Culture comparison and culture change case study of ABB vietnam and ABB singapore

VIETNAM NATIONAL UNIVERSITY, HANOI HANOI SCHOOL OF BUSINESS HOANG PHUONG NGA SERVICE RECOVERY FOR VIETINBANK TRADE FINANCE OPERATION: SITUATION AND SOLUTION FOR IMPROVEMENT Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: DR NGUYEN THI PHI NGA HANOI - 2012 TABLE OF CONTENT ACKNOWLEDEMENTS ABSTRACT TÓM TẮT TABLE OF CONTENT LIST OF TABLES LIST OF FIGURES INTRODUCTION CHAPTER 1: LITERATURE REVIEW 1.1 Definitions 1.1.1 Culture 1.1.2 Organizational Culture 1.2 Cultural layers & cultural diversity 1.2.1 The out layer (Explicit Products/Artifacts) 1.2.2 The middle layer (Norms and Beliefs/Espoused Beliefs and Values) 1.2.3 The core (Basic Assumptions/Underlying Assumptions) 1.3 Sub-culture 1.4 The importance of organizational culture 1.4.1 Coordination 1.4.2 Integration 1.4.3 Motivation 1.4.4 How well can organizational culture its functions? 1.5 Culture analysis – OCAI method 1.5.1 General about culture analysis methods 1.5.2 Advantages of OCAI method 1.5.3 Dimensions in OCAI 1.5.4 Questionnaire applied in OCAI 1.5.5 Scoring the OCAI 1.5.6 What can be found from OCAI result 1.6 Methodology applied in the thesis 1.6.1 OCAI method 1.6.2 Interview method 1.6.3 Other analysis methods 1.6.4 Focused points CHAPTER 2: CULTURE ANALYSIS IN ABB PP DIVISIONS 2.1 Introduction about ABB Singapore and ABB Vietnam 2.1.1 Introduction about ABB Group 2.1.2 Introduction about ABB Vietnam (VNABB) and ABB Singapore (SGABB) 2.2 Organizational culture comparison between SGABB‟s and VNABB‟s PP Division 2.2.1 Different dominant cultures but same major culture types 2.2.2 The current dominant culture gains cultural congruence in both countries 2.2.3 Differences in expected dominant culture types 2.2.4 Less cultural congruence for the expected dominant cultures & the inevitable emergence of Clan and Adhocracy 2.2.5 2.3 Diversity in expectation of employee groups Factors influencing organizational cultures in the two Divisions 2.3.1 The vital role of standardization in ABB‟s operation 2.3.2 Market situation and market orientation in ABB Group 2.3.3 Asian culture – a strong factor supporting for Clan Culture 2.3.4 Adhocracy Culture – an answer to the dilemmas 2.3.5 Business nature & the major sub-groups CHAPTER 3: RECOMMENDATIONS 3.1 The importance of defining culture profile 3.2 Culture incongruence requires leadership involvement 3.2.1 Leaders are to listen and respect the needs of employees 3.2.2 Vision the future culture to pursuit 3.2.3 Define the culture transformation process 3.3 Visioning the transformation 3.3.1 ABB Vietnam – PP Division 3.3.2 ABB Singapore – PP Division 3.4 Operational change for the cultural change 3.4.1 In ABB Vietnam – PP Division 3.4.2 In ABB Singapore – PP Division 3.5 International cooperation and global resource utilization CONCLUSION REFERENCE APPENDIX 1: VARIOUS CATEGORIES USED TO DESCRIBE CULTURE APPENDIX 2: ENVIRONMENTAL VARIABLES AFFECTING MANAGEMENT FUCTIONS APPENDIX 3: DENISON ORGANIZATIONAL CULTURE SURVEY APPENDIX 4: QUESTIONAIRE SAMPLE APPENDIX 5: CULTURE PROFILE COMPARISION VIETNAM VS SINGAPORE CULTURE COMPARISON AND CULTURE CHANGE – CASE STUDY OF ABB VIETNAM AND ABB SINGAPORE Nguyen Thi Hong Lien MBA Candidate, 2008 – 2010 School of business Vietnam National University, Hanoi Supervisors: Dr Dao Thi Thanh Lam Hà Nguyên, MBA INTRODUCTION Purpose The thesis focuses on the following points: - Base on Organizational Culture Assessment Instrument to find out the cultural similarities and differences in the two Divisions in ABB Vietnam and ABB Singapore in terms of dominant cultures, culture congruence, expected dominant culture and factors that drives the needs for culture change - Define predominant factors that should be taken into consideration for culture change so as to increase business performance - Give recommendation for cultural change including action plan for each Division The research scope There are two defined research scope dimensions in this thesis to distribute a solid analysis and practical recommendation - The factors to compare between the two Divisions are concentrated on six categories: (1) Dominant Characteristic, (2) Leadership Style, (3) Management of Employees, (4) Organizational Glue, (5) Strategy Emphases and (6) Criteria of Success - The cultural comparison units are ABB Singapore‟s and ABB Vietnam‟s Power Product Division Methodology - The thesis use both quantitative and qualitative analysis, mainly based on OCAI method - The information is collected from diverse sources: survey, interview, observation, secondary data… - Details are mentioned in 2.2 Applied method in the thesis Structure of the thesis Literature Review Culture analysis in ABB PP Divisions Definitions of Culture and Organizational Culture Recommendation Introduction about ABB Singapore & ABB Vietnam The importance of defining culture profile Cultural layer and cultural diversity Applied methods in the thesis As culture incongruence occurs, leadership involves Sub-culture Organizational Culture comparison Visioning the transformation The importance of Organizational Culture Factors influencing the organizational cultures Operational change for the culture change International cooperation and global resource utilization Culture analysis CHAPTER 1: LITERATURE REVIEW 1.1 Definitions 1.1.1 Culture According to Geert Hosftede definition, “Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another Culture in this sense is a system of collectively held values.” 