Corporate Culture vs. Local Culture: The Impact on Management and HR

There are two predominant factors that impact the design of a Global Human Resources strategy:

  • Corporate Culture;
  • Local Culture.

Corporate culture refers to shared values, attitudes, standards, codes and behaviors of a company’s management and employees. It is rooted in the company’s goals, strategies, structure and approaches to business activities.

Local culture is learned and absorbed during the earliest stages of childhood, reinforced by literature, history, religion, teachers/schools and parents. It affects the way we perceive and judge events, how we respond to and interpret events, and how we communicate to one another in both spoken and unspoken language.

Mastering corporate vs. local

Companies have to learn to master the paradox of global/corporate/standardization vs. local/ customization/responsiveness. In other words, corporate culture vs. local culture.

Let’s talk about how the sales and marketing functions deal with this paradox first before talking about HR.

A good example of a company that has made an attempt to integrate both corporate and local culture is McDonald’s. They insist on some aspects of standardization and values. Quality, cleanliness, speed and branding remain uniform. These values are not negotiable.

However, McDonald’s does realize that they need to adapt their menu to local cultures:

  • Indonesia — rice is substituted for french fries;
  • Korea — roast pork is substituted for beef; and,
  • Germany — beer is served.

Cultural mistakes

Some companies, however, have made mistakes:

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  • Home Depot in China — failed because the Chinese do not do it yourself and do not have garages to store all the equipment.
  • Best Buy in China — the salespeople are known for their knowledge of all the products they sell. In the U.S. customers buy from them because they appreciate all the information they receive during the selection process. In China, people listened very carefully to all this information and then after making a decision they walked down the street to another store and bought the selected product more cheaply.

So now that you have seen how companies deal with sales/marketing within this paradox, how do companies “globalize” HR.

Here are some examples of challenges for HR in “going global”:

Performance Management

  • 360 degree performance plans — China/Japan/Korea react very negatively – they would never appraise their managers or anyone at a higher level than them.
  • Pay for performance — Japan and Korea will push back. Culturally, managers don’t feel comfortable talking to employees about performance issues and tend to give employees the same ratings/same increases. In Korea appraisal and salary policies have traditionally been dependent on seniority and age and not work performance.
  • Europeans see performance appraisals as a forward-looking tool for developmental purposes.
  • The U.S. views performance appraisals as a tool for looking-back at past performance for determining ratings/pay increases as well as for legal documentation in case there is a need to terminate an employee at a later date

Work-life/wellness

  • Wellness programs — Scandinavians prefer ergonomic assessments, while Taiwanese prefer annual physical exams.
  • Telecommuting — In Hong Kong and Japan living space is cramped, so telecommuting is not viewed as a benefit.
  • EAPs will not be seen as useful in Asian countries — For example, in Japan emotional problems are not even discussed with family, much less strangers.

Learning/Development

  • Rolling out training programs without local culture delivery methods — content can be the same, but delivery needs to be different.
  • Asian cultures are uncomfortable with experiential exercises – they prefer a lecture approach.
  • Italians and Latin Americans like to debate, discuss and are very vocal. HR needs to allow more time than usual for a training session.
  • Sweden and Norway are no nonsense – they want the facts and they want them quick.

The answer of HR

So what’s the answer for HR? Maintain the critical balance between globalization and localization. Globalization is not WHERE you do business, but HOW you do business.

HR must trade-off and balance the paradox of:

  • globalization vs. localization;
  • standardization vs. customization.

If HR tries to MAXIMIZE either side of a paradox, sooner or later they will be forced to deal with the other side.

Jacque Vilet, president of Vilet International, has more than 20 years’ experience in international human resources with major multinationals such as Intel, National Semiconductor, and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career. She has also been a speaker in the U.S., Asia, and Europe, and is a regular contributor to various HR and talent management publications. Contact her at jvilet@viletinternational.com.

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5 Comments on “Corporate Culture vs. Local Culture: The Impact on Management and HR

  1. A really good concise aritcle about the differences, thank you.  What would be your take on the cultural variations when it comes to recruitment?  Is the ideal applicant experience during the talent acquisition process different by region/country?  What is your experience?

  2. Hi Jacque very good post.
    In my experience of managing multicultural teams, the best is to create a third culture. For example we implemented global HR programs with a regional approach for 10 countries including cultural antagonists such as Japan and China or Korea rather than dealing with the specificity of each country. Everybody was proud to be part of the regional APAC team and we implemented performance appraisals and pay for performance for all countries without any major problem

  3. Great post Jacque. Based on my international experience, I believe it is extremely important to find a balance between local and corporate culture. A hybrid, incorporating all participating backgrounds can be very functional. The most important lesson I have learned is to keep an open mind about everything. That is the easiest way to adjust to the cultural difference!

  4. Shaun — sorry for the delayed response.   Yes talent acquisiton is dfferent.  
    1) Make sure you know the jobboards used in each country —- they are different by country.  Monster may be worldwide but not necessarily the most popular
    2) Company branding helps greatly.   If a well-known company people are more interested because they believe there are better opportunities for learning/development.   If a small company that no one knows of you really have to make yourself known and differentiate yourself in some way in the market.   Really need a marketing campaign
    3) Corporate websites are great/popular and need to point out the value of diversity (meaning country culture) that bring innovation to the company.   Research shows that teams made up of employees from different countries may take longer to make a decision/recommendation — but end up with a more creative solution than a homogenous team from one country.
    4) Get to know a local recruiter (not a big box firm of expatriates) and get feedback on whether job fairs are good to have or not and best ways to recruit.  You may have to give him some business on one/two positions but worth it.
    5) Lots of young people (Generation Y and yes they exist in all countries) tend to want international assignments as part of ther career.   May want to include in your corporate career website the value management has in developing employees with global experience.   Not long-term but short-term assignments. (long-term is dying).
    6) Teach managers on behavioral interviewing.   Local managers need to probe in interviews.  Many candidates have been promoted quickly and have shallow depth of skill.
    7) Have your local managers attend tradeshows and make a point to get lots of business cards.
    8) Get your corporate compensation people who usually have a counterpart in competitor companies in market you are hiring on their hiring methods.
    9) If you already have employees in the country get names of people they have worked with in the past
    10) If hiring entry level —- check with universites

    Hope this helps!

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