Effect of Cultural Diversity on UK & US Business Operations

Question: What are the Effects of Cultural Diversity on UK US Business Operations? Aim: To explore the effect of cultural diversity on UK US business operations . Objectives: To Conduct a Critical Literature review into cultural diversity and UK US Cultural Diversity To analyse the findings in the light of the theory To discuss the findings To produce tentative recommendations Answer: Introduction Introduction to the Study The aim of this study is to explore the effect of cultural diversity on UK US business operations. Globalization and internationalization is critical and has become of great importance in the recent times. The companies are looking abroad to expand their operations and business as the world becomes more interconnected. The current workforce is a mixture of ethnic groups, genders, races, religions and lifestyles. Cultural Diversity in UK UK is a very homogeneous society. Britain has become increasingly diverse since World War II with a large amount of immigrated populations. It is difficult to identify British in the population because of the mixture in ethnicities. The British tend to be formal and they respect people at a high rank (Kwintessential.co.uk 2016). Cultural Diversity in US The US is a nation of immigrants and it is a culturally diverse country. The Americans have a friendly nature and they are renowned for their informality. They have a direct approach to communication and they value linear thinking. The Americans value time and punctuality (Kwintessential.co.uk 2016). Background and Significance of the Study Since a high number of businesses around the world enter the global market, there is a need of acquiring and sustaining competitiveness. Every country has a different culture but there are various factors that encourage companies to begin operations on an international level. The situation for some countries is not easy as they have to adapt with the cultures in a foreign country. This paper would analyse the cultures of UK and US and help the potential investors or migrants to make an informed decision. The report helps in analyzing the causes, consequences and management of workplace discrimination (Rose 2012). Problem Statement A bad choice of a new country for the investors to conduct business operations can lead to heavy financial losses and reduction in opportunities. Several concerns such as political factors, economic environment and cultural factors play a significant role in the international market. It is critical for a company to consider cultural difference before entering into the foreign market. Many obstacles can be subsidized and the entry in market can be made much more successful. It is important for the organizations to maintain a balance between employees and customers of the particular organization (Eide and Nikunen 2011). Research Questions Based on the problem discussion, the following research question was developed: How do cultural differences influence the business operations in UK and US? What are the most important cultural factors that must be considered by a company for investing in UK and US? Research Aims and Objectives The main aim of this paper is to put a deeper insight on the effect of cultural diversity on UK and US business operations. Other objectives are: To explain the benefits and limitations of workplace diversity To study the factors that influence cultural diversity To create awareness and influence diversity management To determine the different ways of dealing with workplace diversity To provide effective guidelines for diversity management in small as well as international organizations. Research Methodology The data is collected from secondary sources such as published journals, articles, websites and books. An explanatory approach is followed for preparing the paper. Definition of Terms Cultural Diversity Cultural diversity is also known as multiculturalism as a diverse group of individuals are involved. Cultural diversity is the quality of diverse cultures based on gender, ethnicity, age, sex, religion or sexual orientation (Bassett 2012). Diversity Management Diversity management is a process of creating and maintaining a positive work environment by valuing similarities and differences of individuals at the workplace. Not only the diversity management involves how one perceives himself, but also how an individual perceives other members of the organization (Bassett 2012). Literature Review Reasons for diversity management in organisations Various reasons accompany the need for diversity management listed as follows: Talent Shortage- In a competitive environment, it is necessary for the companies to find employees that would enhance creativity and innovation in the organization. Diversity management also reduced absenteeism as organizations are finding ways to attract, retain and utilize the valuable employees effectively (Foster 2011). Range of Consumer Need- The organizations feel the need to serve customers at their best in diversified markets. The communities have different languages, organizational benefits and diversified product range to attract diversified customers. Globalization- Globalization is a process in which businesses or organizations operate internationally crossing domestic boundaries. The prices of inputs vary across the world that enables organizations to outsource labour for cheaper cost. Factors necessary to adopt a diverse workforce The domestic workforce to the globalization of business has been increasing at a fast pace. The most important skill in the workplace for effective