1.1.2 Organizational Culture This thesis used the definition of Edgar H.Schein for Organizational Culture: The culture of a group can now be defined as a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems 1.2 Cultural layers & cultural diversity Cultures differ from each other in many levels, from absolutely visible points to deeply profound factors Researchers categories cultures into many levels For examples, Fons Trompenaars divides culture into levels which are the out layer - Explicit Products, the middle layer - Norms and Values, the core - Basis Assumptions while Schein categorizes culture into level: Artifacts, Espoused Beliefs and Values, Underlying Assumptions While the two researchers used different terms to categorize layers of culture, there are critical common points in their view First, about the influences and how easy to realize one layer, the out layer of culture is easy to realize but difficult to decipher as it is the outcome of deeper layers The deeper of the layer, the stronger influence it has but it is more difficult to be realized When it comes to the core layer, there are few profound assumptions which are taken for granted and decode all the factors in remaining layers Second, in term of cultural diversity and how can people accept culture differences, the level of diversity and acceptance varies through cultural layers The diversity in every single layer, then the combination of all the differences in all layers leads to cultural diversity and cultural conflicts also In the out layer, with its apparentness, the layer shows numerous obvious and incoherent differences between cultures and can make a new comer easily feel overwhelmed Luckily, to a certain level, people still can accept these differences when they are aware of that However, to deeper level, even when the differences are figured out or verbalized, they are still difficult to be accepted as they already became “philosophy”, “rules”, “correct or wrong” in mindset of people This difference in the level is indeed the factor lead to cultural conflicts 1.3 Sub-culture Many organizations or communities comprise diverse subcultures whose constituents conform only in varying degrees to the community‟s character Therefore, it should be taken into consideration that generalizations in culture profiles will produce only an approximation, or stereotype of community or organization character To have a deeper understanding about an organizational culture, it is necessary to have an insight about its subcultures as well as their attribution to the organization‟s culture 1.4 The importance of organizational culture 1.4.1 Coordination A major complementary instrument of coordination is found in organizational culture Two concepts of non-structural coordination mechanism: markets and clans Thereby, markets function through negotiations between demand- and supply-side parties without the need for extensive structural coordination, and clans solve coordination problems by creating an orientation for organizational members through shared values and norms Research into the transformation towards new forms of organizing indicates that cultural programs have the potential to replace the previously existing vertical command and control systems 1.4.2 Integration Organizational culture can act as a “social glue” to keep the corporation together Organizational culture reminds employees of corporate higher goals, of the big picture In view of the tendency to delegate, decentralize, internationalize, empower, and to rely on trust, this glue that organizational culture represents will assume an even more crucial role in the future 1.4.3 Motivation A strong system of clear values can endow employees with an appreciation of the value of their work that may often otherwise be lacking due to the extensive separation and specialization of tasks in addition to automation For example, some organizational cultures allow and foster self-actualization through entrepreneurship in profit center structures or implementation of an employee‟s own ideas by providing either additional time or financial resources for their own research efforts beyond the set research plan 1.4.4 How well can organizational culture its functions? Culture can be either a vital contributor or a deadly constraint for the organization on the way to aim at its goals Culture is beneath awareness in the sense that no one bothers to verbalize it, yet it forms the roots of action This made one anthropologist liken