FACULTY OF EDUCATION AND LANGUAGE

SEMESTER MAY 2011

BBSB4103 CROSS-CULTURAL MANAGEMENT

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TABLE OF CONTENTS Table of Contents THE REVIEW OF LITERATURE 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Introduction ..., 2 Definition of culture ........... 2 Overview of selected organization ..... 5 Corporate culture questionnaire ..... 8 Deep Dive on each questions response ........ 9 Overall evaluation of the result....14 Conclusion ...16 1

REFERENCES 8.0 References...................18

APPENDICES 9.0 Appendix I : Questionnaire by Nicole C. Moss 20

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THE REVIEW OF LITERATURE

This paper evaluates the corporate culture of a selected global organization by reviewing the result of a survey. The survey is based on the questionnaire posted by Nicole C. Moss on Quiz: What is your corporate culture?. Further evaluation of the questionnaire results was discussed including advantages and disadvantages of the culture.

1.0

Introduction

Culture matters. It matters because decisions made without awareness of the operative cultural forces may have unanticipated and undesirable consequences. Corporate culture is believed to influence key aspects of business performance, such as innovation, customer focus, adaptability to change, and organizational learning. Some experts say it is also the defining factor in the areas of employee engagement, loyalty, and retention (Towers Perrin, 2007). When companies get the culture right, success often seems to naturally flow (Saltzman, 2007). But when they get it wrong, failure often seems inevitable (Neuman, 2007; Probst & Raisch, 2005). A landmark 1992 study by J. Kotter and James Hesket concluded that, over a 10-year period, companies that intentionally managed their culture effectively outperformed similar companies that did not. Their findings included revenue growth of 682% versus 166%, stock price increases of 901% versus 74%, net income growth of 756% versus 1%, and job growth of 282% versus 36% (Warshawsky et al., 2006). Companies that manage culture well can also benefit in specific performance areas. Organizations with innovation-friendly cultures, for example, tend to be more profitable, enjoy faster growth, create more jobs, and have a more productive workforce than their non-innovative competitors, even in mature industries (Franko, 1989; Capon et al., 1992; Baldwin & DaPont, 1993). A recent American Management Association (AMA) study, The Quest for Innovation (2006), discusses at length the importance of an innovative culture. In such cultures, customers were found to be the number one driver of

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innovation, and the ability to focus on customers was viewed as the top-ranked factor for developing an innovative culture. Intel, the organization surveyed, has a long and strong 40years culture since the establishment. Paul Otellini, the CEO of Intel, when interviewed by Forbes, cited the success of were due to its culture and belief in egalitarian, merit-based reward, data driven decision, discipline are the main recipe for the company success. In order to explore the understanding, an interview was arranged with an Intel manager in Penang, Malaysia.

2.0

Definition of culture

Before we dwell further on the culture, lets review its definition. The concept of culture has been the subject of considerable academic debate in the last five years, and there are various approaches to defining and studying culture (for example, Barley, Meyer, and Gash, 1988; Martin, 1991; Ott, 1989; Smircich and Calas, 1987). Commonly used words relating to culture emphasize one of its critical aspectsthe idea that certain things in groups are shared or held in common. The major categories of such overt phenomena that are associated with culture in this sense are the following: 1. Observed behavioral regularities when people interact: the language they use, the customs and traditions that evolve, and the rituals they employ in a wide variety of situations (for example, Goffman, 1959, 1967; Jones, Moore, and Snyder, 1988; Trice and Beyer, 1984, 1985; Van Maanen, 1979b). 2. Group norms: the implicit standards and values that evolve in working groups, such as the particular norm of "a fair day's work for a fair day's pay" that evolved among workers in the Bank Wiring Room in the Hawthorne studies (for example, Homans, 1950; Kilmann and Saxton, 1983).

