Introduction:

In this report, Hofstede’s Dimensions of Culture on Intercontinental Hotel will be applied to inform the differences in culture. GroupManaging businesses internationally are associated with dealing with a number of cultural variations which make managing employees complex. Such complexity arises because of variations of cultural diversities that largely differentiate how people around the world perceive, value things and perform jobs. A global company having business operations in multiple countries are affected by such complexity. This essay is based on the title: Differences in managing business globally across cultures. This essay has selected a hospitality company that has operations in more than 100 countries to contextualize the cultural differences among countries and the impact they have on business decision-making. The selected company is InterContinental Hotels Group (IHG). This is a UK-based globally operating hotel chain which operates in the Americas, Europa, the Middle East, Asia, and Africa (InterContinental Hotels Group, 2019). As appendix 1 shows, the hotel chain has 883,563 rooms at the end of 2019, and it has more than 283,043 rooms in the pipeline (InterContinental Hotels Group, 2019). The hotel group has 16 hotel brands in its portfolio which consist of Mainstream, upstream, and Luxury (Appendix 2). IHG generated revenue of 4.627 billion in 2019, which is a rise of 6.7% compared to the previous year (InterContinental Hotels Group, 2019).

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IHG operates in all the continents of the world at well more than 100 countries; therefore, it is highly expected that the group needs to face a lot of cultural variations across the countries. Managing a business in such a diversified business environment is a complex job because it requires companies to have a vast knowledge of different cultures. Hofstede’s Cultural Dimension has six dimensions. The dimensions of the model are an excellent application to know the varieties of cultures being followed across countries; this model also helps to make a decision about the behaviour of an individual to deal with people in respective countries. For example, countries value independence in different approaches: some countries perceive that being alone and having privacy is the right of individuals, whilst another culture believes that being a part of a group is socially and culturally important. A business operating in both of above mentioned 2 cultures should act differently because of the cultural differences. This is where Hofstede’s Cultural Dimension plays a major role in deciding how to behave with people across cultures. Culture-wise behaviour will help businesses to deliver promotional campaigns and messages to the target audience correctly because the business already knows about the cultural settings.

Hofstede Model on InterContinental Hotels Group (IHG)

Power Distance Index (PDI)

The Power Distance Index (PDI) is the first dimension of the Hofstede Model, and it signifies the extent of differences among groups and individuals (Hofstede, 2011). Such culture positively accepts power differences, centralized decision-making, and inequality. A group with high PDI implies that the people in that group value complex hierarchies, centralized organization, large variations in salaries and compensations, authority and respect. Malaysia is such a country having high marks in PDI. On the other hand, a group of cultures with low PDI implies that there are fewer variations among employees and people in that group in terms of status, income, distance etc. (Huang, & Crotts, 2019). Culture with low PDI emphasizes equality, they expect that all people in the cultural group should have the same rights and authority. Finland is such a country having low PDI. Examples of these two countries present only a small fraction of the total number of countries in the world. A company should conduct an effective evaluation to identify the differences among cultural values in the countries of operation.

Business and managing people in culturally different countries can never be the same because of the underlying differences in cultural values. Such differences across cultures pose a significant threat to global companies if they fail to understand the difference and act accordingly (Beugelsdijk, Kostova, & Roth, 2017). This is where Hofstede’s Cultural Dimension Model plays a significant role in understanding cultural values and helps companies to make a culturally informed decision. PDI dimension helps the InterContinental Hotels Group (IHG) to comprehend that there is a difference among people’s perceptions in regard to the extent to which they prefer to be a part of a cultural group. Therefore, Hofstede’s Model informs that countries with high PDI, such as Malaysia, and Japan, should have a centralized decision-making process which is widely practised in those countries (Hofstede et al., 2010). Similarly, leaders and top managers in these high PDI countries should be acknowledged and regarded properly. This is how they perceive and how they work in a company. This will ensure harmony in the work process. In contrast, if IHG applies a decentralized decision-making process in Japan and Malaysia, general employees will not feel capable of executing so because they are not used to executing such duties. As a result, severe mistakes might happen.

On the other hand, there are countries such as Finland and Denmark where the cultural groups have high PDI (Hofstede, 2011). This means that people from those regions are used to making decisions, taking responsibility and executing jobs for themselves. This has significant implications for IHG on how that should behave in these countries with low PDI. Since they are used to taking responsibility and executing jobs, IHG should treat them accordingly. The top leaders and managers should delegate as many responsibilities to fellow employees as possible to make them more engaged and responsible. This will significantly leverage the power of responsibilities and delegation. In a such work environment, employees themselves are the greatest stakeholders because they are directly involved with decision-making and execution rather than those experienced in low PDI culture.

