Executive Summary
Aalborg Industry Vietnam has been marred by the problem of cultural adaptation for a long time. Conflicting cultures of the Danish workers and management and that of the Vietnamese workers and management often clashed, and to some extent, these clashes can be blamed for the poor performance of the company in the country in the initial years. Cultural perspectives of functionalist and constructivism have been used to explain the cultural problems and those of HRM that were experienced in the company. The functionalist perspective views dysfunctions in the operations of an organization emanating from any part of the company to lead to the dysfunction of the entire organization. This is in regard that the organization operates as a living organism, and all parts of the organization are interlinked, and their functions complement each other. The constructivism view, on the other hand, views culture as a mental construct, which is a formation of the mind and one can ascribe meaning to behaviour according to his socialization about culture. Leadership styles also come to view in the eye of management of the Aalborg Industry in Vietnam. The main agenda of this paper is to use these two perspectives to explain the problems in HRM with regard to culture that affects the operations and smooth running of the company, discuss the knowledge management processes that the company employs, analyze strategies that the both companies can use to solve the problem of knowledge management, discuss the usefulness of leadership styles in motivating the Vietnamese employees, assess which of the leadership styles is adopted by Mr. Andersen and Mr. Hjorth in their management in the company, as well as assess the lessons that one can learn from employing expatriate managers.
Introduction
Aalborg Industry Vietnam has faced and continues to face its share of troubles regarding management. The company, which is an affiliate of the Aalborg Danish industry, operates under two major cultures, the Danish and Vietnamese culture. As a result, there have been cultural clashes of these cultures, prompting the need to find a way that the two can be made to work in synchrony.
The case of Aalborg industry presents a perfect learning experience for employees and employers in the recruitment of expatriate managers, and the importance of the human resource management in any organization as a gateway to the organization’s support. The company also presents a good case for the analysis of the importance of knowledge management in any organization, as outlined in the knowledge management theory, as well as the repercussions that are implied if a company fails to apply the processes of knowledge management. Finally, the paper will provide the reader with a perfect case scenario for the study of the importance of adopting and applying effective leadership styles as suited for various occasions.
Question 1
Different cultural perspectives
Much literature has been written on the phenomenon of culture and culture has been defined in numerous ways emphasizing different aspects of the phenomenon. Thus, the concept of culture is rather complex. Although from a broad perspective, culture can be defined as the set of basic values and beliefs shared among a certain group (Dahl, 2000). Culture is furthermore reflected in language, religion, history, values and ways of doing business. Thus, culture is expressed on different levels including national, regional, organizational and occupational and individuals are part of multiple sets of different cultures (Gullestrup, 2006; 161). Furthermore, within a culture several subcultures often exist that have their own values and beliefs that are different from the dominant culture.
Schein (1985) compared culture to an iceberg with both a visible and a larger invisible layer. Comparably, some aspects of culture are clearly visible while others are more invisible. On the visible layer, the culture is expressed through norms, rituals and symbols while the invisible layer expresses deeper beliefs, values, assumptions, perceptions, attitudes and emotions in the culture. A relationship exists between theTomas Christiansen visible and invisible aspects of culture and generally the invisible aspect of culture influence the visible cultural aspect. An example of invisible aspects shown in a visible is religious beliefs, which is often expressed through norms and rituals as clothing and holidays.
Culture can be view from different perspectives. In the following two opposing approached towards culture - functionalist and constructive paradigms are examined.
The Functionalist Paradigm
The functionalist paradigm relies on a static and deterministic approach towards culture and seeks objectivity, measurability and prediction. It is based on an analytical approach, which divides unity into parts to understand the absolute truth. Thus, culture can be understood through simplification and stereotyping (Fang, 2006: 75). The functionalistic approach focuses on the differences and similarities between cultures and it is assumed that cultures are relatively stable over time and that behaviour is determined by values (Fang, 2006; 71-72). Thereby, culture is seen as homogeneous patterns of values and beliefs that do not change significantly. Within a group with similar values, the culture is shared, transmitted and learned which contribute to shape behavior. Fang (2006; 74) compare the functionalistic approach to an onion by comparing the cultural layers to layers of an onion.