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3. Espoused values: the articulated, publicly announced principles and values that the group claims to be trying to achieve, such as "product quality" or "price leadership" (for example, Deal and Kennedy, 1982). 4. Formal philosophy: the broad policies and ideological principles that guide a group's actions toward stockholders, employees, customers, and other stakeholders, such as the highly publicized "HP Way" of Hewlett-Packard (for example, Ouchi, 1981; Pascale and Athos, 1981). 5. Rules of the game: the implicit rules for getting along in the organization, "the ropes" that a newcomer must learn to become an accepted member, "the way we do things around here" (for example, Schein, 1968, 1978; Van Maanen, 1976, 1979b; Ritti and Funkhouser, 1982). 6. Climate: the feeling that is conveyed in a group by the physical layout and the way in which members of the organization interact with each other, with customers, or with other outsiders (for example, Schneider, 1990; Tagiuri and Litwin, 1968). 7. Embedded skills: the special competencies group members display in accomplishing certain tasks, the ability to make certain things that gets passed on from generation to generation without necessarily being articulated in writing (for example, Argyris and Schn, 1978; Cook and Yanow, 1990; Henderson and Clark, 1990; Peters and Waterman, 1982). 8. Habits of thinking, mental models, and/or linguistic paradigms: the shared cognitive frames that guide the perceptions, thought, and language used by the members of a group and are taught to new members in the early socialization process (for example, Douglas, 1986; Hofstede, 1980; Van Maanen, 1979b). 9. Shared meanings: the emergent understandings that are created by group members as they interact with each other (for example, Geertz, 1973; Smircich, 1983; Van Maanen and Barley, 1984). 10. "Root metaphors" or integrating symbols: the ideas, feelings, and images groups develop to characterize themselves, that may or may not be appreciated consciously but that become embodied in buildings, office layout, and other material artifacts of the group. This level of the culture reflects group members' 4

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emotional and aesthetic responses as contrasted with their cognitive or evaluative response (for example, Gagliardi, 1990; Hatch, 1991; Pondy, Frost, Morgan, and Dandridge, 1983; Schultz, 1991). In summary, the culture of a group or an organization can be defined as A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.

3.0

Overview of selected organization

The manager interviewed was from Intel, the largest semiconductor company in the world which has its presence in Malaysia for more than 35years. Mr. Danny Lim who suggested his name not to be disclosed is the operations manager from an organization called Embedded and Communications Group.

According to Danny, Intel was established back in 1968 with the headquarter operated out from Santa Clara, California, United States of America. It has more than 80,000 employees worldwide with approximate 10% of its workforce operated out from Malaysia. Intel is ranked number one in the semiconductor industry with it revenue of USD43.6 billion in 2010. It has a very high gross margin ~66%. Its market capitalization of ~USD120.8 billion provides the scale to lead in semiconductor businesses.

Intel Corporation is the inventor of the x86 series of microprocessors, the processors found in most personal computers. Intel also makes motherboard chipsets, network 5

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interface controllers and integrated circuits, flash memory, graphic chips, embedded processors and other devices related to communications and computing. Founded by semiconductor pioneers Robert Noyce and Gordon Moore and widely associated with the executive leadership and vision of Andrew Grove, Intel combines advanced chip design capability with a leading-edge manufacturing capability.

According to Intel website, Intels mission is This decade we will create and extend computing technology to connect and enrich the lives of every person on earth. There are altogether 6 values that are guiding the way how Intel operates. They are : Customer orientation Results orientation Risk taking Great place to work Quality Discipline

Intels objectives are: Grow PC and Datacenter business with new users and uses Extend Intel Solutions to win in adjacent market segments Create a continuum of secure, personal computing experiences Care for our people, the planet, and inspire the next generation

Speaking about Intel Malaysia, over the past 30 years it has grown into the largest, most mature manufacturing facility outside of the United States. Intel Malaysia now comprises two big campuses and employs more than 8,500 people. Intel Penang houses assembly and test and chip design activities while Intel Kulim has its assembly and test operations for majority of the Intel components as well as board design operations.

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Known for its world-class safety standards in the global semiconductor industry, Intel Malaysia is also a two-time winner of the Prime Minister's Quality Award, a symbol of excellence honored to public and private organizations that implement outstanding totalquality management programs and contribute significantly to the country's economy and community.

For Embedded and Communication Groups in Intel Malaysia, it was established back in 1992 initially was to transfer the embedded microcontroller business back to Malaysia. Since then, it has grown from a member of 12 to a much sizable organization of ~300 people. It has multiple capabilities from chip design, validations, software development, platform design as well as marketing functions. The workforce mainly resides in Penang operations supporting the customers in Asia Pacific as well as designing embedded processors to serve Embedded and Communication Groups customer worldwide.

