CHAPTER 1: INTRODUCTION
This chapter presents the background of the research on “How can international human resources managers effectively manage diversity in multinational company?”- Case study Tesco. The company overview of Tesco in UK, background of the research, organisation background, rationale statement, research questions, and purpose of the research conducted the aim and objectives of the research identified by researcher. The structure of the dissertation is described at the end of the chapter.
1.1 Background of the Research
1.1.1 Managing Diversity
Managing diversity means maximizing diversity’s potential benefits such as greater cultural awareness and broader language skills, while minimizing the potential barriers such as prejudices and bias that can undermine the company’s performance. Dessler (2008, p.61) referred to diversity as potentially a double-edged sword. Generally diversity refers to the variety or multiplicity of demographic features that characterize a company’s workforce, in terms of race, sex, culture, national origin, age and religion.
Many organisations have implemented various types of initiatives within the last few decades in an effort to deal with diversity. A possible missing link between how the human resource managers deal with diversity and its impact on the organisation is a diversity strategy that is executed using a planned approach to systemically manage diversity (Leopold & Harris 2009).
The increasing diversity and changing demographics of the UK workforce, the expansion of anti-discrimination legislation, legal rights for individuals with caring responsibilities and government policy commitment to the work-life balance have created new challenges for employers across employment sectors. This research explores some of the issues that arise for employers, managers and employees in the development and application of multinational organisational human resourcing policies which are intended to promote equality of treatment and recognize diversity in the workforce. The 2004 WERS survey (Kersley et al., 2006) found that 73 percent of workplaces had a final written equal opportunities policy or a policy on managing diversity compared to 64 percent in 1998. This figure increased to 98 percent in the public sector (97 percent in 1998) with the incidence of formal policy being higher in large workplaces which means that most employees work in establishments with a formal policy. This was evident in the 2007 CIPD annual recruitment and retention survey which revealed that only half of the 905 participating organisations had a formal diversity strategy although again the public sector is more proactive with 83 percent reporting a strategic approach to diversity (CIPD, 2007 a).
Today’s business and service organisations are meeting the challenge which demands systematic efforts, as many of them have come to realize. Whether the multi-cultural character of the organisation arises from its international workforce and its local operations in various countries, from the mixed backgrounds of a workforce in a single location, the organisation must address this diversity if it is to be successful.
Groups of people see the world through their own set of assumptions, values, beliefs, customs, traditions and attitudes that are shared by an organisation’s members. Learn about their culture and how it shaped them, and aim to understand how other culture work that can be an effective global manager.
1.2 Organisation Background
In this research, selected company will be Tesco Metro (Whitton, Branch) London outlet where different cultural people working. Tesco is one of the UK’s major retail supermarkets. Tesco is an international retailer where there are working different countries and cross-cultural people. This research is a collection of how the Tesco Company has used diversity to support their business goals and valuable learning and what makes good diversity practice.
Tesco is the fastest and largest growing retail chain in UK as well as international arena. Tesco started its journey in 1919 in the East End of London. As a result, Tesco came as a national store across the country in 1970. To beat others and to reach top Tesco brings more innovative idea and implemented those from 1992 to 2004 like slogan “every little help”, Tesco value, Club card, 24 hours service, Online service and so on (A history of Tesco: The rise of Britain’s biggest supermarket).
Tesco is operating in the UK set its position as a market leader with over £2 billion of profit with total 3728 stores around the world, where in the UK 2,306 stores and employing over 286,394 staff. It provides online services through its subsidiary, Tesco.com. The UK is the company’s largest market where it operates under four banners of Extra, Superstore, Metro and Express. The company sells almost 40,000 food products, including clothing and other non-foods lines. The company’s own-label products (50 percent of sales) are at three levels; value, normal and finest. As well as convenience produce many stores have gas stations, becoming one of Britain’s largest independent petrol retailers (Tesco Annual Report & Review, 2009). According to market share Tesco’s positions in number one in UK and third position around the world. Tesco is the market leader with 30.40% (March, 09) of market share though it’s lost a bit of market share 0.5% in recent year due to credit crunch. Tesco market share is nearly two times higher than other retail shop like Asda (17.5%), Sainsbury (16.1%). (Retail Analysis)
Tesco has a very friendly and supporting approach in the routine ways that staffs at Tesco behave towards each other, and towards those outside the company that can make up the ways people do things, where at great place to work. The control systems and measurements are constantly under the management review to monitor the efficiency of the staff and managers’ decisions. On-going meetings and communication at every level of the company’s hierarchy represent a strong internal environment (Tesco’s Value and Strategy).