On the surface of the onion are the symbols, heroes and rituals. However, in order to understand a culture on a deeper level, it is necessary to “peel” the onion as the core of the onion expose the basic assumptions, values and beliefs that guide the human behaviour in a specific culture. Furthermore, the functionalistic approach to culture states, that when two cultures meet, they will collide and result in cross-cultural conflicts because each culture has its own indigenous beliefs, norms and values that does not change over time (Fang, 2006; 75). A merger or acquisition of two organizations would thereby result in a clash of cultures as each organization has its own unique culture.
Among scholars of the functionalist view of culture, the focus is on understanding how national cultural differences affect individuals, groups and organizations as well as the human resource management within an organization. Thus, the areas of research include cross-cultural comparisons, human resource management in foreign subsidiaries and consumer behavior in foreign markets. Scholars of the functionalistic paradigm include Hofstede (1980), Trompenaars (1993) and Schein (1983) who approach culture in terms of establishing universal cultural dimensions. In the following, we will examine these Hofstede’s contributions in order to be able to explain the human resource management challenges Aalborg Industries experienced in their Vietnamese joint venture.
Hofstede is among the most influential researchers of culture and contributed to cultural research by developing a systematic framework for assessing and differentiating cultures. His studies demonstrated that national cultures have a big impact on organizational behaviour. Hofstede explains culture in terms of a concept, which he refers to as a “mental programme”. According to Hofstede, a mental programme includes three different levels; human, collective and universal. Thus an individuals’ “mental programme” is partly unique and partly shared with others (Hofstede, 1980; 17). The individual level is entirely unique to the individual (i.e. personality). The collective level is shared with some, not all. It is common to people within a certain group (i.e. language). Finally, the universal level is the basic behaviour, which is shared among all (i.e. in human nature) (Hofstede, 1980; 17-18).
It is the analysis of this ‘programming’ that can be used to describe culture. Hofstede defines culture as the collective mental programming. ‘It is the collective programming of the mind which distinguishes the members of one group or category of people from another.’ (Hofstede, 1980; 24) Thus, individuals have their own unique personality, background, and interests. Yet, all people share a basic common human nature. Thus, the unwritten rules of how things are done differ from one group of individuals to another. Thereby, culture is how we call these unwritten rules about how to be a good member of the group. “Culture provides moral standards about how to be an upstanding group member; it defines the group as a “moral circle”. It inspires symbols, heroes, rituals, laws, religions, taboos, and all kinds of practices - but its core is hidden in unconscious values that change at a far slower rate than the practices” (Hofstede).
Hofstede national culture , s simultanspectives styleso lead people - depends als live togetheres belong to other cultures simultancultural dimensions’ is an analytical theoretical framework for describing and comparing national cultures. According to Hofstede, the identified cultural dimensions differ among different cultures and thus behaviour in organisations differs among different cultures (Hofstede). Originally, Hofstede developed the framework when examining the results of a worldwide survey of employee values by IBM in the 1960s and 1970s. The theory was the first of its kind used to explain observed differences between cultures.
Originally, Hofstede’s framework to describe a national culture included four dimensions. Later, Hofstede added another two dimensions; long-term versus short-term orientation and indulgence versus restraint. However, Hofstede has not yet latter. Thus, the framework for analyzing national cultures exist of six dimensions including:
- Power distance, which measures the extent to which a society accepts unequal distribution of power in organizations and institutions.
- Uncertainty avoidance, which refers to a society’s tolerance for uncertainty and ambiguity.
- Individualism versus Collectivism, which measures the degree to which individuals are integrated into groups
- Masculinity versus femininity expresses the emotional values dominance between the genders
- Long-term versus short-term orientation refers to a society’s attitude to time
- Indulgence versus restraint measures a society’s attitude towards gratification
Hofstede ascribed numerical values on the different dimensions for a long range of countries and showed that national cultures vary substantially in terms of their mean scores on each of the dimensions. As a consequence, management might encounter intercultural collaboration problems when two different cultures meet.
The Constructivist Paradigm
The constructivist approach towards culture regards culture as a social construction, which is learned and passed on to new members through social interactions. Culture is thereby constructed through meanings and interpretations rather than values. In contrast to the functionalistic paradigm, the constructivist paradigm assumes that culture is dynamic and changes over time (Fang, 2006; 73). The constructivist approach towards culture is based on paradoxes, which can be defined as contradictory yet irrational elements that seem logical in isolation but absurd and irrational when appearing simultaneously (Fang, 2006; 76). Thus, irregularities and ambiguities are part of culture and consequently within cultures exist both dimensions of a culture – i.e. a culture is both feminine and masculine as opposed the functionalistic approach where a culture is either feminine or masculine.
