The Benefits of Multi-cultural Business

This was written by Ryan Cook, a superb and extremely well written blog that is BUSS4 gold 'Traditionally concerned with the demographic make-up of society and the resulting diversity in traditions, beliefs and norms the concept of multi-culturalism appears to have an ever increasing relevance to the world of business and resulting corporate performance. Never has this been truer than in the last week where once again the banking industry and all its ills were again on show for us all to see and no doubt criticise. Personally I struggle to remember a time when banking scandal, high profile blunders and apparent managerial felonies didn’t dominate the headlines. The latest instalment of which broke last week, firstly with the publication of the ‘Salz Review’ which reported on the working practices at Barclays (http://www.bbc.co.uk/news/business-22012261) was then followed by the Banking Standards Commission’s (BSC) report into the 2008 collapse of HBOS http://www.bbc.co.uk/news/business-22045930). The conclusion of both of these reports was that business practices had been dominated by a single-minded culture of ‘win at all costs’ and that both organisations require transformational change. As a cultural case study things don’t get much better. Breezing through the two articles signposted in this blog is more than sufficient to enrich your studies and provide an excellent opportunity for demonstrating a sound understanding of cultural management (or lack of) and the complexities and challenges posed by organisational change in the forthcoming buss4 exam. However the real opportunity doesn’t end there. The real value of this case study (and hopefully this blog) is the opportunity to deduce themes for evaluation. Let me continue.Neither the Salz review nor the report by the BSC take any prisoners when condemning the actions, practices and ethos of the two organisations who’s contribution to the financial Armageddon in the UK is unquestionable. Banks often cite the global nature of the credit-crunch as their primary line of defence for failure and the fact that much of the problem can be traced back to the United States. Although the author does not question the fact that financial systems are irreversibly inter-connected or the notion that ‘when America sneezes the world gets a cold’ this line of defence does not justify the actions and choices of the banks prior to, during or following the financial meltdown.The internal working practices of Barclays and HBOS were ‘built on uncertain foundations’ had an ‘over-emphasis on short-term financial performance’ and ‘neglected the interests of traditional customers and clients’. Collectively these claims point to a situation where ‘winning at all costs’ in pursuit of bonuses and personal reward was simply rife, penetrating the entireorganisation and its practices to the very core. It may be suggested that all cultural paradigms exhibit a sense of organisational selfishness and that it is exactly this feature, in part, which drives competitive spirit and optimum performance. After all ‘the business of business is business.’ However, organisational paradigms are usually multi-faceted and any element of organisational self-interest is usually tempered, restrained or counteracted by other equally salient values or norms. Not in banking. The lack of a dynamic multi-cultural perspective where different organisational values exist (other than simply profit) and other stakeholder groups are genuinely valued and served produced cultural tunnel vision pre-occupied with, and consumed by, profit. Indeed, the very suggestion from an employee that banks should be even remotely concerned with anything other than profit-making activities is likely to have resulted in being culturally ostracized and ejected from the bank accompanied by the tag‘he doesn’t fit in’. The cultural practices of banks wasn’t simply something they were doing it was something they were, part of the DNA and something which radiated, un-interrupted, fromeach and every banking employee. The mis-selling of PPI and the fixing of the Libor rate are further manifestations of a culture devoid of any sense of responsibility or justice. This is of course not the first time that cultural tunnel vision, and a failure to operate a multi-cultural perspective, has produced a high profile corporate demise. Back in 2001 Enron, an energy trading firm, collapsed following allegations of insider-trading and inaccuratefinancial reporting (http://news.bbc.co.uk/1/hi/business/6079042.stm). The, then, CEO Jeff Skilling cultivated a culture built on an ethos of survival of the fittest where the lowestperforming staff, some 10-15% a year were fired following an assessment of their financial performance. The so called ‘Rank and Yank’ method was a major tool in Skilling’s pursuit of market leadership via an aggressive and no-nonsense culture. Skilling’s questionable endeavours in relation to insider trader and financial window dressing landed him a 24 year prison sentence. Evidence that perhaps in extreme cases if left unmanaged organisational cultures, characterised by greed and self-interests, can evolve from the un-ethical to the criminal. All of these examples share some common characteristics:All were financial institutions All had leaders with very clear perceptions ofhow to win (Diamond, Crosby, Hornby & Stevenson and Skilling) and refusedto deviate from their vision.All enjoyed short / medium term financialsuccessAll cultures were allowed to gather momentum andconsume the ‘architects’ who constructed itAll CEOs have now ‘stepped aside’All businesses adopted the shareholderperspective rather than a more balanced stakeholder modelAll were in markets where little buyer powerexists, barriers to entry are low and few competitors exist. This perhaps generated the ‘we can dowhatever we want attitude’.All cultures were single-minded and devoid of amulti-cultural perspectiveAll businesses failed!So there you have it proof that businesses can benefit from multi-culturalism? Perhaps. The downside of this multi-cultural approach is that it can result in ill-defined strategy, brittle consensus and indecision and a situation where numerous sub-cultures damage performance. That, however, is a conversation for another day!'