Strategy to Gain a Competitive Advantage Through Managing Cultural Diversity Within a Service Sector Organization

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Table of Contents

Introduction
The role of human resource management
Strategies that create a competitive advantage
Conclusion
Reference List

Introduction

In his definition of service industry, Punia (2005) explains that “the service sector produces “intangible” goods, some well known-government, health, education, and business services-and some quite new-modern communications, information, and business services”. This industry is among those with the highest levels of growth and expansion. Like Othman (2011) notes, “everything that grows also changes its structure”.

A growing economy and competition in the service sector means that management, trends, human resource needs and other areas in the industry are constantly adjusting to accommodate the changes. Diverse needs in the service sector means that most organizations are not able to satisfy their human resource needs from one market. As a result, recruitments are done from different markets and regions.

Human resource management is therefore no longer an easy task for the organizations in the service industry (World Bank, n.d). It requires a precise skill to accommodate people with diverse cultural backgrounds, and convert the differences to a valuable asset.

Even as this happens in the industry, “each individual, irrespective of background and context, wants to be valued for what they can bring to an organization” (Smircich, 1983). The need to be valued is instilled in every human being. Perhaps that is why Barnard and Ronald (2000) argue that “it is this human-hunger to be valued that drives the positive power that cultural diversity can bring to the workplace”.

In an attempt to do this, it is notable that managing workforce diversity can be a complex task for many organizations in the service industry. In the face of growing diversity in the sector, organizations need to overcome traditional habits and assumptions to ensure the best practices are implemented. Cultural diversity in an organization can manifest itself in the following ways:

Problem-solving style
National culture
Ethics
Attitude towards problems and opportunities
Embracing change
Embracing technology

The role of human resource management

As Bratton and Gold (2003) explain, “human resources management is the function in an organization charged with the responsibility of implementing policies and strategies related to management of individuals who comprise the work force of an organization”.

Without a stable, well supported and well equipped human resource management team, expensive investments and innovative ideas in the service industry may not yield any results.

Furthermore, for a company’s HRM efforts to pay returns, “the human resource department must align the supply of skilled and qualified individuals and capabilities of the workforce with the organization’s plans to maximize output and secure future success” (McNamara, 2009). Its functions and strategies have to be performed and implemented effectively and pragmatically for it to bear any meaningful results.

The same author explains that “successful organizations are those which are adaptable, resilient, quick to change directions, and customer-centered” (Frame, 2003). The working environment in the service sector today is constantly changing and demands strategic planning and organization.

People in a business are a key determinant of how successful it is going to be and how long it will last. As the labor markets get more and more competitive, and the need for talent becomes more obvious for optimum performance, human resource managers are facing major challenges as they try to get the best in the market, retain them and ensure they have consistent performance.

Strategies that create a competitive advantage

Managing the differences

Several challenges arise when people from different backgrounds with different ways of doing things and relating to people come together. Albrecht (2001) helps the reader understand by explaining that “challenges arising include rightness in conflict where judgments are made from our upbringing, our history, circumstances and our religion, race, beliefs and cultural alignment”.

There are also stresses caused by traditional practices, diversity in values, varying interpretations of various happenings, as well as the normal conflicts arising from backbiting and other bad habits at the workplace.

In the service industry, a competitive advantage is paramount for a business to survive in the highly competitive industry. To develop one, a business must find relevant solutions to these challenges. One way through which these differences can be managed is by developing and adopting acceptance and an understanding of diversity (Baumuller, 2007).

This allows everyone in the organization to experience and work in a harmonious environment. They can also solved by helping employees understand why they have come together and what they need to accomplish. Developing a common team-based mission is one way of doing this.

Regular meetings to clear past group or individual differences is also a significant way of encouraging harmony and letting go of any animosity that may be building up. An organization can even go further and have employees sign agreements and commitments to respect everyone regardless of their cultural backgrounds.

Information and background management

Information management is a challenge when dealing with a team of people from all over the globe. Technological innovations such as Human Resource Management Systems have made it easy for organizations to handle HR information.

Such systems also feature personnel administration, organizational management, industrial management and manpower management. They are tools towards understanding employees’ background in what the organization is involved in.

For multinational corporations, their team could be from all over the globe. It is important that their backgrounds are investigated and past experience understood. Information management is therefore paramount to ensure that employees don’t suffer damaging culture shock by exposed to extremely new kinds of treatment.

For example, employees from Muslim countries might expect that a company provides a private space for prayer hours as it is the case in most companies in the Middle East. An employee from the west may find it hard to cope with a more conservative dress code if they are working for an organization in the more religious nation.

When making decisions of what should be available for employees, how they should dress and how they should behave at work, it is important for a business to understand their backgrounds and come up with standards that suit everyone. For this reason, having access and managing information about employees’ background is paramount.

Communication

Gaining competitive advantage has become a major challenge for organizations in the service industry today. As markets get larger and more competitive, strategic human resource management is a key recipe when formulating effective strategies.

Employers must be able to establish what works in their human resource management efforts and what doesn’t, to eliminate those strategies that waste time and cost the business. This can be much easier when an organization has more open communication channels available for their employees.

It is critical that an organization makes it completely easy for employees to communicate any discomfort. Managing cultural diversity will make more sense to an organization that allows employees to express their feelings freely (Marchington and Adrian, 2005). The avenue should be open for all topics and issues that affect them. This should include sensitive issues such as disagreements with the executive and company policies.

While some people may be conservative where risks are concerned, some are bold and will take bigger risks. It is therefore paramount that an organization understands this before building teams and putting people together for tasks.

Allowing them to communicate is the only way to understand their cultural weaknesses and strengths. Language barriers should also be addressed to ensure everyone can communicate with each other effectively.