Cultural web theory application (The cultural web theory is also an effective analysis for management in order to represent the underlying assumptions linked to political, symbolic and structural aspect of the company) is a useful tool in considering the cultural context for Tesco’s business (Tesco’s Value and Strategy). Culture generally tends to consist of layers of values, beliefs and taken for-granted actions and ways of doing business within and outside the company. Therefore, the concept of cultural web is the representation of these actions taken for granted for understanding how they connect and influence the strategy (Veliyath and Fitzgerald, 2000; Johnson and Scholes, 2003). It is also useful to understand and characterise both the company’s culture and the subcultures in adaptation of future strategies.
1.3 Rationale statement
Generally, a self assessment for international human resource managers is to evaluate and improve their global management skills. But it also creates a challenge for individual managers who must manage with working across geographic and cultural areas; understand how issues of managing diversity inform and influence human resource strategies and evaluate the respective responsibilities of international human resource managers for managing diversity policies and practices.
The key concept of managing diversity accepts that different cultural workforce consists of a diverse population of people. The diversity management can recognize a wide range of individual differences and benefits to the employment relationship to individual needs which can lead to the organisational competitive advantage. This research explores the key principle of diversity in one of UK’s leading super market named Tesco Metro (Whitton Branch) London. The researcher intends that how managers mange working with diversity people in workplace in Tesco, whereas equal opportunity focuses on different ethnic groups.
1.4 Research Questions
As human resource manager in a multinational company needs to consider the following major issues:
1. How people manage a group of different culture people?
2. What is the communication within work?
3. How do the managers manage diversity and equal opportunity within the service?
4. How can the manager influence team’s performance?
5. How can the manager help people learn and develop?
6. How can the manager help people to manage change?
7. How he is motivating people?
8. How can the manager handle equal opportunity?
9. What strategy managers should apply to get a good result from employees?
How a human resource manager can handle all those areas and successfully the organisation’s mission with different country’s people.
1.5 Purpose of the Research
1.5.1 Research Aim
The aim of the dissertation is to analyse the competitive advantage of the organization that are managing people as assets which are fundamental. And to examine diversity, equality and discrimination issues in a multinational company, in the particular way of human resource managers to manage work with different culture people. Tesco has been used as a case study in this dissertation.
1.5.2 Research Objectives
1) An international human resource managers needs to know the way of managing people in the organisation. An overview of what a manager needs to do in relations to managing people in a changing environment which will be include at diversity issues and international human resource management policies.
2) To observe a multicultural company from the perspectives of diverse social peoples.
3) For an organisation to succeed on a global scale, radical shifts in business procedures are required. To become a successful global manager is to develop a global outlook.
4) A global manager needs to know what point an organisation has reached in the globalization process, and where it wants to go. Understand the process and recognize the strategies that will give the organisation a global advantage.
5) Understanding people as individuals and recognizing their differences as well as drawing up some general principles for managing them like motivates them, job satisfaction, and job design.
6) Recruiting, and selecting the right people.
This research will disclose some essential factors which help organisations to maintain their diversity effectively within the organisation and make a fair working environment of employees within the organisation.
1.6 Structure of the Dissertation
The dissertation report has been structured into the following chapters.
Chapter 1: This provides an introduction to the research, where justification of the research is presented and the purpose of the research is explained.
Chapter 2: The second chapter is the literature review of this dissertation concerned about, the works of various authors who have discussed relevant existing theories and policy of diversity and the different interpretations of diversity management which is based on secondary data. Those relevant theories and policy will help to find out the appropriate analyse of the following research.
Chapter 3: The third chapter will discuss the research methodology. Research method presents the research philosophy, approach and sampling, data collection procedures and shows the right direction to achieve an outcome. This chapter also explains the reasons behind the use of selected research method and the advantages by using the research approach.
Chapter 4: This chapter contains the analysis and findings. This part of dissertation informed the research findings quantitatively with the help of constructed research model and research hypotheses. It also shows the data gathered in the company through interview and questionnaire of Tesco’s managers and employees, and analysis the data to provide a productive meaning of the research finding.
Chapter 5: This chapter encloses the conclusion of the dissertation within the research questions and objectives, describe limitation of research and recommends opportunity for further research.
CHAPTER 2: LITERATURE REVIEW
This chapter discusses the works of various authors and scholars who have highlighted theoretical exploration of the existing knowledge that is relevant to the diversity area. This chapter also focuses on similar and contrasting perspectives that researchers have used to approach this research areas.
2.2 What is Diversity
Diversity means relating and working with people who hold different perspectives and views and bringing different qualities to the workplace. According to (Kandola & Fullerton 1994, p.19) diversity consists of visible and non-visible differences which will include age, background, race, sex, disability, personality and lifestyle.
