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The role of social cultures in business optimisation

Across national boundaries

If you manage a multinational team, looking to expand your business or commence projects in a new country, you will know that can be challenging at the best of times. Understanding how social culture affects people’s performance is a critical skill. Yet, many have claimed that “people” management is difficult. And only a few are able to explain why.

If you fall into any of these groups, our inaugural Thinking Manager webinar explored the relationship between social culture, people performance and safety outcomes.

A historical perspective. Social anthropology, the study of social cultures, a recognised discipline since the early 1800s rarely influenced thinking amongst leaders and managers in traditional multinational corporations. Today, we live in a different world, where we celebrate diversity and inclusion. But do we really understand their role in organisational and operational behaviour, business optimisation and performance?

Are we as an industry really embracing our differences? Look around you. Standardised business systems and processes are still commonplace. Designed to flex in relation to national regulation, legislation, or standards. But conspicuous by its absence is the prevailing cultural difference existing within our multi-national and multi-cultural teams and supply chains. Delegates on our wind and solar programmes realise the challenges this causes when rationalising complex demands.

We can agree that one of the key “selling points” of many diversity and inclusion training programmes is that (cultural) differences create opportunity.

But to exploit those opportunities, you must understand the differences. Using the work of leading anthropologists like the late Dr Geert Hofstede to understand cultures better can help you develop flexible systems that provide an opportunity to capitalise on the traits of the nations without compromising overall business governance.

The purpose of anthropology is to make the world safe for human differences

Ruth Benedict

Thinking global, acting local

Russell Ackoff’s famous quote, “Organisations are greater than the sum of their parts. They are products of their interrelationships,” is relevant from a cultural perspective. Think about it…

The renewable sector’s compound annual growth rate (CAGR) is exponential. Many organisations now operate across international borders. As businesses grow, they adopt management frameworks to underpin their operations; standardise systems to support their processes, and introduce consistent performance measures for benchmarking across international operations.

These management systems cover the whole sphere of business, safety and risk management. Specific policies such as quality, HR, finance, management reporting, asset management, and risk management comprising standardised global controls are commonplace.

Companies like Apple, EDF, and Philips have developed their ‘own’ culture. Many organisations promote this as a part of their commitment to social responsibility and actively seek out people who mirror that culture without first considering how effective or ineffective that approach might be.

Through various ARMSA projects around the world, we have been able to see first-hand how companies do not cultivate their interconnections. Instead, they focus on optimising their parts with safety initiatives, cost reduction plans, headcount optimisation programs and so on. The only result we see is a greater division between corporate objectives and local operations.

Geert Hofstede

We can’t talk about cultures without mentioning Geert Hofstede. He has applied an engineering mindset and a lifetime of cross-cultural research to create an analysis of national culture across six dimensions. Hofstede provides an insight into how nations, in the form of groups of its people, are likely to behave.

It would be very wrong to suggest that you can read Hofstede and understand every individual. He is quick to indicate that his work does not reflect any one individual but rather how a group of people from one nation could best be classified. It does, however, provide useful information for companies operating across multiple geographies.

The six dimensions

Hofstede identified six dimensions at each national level: Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Pragmatism, and Indulgence. Let’s dive into these straight away.

1. Power distance

Ask yourself, in my organisation…

…is leadership accepted without question?

…are leadership styles more prescriptive or more consultative?

…how accepting of instruction (and the instructors) are the followers?

Imagine two managers from very different countries. The first prefers a consultative or even negotiated approach to decision-making. The second expects their instructions to be followed unquestioningly. What might happen?

Worse still, imagine a manager who is used to receiving good team feedback on their ideas before implementing them. What might happen if they deliver those ideas to a team that considers it unnatural to question authority?

This acceptance (or otherwise) of instructions underpins the hierarchical nature of most organisational models. Despite this, their performance can vary substantially from country to country. Writings on leadership in the western press often advocate the benefits of one or other particular leadership style with little consideration of the cultural context in which the activity is taking place.

