International Human Resource Management: Cultural Issues Report

This report provides an in-depth analysis of the cultural challenges faced by an Australian technology company as it expands internationally, specifically into Indonesia. The report begins with an executive summary, introduction, and background, outlining the company's expansion and the subsequent cultural issues arising from differing Eastern and Western cultural values. The purpose of the research is to identify cultural differences between Indonesia and Australia, analyze the adoption of Hofstede's cultural dimensions, and determine appropriate HR policies for the Indonesian subsidiary. The scope includes a comparison of the two cultures, assessing individualism, power distance, masculinity, uncertainty avoidance, indulgence, and long-term orientation. The analysis utilizes Hofstede's cultural dimension theory, examining the impact of societal culture on values and behaviors. The report highlights differences in power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance, long-term orientation, and indulgence/restraint between the two countries. Based on these findings, the report concludes with recommendations for HR policies, including safeguarding employee interests, encouraging diversity, promoting participative management, and addressing conflict resolution through third-party intermediaries. The report emphasizes the importance of aligning HR practices with cultural values and socio-economic variations to enhance employee satisfaction and organizational performance.

Running head: International Human Resource Management

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Executive Summary
Culture can be described as the framework of implicit rules of behavior which a particular group
expects its members to do or consider. So, in this context, Dutch psychologist Geert Hofstede has
measured the national culture into five dimensions. He has taught that cooperation across the
cultures is crucial for the survival and growth of the organization.
So, in this report, the cultural issues faced by the Australian Technology company will be stated
and analyzed in the light of the various cultural dimensions defined by Hofstede. Furthermore,
the recommendations to address the issues shall also be stated.

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Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Background..............................................................................................................................................3
Identification...........................................................................................................................................3
Purpose of Research................................................................................................................................3
Scope.......................................................................................................................................................3
Analyses.......................................................................................................................................................3
Conclusions..................................................................................................................................................4
Recommendations.......................................................................................................................................4
References...................................................................................................................................................5

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Introduction
Organizational culture can be defined as the principles, conventions and methods of interaction
within the organization which contribute to its social and psychological environment. The
culture of the organization comprise of the expectations, experiences, philosophy and values
which guide the behavior of the team members. It is expressed in the self-image of the members
and their interactions with the outside world (Eroğlu, 2014).
The organizational culture also comprise of the vision , values, systems, norms , symbols,
languages, habits and beliefs of the personnel working within the organization. The culture of the
organization is a framework of shared assumptions which guides the actions of the personnel by
explaining their behaviors for different situations (Hutnek, 2016).
So, in this report, the cultural issues confronted by the Australian technology company shall be
analyzed in the light of various cultural dimensions as defined by Hofstede. Additionally, various
recommendations shall also be stated to resolve the issues.
Background
The Australian technology company has successfully expanded its business operations
worldwide. It opened up its first subsidiary in New Zealand two years before. The HR Manager
of the company decided to implement the same HR policies in the subsidiary which he used to
implement in the parent company in order to maintain its identity.
Last year the company opened up its second subsidiary in Indonesia and decided to follow the
same strategy which it followed in the first subsidiary. But the HR policies were not so effective
as they were during the implementation of the first subsidiary. The policy of rewarding the
outstanding employees by the individual employees has negatively influenced the team
performance and unity.
Identification
The organization is being confronted by the various cultural issues due to the contradicting
cultural beliefs due to the variations in the eastern and western cultures. The eastern cultures

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are greatly influenced by the religion whereas western culture is deeply influenced by European
culture.
The variations in the beliefs of the organization and the working methods play a significant part
in the contradiction of the cultural issues. The ethics, level of social engagement of the people
along with the team work and the way of dealing with the customers also influence the cultural
issues confronted by the organization (Fu & Kamenou, 2011).
Purpose of Research
The purpose of research is to identify the following:
1. What are the differences between the organizational cultures of Indonesia and Australia?
2. Why do cultural practices differ in both the countries?
3. What type of culture is being adopted in both the countries according to Geert Hoftstede?
4. Which HR policies should be adopted in the Indonesian subsidiary to mitigate this difference?
Scope
The scope of this research is wide and it provides a framework which can be utilized to
comprehend the management implications of variations in different cultures. It attempts to
compare and contrast the cultures of Indonesia and Australia .Furthermore; it analyzes the
difference in cultural practices in both the countries with respect to corporate culture.
The cultures adopted in both the countries will be assessed as the organizational cultures in both
the countries vary in terms of individualism, power distance, masculinity, uncertainty avoidance,
indulgence and long term orientation. Lastly, it evaluates the HR policies to be applied in the
Indonesian organizations in order to accomplish the anticipated objectives.
Analyses
According to Novitskaya (2015) the cultural differences can be analyzed with the help of
Hofstede’s cultural dimension theory. It is an agenda of cross cultural interactions amongst the
personnel working in organizations operating in different cultures. It was developed by Dutch