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4.0

Corporate Culture Questionnaires

According to Nicole C. Moss survey, there are altogether 15 questions that could help one to identify the type of culture for that organization. These are list of questions which are intended to explore different aspects of corporate practices and attributions in order for the categorization of the organizational cultures. In this survey, there are 3 types of cultures being called out by categorizing the questions into three main sections, question 1-5, 6-10, 11-15. If the person answering the questionnaire responded the most True answers in any of the section, then the organization will most likely fall into that type of culture. If the same number of most True questions in more than one section, then the culture believed to be the combination of both. Further evaluation by matching to the research news and data will be correlated. The three sections of the culture called out are Deliberative/ Traditional culture, Established/ Stable Culture and Urgent/Seat of the Pants culture. Below is the set of the questionnaires. If the respondent agrees to the statement, then a True statement will be noted and counted. In the end, number of True statement will be calculated and the section which has the most True responses will be used as the result of the categorization for the type of culture that the respondents organization falls into. Each question, with selected answer will be supplied with additional explanation on rationale. Deliberative Traditional Culture / 1. I know how my projects contribute to the success or failure of our organization. 2. Management here makes lots of announcements to employees. 3. I have colleagues from a wide variety of professional and personal backgrounds. 4. In this organization, people who are not ready to be promoted after a certain length of time at their level are generally

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encouraged to leave. 5. Departments or teams compete with each other for our organization's resources. Established/ Culture Stable 6. When people are not getting along here, it's a long time before we directly address the issue. 7. When it's time for me to learn a new skill, training is readily available at no cost to me. 8. When the boss tells us to "jump!" we ask "how high?" 9. It takes a long time for this organization to address customer concerns. 10. Many employees expect to work at this organization for their whole careers. Urgent/ Seat of the Pants culture 11. Senior management says the door is always open -- and they mean it. 12. It is fun to work here. 13. We have three or fewer layers of management. 14. We have performance reviews less than once a year. 15. 15. Compensation and benefits are relatively low here. Table 1.0 Cultural questions by Nicole C. Moss.

5.0

Deep Dive on each questions response

1. I know how my projects contribute to the success or failure of our organization. Response: True Discussion: Each employee of the organization is given a defined roles and responsibility. The deliverables are tied to a higher goal of the organization and eventually will be linked and supporting to the overall corporate goal. The

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document used to link to the organizational goal is called IMBO (Intel Management By Objective). 2. Management here makes lots of announcements to employees Response: True Discussion: As a technology leader, Intel has deployed lots of electronic communication tool to stay in contact with employees worldwide. Tools like webcast, audiocast that can link the corporate leader to global employees allow the information to be shared on a real time manner. (Karlgaard, 2011), Every quarter, there will be BUM (Business Update Meeting) made available for employees to learn and understand the company business, business strategies and corporate focus areas. That would allow the employee to understand and have a clear understanding of how they can contribute to the overall company direction. Email, web portal, teleconference, Telepresence , phone allows employee to stay in contact with corporate for seamless information sharing and transfer.

3. I have colleagues from a wide variety of professional and personal backgrounds. Response: True Discussion: Intel observes diversity as the source of innovation and equality in employment (Karlgaard, 2011). In its diversity policy, the company respects, values, and welcomes diversity in its workforce, as well as in its customers, its suppliers, and the global marketplace. Intel policy is to provide equal employment opportunities for all employees.

Intel does not discriminate on the basis of race, color, religion, sex, national origin, ancestry, age, disability, veteran status, marital status, gender identity or sexual orientation. Its policy applies to all aspects and stages of employment from recruitment through retirement. It also prohibits harassment of any individual or group.

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4. In this organization, people who are not ready to be promoted after a certain length of time at their level are generally encouraged to leave. Response: False Discussion: In Intel, employees performance is based on meritocracy. Merit is based on performance and not by seniority. For poor performance employee, Intel has its performance management policy to improve their performance but not to terminate them without given sufficient opportunity for improvement. 5. Departments or teams compete with each other for our organizations resources. Response: True Discussion: Similar to any other companies, budget and resources are always constraint. Therefore, each organization will compete for resources, depending on the importance and priority of the projects or deliverables to corporate.

6. When people are not getting along here, it's a long time before we directly address the issue. Response: False Discussion: Intel practices constructive confrontation in which culture created by the former CEO, Andy Grove. If there is any people issue, Intel has process to handle the issue timely and professionally. Even though Intel operates in Asian countries, all employees have guidelines to adopt the corporate culture to confront any issues constructively instead of avoiding it.

7. When it's time for me to learn a new skill, training is readily available at no cost to me. Response: True

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Discussion: Training and people development is very important to Intel. All new employees will be given orientation and on the job training. In fact, lots of money is allocated aside for employees training internally and externally. Intel managers are also required to conduct training and sharing with junior employees to impart learning and experience.

8. When the boss tells us to "jump!" we ask "how high?" Response: True Discussion: This is an interesting statement. According to Danny, this is a typical behavior from the employee to ask for an accurate description of deliverables. Each employee has his deliverables / goals to achieve using the SMART (Specific, Measureable, Achievable, Realistic, Time-bound) criteria. In this context, the goal has to be specific and measurable.

