Discuss about the Case Study of Commonwealth Bank Australia for Cross Cultural Management.
Culture is the ultimate way of life. Culture plays an important role in the life of every individual. Culture could influence people’s lives significantly in both ways and hence it becomes extremely important for contemporary businesses to utilise culture as a key tool for development of the organisation. It could be said that most of the multinational companies all across the world have taken up culture as a key aspect to analyse in order to run their business. Culture could be defined as the norms, beliefs, values and thought patterns of an individual. Culture is developed when a group of people with same beliefs and thoughts are come together (Primecz et al., 2009). Workplace and culture have a strong complementary relationship. When the culture of a workplace is properly practiced it is said to have a significant effect on the performance of an organisation (Søderberg & Holden, 2002). At the same time if cultural practice within the organisation is unethical or ineffective then it is likely to have significant negative effect on the organisational performance and hence culture is considered with utmost importance. With the globalisation taking place all across the world culture has gained broader interest in business the concept of cross cultural management came into existence. Cross cultural management is an essential section of the cultural study especially for business as it would help the organisations to go through different cultures learn their ways and effectively develop strategies to handle cross cultural issues (Hult et al., 2008). Commonwealth Bank Australia one of the leading banks in the country Australia has been successful in expanding its business not only within the nation but it has also successfully done business overseas and this is where the aspect of cross cultural management stands to be important for the organisation. The present study will take an opportunity to discuss the cross cultural issues, problems and their impact on the organisational performance and will also provide suitable recommendations to handle these issues effectively.
Cross Cultural Management and the Workplace
Cross cultural management is one of the most key aspects for the contemporary business houses. It is important for the multinational companies to address the cross cultural issues and identify the key problem which if not attended properly is likely to affect the business to a large extent. For an international business like Commonwealth Bank Australia cross cultural management is one of the most important management challenges that need to be handled effectively by the organisations (Peltokorpi, 2008). Commonwealth Bank Australia is one of the largest financial institutions working with businesses as well as consumers and operates its organisation all across the world and hence this clearly shows the importance of having an effective cross cultural management in position. As per the existing literature, cross cultural management could be defined as the process of managing work team effectively across different cultures and considering their cultural differences, background and diversity in the work teams (Thomas et al., 2008). Commonwealth Bank operates in different contrasting cultures and hence it is important for the organisation to understand the different cross cultural issues which could hamper the business in case they are not properly addressed. Cross cultural differences are highly visible in some countries and some countries have similar ideologies (Stahl et al., 2010). The company applies Hoftsede’s cultural dimension in order to understand the cross cultural differences in the different societies it operates in. Cross cultural management is not only effective for foreign expansion of business but it also helps to effectively manage groups within the organisation itself so that they are able to perform well for the organisation. Commonwealth Bank implements the Model of Cultural Dimension which helps the organisation to frame their cross cultural strategy accordingly. The Geert Hofstede’s Model has six different attributes which discuss a society based on their culture (Kawar, 2012).
Fig 1: Hofstede’s Cultural Dimension Model (Source: Tung, 2008)
The concept of Hofstede is very clear as it tries to understand the cultural difference based on the different attributes. This is actually a process of comparison which the managers of the Commonwealth Bank apply in order to gain suitable insights into the different cultural differences facing the organisation which could naturally impact on the interpersonal interactions. The first attribute power distance helps the managers to understand how a society handles the inequalities in the society (Tung, 2008). In societies where power distance is low people tend to equalise the distribution of power which means employees are more efficient in these societies and hence the workforce should be accordingly handled by the organisation. Example of such kind of society is India. The second attribute individualism and collectivism shows the social framework of a society. It helps the company managers to understand the overall pattern of the society and the ideology of the society in terms of individual growth and collective growth (Berry et al., 2010). The society where individualism is high will focus more on self improvement and growth which helps the managers to motivate employees individually getting effective response and result for the organisation. In cross cultural management masculinity and femininity is considered as one of the key aspects (Testa, 2009). The masculinity preference of a society means that the society is much more inclined to giving out material rewards for good work whereas femininity focuses on cooperation, sharing and caring and quality of life which would help the managers of Commonwealth Bank to implement suitable strategies to handle the workforce and develop rewarding system. The uncertainty avoidance shows the managers the vulnerability of people in the society towards uncertain circumstances and ambiguity. It mainly states the situation that a society cannot predict what’s going to come in the future and accordingly whether they embrace change or not. Long term and short term orientation highlights the inclination of the society towards keeping in mind the past legacies but also change for the future which clearly helps organisations to understand how the society is going to behave in the coming few years and accordingly makes strategies to control business (Tung & Verbeke, 2010). Finally Indulgence vs. Restraint is the last attribute which shows the company whether the society is fun loving society or are highly conservative about their lifestyle.