Motivation and discipline

Motivation and discipline can be achieved by making sure that everyone’s differences are treated as an asset to an organization. Criticizing employees because they are not like everyone else encourages pretence and discourages openness. It may create resentment among employees who feel looked down upon.

Like Syed and Mustafa (2010) explain, there can never be success in a team when people don’t have each other’s best interests at heart. It is also not possible when people are attempting to bring each other down. Such negative happenings occur when an organization is selective when giving praise or compliments.

Motivation and discipline will be achieved when an organization adopts a culture of appreciation and accommodation among its employees. Every member of the organization should be trained to appreciate differences, as well as identify the differences among their colleagues and find ways of putting them into use in different tasks.

Policies should be clear enough for anyone who tries to intimidate or disrespect colleagues for being different from them. Reward mechanisms should only be based on performance at work and not on outlook or cultural backgrounds or practices. A major challenge facing organizations in the service industry is ensuring talented employees stay motivated and disciplined.

A good employer must be courageous enough to let go of employees who affect results negatively. If such qualities lack, holding on to employees simply because they come from a certain cultural background may be costly for an organization.

Relating with customers

The service sector is one of the industries that deal with people directly. Cultural diversity can affect the way employees deal with clients. A business must ensure that no differences occur between employees and customers due to cultural differences. There should be consistency in the way services are provided regardless of who is doing it (Ramsay, Dora and Bill, 2000).

For example, one marketing person may have an extremely different way of interacting with customers and discrepancies could occur when the customers are served by another member of an organization. It is therefore paramount that an organization ensures consistency in employees’ line of duty through training and setting rules and guidelines on how services are delivered.

Effective policies

HR policies serve several purposes in the service sector. They allow organizations to be clear with their employees on issues that affect the way they work and achieve set objectives.

Such issues include what employees should expect from the organization, how policies and procedures work in an organization, acceptable and unacceptable behaviors, the organization’s expectations on employees, and how to handle cultural diversity, among other important issues.

As Baptiste (2007) argues, “the establishment of policies can help an organization demonstrate, both internally and externally, that it meets requirements for diversity, ethics and training as well as its commitments in relation to regulation and corporate governance”.

When managing cultural diversity, they help an organization define everyone’s obligations towards achieving harmony, standards of behavior and document disciplinary procedures, as well as supportive strategies among employees towards helping each other meet goals towards the good of an organization.

Conclusion

Cultural diversity in the service industry can be an advantage or a disadvantage depending with how it is managed. Differences among an organization’s team can be used to enable it manage diverse circumstances.

They can also divide the organization when employees are allowed to focus on what is not common between them. Finding a balance between embracing differences and using them as strength is a major challenge in the service industry.

It is also presents a challenge as far as dealing with a diverse clientele is concerned. “In our fast transforming world, company and organizational leadership often lag the reality of their employee and client-base” (Ely and David, 2001).

From the discussion, it is obvious that these challenges can be managed. To achieve competitive advantage, an organization needs to address the differences, put in place tough discipline measures, identify areas of conflict and solve them, as well as establish communication channels that allow employees to express themselves and get feedback.

As the need for a more diverse workforce grows, cultural diversity is here to stay for businesses in the service sector. It is only wise that organizations start investing in finding long-lasting solutions.

These include aggressive training on how to manage differences when performing team work, how to manage conflicts arising from cultural differences, establishing standard values and professional ethics, as well as enhancing communication channels to allow employees speak out before animosity builds up to unbearable levels.

Reference List

Albrecht, M.H., 2001. International HRM: Managing diversity in the workplace. Oxford: Blackwell.

Baptiste, N.R., 2007. Tightening the link between employees’ well-being at work and performance. A New Dimension for HRM, 46(2), PP. 284-305.

Barnard, M.E. and Ronald, A.R., 2000. How are internally oriented HRM policies related to high-performance work practices? Evidence from Singapore. International Journal of Human Resource Management, 11(6), pp. 1017-1046.

Baumuller, M., 2007. Managing cultural diversity an empirical examination of cultural networks and organizational structures as governance mechanisms in multinational corporations. Oxford Books: New York.

Bratton, J. and Gold, J., 2003. Human resource management theory and practice 3^rd ed. London: Bath Press.

Ely, R.J. and David, A.T., 2001. Cultural diversity at work: The effects of diversity perspective on work group processes and outcomes. Administrative Science Quarterly, 46(2), pp. 229-273.

Frame, J.D., 2003. Managing projects in organizations: How to make the best use of time, techniques, and people. San Francisco, Calif.: Jossey-Bass.

Marchington, M., and Adrian, W., 2005. Human resource management at work. United Kingdom: CIPD.

McNamara, C., 2009. Human resource management. Available at: <https://managementhelp.org/humanresources/index.htm> .

Punia, B.K., 2005. Organizational cultures in service sector an exploration. Delhi Business Review, 6(1), pp. 45-52.

Smircich, L., 1983. Concept of culture and organizational analysis. Administrative Science Quarterly, 28, pp. 339-358.

Syed, J. and Mustafa, O., 2010. Managing cultural diversity in Asia: A research companion. Cheltenham: Edward Elgar.

Othman, R., 2011. Human resource management practice of service organizations: Evidence from selected Malaysian firms. Journal of Asia-Pacific Business, 2(3):pp. 65-80.

Ramsay, H., Dora, S. and Bill, H., 2000. Employee and high performance work systems: Testing inside the black box. British Journal of Industrial Relations, 38(4), pp. 501-531.

World Bank, n.d. Growth of the service sector. Available at: http://www.worldbank.org/ .

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