work performance is cultural competence. It is necessary to build cultural competence as it helps in giving the ability to understand, communicate and interact effectively with people across cultures. A range of factors are influence the workplace stated as under: Communication- It is critical to provide information accurately and promptly for boosting team performance. A project may require immediate corrective actions and people from different cultures have different attitudes towards bad news. Asian cultures may be reluctant to give bad news whereas a few cultures exaggerate the same (Oguntebi, Shcherbakova and Wooten 2012). Team-building- The issues of team-building can become problematic as the cultures may be individualistic, or collectivism may be prominent. Effective cross-cultural team building is necessary for benefitting the cultural diversity in the workplace. Time- Different cultures have different attitudes towards the time balance between personal life and corporate life. Some cultures value time and run errands exactly on deadlines. While in some cultures, deadlines are not given much importance, such cultural diversity impacts daily work. Calendars- Different cultures have different holidays such as Jews observe holiday from Rosh Hashanah to Yom Kippur, Christians celebrate Christmas differently in the West and East. These variations in holidays affect the working schedules (Oguntebi, Shcherbakova and Wooten 2012). Concepts in Diversity Management Diversity management can be defined as the process of planning, organizing, directing and applying the managerial attributes for developing organizational environment. Diversity can be described as having four layers: personality, internal dimensions, external dimensions and organizational dimensions. Personality- It can be described as a stable set of characteristics establishing identity of a person. The personality traits can be classified as positive or negative such as patience, reliance, trustworthy, rude, obnoxious and various others (Oguntebi, Shcherbakova and Wooten 2012). Internal Dimensions- The internal dimensions such as gender, race, ethnicity, physical ability or sexual orientation have a strong influence on peoples attitudes, expectations and attitudes (Johnson et al. 2014). External Dimensions- The dimensions such as educational levels, income, marital status, habits or religion have an influence over the peoples expectations and attitudes (Johnson et al. 2014). Organizational Dimensions- The factors such as work field, management status, division or department have significance in the organization affecting the behaviour and attitudes (Oguntebi, Shcherbakova and Wooten 2012). Cultural Models including modes of Communication and Behaviours The communication between two or more people can be considered effective if there is clarity in values and beliefs. Different industry sectors have different values and beliefs. The transactional process can be implemented in three industrial contexts as stated below. Suppliers and customers- The cultural diversity affects the implementation of work processes between the suppliers and customers. It is critical for the suppliers to share their concerns in order to sell more products to the customers. Communication helps in understanding the diversified customers and suppliers (Calabrese et al. 2015). Students and tutors- Communication plays a critical role for the students studying abroad. The tutors may enhance the different views of students to meet the diverse culture requirements (Galaktionova 2015). Medical professionals and patients- The diverse cultures have a great impact on the medical staff and health care sectors as it helps in innovating new ways to assist patients within the health care (Gone 2011). Hofstedes Model Hofstedes model of cultural dimensions was propounded by Geert Hofstede. He conducted a comprehensive study of valuing culture in different nations. Hofstede defines culture as a collective programming of mind that distinguishes members from one another. The six cultural dimensions of the model are identified as under: Power Distance Index (PDI) UK has a low degree of PDI as they believe in a society with less inequality (Geert-hofstede.com 2016). The US scores 40 and accept that power is distributed unequally (Geert-hofstede.com 2016). Individualism versus Collectivism (IDV) - A high score of 89 for UK depicts that British are highly private people backing individualism (Geert-hofstede.com 2016). The US also has a high score of 91 as Americans are accustomed to do business with people they do not know well (Geert-hofstede.com 2016). Masculinity- Britain is a masculine society at a score of 66 and the people are success oriented (Geert-hofstede.com 2016). The US has a high score of 62 and reflects a masculine culture as the Americans show their individualist drive in the world (Geert-hofstede.com 2016). Uncertainty Avoidance- UK has a low score of 35 indicating that the nation is quite happy and are not threatened (Geert-hofstede.com 2016). With a score 46 for the US, Americans have a fear because of the past incidents and attacks on the country (Geert-hofstede.com 2016). Long-term Orientation- UK has an intermediate score of 51 reflecting that the dominant preference in British culture cannot be determined (Geert-hofstede.com 2016). The US has a low score of 26 reflecting that Americans do not follow a pragmatic culture (Geert-hofstede.com 2016). Indulgence- A score of 69 indicates indulgent British culture exhibiting a willingness to realize their impulses (Geert-hofstede.com 2016). A score of 68 for the US