U05: Being An Ethically Sound, Multicultural Organization Isn’t As Easy As You Think

When we hear words like “global economy” or “multicultural workforce” few of us realize the work that actually goes into being an ethically responsible organization that focuses on a multicultural workforce in a global economy. We assume that all we need to do is hire people from different countries and that makes us “multicultural” or we just open up a plant in another country and that makes us part of the “global economy.” The reality is that couldn’t be further from the truth. There are many things to consider before taking your organization onto the global stage.

As access to information and technology has increased, so has the way we do business. It changes so rapidly, in fact, that sometimes it is difficult to even keep up! But with the increase in access to information, technological advancements and the ease in which to move products around the globe has come a lot of pressure for organizations to act in a responsible manner, particularly when conducting business in another country. No longer is it sufficient for management to distribute flyers or host a seminar presented by senior leadership about the country/region where the company is now planning on conducting business. The employees in the home country and the new region deserve more from the organization if they are choosing to “go global.” But what things should an organization consider if they are contemplating entering the global economy?

There are many things to consider such as what is a “living wage”, what are acceptable working conditions, what are the social norms for this region, what are the holidays in this region and how are they observed, and the list could go on and on. A company needs to consider all of these things (plus many, many more) when looking for the right location to open another facility. They need to insist on adopting policies that demonstrate their desire to do “good” business in the chosen nation. This will help to build organizational trust among the natives and those in the home country by demonstrating their willingness and desire to do right by the people.

Donaldson suggested that when it comes to creating policy that will shape the organization’s ethical practices you should use three guiding principles:

  1. Respect for core human values, which determine the absolute moral threshold for all business activities
  2. Respect for local traditions and
  3. The belief that context matters when deciding what is right and what is wrong.
    (Donaldson 1996)

Donaldson recognizes that developing these ethical policies is not a black/white issue and these three principles allow the latitude to weigh all options. He provides examples of conducting business in Japan, where it is common practice to give gifts when starting a new business venture. In America, that could be misconstrued as a bribe, but in Japan, its offensive if you don’t have a gift or accept a gift as it is given to you.  Another example he provides is the use of a chemical called EDB which is banned in the United States, so it is therefore unethical to use it here. However, in extremely “hot climates, it becomes harmless when exposed to intense solar radiation” so using it in another part of the world, under proper supervision, is an ethically sound decision, hence why context is important (Donaldson 1996).

Cultural stereotyping is another thing to consider when exploring global expansion. Often, business people think if they are doing business in a Spanish speaking country, they just need to hire employees who speak Spanish. However, if those Spanish speaking employees were born and raised in another country, they may not be familiar with the cultural norms of that nation and may be viewed as an outcast among the local workers. This type of cultural stereotyping could have a huge negative impact on the organization trying to conduct business (PSU 2017). By simply hiring someone who speaks the language, the organization is doing a huge disservice to the other employees in the company and to the locals because it is demonstrating that they do not have a vested interest in the local region. It could signify to the locals that the organization believes the only barrier to business is language when in fact, that could be just the tip of the iceberg. This will contribute to an organizational culture of apathy and distrust.

One way that an organization can work to create an ethical corporate culture is by creating a Code of Conduct. “Ninety percent of all Fortune 500 companies have codes of conduct…” (Donaldson, 1996) but most of these have fallen on deaf ears because employees have seen management not live up to them. In order to create an ethical corporate climate that is free from cultural stereotyping and built on organizational commitment, organizations need to not only have a code of conduct, but it is imperative that the senior leadership live and breathe that code so that other employees believe in its validity and also work to contribute toward it.

Clearly, these are just a few of the things that businesses should consider when deciding whether or not to expand into the global market. So while the lecture and flyers about the newly acquired business location may be a good starting point, organizations owe it to their workers, in both locations, to do their due diligence and adopt ethically sound policies on conducting business in various regions that will reduce ethical issues and help to effectively lead diverse people (PSU 2017).

References:

Brett, J., Behfar, K., Kern, M. (2006) Managing Multicultural Teams. Harvard Business Review. Retrieved 20 November 2017, from https://hbr.org/2006/11/managing-multicultural-teams

Donaldson, T., (1996). Values in Tension: Ethics Away from Home. Harvard Business Review. Retrieved 20 November 2017, from https://hbr.org/1996/09/values-in-tension-ethics-away-from-home

Meyer, E. (2014). Leading Across Borders Takes More than a Multicultural Background. Harvard Business Review. Retrieved 20 November 2017, from https://hbr.org/2014/07/leading-across-borders-takes-more-than-a-multicultural-background

Penn State University (n.d.). Globalism/Multicultural Issues. Retrieved from Penn State University Ethics and Leadership: https://psu.instructure.com/courses/1868786/pages/l12-overview?module_item_id=23063503

One Comment

  1. sew5203 December 1, 2017 at 11:49 AM #

    Hi Terra – Wow what a thought-provoking post!

    I had the opportunity to work closely with our international HR teams this past year when 4 of our talented researchers were not selected in the H-1B visa process. We were fortunate enough have established offices in their respective home countries to provide a pretty seamless transition. The pay difference for the same entry-level positions across offices was astounding to me. The Asia-Pacific researchers make about a fourth less than here in the US. More shockingly, was that the Latin American researcher salary is about three-fourths less than one in the US. I found it interesting that the individuals were still very happy with the salaries in comparison to industry standards back home. One must also remember that the global offices are located in major cities, which have a comparative high cost of living to cities the US.

    You mention that a multi-cultural organization must also consider acceptable working conditions, socials norms for the region, holidays in the region and how they are observed. Through this process we ran into several roadblocks including how to process international payroll, strict labor laws to include medical exams, proper use of consecutive vacation days, and differing expectations of appropriate job titles. As you mention in your post, it’s so important for an organization to develop strong ethical practices – especially when dealing with global entities. All ethically sound decisions must value the core human values and local traditions of employees.

    Best,
    Sawyer

Leave a Reply

Skip to toolbar