2. Individualism

Are individuals striving for personal achievement?

Or are they working as a part of a collective unit, supporting each other as part of a team?

The growth of self-managed teams based on shared goals and ambitions is a common theme in the West. But, in an environment where people see a need for personal achievement higher than that of the team, it can culminate in high turnover. In groups that comprise some people with team focus and others with individual focus, it can create high levels of disharmony.

It is possible to maximise both individual and team performance by:

  • recognising the predominant team tendency, i.e. individualistic/collectivist;
  • identifying what the team needs to achieve;
  • determining how to motivate the team, given its dominant tendency; and
  • establishing individual and team objectives.
3. Masculinity

Is it the winning or the taking part?

How is success regarded, and how is it rewarded?

Competitiveness is the theme in this dimension, applied across work, family, and other activities.

If you come from a culture in which you are driven to succeed, you will recognise that unenterprising members of society are often shunned. In business, how do you leverage these differences to drive performance? The best teams consist of a good mix of those who reach to achieve the impossible and those who provide the necessary backup and support to succeed.

4. Uncertainty avoidance

How well do people respond to clear rules and instructions?

What matters most: job security and role clarity, or the opportunity to try something new, without fear of the result?

Do you establish strict rules and explicit terms of engagement?

How might your team react if they are used to having a high level of discretion in the way that they perform their work?

In many cultures, role clarity is critical. Societies with high uncertainty avoidance tendencies like to know what they have to do and how to do it. This prescriptive approach enables people to avoid uncertainty. They can undertake their role in the knowledge that their jobs are secure for as long as they do what is expected of them.

Offering role clarity in a highly dynamic sector like renewables is undoubtedly a challenge. Societies with low uncertainty avoidance tendencies succeed in this environment as people are comfortable with ambiguity. Consider those western renewable businesses expanding into high uncertainty avoidance societies. Would it be reasonable to expect a high level of performance without changing their management approach?

5. Pragmatism

To what extent are things justified or explained by traditional norms?

Is change accepted easily?

How are unexpected events explained?

Is the focus on yesterday or tomorrow?

There is a saying that change is the only constant. Countries and cultures have very different attitudes towards change and can be more or less likely to accept it.

Cultures support, accept, and even readily justify the change in countries where changes have happened regularly. In countries where changes have been a less frequent occurrence and established norms and practices have developed over long periods, change is accepted with difficulty.

6. Indulgence

What constitutes something special?

Are people free to fulfil their desires?

Are people generally optimistic or pessimistic in their outlook?

Countries have very different attitudes towards indulgence. Whilst some can see indulgence as a very natural freedom of expression, an opportunity to push boundaries and have fun, others can see such behaviour as being inappropriate and even offensive.

Knowing how to reward in these different situations can be the difference between encouraging and discouraging success.

When dimensions combine

Whilst each dimension offers powerful insights, you should not treat them exclusively. Hofstede reminds us that cultural characteristics become meaningful when compared with other cultures.

For example, a society that inherently depends on hierarchy (high power distance) and requires clarity (high uncertainty avoidance) are more likely to be viewed by western managers as willing but lacking of critical thought.

At a task level, these combined dimensions also mean that employees are less likely to challenge instructions and impart important information to managers to support decision-making, particularly if it is negative. Combinations of individualism, masculinity, indulgence, uncertainty avoidance and pragmatism dimensions also determine how far people are willing to go.

Might you have to change your expectations?

Join the conversation

In light of the unprecedented market growth, on 26 April 2022, renewable energy professionals discussed how to embrace new social cultures to optimise operations. Request access to the recording of this conversation and learn about the cultural challenges renewable businesses face when expanding into new jurisdictions and how they overcome them.


The role of social cultures in business optimisation © 2022 by Khalida Suleymanova – ARMSA is licensed under CC BY-NC-SA 4.0

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