indicates that Americans believe in work hard and play hard attitude (Geert-hofstede.com 2016). Findings and Analysis Findings and Analysis of UK According to the equality campaigners, there is a gender pay gap between men and women at 14.2% (Kollewe 2015). The data shows little progress in minimizing the gap between salaries for men and women. The above data shows a gap for men and women who are working full time based on the data collected from the Office for National Statistics. The data for 2014 shows 15.7% (Kollewe 2015). The campaigners warned about the little progress made in minimizing the gap for 2013, it would take 54 years to fully balance the gap between salary of men and women (Kollewe 2015). Considering both part-time and full-time workers, the gender pay gap is 19.1% (Kollewe 2015). According to the Trades Union Congress (TUC), the pay gap between men and women among Britains top earners is 55% (Kollewe 2015). The women earn 75,745 while 2% of male earners earn more than 117,352 a year (Kollewe 2015). Due to the increase in gaps between gender pay, the country is heading down the gender equality league table. The country ranks have fallen down from 37th to 46th in economic participation, from 63rd to 94th in health, from 1st to 32nd in educational attainment and 12th to 33rd in political empowerment (The Guardian 2014). In UK, for every 10 percent increase in gender diversity, there was a financial impact as EBIT rose by 3.5 percent due to greater gender diversity resulting in high performance (Hunt, Layton and Prince 2015). According to the Global Gender Gap report, the gap between men and women for wages stands at 66% (Kottasova 2015). It is further reported that 125 women in the UK work for free daily (Kottasova 2015). According to Silvera (2014), the disabled employees at UK still face discrimination at the workplace. According to the law firm Leigh Day, the disabled workers feel unsupported as they are treated differently at the workplace (Silvera 2014). The reports of Purple Workforce report also suggest that almost half of the disabled worker respondents do not feel comfortable their disability while applying for a new job (Silvera 2014). 3/4th of the disabled workers reported that they fear disclosing disability due to fear of discrimination rather than embarrassment (Silvera 2014). The disabled workers face negative attitudes from employers during the interview. Welfare reform minister Lord Freud made an apology for stating that the disabled workers are not worth of receiving the national minimum wage of 6.50 per hour (Silvera 2014). He further suggested paying at least the minimum wage (Silvera 2014). According to a survey taken by the Latvian Community in Boston, Latvia faces discrimination for the migrant workers. The report states that 839 workers stated their experiences and the group is known as Stronger Together (The Baltic Times 2015). 45 workers reported that they were not being paid for statutory holidays and 38 people reported that they were not entitled clearly for working days and holidays entitlement (The Baltic Times 2015). Several cases were reported where the employers made demands for working over time without giving any notice. The employees were also penalised with 7-14 days unpaid leave in case they did not arrive within an hour or two (The Baltic Times 2015). 33 workers reported that they had injuries at work and were dismissed (The Baltic Times 2015). 17 employees reported that the pregnant women were not given jobs and were denied maternity leave (The Baltic Times 2015). 30 Latvians reported that the migrants had to find alternative accommodation as the land lords were not willing to carry essential repairs (The Baltic Times 2015). The researchers state that the legal migrant workers are critical to the US economy and they face discrimination at the workplace. The temporary agricultural workers have a salary of $10 an hour or less (Jula 2015). The number of temporary workers has increased from 6,573 to 111,670 from 1990 to 2013 (Jula 2015). It is harder for the companies to find workers even with temporary visas (Jula 2015). Findings and Analysis of US The U.S. Census Bureau reported that the gender wage gap has narrowed (Hartmann 2015). According to the reports, women earned 78.6% of what men earned in the year 2014 increased from 78.3% (Hartmann 2015). The gap between men and women remained stagnant at about $11,000-$12,000 since 2001 (Hartmann 2015). According to the research conducted by Institute for Womens Policy Research, it was reported that the women would not see equal pay until 2059 (Hartmann 2015). Further, the Global Gender Gap report stated that the gap between men and women for wages stands at 64% indicating that the women earn two-thirds of what men earn for performing similar work (Kottasova 2015). The US stands at 74th rank for wage equality among 145 countries (Kottasova 2015). It is further reported that 133 women in the US work for free daily (Kottasova 2015). President Obama was embarrassed reporting that women earn only 77 cents in comparison to every dollar a man earns (Smith 2014). According to the Bureau of Labour Statistics survey for 2012, the real figure was reported as 81 cents on the dollar for median income of women (Smith 2014). The women must be paid even more. Black men make only 87 cents on a dollar in comparison to other men (Smith 2014). The black women earn 78 cents on the dollar (Smith 2014). According to the new Cornell University study, the researchers further state that workers with disabilities are paid 8% less in total compensation including wages, vacation time, health insurance, and 10% less than workers in similar jobs (Omaye 2013). The disabled workers are more likely to opt for jobs with lower wages than the jobs offering strong benefit packages (Omaye 2013). 