Cross Cultural Issues for Commonwealth Bank Australia
There are number of different cross cultural issues which hinder the business growth. For Commonwealth Bank it is important that cross cultural issues are addressed properly. The main cross cultural issue that the company has to face is during business interaction. The company has always focused on effective communication as it helps to interact properly with the employees and the consumers but workings in different cultural regions affect communication. It often creates communication gap between individuals. In a completely different culture and in orthodox countries like in Russia or China people are disinclined to speak in any foreign tongue and this often creates confusion especially for a company like Commonwealth Bank that hails from a completely English speaking country (Singh et al., 2008). Employees of this organisation face problems working in foreign conditions as communication with consumers become a huge problem. On the other hand another key issue is internal communication. Recruiting employees from different backgrounds and culture creates communication gap as well. As the company operates in different countries in Asia and Europe it faces problem of internal communication as well due to the lack of proper communication. For instances if a person is not acquainted with the culture of a particular society it will definitely be tough to communicate with them and hence this is extremely important for a company of the stature of Commonwealth Bank to understand. Another key cross cultural issue that is facing Commonwealth Bank is management issues (De Mooij & Hofstede, 2010).
In most of its global sites the company has put in managers from Australia. The problem of expatriate acceptance among employees often stands to be a key reason for the downfall of a company or the regression in the organisational performance. The expatriates posted in foreign conditions should be well aware of the market conditions and should focus on developing the communications with the employees especially the local employees so that a communal feeling is created among the management and workforce. The manager should be aware of the key determinants of culture which are language, religion, education, social structure which would help the managers to handle the issues of communication and confusions effectively (Ungar, 2008).
Hierarchy plays an extremely important role in the process of communication and in case the employees are reluctant to communicate in other languages it could be a serious problem for the organisation Commonwealth Bank. The Commonwealth Bank faced significant problems with its expatriate managers operating in China and India as people there are educated and brought up with different culture and tend to be very orthodox mostly the Chinese people (Kirkman et al., 2009). Hence the expatriates will not be able to work if the employees or the consumers are not aware of the local culture and language. Getting respect is what these people want and hence especially in Chinese market Commonwealth Bank should be much more careful. The Chinese and US consumers are largely Ethnocentric and mostly disregard other religions and culture and hence in this scenario expatriates face humiliation regarding their language and religion and hence having a strong strategy to handle these aspects are extremely important for an organisation like Commonwealth Bank (Grisham & Walker, 2008).
Cross Cultural Problems and Impact on the Organisational Performance
The Commonwealth Bank considers its workforce as one of the most important assets that the company has and also takes significant initiatives to keep that intact. Working in a cross cultural environment often it is seen there is cultural difference sometimes due to communication gap and sometimes for the differences in the ideologies teamwork is often affected. In the banking sector especially in top class multinational companies like Commonwealth Bank teamwork is extremely important and due to the cross cultural gaps communication is hindered which affects the decisions making of the organisation and this overall affects the movement of the organisation towards the objectives set in the global business. Poor communication is the root of all problems and it breaks the teamwork and the coordination (Caligiuri & Tarique, 2012). When two persons from completely different backgrounds come together it becomes tough for them to understand and respect each other’s background and culture and this directly affects the overall organisational performance as they feel reluctant to work with each other citing the personal problems. The ethnocentric mindset of the employees will affect organisational harmony as problems created due to culture will tear the unity of the workforce. It is extremely important for Commonwealth Bank to focus on improving the interpersonal communication but as long as the employees do not respect the cultures of each other it will remain the same for the company which will gradually lead to problems of performance, and the company will lose significant market share in the business (Rockstuhl et al., 2011). Consumers tend to lose customer loyalty when not communicated which naturally leads to failure of the organisation in the respective global market and also leads to internal turmoil for non-cooperation among employees.
Cross cultural issues seem to have a significant negative effect on the organisational performance of an organisation in this case Commonwealth Bank. It is extremely important for the organisation to focus on having a proper cross cultural strategic framework in place which would help to mitigate the cross cultural problems and will help to improve the organisational performance. The organisation Commonwealth Bank needs to address the different key cross cultural issues of communication, coordination and understanding and hence it is important for the organisation to implement certain key strategies to improve cross cultural management.
Based on the above issues these recommendations could be implemented to mitigate the cross cultural issues of Commonwealth Bank are discussed below:
- Cross Cultural Literacy is one of the key aspects that need to be implemented especially for managers to understand the cross cultural differences between two different markets. The managers should be provided with ample knowledge about different cultural practices which would help the managers to handle cross cultural business properly (Carbaugh, 2013).
- Inculcating cultural intelligence among the employees of the organisation Commonwealth Bank would help to improve the communication of the employees and managers working in a cross cultural society. In a company of multicultural background Cultural intelligence helps to assess the performance of the managers and employees in a given culture (Minkov & Hofstede, 2011).
- Managing the attitude, and understanding cultural perspective and implementing cultural knowledge will help to improve the cross cultural communication and hence Commonwealth Bank Managers should be instilled with this knowledge. Having respect for people from different cultures will help to crack a good conversation effectively (Primecz et al., 2011).
- Constant monitoring of the cross cultural environment will help to get a lot of insights which would help the managers to implement them effectively (Huang, 2010).
- Understanding the labor laws, compensation practices and will help the company Commonwealth Bank to focus on improving their cross cultural practices effectively.
- Consistent training program and change in the expatriate managers of a particular global area with ample knowledge of the place will help to continue having a good relationship with the consumers as well with the market forces which will help to improve the overall organisational performance of the organisation Commonwealth Bank Australia (Shi & Wang, 2011).
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