it to an iceberg, with its largest implicit part beneath the water” Similarly, in an organization, it is easy to see plans, strategies, structure, goals… but they are just the floating part which is quickly changeable However, the sunk part including norms, values, underlying assumptions…which has a total impact on the organization is visible as well as difficult to change Therefore, a complete change requires both culture and strategy, goals to have correlation with each other Culture analysis – OCAI method 1.5 1.5.1 General about culture analysis methods There are various methods to categorize culture because it comprises a complex, interrelated, comprehensive and ambiguous set of factors For examples, Deal & Kennedy proposed a dimension based on Speed of Feedback (high speed to low speed) and a Degree of Risk dimension (high risk to low risk), Ernst argued for People Orientation (participative versus non-participative) and Response to the Environment (reactive versus proactive) while Hofstede focused on Power Distance, Uncertainty Avoidance, Individualism, and Masculinity, then broaden to Long-term orientation 1.5.2 Advantages of OCAI method TABLE 0-1: COMPARISION BETWEEN OCAI METHOD AND OTHER METHODS OCAI Method Hofstede’s method  Focus on organizational culture  Focus on national culture Denison’s method  Focus on organizational culture  The first intervention to initiate change  Not mentioned  To explain how organisations deal with  Base on competing values framework that argues each seemingly contradictory or paradoxical goals and demands company can pick up a proportion among categories as their strength to deal with internal integration and external adaptation  Not only point out the current  Focus on defining only the culture profile but also focus on culture change by defining  Point out the current culture current culture but not preferred culture profile preferred culture in an organization  People become aware of the current and of the preferred culture “Where are we now and where we want to or have to go?” This can generate momentum for change  Based on specific categories, it is easier to predict which measures of  Categories are not pointed out specifically to define change will turn out to be effective Management will get  where the effects come more grips on change  Resistance to change can be anticipated, it will not happen completely unexpected  It offers starting points to  Culture changes are also encourage employees and thus use mentioned but in a form of their energy and creativity that leads to more support for change ideas, not step-by-step  Not mentioned  It is the basis for a step-by-step, systematic change plan  Easy & user friendly form to   More complicated survey to survey for a large sample be implemented 1.5.3 Dimensions in OCAI Following is the two major dimensions forming the Competing Value Framework: Internal Focus and Integration versus External Focus and Differentiation Stability and Control versus Flexibility and Discretion The two dimensions create four quadrants each of them represents a distinct set of organizational effectiveness indicators These indicators of effectiveness represent what people value about an organization‟s performance They define what is seen as good and right and appropriate The four clusters of criteria, in other words, define the core values on which judgments about organizations are made What is notable about these four core values is that they represent opposite or competing assumptions Each continuum highlights a core value that is opposite from the value on the other end of the continuum – flexibility versus stability, internal versus external 1.5.4 Questionnaire applied in OCAI In OCAI method, Cameron and Quinn based on a questionnaire with six categories to capture an organization‟s culture profile The purpose of OCAI is to assess six key categories of organizational culture which are: (1) Dominant Characteristic, (2) Leadership Style, (3) Management of Employees, (4) Organizational Glue, (5) Strategy Emphases, (6) Criteria of Success The response will produce two independence ratings of the organization‟s culture – one as it currently exists and one as it is wished to be in the future 1.5.5 Scoring the OCAI Scoring the OCAI based on simple arithmetic calculations As each alternative name A, B, C, D represents each culture type through categories, it is to take the average of each alternative (A, B, C, D) in NOW and PRESENT to capture the organization‟s culture 1.5.6 What can be found from OCAI result 1.5.6.1 Four culture types based on the OCAI method (1) THE HIERARCHY CULTURE The significant point in the Hierarchy Culture is a very formalized and structured place to work Procedures govern what people The leaders pride themselves on being good coordinators and organizers who are efficiency-minded Maintaining a smooth-running organization is most critical Formal rules and policies hold the organization together The long-term concern is stability and performance with