Academic Discussion

The commonly accepted definition of organizational structure is the durable arrangements constructed by a particular organization, to facilitate its processes and help achieve its objectives. However, a more dynamic perspective on organizations places emphasis on such features as working relationships, actual experiences of members, and interpretations of occurrences. As opined by Pepper (1995), structure is a form of document, forged, communicated, and responded to over time. There is thus a causal , vibrant connection between the structure and the activities of members . Since interpretation plays a role in how effective a structure is from an intercultural management standpoint, it is desirable that the structure enables accommodation and cultural integration to take place. Accordingly, the structure suitable for intercultural management is a negotiated one. The greater the scope for widespread participation in the negotiation process, the more representative the structure will be of the diverse constituents of that organization.

A useful analogy is an improvisational jazz concert, or an Indian classical music rendition , which also revolves around improvisation. As Weick (1995) stipulated when he spoke about enacting organizations, 'organizing is a continuous flow of movement that people try to co-ordinate with a continuous flow of input'. Organizational structure attempts to impose form on processes so that there can be order. However, when the processes require a response to unfolding events, having too much order can be counterproductive. And in the case of an organization that is increasing in diversity, the processes themselves are adapting to what is happening. This thus necessitates a structure capable of improvisation. As the case study on Credit Suisse demonstrates , an organizational structure congruent with intercultural management should have sufficient flexibility of form to cope with friction points caused by cultural imperatives.

Common sense suggests that there are a few guiding principles that can be kept in mind when designing structures for intercultural management. The first is that structure should possess a human touch. The more intercultural the organization becomes, the more preferable it is that people confront each other face to face. Essentially, organizational members should be provided with opportunities to get to know each other. The frequent contact enables people to relate to each other as individuals, and overcome any cultural stereotypes they might have. Sometimes people have reservations about individuals from other cultures, because they are ignorant about those cultures. Nothing can educate a person about another culture more than direct contact with people from that culture.

Second, people from different cultural contexts are likely to exhibit different preferences regarding structure, as indicated by the research by Stevens of INSEAD (cited in Hofstede, 1991). MBA students from France, Germany and Great Britain framed markedly different structural solutions when presented with an organizational problem in the form of a caselet. The problem revolved around a conflict between two departmental heads. The French students displayed a preference for referring the problem one level up, to the president of the organization. The German students, for the most part, recommended greater clarity in the description of the structure, with roles, responsibilities, and areas of expertise of the conflicting department heads clearly defined. Most of the British students defined the problem as arising out of lack of proper communication between the department heads, and recommended that they be provided with training in interpersonal skills.

Of course, an organization interested in promoting intercultural harmony and integration would not divide its members along cultural lines. In fact, people with exposure to multiple cultures would protest at being divided into work groups along cultural lines. What is being emphasized here is that a structure should be flexible and esoteric enough to be able to evolve constantly. A structure that attempts to take cognizance of different cultural constituents should be evolving and getting modified. Of course, a structure relevant for a multicultural work force is one that can enable newcomers to align themselves with the organization, not one that tries to please everybody by incorporating everybody's preferences regarding culture. The structure should be designed so that if newcomers do not become aligned, then it is because the problem rests with the individual and not with the organization.

Third, the structure should be capable of modification even on a decision-to-decision basis. It should be remembered that diversity is only one of the variables adding complexity to the functioning of a successful, high-performance global company. The structure of global companies also has to take into account the complexity of the tasks being performed and the heterogeneity of the external environment.

GLOBALIZATION AND ORGANIZATIONAL STRUCTURES

Many companies make their initial foray into the world of intercultural management by exporting their outputs. Such companies are not limited to production companies, but include service organizations as well. The service exported could include advertising expertise, legal expertise, hotel and hospitality expertise, management consulting and training, building construction expertise, or medical expertise. An export department usually manages the export effort. This department comprises home office personnel who are primarily concerned with marketing the exported products in a new location. Once a company finds its products are being sold in an expanding market, it can progress to setting up on-site production facilities.

The setting up of a subsidiary (or subsidiaries) overseas results in an alteration to existing structural arrangements. The general pattern has been for an international operations division at headquarters, to oversee a global corporation's overseas subsidiaries. This international operations division coordinates and supervises overseas activities, and ensures that the objectives of these divisions are in keeping with the overall objectives and mission of the corporation. Over time, local branches may be invested with broad local authority and considerable autonomy. But the system of reporting to an international operations division at headquarters continues, more likely than not.

However, if global corporations want to remain successful, when their scale of operations overseas becomes considerable they typically have to abandon such a simple-minded approach to organization, and adopt more complex modes, as has been argued by Karen Lowry Miller.

Source: based on Lowry Miller (1995).

 

Transnational corporations have outlived and transcended linear, hierarchical forms of organization. Intercultural management is management in transition; management by continuous learning and adaptation; and management with multidimensional skills. The attendant structures thus have to be flexible and responsive . They have to be fluid, rather than engraved in rock. The latter conjure up images of ossified bureaucracies. The former bring to mind the fabric Lycra, used to make bodysuits for gymnasts and swimmers. Lycra has simultaneous liquid and solid properties. It therefore affords extensive stretch and recovery facilities to users, while retaining its form as a fabric. Such a structure is congruent with systems where roles are constantly being redefined.

This was the case, for example, in the Credit Suisse case study, where the members of Project Copernicus had their roles redefined. Recall the Chinese man who had to learn to express his opinion at Monday meetings, in the interests of being more effective professionally. This entailed having to redefine his view of what he considered acceptable behaviour towards others.

Structures suitable for transnational organizations are thus networked. Although a formal hierarchy exists, often the decision-making responsibility is shared by a large number of members, who are more or less on an equal footing. This is most likely to be the case in multinational corporations using cutting edge technology and engaging in software fabrication.

