Case Study: G-Tech MNC – Global Management Practices

Company Background

 

G-Tech is a US multi-national organisation with its headquarters and HR function in Florida. It is a leading organisation in the area of Information Technology. G-Tech was established in the year 1989 and has about 50,000 employees, of which approximately 30,000 are employed in the US and the rest abroad. The first foreign subsidiary of G-Tech was established in 1999 in Germany and ten years later subsidiaries were established in Bangalore (India), Helsinki (Finland) and later on in Eastern Europe, Brazil and China. Today, G-Tech has subsidiaries around the globe in the areas of IT manufacturing, IT sales and IT development.

 

Sales for G-Tech IT products have fallen in recent times and the new CEO, Mr. Hilly, is determined to turn around the company’s fortunes and increase sales by 10% within two years (2018). He is also determined to improve intercultural relations within and between the subsidiaries and between the head office employees and subsidiary employees.

 

A recently commissioned HR management report identified cross cultural management issues as G-Tech’s main problem affecting employee performance and subsidiary productivity. At your meeting with the global human resource manager, Mrs. Smart, you (a G-Tech junior executive employee) learn about G-Tech’s plans to transfer US based HRM policies to the subsidiaries, to integrate employee knowledge, to improve intercultural relations and to increase employee performance and subsidiary productivity.

Mrs. Smart gives you the HR management report at this meeting which contains the commissioned consultancy’s observations of key cross-cultural management issues in three countries (below).

As an overview, the following extract from the HR management report focuses on three key cross cultural management themes observed in the Berlin and Bangalore subsidiaries and the headquarters in Florida. It reads:

 

G-Tech Germany

 

G-Tech owns 51% stake of G-Tech Germany. In Germany G-Tech engages in sales and developmental activities in the Information Technology area. It employs about 1000 employees and about 50 employees at G-Tech Germany are expatriate US, Indian, Russian, Brazillian and UK foreign nationals.

 

G-Tech Germany has a strong organsational culture and the workforce is highly culturally and gender diverse at the lower occupational stratas. Authority is based on expertise and high status is given to engineers, particularly those who came up through the apprentice system. Leadership styles are based on German democratic cultural values. Managers possess generalist management competencies. They highly value employee participation, motivation, team orientation and delegation. Due to this way of working employer and employee relations can be described as amicable, consultative and productive.

 

Inevitably, business negotiations and intercultural communication in G-Techs Germany is different in India and Florida. In G-Techs Germany making a proper first impression is culturally important. The dress code is regarded as essential. For instance, in G-Techs Germany each business meeting is formal and communication is direct. ‘’Meetings begin with G-Techs Germany associates’ and guests’ introduction. Protocol requires that the highest ranking visitor introduces himself, or is introduced, to the G-Tech Germany senior manager present, and then the senior manager is introduced to the visiting team – again by seniority – with brief descriptions of their area of responsibility. Another significant issue is physical distance during business meetings. In addition, G-Techs German executives tend to separate their private and professional lives and they’re not likely to volunteer information about their families. In all, G-Techs German business meetings are commonly well- organized and accurately planned.

 

In G-Tech Germany standardisation of IHRM policies and practices is low. Performance management for G-Techs Germany executives is consistent with the MNC’s integrated worldwide expatriation policy. All other HRM instruments are locally constructed, including appraisals, empowerment, pay-for performance, flat structures, work team systems.  There is evidence to suggest that G-Techs Germany has good HRM systems in place. For example, the organisation’s personnel development system won a prestigious German prize in the early 2000s. Employees are identified early for the leadership potential management scheme and involved in the development of their development plans.

 

G-Tech Florida

 

G-Tech Florida is the headquarter of G-Tech MNC. G-Tech Florida engages in strategy, development and sales activities in the information technology area. It employs about 2000 employees of which 250 employees are expatriates, many of whom are IT experts from India.

 

In terms of preferred leadership styles and culture, Florida uses distributed leadership to empower its workforce. This does not always translate well for the expatriate employees. However, the policy of empowering and facilitating employees’ work has led to a large number of innovations and growth for the company. G-Tech Florida is what one would call a “flat” company, with fewer number of middle managers and an upper management that is hands-on and accessible. This short hierarchy cultivates a more open atmosphere for employees to integrate and express their opinions and new ideas. Managers emphasize people moving forward together through open communication and honesty, with open discussion at team meetings. Employees are recognized for small and big initiatives and mistakes are viewed as opportunities for learning. This approach leads to a fearless office culture, where people are willing to take risks.

 

Business negotiations and intercultural communication in G-Tech Florida is very American. The employees and managers tend to be competitive in their approach to negotiations. They begin with an unrealistic offer, with an aim to achieve higher that the realistic outcome. They are energetic, confident, and persistent; they focus on areas of disagreement (not commonality) and enjoy arguing their positions. At the end of a negotiation, they like to achieve closure and certainty rather than open-endedness or fuzziness.