Furthermore, it is believed that behavior is shaped by values and beliefs however as opposed to the functionalistic approach, the values and beliefs can shape new behaviors developing the process of cultural change (Fang, 2006; 83).
In the constructivist perspective, research focus on understanding the nature of bicultural and multicultural interaction and its perceived impact on organizational life as well as the characteristics and processes of culture formation, evolution and emergence from such interactions. The research is based on experiences rather than an analytical approach. Thus, the areas of research include intercultural interaction (i.e. joint ventures, mergers and acquisitions), cultural changes and cross- cultural learning.
Theories of this paradigm include cultural sensemaking. Cultural sensemaking provides basis for understanding culture and constructing a new culture. It is defined as “about such things as placement of items into frameworks, comprehending, redressing surprise, constructing meaning, interacting in pursuit of mutual understanding, and patterning” (Weick, 1995). Thus, culture is paradoxical and not understandable without being put in its historical context. Opposed to Hofstede’s neatly categorization of culture, this approach a focus more on the paradoxes of culture that exibit a contradictory nature. “The more exposure and understanding one gains about any culture, the more paradoxical it becomes U.S. Americans are individualistic in some situations and collectivist in others. ” (Osland & Bird, 2000; 65) Thus, cultural generalizations are prominent in initial interpretations but are gradually replaced by more refined understandings. Osland & Bird (2000, 70-71) developed a theory to make sense of cultural paradoxes and convey a holistic understanding of culture.
Figure 1 Cultural sense making model
Source: Osland & Bird (2000; 70)
According to Osland & Bird (2000; 70) cultural sensemaking is a cycle of sequential events. The process begins when an individual identifies a context and then engages in indexing behaviour. The next step is attribution where the contextual cues are analyzed to match the context with appropriate schema. Schemas are cultural scripts defined as patterns of social interaction that is characteristic of a particular cultural group. They are accepted, appropriate ways of behaving, specifying certain patterns of interaction. Schemas reflect underlying hierarchy of cultural values. When interpreting schema, one might find tracks of cultural history and tradition (Osland & Bird, 2000; 71).
Human Resource Management Challenges
(b)
Managing a different cultural workforce puts pressure on managers to recognize and adapt to cultural differences, which if overlooked can result in cross-cultural communication and management problems which can have a significant negative impact on projects. In the case, management at Aalborg Industries face a number of human resource challenges in their Vietnamese joint venture. In the following these challenges will be presented, discussed and explained through the cultural theories described in the above.
HRM issues in the case:
Different perception of risk (shoe and helmet incident p. 9)
Communication misunderstandings - The use of language (p. 14)
The cultural theories can give insight to which challenges Aalborg Industries might face in Vietnam due to different cultures, different human values and different ways of doing business. An analysis of the national culture according to Hofstede’s model shows differences on several cultural levels between Denmark and Vietnam. These cultural differences can provide basis for explaining the human ressource challenges Aalborg Industries are experiencing in Vietnam. In the following, the human resource challenges are held up against the findings of Hofstede. Thus, we analyze the Danish culture compared to the Vietnameese culture from Hofstede’s cultural dimensions.
Power distance
Generally, the Danish population expects and accepts equality. Consequently, the Danish management styles apply a high degree of independence among employees high accessibility to managers. A flat organizational structure is preferred and the decision-making is often decentralized to employees on all levels of the organization.
On the contrary, the Vietnamese population generally expects and accepts inequality. Organizations are often highly hierarchical and decisions are centralized. As a result, employees do not have the ability to make decisions on their own and expect to be told exactly what to do.
Individualism
Denmark is an individualistic society which means that there is no need to create a relationship with business partners before doing business. Furthermore, the communication is very direct.
Masculinity
Denmark is considered a feminine society where managers strive for consensus, equality is valued and conflicts are resolved by negotiations and compromises.
Vietnam similarly considered a feminine society, however to a lesser extent than Denmark.