21% of the employees with disabilities are actively looking for a job or are employed (Omaye 2013). The unemployment rate increased from 7% to 13% in the year 2013 (Omaye 2013). According to the reports, there were two job groups clustered for 62% Hispanics- sales and office occupations and service occupations (Fisher 2015). The data is compared with employees of same job categories for 51% of whites, 44% Asians and 57% blacks (Fisher 2015). The employees having disabilities are underrepresented in white-collar jobs and overrepresented as manual labour jobs. The limitation of the research was that only full-time male workers were surveyed to determine wage gaps (Fisher 2015). Discussion Workplace discrimination based on cultural diversity in age, gender, race and various other factors has come a long way in the recent decades. Despite times of legislation, activism and human resources, workplace discrimination still exists as a curse for countries like UK and the US. Most workplace laws and policies to prevent stereotypes based on culture, gender, race, creed or sexual orientation are affecting workplace decisions. Prejudice comes in different qualitative forms that have to be managed be according to emerging evidence in neuroscience and social psychology. Culture is the most important part of leadership. The employees need a sense of purpose and direction that makes an organization stronger. The organizations cannot be overt about discriminating like in traditional times. The commitment to workplace diversity must be promoted (Foster 2011). Researchers have found out that a section of gender age gap is caused due to various factors. There are various social and economic factors that drive wage gap based on racial discrimination. Several policies like medical leave, paid sick days helps in ensuring women of colour are able to maintain a balance and parity between work and family. The public policy would not close the gender gap for women of colour. The subpopulations experience different needs, positions and wants in relations to power and force. Cultural diversity refers to the co-presence of the above mentioned cultural systems within the same geopolitical boundaries (Foster 2011). Cultural diversity has a major impact on the communication as the emerging economies have begun to integrate the business cultures of traditional powerhouse nations into their businesses. A negative effect of cultural diversity in the workplace is that there is increased tendency of indulgence in conflicts. The difference in opinion and mutu al effort differs, this leads to hindrance in development of unity. The personal culture of the people generally comes from the context of his or her family or friends or from the educational environments. The knowledge of cultural values helps in strengthening the domestic values (Foster 2011). Diversity management is a process that is intended to create a positive work atmosphere while accepting differences of individuals. The human resource practices, institutional environments, expectations, perceived practices and diversity- related pressures are mostly emphasized on organizational culture. Wage discrimination negatively affects the workplace beyond cash liabilities, workplace productivity, retention of staffs and perception among customers. Discriminatory practices have a negative effect on the job satisfaction levels as all employees are not treated as one. The promotions, benefits or bonuses should be exclusively awarded on the basis of candidate performance and qualifications (Eide and Nikunen 2011). If any employee at the workplace is discriminated on the basis of gender, race, creed or other discriminatory factors, the workplace productivity is negatively affected. The turnover levels can increase if the staffs regularly witness discrimination at the workplace. If the employee has a perception of job insecurity or no future in the organization, he will not perform efficiently and invest less. The level of organizational commitment would be negatively affected (Rose 2012). Diversity is a set of conscious practices involving and appreciating the importance of cultures, natural environment, humanity that are different from our own. Discriminatory practices also affect the reputation of the organization. Discrimination also affects the clients or customers of the organization. The jobseekers research the company whether application and if the organization is facing several discriminatory lawsuits, the potential employees are less likely to apply. The crippling effects of workplace discrimination involve negative fallout, reduced profits and demoralized workforce. One of the biggest negative effects of workplace discrimination is the poor working atmosphere. Workplace diversity refers to number of differences between people in the organization. A culture of suspicion, mistrust, rivalry and hostility is created. If the employees are discriminated at the workplace, the employees tend to lose focus and waste time. Discrimination causes negative motivation amo ng employees again leading to loss of productivity. The employees have a tendency to switch jobs and cope with low productivity. Discrimination at workplace usually leads to a debilitating effect on the psychology of employees. Some of the incidents at workplace due to discrimination lead to domestic violence and even murder caused by rage due to loss of self