The concept of diversity means respect and acceptance, means understanding each individual is unique and recognizing our individual’s differences. It can be the aspects of race, age, gender, ethnicity, sex, disability, religious beliefs, and political views and so on. It is also exploration of these differences in a safe positive and development organizational environment.
As the Wall Street Journal (2005) put about diversity, as companies do more and more business around the world, diversity is simple a matter of doing what is fair or good public relations which is a business imperative but diversity is supposed to enrich an organisation’s human capital, whereas equal opportunity focuses on various ethnic groups.
Brewster (2002) defined that managing diversity tries to build specific skills and to create policies that derive the best from each employee and it is based on the assumption that diverse groups will create new ways of working together and have understanding in that group, profit and productivity will increase in the organisation. Where he found, diversity management is fast becoming a management approach that is being applied effectively within the organizations.
2.3 Benefits of Diversity
Diversity needs to be seen as an integral part of the business plan, essential to successful products and increased sales. This is especially true in today’s global marketplace, as organizations interact with different cultures and people. Kandola & Fullerton (1998) identified the possible areas of diversity benefits, these are:
a) Creativity increases – when people with different ways of solving difficult problems work together towards a common solution and the more ideas can obtain from different people.
b) Productivity increases – when people are from all cultures pull together towards a single inspiring goal. Increased productivity is an obvious advantage of diversity in the workplace.
c) Provide strong leadership – they take strong stands on advocating the need for a diverse workforce and can handle effectively different cultural people.
d) New attitudes – are brought to the business by people from diverse cultures. In most other countries around the world time is for building relationships and an integral part of getting to know that are considering doing business with before starting a transaction.
e) Provide diversity training and education – are obviously needed in today’s increasingly global market and diverse employees often have this ability. Every company needs specific knowledge or language skills where the international job seekers have the advantage.
f) New processes – when people are with different ideas come together and collaborate. In today’s first moving world, employee must bring multiple skills to the working environment and adapt quickly to new situations. (Harris et al. 2003)
International human resource manager can make organisations more successful and productive by managing diversity in the work place. Diversity brings real benefits to business environment where employing a diverse workforce enables it to use a wider range of skills and lead to creativity and innovation.
2.4 Human Resource (HR) Policies
HR policies provide guidelines on how key aspects of people management should be handled. The aim is to ensure that any HR issues are dealt with the values of the organisation with certain principles. Armstrong (2009) defined the philosophies and values of the organisation on how people should be treated and all organisations have HR policies. HR policies can be expressed formally as overall statements of the values of the organisation or in specific areas. Kandola & Fullerton (1994), these values are espoused by many organizations in one form or another. HR policy on managing diversity recognizes that there are differences among employees and properly managed where will enable work to be more effectively.
2.5 Managing Workforce Diversity
Legislation and the high profile of equal opportunities in the UK has had both positive
and negative effects on the way people view each other, (Barker, 2000). On the one hand, there is now widespread recognition that discrimination at work on the grounds of gender, race or ability alone is unjust, although the practice still continues. However, the grouping of minorities such as women or ethnic or disabled has produced responses. More recent thinking has moved towards ‘managing diversity’-recognizing and valuing differences in people and their unique contributions to the workforce.
Managing diversity involves creating an environment that allows all employees to contribute to organizational goals and experience personal growth. This requires the company to develop employees that they are comfortable working with others from a variety of ethnic, racial and religious backgrounds. Noe et al. (2003) found that managing diversity may require changing the company culture. It includes the company’s standards and how employees are treated, competitiveness, innovation and risk taking. Where management of diversity has been linked to innovation, improved productivity, lower employee turnover and other costs related to human resources, (Cox, 1993, p.24).
Price (1997, p.265) noted that the management of diversity goes beyond equal opportunity instead of allowing a greater range of people the opportunity to ‘fit in’ the concept of diversity embodies the belief that people should be valued for their differences and variety. Diversity perceived to enrich an organisation’s human capital. Whereas equal opportunity focuses on various disadvantaged groups, the management of diversity is about individuals and model of resourcing aimed at finding flexible employees. According to Harvard Business Review, managing diversity does not mean controlling or containing diversity, it means enabling every member of workforce to perform to their potential and getting from employees; everything right to expect and if it is well then thing they have to give, (Thomas, 2001).
The future success of any organisations relies on the ability to manage a diverse of capacity that can bring innovative ideas, perspectives and views to their work. The challenge and problems faced of workplace diversity can be turned into a strategic organisational asset if an organisation is able to make the most of diverse talents. Especially for multinational companies, who have operations on a global scale and employ people of different countries, ethical and cultural backgrounds.