efficient, smooth operations Success is defined in terms of dependable delivery, smooth scheduling and low cost The management of employees is concerned with secure employment and predictability (2) THE MARKET CULTURE It is easy to see that Market Culture has a result-oriented organization whose major concern is getting the job done People are competitive and goal-oriented The leaders are hard drivers, producers, and competitors They are tough and demanding The glue that holds the organization together is an emphasis on winning Reputation and success are common concerns The long-term focus is on competitive actions and achievement of measurable goals and targets Success is defined in terms of market share and penetration Competitive pricing and market leadership are important The organizational style is hard-driving competitiveness (3) THE CLAN CULTURE Clan Culture can be describe as a very pleasant place to work, where people share a lot of personal information, much like an extended family The leaders or heads of the organization are seen as mentors and perhaps even parent figures The organization is held together by loyalty or tradition Commitment is high The organization emphasizes the long-term benefit of human resources development and attaches great importance to cohesion and morale Success is defined in terms of sensitivity to customers and concern for people The organization places a premium on teamwork, participation, and consensus (4) THE ADHOCRACY CULTURE In Adhocracy Culture, a dynamic, entrepreneurial, and creative place to work is what expected People stick out their necks and take risks The leaders are considered innovators and risk takers The glue that holds the organization together is commitment to experimentation and innovation The emphasis is on being on the leading edge The organization‟s long term emphasis is on growth and acquiring new resources Success means gaining unique and new products or services Being a product or service leader is important The organization encourages individual initiative and freedom 1.5.6.2 Dominant culture type in an organization From Quinn and Cameron‟s extensive research it was found that most organizations have developed a dominant culture-style but an organization rarely has only one culture type Research has shown that strong cultures correspond with homogeneity of efforts, a clear sense of direction, an unambiguous environment and services Conflicts within the Competing Values Framework may be caused by the fact that the values and the corresponding organizational cultures compete with each other This is because organizations can spend their money, attention and time only once 1.5.6.3 Which culture type is the most effective? The „best‟ organizations can handle competition within this framework well Every culture type works best in the activities domain corresponding to that particular culture type So sometimes there is no ultimate „best‟ organizational culture, although a specific type may be better than others in particular situations 1.5.6.4 Cultural congruence Congruence means the aspects are based on the same values, and fall into the same cultural quadrant Research shows that successful organizations often have a congruent culture They experience fewer inner conflicts and contradictions Cultural incongruence will often stimulate an awareness of the necessity of change It will take a lot of time and debate; it leads to differences in values, views, targets and strategies Sometimes the incongruence specifically occurs between different departments or people It may be interesting to assess these separately 1.5.6.5 Discrepancies between present and prefer culture and the need for culture change Differences of over 10 points are especially relevant and should induce the company to take action This discrepancy yields important information about any desired changes; which direction should the organization move in production but also services (like commissioning and installation for after sales) With that purpose, sales and service activity play a major role in operation and business performance 2.1.2.4 Employee groups and group characteristics In accordance with business activity and nature, there are main differences between VNABB and SGABB PP Divisions While in Vietnam PP Division, the high concentration is in the Production (workshop) group with 63% of the total Division‟s employees, in Singapore PP Division, the significant weight is in Sales group with 43% VNABB PP Division has 4.2 times more employees than SGABB PP Division as it contains Business Units while Singapore includes of Business Units Besides, for production purpose, it requires more employees than for sales and service purpose Organizational culture comparison between SGABB’s and VNABB’s PP Division 2.2 2.2.1 Different dominant cultures but same major culture types While ABB Vietnam is under the domination of Hierarchy Culture, ABB Singapore has Market Culture as the dominant one However, Hierarchy and Market play the