Ltd., p. 248.

Cateora, P.R. (2003). International Marketing, Singapore: McGraw-Hill Company, p. 15

De Cieri, H. and Karar, R. (2003). Human Resource Management in Australia, Sydney: MacGraw-Hill Australia Pty Ltd., p. 259.

Carnevale, P. and Stone, S. (1994) Diversity: beyond the golden rule, Training and Development, Oct 1994, Vol. 48, No 10, p 26

Appendix I, Case Study – WGA Ltd, Hong Kong, Managing Diversity: How misinterpreting culture can send employees packing

See Appendix II,Case Study - WGA Ltd., Financial Loss Calculations from Employee Turnover (January 2001 – May 2002)

See Appendix IV: Successful Corporate Diversity Strategies

De Cieri, H. and Karar, R. (2003). Human Resource Management in Australia, Sydney: MacGraw-Hill Australia Pty Ltd., p. 261.

Welch, D.E. and Welch, L.S. (1997). Pre-Expatriation, the role of HR factors in the early stages of internationalization, The International Journal of Human Resource Management, 8:4 Aug 1997 p. 406.

Pucik, V. and others (2002) Selecting and Developing the Global Versus the Expatriate Manager: A Review of the State-of-the-Art, Human Resource Planning, EBSCO Publishing, p. 40

Katz, J.P. and Elsea, S.W. (2002). A Framework for Assessing International Labor Relations: What Every HR Manager Needs to Know, Human Resource Planning, EBSCO Publishing, p.16.

Leung, A.S.M. (2004). Corporate Restructuring and Career Advancement in Hong Kong, International Journal of Human Resource Management, 15:1 Feb 2004 pp 163-179.

Note: The third partner, an American, oversaw the Kuala Lumpur office.

Anti-Discrimination Board [Online], [Accessed 2 April 2004]. Capitalising on the diversity of staff – Examples, Available at www.lawlink.nsw.gov.au/adb.nsf/pages/empegs

Allen, G. (1991) Valuing cultural diversity: industry woos a new work force, Communication World, May 1991 Vol 8 No. 6 p. 14.