Uncertainty avoidance
Both Denmark and Vietnam generally have a low preference for uncertainty avoidance which indicates that there is no need for a significant amount of structure and predictability in their work and it is highly accepted that plans can change.
Long-term orientation
Denmark is considered a short-term orientation culture where focus is on the present as opposed to the past. Abstract nationality and analytical thinking.
Vietnam is a long term orientation culture where focus is on the past. Consequently, traditions are adapted to a modern context.
Question 1b
HRM Problems in Aalborg
According to the functionalist theory of culture, an organization or society is a functional unit, and the various departments and organizational units all function in harmony and synchrony to produce a single functional unit. All the parts have to be aligned in their functioning in order for the whole unit to be effective. In the event that one unit or part fails to function effectively, this will affect the entire organization, which is bound to fail in its operations.
In the case of Aalborg, there were a number of challenges, particularly in the management of the company’s human resources. The managing director, Mr. Andersen, believed in western values, so much that he did not take time to understand that Aalborg Vietnam was actually in Vietnam, an Asian country and not in the US or Europe. As such, his policies sought to promote western ideals of work. He did not pay a lot of attention in training the employees so that they could conform to his rules. Mr. Andersen did not see the value of sending Vietnamese workers to the plant in Denmark, as he thought that the Vietnamese workers had no capacity to pass on what they had learnt in Denmark to the benefit of the Vietnamese company. As such, he denied the Vietnamese workers the training and the exposure they needed. Besides, he preferred having Danish workers take lead of the Vietnamese branch so that the Vietnamese workers could remain subordinate to the Danish workers.
This was the greatest undoing for the company, as the Vietnamese workers felt relegated to the periphery of the running of the company, and as much as Aalborg was a Vietnamese company, it was actually a Danish company in Vietnam. According to the functionalist theory, this was a dysfunction in the company, whose consequences would include a division in the manner in which the company employees performed their duties in the company. As a result, the company could not operate to its fullest potential.
Cultural differences between the two groups of workers was eminent. The Danish workers, for instance, regarded workplace risk highly, and as a result, were quite receptive of the use of safety gadgets such as helmets and safety shoes. The Vietnamese workers, on the other hand, did not view these risks as highly as the Danes, and as a result, they were antagonistic toward using them. They only came to accept them after much persuasion. These challenges were amplified by the fact that the MD, Mr. Andersen did little to encourage cooperation between the two groups of employees, thus widening the gap between the differences of the two.
With regarding to decision making, Mr. Andersen found Vietnamese employees highly wanting as their perceptions about various decisions varied with those of the Danish workers. Rather than take time to orient them on the western way, he preferred to hire younger employees who did not have preconceived notions about some decisions and the ways that things were done. This was a malfunction. According to the functionalist theory of culture, there was need to fill the gap in these differences if the company was to do well in decision making. There was also a need to ensure that all the employees read on the same script regarding the manner that things were supposed to be done.
There were also differences in the manner in which the managers on both sides of the Vietnamese and Danish sides viewed some standards on the quality of production for the company. Due to differences in their cultural orientations, they had varied perspectives with regard to this. The Danish were accustomed to setting very high standards for the products the company produced, while the Vietnamese were more comfortable with lower standards, citing higher costs of production if they followed the Danish regulations. Besides, the Danish managers were quite manipulative and did not regard their counterparts, the Vietnamese managers, highly. They sawthem to be subordinate to them, and had their way in everything they did. The Vietnamese managers had nothing to do as they could not voice their objections to some things, knowing that they were in vain. They, therefore, accepted their fate and kept to themselves (Dao, 2013: p13).
Functionalist Theory
These and many other examples serve to show the amount of dysfunctions there were in the Human Resource management in the company. This can be explained using the functionalist theory, which stresses on the importance of all units in the organization working in harmony with each other in order for the organization to function well as a whole. These problems among the employees divided the employees between the Danish and Vietnamese lines. The divisions were very clear that cooperation between the two sets of employees, and it was clear that the Danish employees regarded themselves highly as compared to the Vietnamese employees.