9. It takes a long time for this organization to address customer concerns. Response: True Discussion: This is partly true due to the structure of how the company operates. There are many organizations which will handle with customer concerns and the responsiveness is sometimes delayed. However, Paul Otellini, Intel CEO, launched a shift in customer focus program (Business Week, 2006). Through out several years effort, Intel has won Apple and Sun which were once had never used Intel chips before.

10. Many employees expect to work at this organization for their whole careers. Response: False Discussion: Though Intel wishes to keep their employees, however, the truth is that employees move from one organization to another. Internally Intel allows job rotation and job realignment which allow to a larger extent job enrichment that would enhance job satisfaction as well as employee retention.

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11. Senior management says the door is always open -- and they mean it. Response: True Discussion: Intel has policy called Open Door Policy which allows the employee to escalate any issue to senior management or Human Resources without any fear. In fact, all open door cases are handled confidentially to respect the employee who raised the issue. Issues can be personal, harassment, code of conduct, unfair treatment etcetera.

12. It is fun to work here. Response: True Discussion: Intel allocated a certain budget to make the work place a work place of choice. Events like festive celebrations, durian party, sports competition, annual function etcetera are commonly held in addition to the conducive workplace. Relax room, gym, free soft drinks and fruits are among the perks given to improve the overall work place on top of the flexible working hour, telecommute etcetera.

13. We have three or fewer layers of management. Response: False Discussion: Intel has >80,000 employees worldwide and therefore it has more than 5 layers of management right from the top. Even though a flatter organization is desired but it is still a challenge to have less layers given the size of the organization.

14. We have performance reviews less than once a year. Response: True Discussion: Intel practices year round performance though the formal review will be done twice a year.

15. Compensation and benefits are relatively low here. Response: False 13

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Discussion: Intels compensation is competitive to the market with the similar industry. This is to ensure attractiveness to attract talents into the organization.

6.0

Overall evaluation of the result

Based on the survey, there are many True answers in the 15 questions. Among them, section for questions 1-5 have 4 Trues whereby there are 3 Trues for both questions 6-10 and questions 11-15. Therefore, per the guidelines from the survey, the organization surveyed falls into the type of Deliberative/ Traditional culture. The other two types are close and it may have some elements from the other two types of culture.

Firstly, lets discuss the advantages and pitfalls from this type of culture.

6.1

Advantages

The surveyed organizations culture tends to be traditional type where there are lots of intellect and thoughtfulness in managing this type of organization. In Intel, through the 43 years of presence, it bounds to have lots of wisdom in the way how this organization being managed. From the book of Good to Great by Jim Collins, there are not many companies that can survive through the business challenges especially in technology based industry. There has to be lots of right people on the bus which will set up good processes to navigate through the turbulence of business. Intels philosophy is to attract talents. Through the diversed hiring policy, many talents are attracted to join the organization. There are also lots of structures in place in order to manage the global workforce effectively. Intels former CEO, Andy Grove who was widely recognized by the industry as a thoughtful leader has set the company ahead of competition using the company asset which is mainly the people to innovate and deliver one after another, great products that can excite the personal computer industry. Without which the people, 14

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there will not be the technology such as processor, wireless connection, WiMAX, USB etcetera that will become a not to be missed technology in todays life. In Intel, communication is crucial to the company. Senior management constantly communicates the company direction, business strategies from time to time via the BUM (Business Update Meeting), open forum, Meet the people session, online chat, teleconference, intranet, videos, web portal, Internal Facebook-like network and many more. It allows the employees to stay connected with the senior management at the top.

6.2

Pitfalls

One of the recognize pitfalls for the organization is its size which is a challenge for the company to stay nimble and agile in responding to the ever changing business environment. Due to many layers of management, it is also possible that sometimes certain information is not able to reach to the grass root of the organization. There are also many stakeholders to be managed in order to reach consensus and agreement on certain strategies. Innovation, an element that is vital to a company which relies on technology will become a challenge if there are many bureaucracy and red-tapes in the organization. Great ideas may not be able to bubble up to the top and it may be dead in the middle of the incubation. Therefore, the organization has acknowledged the barrier and challenge and has put forth processes to incubate and breed new ideas. New Business Initiative (NBI) is one of the initiatives to invest in new technologies and breakthrough so as the innovation will continue and flourish within the organization. In order to respond to change, the organization will need to stay agile in its decision making process. There are many tools were deployed in order to facilitate and expedite decision making process such as product funding, termination, new 15

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product development etcetera. It is crucial as the more stakeholders are in the decision making process, the clearer roles are required to avoid any delay in the decision.