Individualism versus Collectivism ( IDV)

Individualism versus Collectivism, or briefly IDV, is the second dimension of Hofstede’s cultural difference model. This dimension refers to the extent to which a person thinks of himself as part of a team. Individualism and collectivism are the two approaches to the IDV dimension. Individualism indicates to the happiness and psychology of people where they are concerned about their personal happiness and do not care about the achievement of their team and family (Brewer and Venaik, 2011). USA, Canada and people from Western countries: thus, they feel proud of having personal achievement rather than a group (Hofstede et al., 2010). People of these countries focus on their own work achievements and feel proud, therefore, multinationals have to consider this culture while managing people in these countries. Companies have to appreciate their employees individually on the basis of their performance and appreciate their individual work to satisfy them. It will make them proactive to do better in future. IDV helps the multinationals to understand this cultural difference that helps them to manage their employees individually according to the culture, and employees remain satisfied with the companies.

Individualism of IDV dimension from Hofstede model helps IHG to understand that they need to consider the self-satisfaction of their employees while managing them in host countries which have individualism culture. When IHG operates their business in German, France and other Germanic Europe countries, the company keeps focusing on appreciating employees’ work individually. Even employees of every team have to be appreciated individually because they feel proud of their personal achievements. It will meet their self-satisfaction need because they will get appreciation from their company, and they will be more proactive and responsible toward their work. As a result, employees will give their best to achieve personal accomplishment; however, they might break the rules and harm their co-workers to accomplish their own success, which can break the discipline of a workplace. In that case, managers and leaders of IHG have to keep appreciating and motivating employees individually to have the best performance and make strict rules to stop employees from breaking the rules and discipline of the workplace.

On the other hand, collectivist culture is the opposite culture to individualism. People in the country where collectivism exists emphasize the welfare and accomplishment of their team or group without being selfish (Minkov et al., 2017). People work cooperatively to accomplish success together and stay together in order to overcome any kind of complexities. Latin America, Confucian Asia, Sub-Saharan Africa and Southern Asia are the countries where collectivism exists, and people focus on their group’s success by helping one another and supporting themselves to stay strong (Ozgen, 2012). People who are collectivistic easily sacrifice their self-benefit for their teams and make an effort to maintain a strong relationship with team members. Multinationals have to consider the collectivist culture of the countries where it exists and design their employee management plan according to the culture. Companies cannot influence employees by offering personal benefits because they work as a team and are concerned about fulfilling their common interests.

While executing operations in Brazil, Argentina and other countries of Latin America and these types of countries with collectivist cultures, IHG has to be careful about its culture in order to keep employees satisfied and have the best results by operating with their culture. Employees of the country where collectivism exists work together by helping each other in IHG. In these countries, employees share good interpersonal relations with each other and focus on their group achievement by sacrificing personal success. Hofstede’s model helps IHG to understand this collectivistic expectation of employees, and the company can motivate and appreciate teamwork except for individual performance. It makes team members happy, and they become more dedicated to their teams and focus more on achieving team success. Therefore, the discipline of the workplace does not get hampered, and employees make the workplace effective by supporting and loving each other. As a result, IHG becomes capable of reducing additional costs and increasing profit levels by getting full effort from their employees.

Masculinity VS Femininity (MAS)

The third dimension of Hofstede’s culture model is Masculinity VS Femininity, and it is called MAS briefly. Masculinity and Femininity are the approaches that show the gender inequality culture of different countries across the world. Multinationals become capable of knowing the gender inequality culture of host countries through the MAS dimension of Hofstede’s cultural model and become able to interact with the culture to ensure flawless executions. Countries where men are expected to be stronger than women in many terms, such as high intelligence, and large income masculinity cultured countries (Taras, Steel and Kirkman, 2012). Even men in countries with higher masculinity cultures hate tall women because they think that men should be taller than women. In masculinity culture, women are dominated by men, and they do not get positive support from them. For instance, Japan is a country with masculine culture, and work hours are longer till night which makes things harder for women to give better performances because of their family commitments (Reisinger & Crotts, 2010).