The extent of the failure for the organization to function under these problems and poor management of the human resource was clearer when Mr. Andersen left the company and Mr. Hjorth took over the management of the company. He knew the importance of all units of the organization working together, and worked to integrate the efforts of all the workers. The first thing he did was to identify the importance of integrating the Vietnamese workers to the general running of the organization. He offered them the necessary training they needed in order to fulfill the requirements of effectively running the company. He identified the one aspect that acted to block effective functioning as the differences in culture between the Vietnamese and Danish or western cultures. In order for the employees to function well, they had to share the same perspective regarding the running and operation of the company.
According to Hofstede’s cultural dimension, various cultures handle different situations differently. The first characterization of these dimensions is power distance in an organization. The Vietnamese were more tolerant to unequal power distribution in the organization, as they complied with their subservience status without much opposition. This can be explained by the way that they were socialized, where by many societies attributed power and authority to western societies, and are ready to accept lower status to the western ideals. The western mentality is often perceived to be of a higher quality than any other mentality, and as such, they are more comfortable being led by propagators of this mentality than their own. This attitude can also be seen in the manner that the Vietnamese managers settled for lower standards in the quality of production, standards which the Danish managers were not ready to accept. This shows that culturally, the Vietnamese viewed standards in a different way compared to the western way, whereby they did not attribute a lot of importance to the same. The same was seen in the use of safety shoes and helmets, which they did not value as much as the Danish employees did. This serves to shows that culturally, Vietnamese employees ascribed lesser importance to human life (Fang, 2006: 76).
Constructivism Theory
The second theory to the aspect of culture discussed in this issue is the constructivist theory. According to this theory, culture is just a mental construct, and it makes sense as long as the meanings ascribed to the cultural exhibits are concerned. These meanings are passed down to subsequent generations. The meanings for various cultural aspects can be changed according to changes in the meanings ascribed to these cultural aspects, and as such, culture is not as distinct as it is in the functionalism approach (Fang, 2006; 78).
In the case of Aalborg, the problems in the HRM can be explained by differences in culture between the Vietnamese and the Danish employees. The Danish employees had constructed in their minds the mentality that they were better placed in running the industry than the Vietnamese workers, because of the mental constructs about the western way of doing things as opposed to other ways. Mr. Hjorth disputed this mentality when he ‘gave back’ the industry to the Vietnamese employees. He empowered them to run the company, empowered them to make decisions regarding the working of the company, and let them use their expertise and abilities to run the company. The results were a tremendous improvement in the productivity of the firm, proving that the initial ideology, that the Vietnamese lacked the capacity to effectively run the firm and even perform well, was just a mental construct in the minds of the Danish workers and managers.
Recommendations
There is need for Aalborg industries Vietnam to come up strategies that will remedy the current problems in the company. One way it can do this is by appreciating the differences in culture there are between Denmark and Vietnam. There should be concerted effort to study these differences and understand them as much as possible before designing ways of dealing with them. Given that management wants the company to be run on western values, it should start instituting reforms and changes in the manner that the Vietnamese workers viewed the operations of the company. The workers would then be trained on what is required of them such as the quality of standards that the company needed to uphold, explaining the importance of this. Other factors such as the need for helmets and other safety precautions need to be explained with an understanding of the reasons why they are important. All these need to be explained returning the benefits back to the user, so that the workers could appreciate them. Management too, needs to empower the local workers, train them on processes such as decision making so that they could have the authority it required for them to run the company. This sense of ownership would work to give them the morale and motivation they needed to work harder for the benefit of the company.
Question 2a
Knowledge Management Processes Adopted by Aalborg
The art of knowledge management involves a number of strategies and processes that an organization uses to identify, create, distribute, represent, and enable the adoption of knowledge as embedded in individuals and the organization. The practice of knowledge management is often integrated in businesses as a business strategy through information technology and or the human resource department. Knowledge management efforts endeavor to provide results for the company based on the company’s objectives, competitive advantage, innovation, as well as integration of the human resource of the organization.
The first process that the company engaged in, in its efforts to effectively manage knowledge was to collect the necessary data about what was needed in terms of knowledge for the company. According to the knowledge management model, this is the most crucial stage in knowledge management, such that only the relevant and important information needs to be collected so that the resulting knowledge is also relevant and accurate. This also translates that the decisions that will be made from this knowledge will be accurate in relation to the problems being solved. Data collection is done procedurally, and may involve processes such as examination of monthly sales reports, daily attendance reports, education and experience qualifications of employees, and even observation (Alavi & Leidner, 2001, p. 133).
