3.7 Managing cultural differences
Nokia Siemens Networks’ birth involved more than merging product lines and operations. Soft issues rather than hard ones can kill a merger in its infancy, and considering the might and history of NSN’s parents, unifying two distinct corporate cultures in to one would prove to be one of the venture’s biggest challenges
In November 2006, 250 executives from Nokia Networks and Siemens Communications got together in a room in Munich, tasked with hashing out the details of their impending merger. Nokia and Siemens already had a good idea of what the company would look like on paper: They would create a huge global company with strengths in both wireless and wireline telecommunications, leverage a massive international sales force and achieve economies of scale unavailable to either company so long as they remained network divisions of their parent companies. But NSN also would be the merger of two distinct corporate cultures. Bastions of engineering in their own countries, Germany and Finland, each had their own deeply ingrained identities and, yes, pride. The numbers aside, how would the new NSN function?
Attending that meeting was Bosco Novak, who would become the head of human resources for the new joint venture. The president of Nokia Networks and future CEO of NSN, Simon Beresford-Wylie, had asked Novak to take over the role in July, two days before the merger agreement was publicly announced. At the time, Novak headed Nokia's global services division and supervised a huge multinational organization – and also had an inherent cultural asset: He was a German who had worked for Nokia since 2000. But Novak had not a lick of HR experience and was puzzled by his boss' choice. But Beresford-Wylie explained that his role wouldn’t be that of an ordinary HR manager. Novak would be responsible for crafting and implementing an entirely new culture at NSN. Novak accepted and five months later he and 249 other executives, managers and engineers were trying to figure out what exactly that new NSN culture would be.
The group managed to find several fundamentals that the two companies had in common: They both were Western European; they both had an ingrained engineering culture; and their employees also had a deep pride in being on technology’s cutting edge and a feeling of making a difference in the world. But those cram sessions also revealed some profound differences, not just in their surface organizations but in how their employees related to one another and management and in their approach to problems. Most striking of those differences was a sense of formality and structure in Siemens’ culture, as opposed to a looser set of relationships and emphasis on flexibility at Nokia.
The NSN case illustrates how senior managers begin to promote the adoption of a new corporate culture. Managing the differences that arise, whatever their origins, can present considerable challenges for a manager. You can see that managers from these two organisations coming together from different cultures may perceive requirements for meeting their commitment to customer service, for example, in different ways. These influences can and do lead to differences in preferred methods of pursuing goals, as illustrated by NSN. National cultural influences may colour perceptions of what is important as well, as informed by the works of Hofstede and Trompenaars and Hampden-Turner.
The NSN case illustrates the distinction between organisational and corporate culture and shows how proponents of a strong culture argue for promoting a homogeneous and consistent corporate culture (which is realistic and important) rather than a homogeneous and consistent organisational culture (which they accept is unrealistic and unnecessary). So, for example, a company such as NSN can and should share a distinctive corporate culture across Europe, even though its managers will represent many different culture areas and have different functional backgrounds. Managers and staff can behave and respond similarly in some respects, yet differ (perhaps considerably) in many other respects.
Many organisations, whether multinational or not, try to promote strongly shared guiding values such as customer service. Multinationals seek to embed such values to ensure that managers and workforce, irrespective of their diverse cultural backgrounds, pull in the same direction as they strive to achieve the same broad corporate aims and goals. Novak’s task at NSN would be to arrive at new shared values and describe how these values are going to operate in the company. At the organisational level, the intention is not to suppress diversity of opinion about how best to achieve these aims and goals. It is stated that NSN has two very distinct differences, which imply a ‘culture clash’ and a challenge about whose culture will be adopted – which also has the potential to alienate the other group.
Stop and reflect
An organisation’s culture, once established, rarely fades away – so how would Novak at NSN create a new organisational culture? Do differences between the cultures at NSN generate problems? What might reinforce and sustain this new culture once in place? How do new employees learn their organisation’s culture?
The models that you have looked at thus far are useful tools for cultural analysis. Cultures may involve conflict as well as agreement, and divide just as much as they integrate. The new corporate values that managers attempt to promote through such methods may or may not become embedded in the organisation’s culture in time. However, by creating behavioural expectations that accord with these values, managers help to generate the parameters within which initiative is exercised by those at lower organisational levels. They can perpetuate exclusions and inequalities just as much as a sense of belonging and identity. Attempts to force one culture on a group with very different values are fairly common, but may be counter-productive. A better understanding of why cultures differ, and of the value of such differences, may make such initiatives less likely, and remove much of the friction associated with working across cultural boundaries.
Stop and reflect
What problems have you observed or associated with working with different national or organisational cultures in your organisation or one that you know well? How have these been handled? Were there any tensions between dominant and subordinate cultures? What is your role in this?
Activity 5 Looking back on section 3
After reading section 3, you may wish to use your Learning Journal to record your notes on the following questions:
- Choose one of the frameworks discussed in section 3.5 – for example, Deal and Kennedy or Handy’s four types of organisational culture – and think about where your own organisation would fit. Note your thoughts about whether it is a good fit or perhaps you can see more than one cultural type or can identify where the framework itself is lacking.
- Choose either Hofstede or Trompenaars and Hampden-Turner’s framework and consider whether the dimensions they identify resonate with your own experiences. Note your thoughts about how helpful these frameworks are in alerting you to differences in cultures. How might these understandings help your practice of management?
- Reflect on how the use of these frameworks helps you think about organisations in new ways.
Theories, frameworks and models are, essentially, tools for thinking. They are simplifications of real-world phenomena. Being simplifications, they cannot represent all the subtleties and nuances of the real world. This is both a disadvantage and an advantage.
It is a disadvantage because they can always be criticised for not taking account of this or that factor. Certainly theories, such as Hofstede’s framework for example, are open to scrutiny and criticism.
It is an advantage because they can draw attention to the most important issues, cutting away the secondary factors. If an analytical framework contained all the relevant factors then it would be as complex as the real world and probably of little use. Theories can also encourage us to approach issues and problems in new ways, consider different dimensions and angles, and thereby gain new insights and even solutions.