IHG has to focus on the culture when they operate offices in masculinity-cultured countries to ensure better execution and greater result. Japan is a country where masculinity exists, and males are powerful and dominating of their female co-workers. IHG can operate its offices for long hours according to the culture of Japan; therefore, female employees cannot give their best and work for a long hours with men co-workers for their family commitments. For that reason, managers and leaders of IHG in Japan do not give major tasks to female workers because they cannot give their best to their work, and men workers are more in the number who do not like to deliver major tasks to females. Though men are more powerful in a country with masculine culture, IHG gives major tasks to men, and they work hard for a longer hour to make the work successful. In this culture, people are desperate to achieve more money and achievement than one another to prove themselves as a person with high status. Therefore, IHG has to pay handsome amounts to the employees of countries where masculinity exists, such as Japan, to keep the male employees highly satisfied.

Femininity is opposite to masculinity culture, and females are considered stronger than men in society (Cronjé, 2011). Gender inequality is less visible in femininity-cultured countries. Female team members get equal respect from their male co-workers, and work hour is not as long as in masculine culture; therefore, female employees can contribute more to organizational success. They are free to utilize their intelligence in executing the responsibilities they get, and men co-workers do not underestimate their capabilities. For that reason, people focus on handling issues by discussing, compromising and negotiating with each other in a femininity cultured country (Cronjé, 20). Money and achievement are not everything in this culture, and people are relationship oriented. They focus more on maintaining living standards and leading a better life by balancing their work and personal life. Therefore, multinationals have to manage employees carefully according to the femininity culture of the host country to keep employees motivated and have a better outcomes from them.

MAS culture informs IHG that the company can delegate major tasks to the female team members, and they will fulfil their responsibilities effectively like men team members. For instance, Sweden is a country where feminine culture exists; therefore, IHG has to ensure that female employees will get their rights and respect in the workplace, and the company will give them the opportunity to prove them. The company cannot run its office for longer hours than local law because people of femininity culture are also aware of their personal life with work life, and they will not give more time to work furthermore will balance their personal and work life. Though people of this culture solve problems through negotiating, discussing and negotiating, the discipline of IHG’s workplace will stay balanced because employees will not be engaged in conflicts.

Uncertainty Avoidance Index (UAI)

The fourth dimension of Hofstede’s cultural model is UAI which stands for Uncertainty Avoidance Index. The uncertainty avoidance index refers to the psychological power of people through which they cope with their anxiety. AI helps companies to know about the tolerance extent of people from different countries and the way they deal with their anxiety. People with high uncertainty avoidance index have a lower extent of handling uncertainties and cannot control their anxiety (Beugelsdijk and Welzel, 2018). In a country where high uncertainty avoidance exists, people cannot take risks and face unexpected challenges; therefore, they make hard rules and regulations to avoid uncertainty. For instance, South American countries like Peru, Chile etcetera are the countries with higher uncertainty avoidance index culture (De Mooij & Hofstede, 2010). They have no courage to handle unexpected complex situations or take any risks. For that reason, these countries have hard rules and regulations to avoid uncertainty and risky situations.

Higher UAI countries’ people cannot face risks, and they do not have the patience to keep trying IHG has to take necessary steps to interact with the people of this culture to ensure better execution in that countries. For instance, Argentina has high uncertainty index culture, and the people of the country cannot face risks because they do not have the courage or patience to do that. IHG should consider this culture when it operates its hotels in Argentina. The company has to make strict rules and regulations to keep its employees on track and avoid unexpected risks from taking place. People with higher uncertainty avoidance index are unable to handle risky situations because they give up easily when things go outside of their hands. Therefore, IHG’s leaders and managers have to control the employees tactically and make a pre-plan about the risks that may occur while executing different operations. As a result, employees will feel less pressured because managers and leaders will handle the problem, and they do not have to handle the risks.

People with a lower uncertainty avoidance index can control their anxiety, face uncertainties in a relaxed mood and do not try to control their lives by staying in bound by rules and regulations (Shi and Wang, 2011). In countries where lower uncertainty avoidance index exists, people are innovative and stay excited to accept needed changes furthermore do innovate to solve different problems. These types of countries do not make rules and regulations to keep things under their control and keep trying to overcome uncertainties that they face. For instance, Singapore is a country with lower uncertainty avoidance index culture, and the people of the country are active and excited enough to face challenges and win (Hofstede et al., 2010). This culture is beneficial for Multinationals because people with the culture take challenging work and work hard to make it successful by giving their full effort. As a result, the employees become capable of solving challenging problems, and companies get the best output from the operations.