esteem. Not only the diversity management involves how one perceives himself, but also how an individual perceives other members of the organization (Neuman, W. L. 2011). Modern organizations face many significant challenges due to competitive global economy and turbulent environment. Culture and language differences result in miscommunication jeopardizing trust, team identity and cohesion. Closing the gender pay gap is necessary for both the employers and workers. Apart from creating a positive work environment and motivation to employees, the economy attains profitability as a whole. The undervaluing of women's work and the under-utilisation of women's skills is a lost resource for the economy and for society at large (Chen 2011). A better use of women's skills allows them to better contribute to the economy as a whole. The reduction in gap also promotes equal opportunities and social justice. The economic independence is improved as the skills and values motivate performance. If the women-owned businesses are expanded, more capital may be drawn into more productive businesses. Small business getting more capital acts as a stimulus for local communi ties. The wage gap hurts women and families (de Castro Campos, Kool and Muysken 2013). Recommendations The proposed solution for minimizing the wage gap between disabled workers, men and women and other discriminatory grounds require expansion of services, improve management training, raise awareness and accommodate employees with disabilities (Teeratansirikool et al. 2013). Cultural Literacy and competence Cultural literacy is the ability to understand and increase participation fluently in a particular culture. The term was coined by E. D. Hirsch and it is an analogy to literacy of reading and writing. Cultural literacy can act as an international strategy for dealing with cultural diversity (Shwalb, Shwalb, and Lamb 2013). A cultural literate person would be able to talk, understand and manage the people of other culture. The social mobility increases due to cultural literacy as every person can participate in the conversation with teachers or employers. Cultural illiteracy is the most common and reasons of poverty and powerlessness. Literacy is not just a matter of decoding the string of words or letters, but it is a matter of decoding context. Anyone working in the information and service economy is well served by being as culturally literate as possible (Andrevski et al. 2011). Cultural competence is a set of behaviours, policies and attitudes that enable an organization to work effectively in cross-cultural situations. Cultural competency includes valuing diversity, being conscious about interaction of cultures, having the capacity for self-assessment and developed adaptations to service delivery. The above factors can be incorporated in all aspects of practice, knowledge and skills. Cultural competence acknowledges and incorporates variance in normative acceptable behaviors, beliefs and values in determining an individuals mental wellness/illness, and incorporating those variables into assessment and treatment (Suedekum, Wolf and Blien 2012). Creative conflict Management Conflicts arise in organizations due to various reasons. The strategies to manage conflicts are very crucial. The international strategy can be useful when the workers feel their self-esteem is under attack. There are five different conflict modes- aggressive mode, accommodating mode, compromising mode, collaborating mode and avoiding mode (Logan 2012). The organizations must inculcate a creative culture. The employees must pay attention to details and must maintain security of employment. Leader plays a critical role in creative conflict management. A successful organizational culture results from only two things: top leaders and engaging employees. Leaders need to encourage other leaders that would help in shaping organizational culture and value conflict management (Bassett 2012). The misunderstandings may lead to unproductive conflicts. The best way to address the issue of cultures is to make community building a part of organizations purpose. An effective conflict resolution strategy would help the diverse team in reducing conflict and increasing productivity. Creative conflict would help in building innovation and increasing productivity. Creative conflict is characterized by effective communication and strong relationships. Team or group development, learning, and facilitation matched to the members' current intercultural expertise. A diverse culture leads to discrimination between employees resulting in conflicts. It is the responsibility of the management to spread cooperation and collaboration for diverse culture and encourage employees in reducing conflicts. Conflict resolution also evaluates the significant growth of the organization (Nederveen Pieterse, van Knippenberg and van Dierendonck 2012). Localization One of the most important strategies in handling discrimination at workplace is localization. Localization implies process of adapting to the specific culture or locale. Through localization, the objectives and goals can be aligned with activities of the organization. The expansion of global reach and penetrating existing markets further is a key objective of organizations. With the promotion of localization activities, the teams can shine light on the teams expertise and knowledge. The organization can obtain education and gain access to technological tools (Song 2011). The organizations must find a balance between standardization and localization of web content. Localization would provide the local knowledge in