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psychologist Geert Hofstede. It explains the impact of the culture of the society on the values and
beliefs of its members and how these values play a part in governing their behavior.
The Hofstede model of national culture comprises of six dimensions namely individualism
versus collectivism , power distance index , uncertainty avoidance index, masculinity versus
femininity , indulgence versus restraint and long term orientation versus short term normative
orientation .These cultural dimensions signify prioritizing one state of affair over another over
another which helps in distinguishing the culture of one country from another (Jouda et al.,
2016).
As per Jariya (2012) the power distance index examines the intensity to which the least powerful
individuals in the society admit and assume that the authority is dispersed in an unequal
manner. Thus, people in high power distance societies give their regards to personnel appointed
on higher designations as compared to people working in the middle or lower management. On
the other hand, societies with low power distance, people struggle for equalization of power and
demand justice for unequal distribution of authority.
Thus Indonesia has a higher power distance as compared to Australia. People are not considered
equal in the Indonesian society. Therefore employees appointed on lower designation expect and
accept less at their workplace as well. The concept of hierarchy is still followed and people liked
to be called by the titles rather than direct name recognitions.
In the context of individualism and collectivism, it is the degree of dependence a society
continues to have upon its members. It is related to the self-image of the people in terms of ‘I’
versus ‘We’. In the societies with high individualism , people take care of themselves and their
immediate families whereas in the collectivist societies , people believe in groups and take care
of each other in exchange of faithfulness. The Indonesian society is a collectivist society as
compared to Australia which is an individualist society (Groutsis et al., 2014).
Masculinity refers to the society which is driven by a sense of accomplishment, success and
competition indicating that winner being defined by success. This belief system starts at school
and continues throughout the life of the individual. On the other hand, in the feminist societies,

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quality of life signifies success. So Indonesian society has low masculinity whereas Australian
society has high masculinity.
Uncertainty avoidance is associated with the belief that the society deals with the doubtful and
unknown situations and has formulated institutions and beliefs to mitigate these doubts. The
organizational culture of Indonesia and Australia coincide in this case and both of them have the
characteristics of low uncertainty avoidance. It implies that there is a strong preference of
detachment of internal self from external self. It means that no matter how angry or disappointed
a person is on his workplace, he will never show his anger in order to maintain peace and
harmony on the workplace.
The other aspect is conflict resolution. Direct communication can be seen as a threatening
situation in both the cultures rather the appointment of a third party intermediary is a more
familiar route to rectify the situation (Rinuastuti et al., 2014).
Long term orientation explains how every civilization has to preserve some connection with its
past along with managing the present and upcoming challenges. Societies with this kind of
culture believe that truth is dependent on context, situation and time. They have the capability to
adopt the traditions in accordance with the changed conditions and have a strong inclination
towards savings and investment and determination towards accomplishing the results. Indonesian
culture has a high long term orientation whereas Australian culture has a low long term
orientation.
Indulgence is the degree up to which individuals try to restrain their wishes and expectations
which is based on the way they are raised. The weaker control is known as indulgence and higher
control is known as restraint. The organizational culture of Indonesia has a culture of restraint
whereas Australian organizations possess a high indulgent culture (Ourfali , 2015).
Thus Indonesian culture is characterized by the higher power distance index , collectivism
and restraint cultures and low uncertainty avoidance , masculinity and long term orientation
whereas Australian culture is characterized by low power distance and high collectivism , long
term orientation, indulgence, masculinity and intermediate uncertainty avoidance .

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The HR policies to be adopted in the Indonesian subsidiary should comprise of safeguarding the
interests of the employees against work place bullying and torture and those which encourage
diversity at workplace and avoid discrimination. They should adopt the policy of participative
management, career development and compensation (Mihaela , 2014).
Conclusions
Hence to conclude it can be said that the human resource policies shall be adopted considering
the relevant cultural frame works and socio economic variations between the countries. Based on
the cultural variations in the Australian and Indonesian organizations, the policies should relate
to valuing the seniority and the importance of humans in the organizations. In the global market
scenario, the challenges faced by the multinational corporations are multifaceted so is the
purpose of human resource management. It is directed here that the Indonesian employees should
be able to align the policies and practices related to HR along with their values and beliefs
pertaining to culture.
Recommendations
The efficiency and competitiveness are the two main ideas in the forefront which form the
structure of the relations amongst the employees working in a modern multicultural corporate
workplace. So the issues relating to these two ideologies become the primary reason for conflict
when any problem or task needs to be addressed.
Cultural differences such as the manner of communication and the power culture of the
organization should be considered while formulating the HR policies. The power distance of
Indonesia is high, so suitable HR policies are recommended to safeguard the interest of the
subordinates and mentoring them should be formulated. The higher management should regulate
the up and down of the cultural scale. They should mentor the employees of the lower cadre and
motivate them to perform better (Sarayrah et al., 2016).
In the context of collectivism, the practices relating to human resource helps in encouraging
unity and team spirit amongst the employees . It will lead to increase in the performance and
satisfaction of the employees which will reduce the employee turnover and absenteeism
(Windiarti et al., 2014).

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With reference to Masculinity, the score of Indonesia was low so the human resource practices
related to the training of the employees to boost their morale should be formulated. It will
increase their motivation and satisfaction. It will assist the organization in retaining people and
maintaining good employee relations. They should be motivated to contribute in the decision
making process of the administration so that they feel a sense of accountability and
accomplishment in the business which will enhance their quality of life (Brewster et al., 2016).
The policies related to uncertainty avoidance should be formulated in such a way that for
resolving the conflicts, third party or arbitrators should be appointed as the intermediary avoids
the uncertainty related to confrontation (Siddique et al., 2016).
In the context of Long term orientation, the HR policies should be formulated according to the
cultural beliefs and values of the organization. In the context of restraint cultures, the HR
policies relating to provisions of yearly leaves to the employees should be formulated so that
they can be relieved from the work pressure. The organization can plan leisure trips for the
employees so that they can relax and spend time with their families.

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