UAI helps IHG to know about the lower uncertainty avoidance index of different countries and make a proper plan to interact with the employees of the countries. This culture has a positive influence on IHG because employees who belong to lower UAI can control their anxiety and not let their anxiety influence their work. These employees tend to innovate a new ways of doing work, solve different problems and have the capability to handle unexpected situations. As a result, employees of these countries can execute the operations of IHG effectively by solving different types of risks. Employees of the countries are more open to different ideas and approaches that help them to do work in an innovative way and bring the maximum output from their effort. Therefore, managers and leaders of IHG can delegate challenging tasks to the employees of the countries with lower UAI, and it will bring the best outcome for the company.

Long-Term Orientation VS Short-Term Orientation (LTO)

LTO is the fifth dimension of Hofstede’s cultural model and it has two approaches as Long-Term Orientation VS Short-Term Orientation. This dimension refers to the time horizon of people from various countries across the world and their concern about accomplishing long-term or short-term success (Mazanec, Crotts and Gursoy, 2015). Long-term-orientation cultured people are modest, practical and careful which helps them to make an effective plan in order to accomplish long-term success. People of this culture focus on their future and work hard to make the future secure without expecting any fast result from their effort, which refers to the great patience extent of them. They like to keep themselves prepared for the future to accomplish outstanding outcomes and they have the capability to adapt to complex situations. As a result, they become capable of overcoming the complexities of their personal and professional life that helps them to achieve long-term success.

LTO helps IHG to know about the time orientation culture of their employees and the company can effectively motivate their employees by identifying their time orientation nature. For instance, East Asian countries such as China, Japan, etcetera has long-term orientation culture, and IHG has to consider this culture while doing business in these countries. In these countries, IHG find out its success in finding out its yearly revenue and employees of the company work hard to bring long-term success to the company. Employees focus on practical factors, their education and other factors in preparing themselves for future success. Therefore, leaders and managers of IHG have to arrange development programs for employees to help them to build themselves for the future and make them capable of achieving long-term success for IHG.

Short-orientation culture of LTO informs refers to the lower patience extent of people and their concern about achieving short-term success. In countries where short-term orientation culture exists, people focus on their present only. They are not concerned about their future success and just focus on present success. People with short-term oriented cultures respect their traditions and are obliged to fulfil social obligations. Even if they are typically religious and nationalistic in nature. For instance, the US is a country with short-term-oriented culture, and people want the immediate results of their effort; therefore calculate the revenue or profit margin of their companies quarterly to identify whether they are getting success or not.

IHG also get informed about the short-term orientation approach of their employees from the LTO dimension of Hofstede’s cultural dimension model. The company has to consider this culture in the time handling or managing employees of short-term orientation cultured countries to ensure better management and employee satisfaction. For instance, African countries such as Nigeria, and DR Congo have short-term orientation cultures, and they value their culture and traditions furthermore, short-term success focused. IHG has to consider the traditions and social values of these countries by showing respect. Employees of these countries will be happy when they will see that their company is respecting and considering their social values. As a result, they will be loyal to their company and give their full effort, which will increase the productivity of IHG. Even IHG have to calculate its profit and revenue quarterly to keep its employees happy because employees want to check whether their short-term success has been achieved or not. Managers and leaders have to identify top monthly performers because the employees want short-term success and work appreciation. As a result, others will also work to get the appreciation, and IHG will get the best outcome.

Indulgence VS Restraint (IVR)

The sixth and last dimension of Hofstede’s cultural model is IVR which consists of two approaches as Indulgence VS Restraint. IVR refers to the extent of a nation’s interest in meeting its human basic needs and wishes (Dartey-Baah, 2013). The countries where indulgence culture exists love to enjoy their life according to their own wish and have fun. The social norms of these countries are flexible, and people have the right to enjoy their life in their own way. These people are freedom lovers and love to express their opinion openly, and do not take life seriously. These types of people focus more on their personal happiness than their professional life or career. Therefore, they love flexible work environments to do their work independently with their own way of doing work.

IVR dimension helps IHG to know about the indulgence culture of people and be careful of handling the employees of this culture. America, France, German,y etcetera are the country with indulgent natures. When IHG operate a business in these countries, the company face some difficulties because the employees are not too much serious about their work. They just do work for social status because most of the people of the culture are financially stable. IHG ensures that managers and leaders of the company do not pressure the employees and provide a flexible work environment with freedom of speech. The company has to give leisure time to the employees as a reward to keep them satisfied because they emphasise spending leisure time. As a result, employees get loyal to their IHG after seeing that the company is considering their culture and giving their best.

