by National Culture
Different countries have different cultures, and nations are distinguishable from each other by a shared cultural history like religion, language and racial identity. Moreover, what creates a common culture include shared language, religious and moral values, history, relationships between the individual and group, and other elements. It is for this reason that Hofstede postulates that national culture relates primarily to deep-seated values. In fact, his study found that national culture explains 50% of the differences in managers’ attitudes, beliefs, and values.
Organizational Culture
As people work together to achieve collective goals, groups tend to develop into organizations. As goals become more specific and longer-term; and work more specialized, organizations become both more formal and institutionalized. Thus, organizations normally tend to take on a life of their own thereby developing widely held beliefs, values, and practices. This situation results into distinction between one organization and another and the difference often affects the organization’s success or failure. It is important, therefore, that international organizations understand, manage and utilize appropriate CCHRM practices so that their companies survive and increase their success.
Culture as System
In this context, culture is perceived as an entity or a concept worthy examining and analyzing. Culture is “created, embedded and developed” and can be “manipulated, managed and changed”. He further argues that the “dynamic processes of culture creation and management are the essence of leadership” and that leadership and culture are two sides of the same coin. Adding to that, Brown (1998) lists 14 different definitions of culture and states that in 1952, the anthropologists Kroeber and Kluckhohn isolated 164 different definitions of culture. Literature also tells us that most cultural change models, [Brown (1998) for a detailed exploration of five of these models] are, like Schein’s model, largely based on a systems understanding of organizations and are concerned with large-scale changes of the ‘whole system’ through planned processes of intervention which is heavily dependent on the leader who is a designer and implementer.
It is worth noting that professional cultures develop through socialization as individuals receive the socialization during their training and occupational education. Socialization is reinforced through the individuals’ professional experiences and interactions that lead to a broad understanding of how their occupation should be conducted. Moreover, Trice and Beyer concluded that professional cultures shape up as people share a set of norms, values, and beliefs related to their occupation. Sirmon and Lane’s research findings suggest that professional, cultural differences are often the most relevant and salient cultural differences that the interacting employees face, and thus professional culture differences are the most disruptive to the alliance’s effectiveness in achieving its primary value-creating activities. It is for this reason that organizations and business firms use training and other strategies to induct their employees, so that cultural elements do not negatively affect operations and drives to achieve goals.
Impact of Culture on Organizational Performance
There is ample research which indicates that culture has a mammoth impact on the performance of any business and that the impact is even stronger on international companies. This scenario is said to be because cultural differences can directly impact on the success or failure of a project. Therefore, it was deemed very important to establish how different cultures impact on the international business companies in Rwanda as a proxy.
Impact of HRM on Business Performance
Human resources management (HRM) is defined as implementation of policies and practices needed to carry out the “people” or human resource aspect of a management position, including selection, job definition, training, performance appraisal, compensation, career planning and encouraging employee participation in decision making (Sanders, Shipton, and Gomes, 2014; Storey, 2014). From another point of view, HRM is defined as a process for the development of abilities and the attitude of the individuals, leading to personal growth and self actualization which enables the individual to contribute towards organizational objective. Human resource management is associated with all the managerial functions involved in planning for recruiting, selecting, developing, utilizing, rewarding, and maximizing the potential of the human resources in an organization. Comparative advantages and organizational performance are largely derived from organizational human resources management and high involvement of human resource management practices. Although, in most of the developing countries the main struggle is going on to find out best ways to optimally utilize these practices.
One other point to note is that effective use of cross-cultural teams in an organization can provide a source of experience sharing and innovative thinking to enhance the competitive position of organizations. However, cultural differences can also interfere with the successful completion of projects in today’s multicultural global business community. To achieve project goals and avoid cultural misunderstandings, project managers should be culturally sensitive and promote creativity and motivation among their staff. This could be done through flexible leadership; application of CCHRM theories, use of motivational orientation, orientation toward risk, definition of the ‘self’ versus ‘others’, improvement of attitudes to time and the environment. We will later focus on motivation and training of multicultural project teams and relevant implications for international business management.
The focus of this study was on HRM domains of selection, training, job description, performance appraisal system, compensation system career planning system and employee participation with relation to cross culture. In the field of human resource management and behavioral sciences, plenty research and debate indicate that there is a positive correlation between effective HRM practices and organizational performance. The effect of selection, performance appraisal, training, and compensation system and employee participation with organizational performance. Out of these practices, only selection, training and employee participation had positive impacts on organizational performance and market performance of the organization.
From other studies, job definition and career planning system have been established to have a negative and insignificant impact on business performance. For instance, Organizational performance and competitiveness can be enhanced by utilizing high-performance work system. In another study, Arthur (1994) found that steel mills that use an HRM ‘Commitment System’ have higher productivity levels than those that do not. On the other hand, companies interested in enhancing HR performance may emphasize the need for staff empowerment and training.
In a few studies, however, there is no clear effect of HRM practices on productivity. For instance, Kelley found that HRM practices do not affect performance of organizations. Batt also found out that HRM practices do not pay off in small organizations that operate in local markets. Cappelli and Newmark identified that HRM practices may increase productivity slightly, but they also increase labor costs. In a different study, Huselid (1995) established that HRM practices are statistically significant and have positive effect on corporate financial performance of the organization. It can, therefore, be seen that numerous researchers found a relationship between corporate financial performance and HRM practices. For example, Flamholtz (1985) and Cascio (1991) concluded that financial returns associated with investments in progressive HRM practices are generally substantial. Schmidt (1979) explored that increasing one unit of employee performance is equivalent to 40% of salary increase. Each of these studies has emphasized the impact of HRM on organizational performance.
