Managing international Teams and Workforce Diversity

Table of contents

1. Intercultural Management as a challenge
1.1. Globalisation of the economy
1.2. Demographics
1.3. Migration

2. Cultural Differences
2.1. Theories of cultures
2.1.1. Hofstede
2.1.2. Trompenaars
2.1.3. Hall
2.1.4. Pinto
2.2. Intercultural behaviour
2.3. Conclusion

3. Intercultural Communication
3.1. Communication model
3.2. Cultural Communication barriers
3.3. Successful communication

4. International Teams
4.1. Multicultural workgroups
4.2. Team development
4.3. Critical areas for successful teamwork

5. Diversity Management
5.1. Classical vs. modern definition
5.2. Historical development
5.3. Diversity Management as a competitive advantage

6. Conclusion

8. Literature
8.1. Books and other printed media
8.2. Websites

Table of pictures

Picture 1 Steps of international involvment

Picture 2 Model of the communication process

Picture 3 The historical development of Diversity Management

1. Intercultural Management as a challenge

The main purpose of intercultural management is to manage the diverse workforce that appears in most of our companies. During the last decades, a trend towards globalisation could be monitored. The workforce doesn’t consist mainly of male Caucasians anymore. Today, we have a colourful mixture of people at the workplace. People who come from different countries, different cultures and different ethical backgrounds.

1.1. Globalisation of the economy

Since the 1960’s the international relations between the nations have increased constantly. That included cross border activities of companies. The trade is becoming more and more international. Mergers and acquisitions are becoming more international, accounting practices are mostly standardised around the world, companies from industrialised countries are in direct competition with companies from “cheap labour countries” and employees must be able to speak foreign languages^[1].

Most of the huge international companies are only working with suppliers that are able to deliver Europe-wide or world wide. The direct investments of German companies have risen by 66% during the first half of the 1990’s. Also the number of employees in foreign subsidiaries has increased^[2].

Reasons for globalisation

There are many reasons for globalisation but the main reasons are:

The creation of free trade areas (NAFTA, European Union, etc)

Increased industrial relations between west and east and the liberalisation of the market in eastern Europe

The emergence of a pacific trade area and the approximation of Japan and the USA

The fast and relatively cheap transport systems (plane, etc.)

The development in the communication industry which supports the creation of networks and reduces reaction times (e.g. internet)

Demographic developments (e.g. decreasing birth-rates in western Europe)

These reasons force companies to think “globally”. Only the best fife to eight companies in one industry worldwide will be able to survive. Therefore an international approach to management should be developed in all parts of the company.

Different forms of international involvement

When doing international business, we can distinguish different forms of involvement. If the capital and management activities are mostly done in the home country, international involvement is low. A typical form for this kind of doing business is indirect export.

If a lot of capital and management activities are done in the foreign country, international involvement is high. A typical form for this is building up a subsidiary.

illustration not visible in this excerpt

Picture 1 Steps of international involvement^[3]

Picture 1 shows the different steps of international involvement.

Multinational companies

A multinational corporation is defined as “an enterprise that has an interlocking network of subsidiaries in several countries, whose executives view the whole world as its theatre of operations, and who therefore obtain and allocate financial, material, technical and managerial resources in a manner conducive to the achievement of total enterprise objectives.”^[4] Multinational companies are huge companies like Wal Mart, Coca Cola or Nike. These Companies spread their activities over many countries. They have global strategies and have subsidiaries in the whole world. They can achieve international economies of scale and have a lot of political and economic power. These kinds of companies are relatively young and have emerged and evolved by international mergers and are culturally diverse. Therefore diversity management is a big issue in these companies.

1.2. Demographics

A big issue, which is also strongly related to the globalisation, is demographics. On the one hand the world population is increasing, but on the other hand the populations of most of the western, industrialised countries are decreasing. The birth rates in these countries are decreasing dramatically and the average age is rising. This trend of over-aging consists of two problems:

1. The people are getting older.
2. The number of births is decreasing.

This trend is only slowed down by immigration.

For companies, this is a problem because in the future it will be more difficult to find suitable personnel. An older society needs more medical and social services. At the same time the number of new employees does not grow with the same extent as the need for medical and social services. That will lead to financial problems. Especially in countries with public pension funds this will be a big burden for the working class. This unbalance in the labour market will attract many foreigners to come to western countries for example the Netherlands or Germany. The question, if immigration can be the solution for the over-aging population is discussed controversially at the moment.

1.3. Migration

Migration means immigration and emigration. In other words: people change their centre of living over a border to another country^[5].

Typical groups of migrants are EU citizens who come to Germany, seasonal workers from Non-EU countries, Jews from the former Soviet Union, fugitives, etc. Migration is not only immigration but also emigration. For most European countries migration is a common phenomenon. Some examples for these migrations are:

Emigration of Germans to America in the 19th century

Workers, who came from southern Europe to Germany in the 1950s

All these migrations are bound to the history of the country. For example a lot of Africans live in France because France had many colonies in Africa and allowed people from their colonies to move to France.

For Human Resource Management migration is a very important aspect. Migration leads to a multicultural workforce which can be a tough challenge for Human Resource Manager. They need to know, from which country their employees come and how their culture affects the way they behave.

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^[1] Blom/Meier (2002), page 2

^[2] Blom/Meier (2002), page 2

^[3] Blom/Meier (2002), page 9

^[4] Fisher, Schoenfeldt, Shaw (1999) page 804

^[5] Blom/Meier (2002), page 21