most major roles in both divisions in present The dominant culture shows that Vietnam PP Division focuses on internal focus and integration with stability and control The Division is a very formalized and structure place to work and procedures, regulations govern what people The prerequisite conditions for the management are to be good coordinators and organizers who are efficiency-minded as the managerial aim here is to maintain a efficient and smoothrunning organization Success is defined in terms of dependable delivery, smooth scheduling and low cost The management of employees is concerned with secure employment and predictability The second runner is Market Culture (24.8 points) The combination between Hierarchy and Market make their proportion becomes to 60.4 points over 100 That also means 60.4% Vietnam PP Division pays for stability and control, the remaining 39.6% is focused on flexibility and discretion In comparison with Vietnam PP Division, Singapore PP Division also focuses on stability and control but it pays attention to external focus and differentiation rather than internal focus and integration Singapore PP Division is indeed a result-oriented organization whose major target is increasing the market share through satisfying customers The leaders are hard drivers, producers, and competitors Besides, people are held together by the emphasis on winning and get things done is what must be kept in mind In comparison, Vietnam PP Division focuses more on internal and integration while Singapore PP Division pays attention to external and differentiation However, the major concern in both of the Divisions is stability and control 2.2.2 The current dominant culture gains cultural congruence in both countries The dominant culture gains congruence in both countries, it means the dominant culture surpasses the remaining culture types in every single of the following categories Accordingly the dominant culture has become the momentum for the organization moving forward Similarly, it is also remarkable to see the cultural congruence for the runner-up in each division 10 In comparison, the gap between the dominant culture and the remaining ones points out that the dominant culture in PP Division Vietnam shows more strongly its presence rather than the one in PP Division Singapore Besides, the result of dominant culture achieves consensus in assessment of all employee groups in each division That mean whatever group of employee, they have the same and clear feeling and assessment about the domination of their major culture The interesting point is the Management is the group has the strongest sense about the dominant culture in both divisions 2.2.3 Differences in expected dominant culture types While in ABB Vietnam PP Division, Hierarchy is still expected to be the dominant, ABB Singapore wants to shift the dominant culture from Market Culture to Clan Culture As productivity and smooth operation are still the prerequisite conditions for effectiveness in Vietnam PP Division, Hierarchy with stability and control combined with internal focus and integration is still preferred the most However, Vietnam PP Division also wants to trade-off 3.6 points from Hierarchy Culture to increase other culture types, meaning that they begin to pay more attention to other types like Adhocracy and Clan About Singapore PP Division‟s cultural profile, it shows a significant transformation from dominant Market Culture (32.4 points in present) to the most desired Clan Culture (27.3 points for future) The two types of culture in opposite quadrants show their contrary in values Market Culture focuses on stability and control with external focus and differentiation while Clan Culture highly appreciates flexibility and discretion with internal focus and integration This overthrow is deeply impressive as Clan is from the number three to the number one (increase by 6.9 points) while Market drops down from the dominant position to the third position (decrease by 7.6 points) With this amount of change, it really requires the management to take action 2.2.4 Less cultural congruence for the expected dominant cultures & the inevitable emergence of Clan and Adhocracy In both divisions, the expected dominant cultures gain less cultural congruence than the current dominant ones Meanwhile, we can see the emergence of Clan and Adhocracy in both divisions, especially the obvious increase of Clan Culture In ABB Vietnam, Hierarchy still remains as the dominant culture, but it reduces the gap with the remaining culture types, especially with Clan Culture (from average 13.6 points of gap to 4.5 points) It shows that, while keep focusing on internal and integration, Vietnam PP Division prefers more flexibility instead of remaining very high degree of stability and control as the current In ABB Singapore, Market Culture was overthrew from the dominant position down to around third place Meanwhile, a significant increase is noticed from Clan Culture and Adhocracy Hierarchy Culture