In the case of Aalborg, the management had to collect detailed information before it could embark on training for the employees. This information was what provided knowledge for the training requirements. For instance, employees were interviewed on aspects such as decision making in their routine operations. It was discovered, for instance, that they did not have the right to decision making as most decisions were made for them by the Danish and Vietnamese managers. Their suggestions were often ignored; they even stopped suggesting at all. Observations in the running of the company also revealed that there were eminent power wrangles between the Danish managers and the Vietnamese managers. This required for the organization to implement some sort of structures to outline the roles of each managers in the organization. Such information and much more was collected and used to inform the training and restructuring requirements for the company in an effort to ensure that knowledge was effectively managed. According to the knowledge management theory, the company was doing great injustice to the Vietnamese employees, by denying them the right to sufficient knowledge to empower their decision making capacity. The theory posits that knowledge should be made readily available to all stakeholders involved in the processes of the organization.
The second process that the company employed was analysis of the collected information. This stage, according to the knowledge management theory, requires that the information collected in the first step is analyzed so as to identify and determine relationships between the various fragments of the information, redundancies, and patterns in the occurrence of events and the organization of the information. According to the knowledge management model, this process requires the input of an expert or expert team, to effectively and accurately articulate the patterns of dysfunctions in the company operations.
After the management team collected the information about the problems that were in the company, it analyzed these problems to compress them into actionable programs. It, for instance, was clear that the Vietnamese workers were marginalized in their role in the company, as they were treated insubordinately to the Danish workers (Dao, 2013, p. 10 & 11). An analysis of this observation would bring out the issue of racism and unfairness in the organizational framework of the company. Such a domineering and dominated mentality was responsible for a number of dysfunctions in the company, including language problems between the two sets of employees. From the failures in the communication systems, for instance, between the Vietnamese and the Danish managers, a critical analysis of the issue brought one to the knowledge that the Vietnamese used this as an excuse to escape responsibility and the need to solve the problems there were in the company.
The knowledge management theory identifies this as one of the problems of diversity in organizations, as people use this to determine the lies across which information is shared. One of the biggest problems, according to this theory, is the discrimination in sharing of information on the basis of demographic differences. This analysis informed the management of the company of the underlying problems for the company; dealing with the issue of racism.
After analyzing the information gathered, the company then synthesized this information to form a body of knowledge. The synthesis procedure, according to the knowledge management theory, helps in the deriving of concepts and artifacts for action on the problems raised. Explanations are sought regarding the observed behavior, and patterns of behavior can be used to explain another set of behavior and so on. It is this knowledge that is then used to determine the appropriate course of action for the company in dealing with issues affecting the organization.
In an effort to further understand the differences between the two sets of employees in the company, management carried out a detailed synthesis of the information they had gathered. While from the beginning it included petty aspects and incidents such as the Danish MD using offensive language while speaking to his employees, the synthesis of the larger patterns of behavior brought out blocks of issues that culminated in these small events. One aspect was clear; the Danish workers and even managers viewed in disregard the Vietnamese workers. Furthermore, they made it open and clear to the Vietnamese workers that they were subordinate to them, and would not act on the same capacity. This served to put off the Vietnamese employees, who felt inferior, and as a result, reduced their morale to work as efficiently and effectively as they needed to. Lack of equality was eminent, and the company needed to do something if it was to save itself from collapse.
The other process that the company adopted in knowledge management was knowledge sharing. As posited by the knowledge management theory, knowledge gathered is shared among the appropriate people in order to inform the decisions that are made out of this knowledge. Knowledge is only shared among the concerned parties, and those to whom such knowledge concerns (Alavi & Leidner, 2001, p. 134). These are the people with the power and authority to induce reforms to correspond with the information gathered in the initial processes, and they must be the people with the right interests for the company. This is so that they do not use the knowledge to bring the company down, but rather to remedy the problems and build the company. It is important to note that sharing knowledge is for the purposes of enacting and implementing meaningful reforms to the company, and not for the fun of it.
In the case of Aalborg, the knowledge that was formed of the operations in the company was shared among the company top officials, with a call for the new MD to implement some changes. Sharing of information helps the company to clear out any suspicions there may be in the collection process, so that anyone who wishes to dispute the judgments made is free to air them.