Thus, a HR manager needs to be aware and may utilize a ‘Think Global, Act Local’ approach in most circumstances, (Jackson, 2002).
The goals of diversity training are eliminate values and managerial practices that restrain employee’s personal development and allow employees to contribute to organisational goals within the cultural background, (Jackson & Associates, 1992). It is because of equal opportunity employment laws that companies have focused on ensuring equal access to jobs.
With a population attempt towards high technology and knowledge-based economy; foreign ability are tempt to share their expertise in these areas. Thus human resource managers have to undergo cultural-based human resource management training to further their abilities to motivate a group of professional that are highly qualified but culturally diverse.
2.6 Achieving Equality and diversity Approach
The diversity approaches argue that diverse workgroups generate wealthier ideas and solutions than homogenous groups where benefits of diversity management include a greater concern for socially responsible behavior in organisations and more flexibility in organizational policies, (Wentling & Palma-Rivas, 1998, p.237).
Ross & Schneider (1992, p.49) discussed the fundamental perspective from equality to diversity that employers will find competitive advantage in encouraging diversity at work. Equal opportunities should become internally driven not externally imposed and focused on individuals where the responsibility of all.
Fredman (2001) observes that traditionally equality laws have been informed by neutrality, individualism and promotion of autonomy principles. These principles aim to ensure that people are treated in the same way and appear to be the most consideration in the UK anti-discrimination framework which is an approach to workplace equality based on achieving fairness. Walsh (2007) in her analysis of the 2004 Workplace Employment Relations Survey findings points out that women’s representation in senior management in UK workplaces had only marginally improved by 2 percent between 1998 and 2004.
So diversity is a concept which recognises the benefits to be gained from differences and equal opportunity has traditionally been a concept, which sought to legislate against discrimination. These two concepts have the following characteristics:.
Those characteristics suggest that how organisations can move from where most are at present to a situation in which diversity enters the majority.
2.7 How the Diversity Concept has developed
Changes in the social and economic landscape led to legislation covering equal pay, sex and racial discrimination in the 1970s, followed by disability laws in the 1990s, (Daniels & Macdonald, 2005). More recently discrimination of sexual orientation and religion has been added by the law. By 1990s, it was being recognised that they had limited success in achieving their goals. At around the same time, researchers were also finding that culturally diverse teams were more creative than homogenous teams and contributed more effectively to meeting organisational goals. Three separate commissions have promoted equality and particular aspects of the legislation: the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission. From October 2007, a new Equality and Human Rights Commission has been established to cover all equality issues as well as of human rights, from (CIPD, 2007).
From the recent survey, unemployment is twice as high among people from ethnic minorities, although in UK relatively more Asian and Black African graduates than white graduates where only 12 percent of white men are in professional occupations. Statistical survey found that 41 percent of white women in employment work part-time but only 7 percent of white men and as opposed to 38 percent of Bangladeshi men, (http://www.cipd.co.uk/surveys).
2.8 Diversity Policy
Changing workforce demographics and new organisational forms are increasing the diversity of work teams in general and decision-making teams in particular. The perspectives of diversity policy may lead to a variety of different consequences for decision-making teams in the organisation.
2.8.1 The Business Issues
Equal opportunities are often seen as meaning treating everyone in exactly the same way. Kandola (2006) argued that the social justice and business issues for diversity are complementary because unless people are treated fairly at work they will therefore under-perform. But diversity takes equality forward and evidence indicates that organisations that are serious about diversity show better overall financial performance. Diversity policies also help organisations to create an environment in which people from all backgrounds can work together.
2.8.2 People Issues
People are aspiring to work for employers with good employment practices and feel valued at work place. Dowling et al. (1999, p.262) states that to be competitive organisations need to derive the best contributions from everyone and need to create an inclusive workplace culture in which everyone feels valued. The HRM aspects are operating different countries as a way of illustrating the situation that may confront multinationals attempting to penetrate developing markets.
2.9 The Nature of Diversity in Decision-Making Teams
Many organisations use the term diversity to refer only to demographic differences among employees, with gender, ethnicity and age being the dimensions of greatest concern. Changing workforce demographics and new organisational forms are increasing the diversity of work teams in general and decision-making teams in particular. Diversity may lead to a variety of different consequences for decision-making teams.
2.9.1 Gender Diversity
Gender diversity in teams may indicate the extent to which team members form same gender relationships outside the team. Studies on social networks suggest that employees form relationships with each other based on their gender. In a study of male and female managers in an advertising firm, Ibarra (1995) found that men and women formed same gender networks that served both social and instrumental goals.