tries to keep its portion, however, there is a fluctuation throughout the six categories Similarly, even Adhocracy gains an increase but it is not at equal levels The important point is it is not clear to point out which culture type can become the new dominant culture 11 2.2.5 Diversity in expectation of employee groups There are differences between employee groups‟ expectations in both divisions First in ABB Vietnam: - Hierarchy Culture: while Management and Production side still want to keep it as the dominant culture, Administration and Sales team expect to reduce its role as a secondary culture type - Market Culture: While Management and Production (in office) employees expect to slightly reduce its portion, Production (in workshop) employees expects a significant decrease in Market Culture In contrary, Sales team expect to see more Market Culture within their unit, even as the dominant culture - Clan Culture: this type is the only one case that has a remarkable number of advocates to become the dominant culture (except for Management who votes for Hierarchy and Sales who expects Market Culture) Adhocracy Culture: While Production (workshop) groups remain Adhocracy‟s portion, an increase is - expected by all remaining groups, even though with a minor gap However, a strong urge can be noticed from Management, Administration and Sales team In ABB Singapore: - Market Culture: it appears as the least welcomed culture type in future when all groups expect to reduce its portion With a closer look, Management and Sales team still keep it as the dominant culture but Production side (in office) wants to drop this type to the forth place and remaining group expect it as a secondary culture type - Hierarchy Culture: it still keep the portion in the preferred culture profile Besides, it gain a strong vote from Production (in workshop) - Clan Culture: it gain a remarkable support in all groups, except for Management and Production (in workshop) all remaining group look forward to seeing Clan as the new champion - Adhocracy: this culture type also has an increase but not a significant amount in general, it is still considered as the forth place 2.3 Factors influencing organizational cultures in the two Divisions This part digs down into the main reasons or factors that create similarities and diversities in the culture of the two units In other word, the it is necessary for the management to take these factor into consideration while visioning the future culture they want to apply for their units 2.3.1 The vital role of standardization in ABB’s operation ABB is operating in power and automation technology, having its presence in around 100 countries This industry itself and the scale of operation make it not an exaggeration to say standardization is a critical compass for ABB to put it name worldwide, due to that Hierarchy Culture always contributes a major part It is clear to see the presence of Hierarchy Culture and its roles in the following point: high standardization The standardization is indeed gets critical points due to the following reason First, as ABB is operating in heavy industries where dealing with complex and huge systems is the requirement, there is no tolerance for errors; therefore strict standardization is for quality management 12 Second, in the industry, safety is seriously taken into account where a slight mistake can insult in loosing many lives; therefore, it is obviously not enough just by providing workers with the best safety working clothing and equipments, it is a must to build a whole working process whereby every single action are to ensure in a safe manner Third, the operation itself is a complex process where employee internal transfer and internal transactions are constantly happening in ABB It should be standardized to help an employee transferring from a country to another country not to take time to get acquainted with the system as well as the transactions can be operated without any systemically misunderstanding However, a less endearing side of high standardization is that the Group Directive, added up with regional regulations, then with every country customization and then every single division or business unit makes the rules and regulation become a huge overwhelming amount of information to absorb 2.3.2 Market situation and market orientation in ABB Group Through years, PP Division is expected to remain annual growth rate at 5-7% meaning after years it can dominate more of 27%-40% in comparison with what it is achieving now In addition, with expected annual growth rate of 14-20% EBITDA (profitability) it requires not only strong force in market domination but also efficiency in cost saving In a ballgame where competitors are equally hungry, this growth rate targets obviously put a high pressure to PP Division, globally ABB Asia shows a major role in terms of orders received and revenues recognition in PP Division With the group targets, a high expectation relies on ABB Asia including Southeast Asia However, to