a particular situation as the deep knowledge and behaviour would bring potential for dealing with employees. Localization helps in minimizing the disadvantages of diversity. Establishment of leadership in the organization would help in managing the challenges arising from diverse cultures globally. Poor communication process also influences the diversity management practices within various organizations. It is very important for the organization as well as the management team of the organization to understand the local or regional values and beliefs as this will help in executing the business process of the concerned firm (Moran, Harris and Moran 2011). Internationalization of Websites The internationalization of websites help in encouraging diversity practices on international grounds. The promotion and encouragement of diverse cultures can be a great strategy for diverse cultures across the world. It is important for the organizations to maintain a balance between employees and customers of the particular organization. Diversity in cultures help in evaluating the desired growth of the organization. The communication process is enhanced creating awareness among the people. Advancement of the communication technology plays the most vital role in reducing the great impact of the diversity across people working internationally (Laroche 2012). The personal culture of the people coming from different countries revealed their attitudes, behavior, traits, qualities and skills within a particular field. The personal culture of the people generally comes from the context of his or her family or friends or from the educational environments. The knowledge of cultural values helps in strengthening the domestic values. It enhances the communication process and creates awareness among the people which proves to be very helpful in reducing the discrimination and the social injustice that prevails between the different categories of people due to diverse cultures (Posthuma and Al-Riyami 2012). Conclusion The above paper explores the effect of cultural diversity on UK US business operations. Globalization and internationalization is critical and has become of great importance in the recent times. Britain has become increasingly diverse since World War II with a large amount of immigrated populations. The US is a nation of immigrants and it is a culturally diverse country. The Americans have a friendly nature and they are renowned for their informality. Every country has a different culture but there are various factors that encourage companies to begin operations on an international level. The situation for some countries is not easy as they have to adapt with the cultures in a foreign country. Several concerns such as political factors, economic environment and cultural factors play a significant role in the international market. The data is collected from secondary sources such as published journals, articles, websites and books. An explanatory approach is followed for preparing the paper. It is necessary for the companies to find employees that would enhance creativity and innovation in the organization. Every country has a different culture but there are various factors that encourage companies to begin operations on an international level. The issues of team-building can become problematic as the cultures may be individualistic, or collectivism may be prominent. The communication between two or more people can be considered effective if there is clarity on values and beliefs. Communication plays a critical role for the students studying abroad. The tutors may enhance the different views of students to meet the diverse culture requirements. Hofstede defines culture as a collective programming of mind that distinguishes members from one another. Due to the increase in gaps between gender pay, the country is heading in the gender equality league table. The disabled employees at UK still face discrimination at the workplace. The disabled workers face negative attitudes from employers during the interview. Several cases were reported where the employers made demands for working over time without giving any notice. The limitation of the research was that only full-time male workers were surveyed to determine wage gaps. The turnover levels can increase if the staffs regularly witness discrimination at the workplace. If the employee has a perception of job insecurity or no future in the organization, he will not perform efficiently and invest less. Several policies like medical leave, paid sick days helps in ensuring women of colour can maintain a balance and parity between work and family. If the women-owned businesses are expanded, more capital may be drawn into more productive businesses. Small business getting more capital acts as a stimulus for local communities. The wage gap hurts women and families. Most workplace laws and policies to prevent stereotypes based on culture, gender, race, creed or sexual orientation are affecting workplace decisions. Establishment of leadership in the organization would help in managing the challenges arising from diverse cultures globally. It is important for the organizations to maintain a balance between employees and customers of the particular organization. References Andrevski, G., Richard, O., Shaw, J. and Ferrier, W., 2011. Racial Diversity and Firm Performance: The Mediating Role of Competitive Intensity.Journal of Management, 40(3), pp.820-844. Bassett, L., 2012.Economists: Closing Gender Wage Gap Would Create 'Huge' Economic Stimulus. [online] The Huffington Post. 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