One of the great challenges of organizational structure for intercultural management is the relationship between overseas branches and the headquarters. Credit Suisse's Copernicus project may have a 'state of the art' structure consonant with its multicultural workforce and the tasks that are being performed there, but the company's headquarters in Zurich remains the model of a traditional, high-performance bank in Switzerland. When Project Copernicus transacts with headquarters it has to defer to the Credit Suisse mode of functioning, while retaining its uniqueness for all its internal operations. This is the modus operandi evolved by Credit Suisse.

On the other hand, Nestl 's orientation (referred to in two of the opening case studies in this book) is a little different. The basic principles are uniform and are monitored at headquarters. However, within the overall framework, the individual branches are at liberty to make local structural adjustments. Thus there is some divergence in the extent of local decentralization found in Nestl 's various branches.

A very modern type of structure described by McHugh and Wheeler (1995) can, when modified appropriately, be used to facilitate intercultural management. McHugh and Wheeler call it the holonic network. They define this as 'a set of companies that acts integratedly and organically; it is constantly re-configured to manage each business opportunity a customer presents . Each company within the network provides a different process capability and is called a holon.'

In this book we view the holonic network slightly differently: as a set of units of a transnational corporation. Being located in different cultures could differentiate the units. Even at different locations, performing different tasks, and therefore having different process capabilities, could differentiate the units. Thus Credit Suisse Private Banking has a unit in Zurich as well as units in Singapore. Project Copernicus is a unit (or holon) separate from the rest of Credit Suisse Private Banking Singapore because it is performing different tasks from the rest. Each holon is capable of being constantly reconfigured, not only to manage new business opportunities, but also to reflect the impact of managers from different cultures, as is the case with Project Copernicus. The units are integrated so that they collectively constitute Credit Suisse Private Banking, and the fact that each unit is free to structure itself as it deems fit does not throw the entire transnational organization out of gear. Although a holon is described as being flexible, it can coexist with units that are not intrinsically flexible. A holon, as we have adopted the definition, is a unit that has been structured with the flexibility required for it to reconfigure itself.

According to McHugh and Wheeler (1995), an organization with a holoniated network has certain properties. In our modified version of the holoniated structure, only a holon has those properties, and not necessarily all units which make up a particular transnational organization. These properties are:

• There exists no rigid hierarchy.

• There is constant evolution, as a response to both the external environment and the culture of its incumbent managers.

• It is a continuously learning entity.

• There is easy access to, and exchange of information among, managers.

• It manages and regulates itself.

• Conditions within the holon are dynamic, without being disruptive.

• The holon is connected to other units.

As can be noticed by taking stock of these characteristics, a holon is particularly suited for grappling with the need to accommodate the culture of its managers.

Mention must be made here of Coulson-Thomas (1991), whose writings preceded McHugh and Wheeler. Coulson-Thomas predicted that corporations dealing with diversity and complexity would opt for 'flatter and more fluid organizational structures that (can) develop into networks', as well as have 'greater flexibility and responsiveness to customer needs'. There would also be 'delegation of work to multifunctional, multilocational teams '. All these would be accompanied by 'a management approach which pushes organizational hierarchy to individuals, who require access to expertise and specialists'.

GLOBAL STRUCTURAL INTEGRATION

General Electric is believed to be a model of global structural integration. Through structural integration, it has become globally focused. It also achieved a shift from its previous mode of being widely diversified and dissipated.

In the light of the General Electric experience, Handy's prognosis (1996) is relevant. According to Handy, future concerns about structure should not be viewed in terms of structural integration or decentralization. Instead, organizational design specialists should think more in terms of a structure where 'you can combine small and big, be centralized when it matters, and yet be decentralized and different when it counts'. Bedeian and Zammuto (1991) also articulated this point of view. They aver that the balance between centralization and decentralization shifts continuously. Such shifts occur in response to changes in company size , market opportunities, developments in new technology, the quality of existing decision making, and the expansion of the company into new cultures. As a transnational company from Europe, for instance, moves into emerging markets like China or Eastern Europe, it may choose to decentralize, so that managers at the scene of action can take decisions appropriate to local conditions. After investing in technology that enables all its branches to communicate speedily with each other as well as with headquarters, the same company may prefer to centralize certain facets of decision making.

In many respects, the philosophy embedded in Bedeian and Zammuto, as well as in Handy, was labelled by Peters and Waterman (1982) as the principle of simultaneous loose-tight properties. This principle reconciles the need for overall control with a commitment to autonomy.

Source: based on Dess et al (1995).

 

The appropriate stance to adopt regarding organizational structure may be that of judiciously employing the contingency approach to management. This approach recommends that organizations always keep in mind the context. Thus, an organization should adopt a matrix structure if that is appropriate for the context, or a bureaucratic approach if that is appropriate for the context, and so on. Hence, a global organization may be advised to design different structures for its different branches worldwide, keeping in mind the context of each branch. Among the location-specific considerations that a transnational corporation might like to keep in mind are, as Daniels and Radebaugh (1998) have pointed out, market size, type of competition, nature of the product, labour cost and currency. And of course, the intercultural composition of the workforce should play a part in determining the structure.

Another modern theory appropriate when designing structures in the intercultural context is strategic choice. This theory holds that organizational structure is entirely the outcome of managerial choice and decision making. Hence, it is a matter of managerial choice whether the structure has been made flexible enough to assimilate, adapt, blend and imbibe the influences of many cultures. Strategic choice theory is actually a variation of the contingency approach. Taken together, these two theories imply that a flexible structure capable of constant evolution is appropriate for intercultural management, and designing such a structure is a matter of conscious managerial choice.