have a closer look, this situation happened in the same way with competitors That means, in the next coming years, all the giants will flock into Asia with stronger force to stand on the ground that would make the competition tougher than ever To illustrate for a tough competition, PP Division still delivered a positive growth rate, however, pricing and tougher competitions are what it is facing ABB is always proud of its pioneer in technology, lead time, quality and price has never been considered as an ABB‟s competitive advantage Therefore, talking about pricing is a sign of tougher competition ABB is facing With that situation, market orientation needs to develop in ABB Group as Mr.Joe Hogan, ABB Group‟s Chief Executive Officer declared:“ABB’s approach must center on being close to our customers and developing a deep understanding of local needs Then we have to make sure we have the right local resources in place to meet those needs in terms of engineering, R&D, sales & marketing, service, suppliers, and manufacturing” 2.3.3 Asian culture – a strong factor supporting for Clan Culture One remarkable point in the expectation of both Divisions is the emerging of Clan Culture This Clan Culture‟s increase can be supported from Asian culture‟s characteristic (mentioned in 1.2.3.\Example – Individualism vesus Colletivism) Collectivism gain strong support from Clan Culture which strengthen the following points:  Friendly working environment  Loyalty 13  Employee participation 2.3.4 Adhocracy Culture – an answer to the dilemmas To achieve a high adaptation to the market which is becoming a fierce competition ground, it is not sufficient enough for the divisions, especially Singapore PP Division to follow the same old methods Thinking of a new way to approach customers, re-arranging group, building a team where people are always inspired of and ready for changes is very critical to gain the multiple targets: cost effectiveness and stable growth rate 2.3.5 Business nature & the major sub-groups The main factors attribute to the difference between two Division‟s dominant culture is business nature and then the culture of major sub-groups TABLE 0-1: COMPARISION BETWEEN SGABB PP DIVISION & VNABB PP DIVISION CATEGORY SGABB PP DIVISION VNABB PP DIVISION Type of business Mainly in sales and service Mainly in production Years of operation 45 years Around 15 years Number of employees 95 398 Main employee group Sales - high flexibility and moderate discretion; high external focus and moderate differentiation Production (workshop) - high stability and control; high internal focus and integration Production (office) - moderate stability and control; moderate internal focus and integration Period of development Have sophisticated and effective system Have a high expectation from the Group to become the hub in SAS region (Asian, New Zealand and Australia) In the early stage to standardize working process 14 CHAPTER 3: RECOMMENDATIONS 3.1 The importance of defining culture profile Defining culture profile is the abovementioned step where the current situation and preferred picture are defined individually From the analysis, we can see significant differences between employee groups‟ expectation Therefore, having culture assessed by employee groups can bring main benefits to management 3.2 Culture incongruence requires leadership involvement Culture incongruence can be understood as the conflict between employee groups‟ expectation when each employee group has different working culture What is the role of leadership in that case? Leaders in the divisions are considered as the linkage between Group and employees to monitor internal operation integration and external adaptation 3.2.1 Leaders are to listen and respect the needs of employees Why? Culture is considered as a coordinator and motivation for employee Therefore, if the culture change can go along with employees‟ needs, it would become the leverage for the development, otherwise, a culture going against employees‟ needs can become a deadly constraint for development and encounters resistance for changes How? Mangers can collect the assessments from employee groups and analysis which culture type they want to pursuit, how they can trade-off for the culture change (measured by the gap between points allocated to preferred culture and present culture) Moreover, managers need to gain an insight which factor in each culture type the employees want to change or to pursuit 3.2.2 Vision the future culture to pursuit Leaders or managers is group who take responsibility for the whole organization and they have most sufficient information, hence their role is to vision a culture that meets the requirements from the four major factors: (1) Support the cultural needs of employees, (2) In line with the requirements or directions of the Group, (3) Effectively adapt and stir with market situation or business environment, (4) Enhance the internal operation 3.2.3 Define the culture transformation process For the culture