 

At G-Tech Florida, people endeavour to make productive use of their time. Managers encourage employees to schedule their calendars to block time for their individual goals and activities. The work week at G-Tech Florida generally starts off with low energy on Monday, then work energy peaks on Tuesday and Wednesday, and slowly reduces by Thursday and Friday and into the weekend. As a result of this work energy cycle, employees use Monday for planning their week and setting goals; Tuesday and Wednesday to focus on creative tasks whilst they are at their most productive and energetic stage; Thursday to catch-up with team meetings and one-to-one meetings, and Friday for finishing off reports and other clerical tasks. Employees guard their time fiercely to ensure that they don’t spend their work week tied up in meetings or dealing with other peoples’ priorities. Meetings are typically short in duration, the agenda items are few, and people are free to leave as soon as a consensus is reached on their matter of interest.

 

Senior and middle managers at the headquarters and subsidiaries of G-Tech engage in regular online and face-to-face encounters. The multicultural workforce means that managers need to develop intercultural competences in order to reduce barriers of communication and to achieve synergy. G-Tech enables this by sending its managers on short assignments overseas so that they can have firsthand experiences of different cultural practices in the workplace. This is also a strategy to promote integration and assimilation to the policies and practices of their headquarter office.

 

G-Tech India

 

After the liberalization of Indian economic policies in 1991, G-Tech owned a 70% stake in G-Tech India while the remaining 30% is state owned. In India, G-Tech engages in both manufacturing and developmental activities in the Information technology area. It employs about 1,000 employees in India with about 20 employees at G-Tech India are expat US, UK and French foreign nationals.

 

In G-Tech India, expectedly, a manager’s leadership style is different to G-Tech leaders’ in Europe and the rest of the western world. Leaders are expected to be involved in work processes. Rather than a contractual relationship, a personalised relationship is preferred in G-Tech India. Even though there is a tall hierarchical organisational structure, their leader is more than an authority; he/she is a benevolent source on which the subordinates can depend for indulgence.

 

Intercultural communication and negotiations in India are complex. In G-Tech India, business with non-Indians is personal and about establishing relationships. Business negotiations can follow formal procedures, although the atmosphere is friendly and relaxed. G-Tech India managers see ‘‘No’’ as harsh and evasive refusals are common. Unsurprisingly, they see ‘‘time-is-money’’ as an alien concept. Consequently, facts are less persuasive than feelings. In business negotiations, G-Tech India managers take risks and establish rapport quickly; then move to negotiating, looking for mutual gains.  G-Tech India managers prefer to leave the table having established a relationship.

 

In terms of the internationalisation of HRM practices, standardisation of IHRM practices is low. The Human resources department at G-Tech India employees around 40 Indian HR associates. A strong organisation culture means Indian nationals occupy mostly top, middle and junior positions and there is little intercultural relationships and interaction with G-Tech employees around the globe.

 

Unsurprisingly, HR activities are mainly locally based. This means recruitment and compensation and benefits and Training and development and performance appraisals are carried out locally while change management is done globally by G-Tech in USA. Rewards are traditionally based upon seniority and appointments can be based on family ties.  Employees tend retire very late into old age.

 

Assimilation into local organisation culture is expected and so culture-building exercises are initiated at the local level. In addition, at G-Techs India, there is a strong hierarchical work structure and a strong emphasis on discipline, obedience and power.

 

Task:

You are required to answer a total of three questions on the case study. Please present your answers in an essay format. You are strongly advised to use relevant cross-cultural management theories, international business theories and international human resource management theories to ground your answers. 

 

Question 1 (20 marks)

 

With reference to the case of G-Tech MNC, and relevant cross-cultural theories, discuss how national cultural differences might influence the management of people at its foreign subsidiaries.

 

Answer guidelines:

  1. You will need to consider the different institutional and cultural factors that influence human resource management policies and practices in different countries.
  2. Use examples to illustrate divergence and convergence of practices between Florida and the two subsidiaries outlined in the case study (Germany and India).
  3. Consider how Hofstede’s cultural dimensions might give insight into differences between national cultures and organizational practices.

 

 

Question 2 (25 marks)

 

With reference to the case of G-Tech MNC, evaluate the key competences of leaders who engage with multicultural teams. What do you think are the most suitable styles of leadership for the different subsidiaries of G-Tech?

 

Answer guidelines:

  1. Consider how cross-cultural differences might impact leadership styles.
  2. Consider Westwood’s notion of ‘paternal leadership’ and discuss how this leadership style differs from participative leadership typically practiced in western countries.
  3. Consider the Project GLOBE in your evaluation of cultural and contingent factors that impact cross-cultural leadership.

 

Question 3 (25 marks)

 

With reference to the different work contexts at G-Tech MNC, discuss how managers might overcome barriers to effective communication in multicultural teams.

 

Answer guidelines:

  1. Identify the elements of intercultural communication process, highlighting potential barriers to intercultural communication.
  2. Consider Hall’s typology of low- context and high-context culture in explaining intercultural communication.

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