Another factor of IVR is Restraint which refers to the higher extent of control of people their wishes (Venaik and Brewer, 2013). People of restrained culture do not spend much time on leisure because they are serious about their life. Social norms of a country with a restraint culture are strict, and people lead life by following their social norms. People cannot fulfil their wishes by breaking the social norms of their country; therefore, they have to obey the rules and regulations of their country. These people are more professional and avoid jokes or irrelevant discussions while doing their work.

IHG gets benefit while executing their operations in countries of restrained culture or cultured employees. Restraint cultured people do not like to waste time or spend more time in leisure because they are too much serious about life. It makes them more responsible toward their jobs, and they give their best effort to their work. For instance, Russia is a country with restrained culture, and they do not make jokes while working. Employees of IHG from Russia fulfil their responsibilities without compromising quality and do not waste time when they work. The professionalism of restrained cultured people ensures that they will deliver the best customer services which will increase customers’ satisfaction. As a result, the revenue of IHG will increase highly. The negative aspect of restrained cultured people is they spread negativity about the whole word and do not like other countries; therefore cannot adjust themselves to people of other cultures. As a result, restrained cultured employees of IHG who are appointed in other countries create complexities in teamwork because they can hardly adjust with other team members.

Conclusion:

Hofstede’s cultural dimension model indicates the difficulties that multinationals face while managing and leading employees in different cultures (Kim, 2017). Six dimensions of the model show the complexities that IHG faces while managing and leading its employees across the world. PDI means that centralized decision making are encouraged in high PDI cultured countries; therefore, the company cannot engage its employees in decision-making because they will not be able to take effective decisions. Whilst, lower PDI cultured countries’ employees, are able to make decisions, and they are used to decentralized decision-making. Therefore, IHG has to involve them in decision-making, and it makes the decision-making process time consuming because more people get engaged in decision-making. Individualism of the IDV dimension shows IHG that they have to appreciate and reward employees individually because people with this culture feel proud of their personal success. Whist, collectivist employees, need an appreciation of their teamwork from IHG, and the company has to encourage their team work to keep them motivated and ensure the best outcome. MAS dimension’s masculinity approach shows that female cannot perform well; therefore, IHG does not delegate challenging tasks to the female workers of the country. The femininity approach of MAS means that female employees can deliver the best result like men; therefore, the company can delegate responsibilities to female workers. UAI dimension reveals that people with higher uncertainty avoidance index cannot handle risks and pressures; therefore, IHG’s managers and leaders have to make strict rules and regulations which will be followed by employees, which helps to avoid unexpected risks. On the other hand, people with a lower uncertainty index can handle risks and challenges so that IHG’s managers and leaders give them challenging tasks and get the best outcome because of their ability to handle risks and challenges. IHG sees that long-term orientation cultured people from the LTO dimension focus on the future and build themselves for long-term success; therefore, the company helps employees by providing development programs and encouraging them. The company face problems in countries with short-term orientation from LTO because the employees focus on the short-term success of the company that lasts for a very short time in the company. The last dimension, IVR, shows that indulgent cultured people are fun-loving and love to spend time leisure, so IHG has to give leisure facilities to their employees to keep them motivated. Whilst restraint from IVR refers to the fact that people of this culture are serious about their work and do not waste time. For that reason, IHG gets full engagement from its employees and its productivity increases.

References

Beugelsdijk, S., Kostova, T., & Roth, K. (2017). An overview of Hofstede-inspired country-level culture research in international business since 2006. Journal of International Business Studies.

Brewer, P., & Venaik, S. (2011). Individualism–collectivism in Hofstede and GLOBE. Journal of International Business Studies.

Cronjé, J. C. (2011). Using Hofstede’s cultural dimensions to interpret cross-cultural blended teaching and learning. Computers & Education.

De Mooij, M., & Hofstede, G. (2010). The Hofstede model: Applications to global branding and advertising strategy and research. International Journal of advertising, 29(1), 85-110.

Hofstede, G., Garibaldi de Hilal, A. V., Malvezzi, S., Tanure, B., & Vinken, H. (2010). Comparing regional cultures within a country: Lessons from Brazil. Journal of Cross-Cultural Psychology, 41(3), 336-352.

Hofstede, G. (2011). Dimensionalizing cultures: The Hofstede model in context. Online readings in psychology and culture.

InterContinental Hotels Group, (2019). Annual Report. [Online] Retrieved from: https://www.ihgplc.com/-/media/ihg/annualreports/2019/pdf/ar-report-2019/ihg_2019ar.pdf?la=en&hash=9F491366E66A68491D6C545E1692F43F [Assessed on 16 September 2020]