2.9.2 Ethnicity Diversity
Social identity and organisational demography suggests that people are preferred to interact with members of their own identity group rather than with members of other groups. Where white males tend to perform in higher positions, (Chow & Crawford, 2004) females and ethnic minorities tend to occupy more junior positions. Experiences of racism shared by women and members of different ethnic groups affect their attitudes and behaviours in the workplace.
2.9.3 Age Diversity
People within age groups share common experiences, attitudes and values (Lawrence, 1988), a person’s age can act as an indication that triggers social categorization processes and promotes communication among group members.
Descriptions of workforce demographics usually emphasize the fact that the average age of the work force is increasing but the distribution of ages represented in the workforce is also changing. Following figure showing age distribution where non-white groups are younger:
White groups have an older age structure where the mixed group had the youngest age structure 50 percent were under the aged of 16. The Bangladeshi, other Black and Pakistani groups also had young age structures of 38 percent were aged 16. This was almost double the proportion of the White British group, where 20 percent were under the age of 16.
2.10 Managing Diversity is Different from Affirmative Action
Managing diversity focuses on maximizing the ability of all employees to contribute to organisational goals. Affirmative action focuses on specific groups because of historical discrimination, such as people of colour and women, (Kravitz & Klineberg, 2000). Affirmative action emphasizes legal necessity and social responsibility where managing diversity emphasizes business necessity. So it is much more inclusive and acknowledges that diversity must work for everyone.
Affirmative actions having the employer take actions in recruitment, hiring, promotions and compensation to eliminate the present effects of past discrimination. Affirmative action is still a significant workplace issue today. The incidence of major court-mandated affirmative action is down, but courts still use them. Furthermore, many employers must still engage in voluntary programs. For example, executive order 11246 (issued in 1965) requires federal contractors to take affirmative action to improve employment opportunities for groups such as women and racial minorities. EEO 11246 covers about 26 million workers about 22 percent of the US workforce, (Dessler 2008, p.63).
2.11 Organisational Context
Managerial approaches to diversity will inevitably be informed by the specific organisational context. Attracting different types of people to an organisation will be determined by people’s perceptions of the industry in which the organisation operates. The image and reputation of the organisation as an employer will affect the types of people attracted to the organisation, (Markwick & Fill, 1997). The maternity and children specialist retailer who came 18th in the 2008 Sunday Times ’20 Best Big Companies to Work For’ list attribute their ranking to a number of factors to their employer brand. These include an emphasis on work-life balance, flexible working, better than average maternity pay and leave. These argue helps to attract and retain staff especially female employees, (Leopold & Harris, 2009).
If an organisation is able to employ a diverse workforce, the extent to which these individual differences are recognised in employment practices will be significantly affected by the size and structure of the organisation.
2.12 Diversity in Multinational Companies
As more and more organisations become global and people of different cultures and ethnic backgrounds work together, the need for multicultural understanding becoming obvious to many organisation. Harris et al. (2003, p.25) referred that a multinational team would be much stronger in communication which is vital aspect in business. Most of the multinational company gives priority to work with diversity people as a result they are success in international market. Ansari & Jackson (1995, p.12) described, multicultural teams led to more people from different culture and ethnic intermarrying. Globalisation and advances in communication and technology have reduced trade barriers and increased interaction among people. Companies and leaders who recognise the cultural diversity and find the right cultural mixture among the team can achieve comparative advantages.
To understand how diversity is managed in multinational company, in that case need to understand the concept of corporate culture which describe the organisational diversity programs and how to minimize conflict between employees.
2.13 Why Culture Counts
According to Mattock (1999) organisations have moved on from international to multinational to global. Multicultural teams have become very common in recent years. With cross border mobility becoming much easier the number of people moving from one country to another has grown significantly. As a manager need to successful interaction with others like sharing ideas, their needs and helping to improve performance, where need to consider cultural context.
A diverse multi cultural work place enables a company to handle diverse projects. Erlenkamp (2007, p.7) found, in the last decades many scientist tried to define intercultural difference to enhance the communication between different cultures. ‘The most important studies were conducted by Geert Hofstede, Edward Hall and Fons Trompenaars,’ that shows the importance of multicultural workforce and HRM of many organisations do study these theories to implement it in their employee training.
2.14 Understanding Cross-Cultural Communication
Language issues can develop into a source of conflict and inequality within culturally diverse organisations becomes more and more multicultural, (Ansari & Jackson 1995). In the international business environment of today and tomorrow communication is a business necessity