7.0

Conclusion

Though the survey called out the organization as a Deliberative/ Traditional type, it does exhibit attributes from the stable and urgent type of organization. For example, Intel has been in the industry for more than 40years and its business has been focused on computing industry all this while is in fact an evidence of a stable company. It has many processes in place and has emphasized on the importance of people development and training opportunities. The compensation for the employees is equally good and competitive. On the other hand, Intel is also a People Orientation company. GPTW (Great Place To Work) and win and have fun is one of the companys six values. It can rally the whole organization in addressing the threat and able to navigate through the challenges such as memory to processor business direction change, rise of mobility, internet boom challenges, interoperability of different devices and so forth.

As a summary, it is important for a global company like Intel to have a process and structure in place in order for the people to work with each other and rally the organization to achieve its goal. However, due to its size and scale, it is also important for the organization to stay nimble to face the fierce competition in the industry. It has to strike between the two in managing the size as well as operating like a small company. In addition, the asset for this company is actually new technology which is invented by the people should be valued and appreciated. Therefore, the recognition and reward system is 16

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important to retain the talent. Change management is vital to a technology company in which the communication is critical for successful transition and also change in the corporate decision and strategies. Intel has good track record and has proven to the industry that a global and stable company can still excel and successful using technology and also the intellects of the organization. [Total word count: 3950]

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8.0

REFERENCES

American Management Association/Human Resources Institute (2008). Cultivating Effective Corporate Cultures: A Global Study of Challenges and Strategies: Current Trends and Future Possibilities 2008-2018, American Management Association Andrew S. Grove (1995). High Output Management, Vintage Books Edgar H. Schein (1999). The Corporate Culture Survival Guide, Jossey-Bass Edgar H. Schein (1999). Jossey-Bass Organizational Culture and Leadership, Second Edition,

Edwards, Cliff (2006). Inside Intel: Paul Otellini's plan will send the chipmaker into uncharted territory. And founder Andy Grove applauds the shift, Business Week Karlgaard, Rich (2011). Intel CEO Otellini on Successful Company Culture, Forbes [Online] Available: http://blogs.forbes.com/richkarlgaard/2011/02/16/intel-ceo-otellinion-successful-company-culture/ Lvey Imre, Manohar S. Nadkarni Manohar, and Eszter Erdlyi Eszter (2007). How Healthy is Your Organization?: The Leaders Guide to Curing Corporate Diseases and Promoting Joyful Cultures, Greenwood Press Neuman, J. H. (n.d.). Measuring the costs associated with stress, injustice and bullying. Workplace Bullying Institute. Retrieved on September 2, 2007, from www.bullyinginstitute.org Nicole C. Moss (2006). Quiz: What is your corporate culture? [Online] Available:
http://www.inc.com/articles/2001/08/23312.html

Towers, Perrin (2007). Global Workforce Study. [Online] Available: http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/NLD/2007/200710/GWS_c orereport_NL.pdf

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Solomon, M Charlene and Schell, S. Michael (2009). Managing Across Cultures: The Seven Keys to Doing Business with a Global Mindset , McGraw-Hill Probst, Gilbert and Raisch, Sebastian (2005). Organizational crisis: The logic of failure, Academy of Management Executive Saltzman, J. M. (2007). Corporate culture: The ultimate competitive advantage. Talent Management Magazine, 18-21. Woppman, Glenn (2010) Manager Forum: Nurturing Your Culture Goes to the Bottom Line, ASSET InterTech

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Appendix I Questionnaire by Nicole C. Moss Respondent: Danny Lim

Cultural Type Deliberative Traditional Culture / 1. Question I know how my projects contribute to the success or failure of our organization. Response 1. 2. True True

2. Management here makes lots of announcements to employees. 3. I have colleagues from a wide variety of professional and personal backgrounds. 4. In this organization, people who are not ready to be promoted after a certain length of time at their level are generally encouraged to leave. 5. Departments or teams compete with each other for our organization's resources. Established/ Stable Culture 6. When people are not getting along here, it's a long time before we directly address the issue. 7. When it's time for me to learn a new skill, training is readily available at no cost to me. 8. When the boss tells us to "jump!" we ask "how high?" 9. It takes a long time for this organization to address customer concerns. 10. Many employees expect to work at this organization for their whole careers. Urgent/ Seat of the Pants culture 11. Senior management says the door is always open -- and they mean it. 12. It is fun to work here. 13. We have three or fewer layers of management. 14. We have performance reviews less than once a year. 15. Compensation and benefits are relatively low here.

3.

True

4.

False

5.

True

6. 7.

False True

8. 9.

True True

10. False

11. True

12. True 13. False 14. True 15. False

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