change, the leaders need to define phases for the transformation From the current profile to the preferred one there should be many changes in culture types - As the organizations have scared resource, the leaders should know which culture type has higher priority to change, which type can be the leverage for the change - The culture change should implemented in the way that have the least interfere to the operational process in transformation period or in an ideal cases, it can leverage the operation process and productivity can improve in a short time 3.3 Visioning the transformation 3.3.1 ABB Vietnam – PP Division 15 TABLE 0-1: VIETNAM PP DIVISION - EXPECTATION FOR MAJOR CHANGE CULTURE TYPE Keep Hierarchy culture as the momentum of the company Dominant Characteristic: -7.4 Leadership Style: -2.4 Management of Employee: -5.4 Organizational Glue: -5.1 Strategy Emphases: -2.9 Criteria of Success: +1.3 - - - Market Culture can be tradedoff for a longer term vision Dominant Characteristic: -1.5 Leadership Style: -3.7 Management of Employee: -0.5 Organizational Glue: -4.5 Strategy Emphases: -4.2 Criteria of Success: -3.5 Strengthen Clan culture Dominant Characteristic: +5.6 Leadership Style: +3.2 Management of Employee: +4.2 Organizational Glue: +10.0 Strategy Emphases: +4.3 Criteria of Success: +5.3 - - - - - Adhocracy can be encouraged but not yet as an urgent demand Dominant Characteristic: +3.3 Leadership Style: +2.7 Management of Employee: +1.7 Organizational Glue: -0.4 Strategy Emphases: +2.3 Criteria of Success: -2.8 - - - MAJOR CHANGE IN EXPECTATION As a production-based division, the clarity and stability is critical to ensure the production quality as well as occupational health and safety It is the reason for criteria of success increased by 1.3 points However, to balance with other culture, the company should be less described as “a very controlled and structured place where formal procedures generally govern what people do” Besides, about management of employee and organizational glue, the role of “formal rules and policies and maintaining a smooth-running organization ” should be reduced All the above points show that Hierarchy as the Dominant needs a strong support from other culture as a leverage for culture change As “competitive actions and achievement, hitting stretch targets and winning in the marketplace” is not considered the dominant way for strategy emphases, the employees, especially Production (in workshop) group feel that the glue holding people together is not only “achievement and goal accomplishment” In addition to that, managing by “hard-driving competitiveness, high demands, and achievement” also should be reduced Clan culture is mostly welcomed to increase its contribution Accordingly, the company should be more as “a very personal place, an extended family where people seem to share a lot of themselves” The significant expectation comes from organizational glue whereby people hope “loyalty, mutual trust and commitment to this organization runs high” is the motivation help them work together That is indeed the balance point with organization glue in Hierarchy culture Besides, people emphases on “development of human resources, teamwork, employee commitment, and concern for people” as the key criteria of success As the business nature of ABB Vietnam as a factory, the employees judge criteria of success not necessarily as “the most unique or newest products” or to be “a product leader and innovator”, therefore, Adhocracy is also expected to increased, but not yet as an urgent demand On the other hand, innovation and flexibility can be applied, first for office employees (sales or backoffice employees) to encourage people contributing innovation, gaining outstanding outcome and getting promotion in career path Accordingly, they expect their unit should be like a “very dynamic and entrepreneurial place where people are willing to stick their necks out and take risks.” Moreover, they employees expect the change mostly to come from leadership style where the leaders are described as “entrepreneurship, innovation, or risk taking” 16 3.3.2 ABB Singapore – PP Division TABLE 0-2: SINGAPORE PP DIVISION - EXPECTATION FOR MAJOR CHANGE CULTURE TYPE Still consider Market Culture as MAJOR CHANGE IN EXPECTATION - With the condition that Singapore PP Division is going to get more the dominant but strongly reduce its portion Dominant Characteristic: -5.8 Leadership Style: -12.0 pressure for the next coming years combined with intense rivalry for sales team which is the most critical activity; It is essential to Management of Employee: -9.2 Organizational Glue: -6.6 However, its portion will be reduced for the increase of other culture types, especially Clan Culture Strategy Emphases: -6.4 keep the Market Culture as the dominant characteristic to help employees gain strong market senses and customer orientation - Accordingly, the characteristic of the organization should be less as “very result-oriented place where a major concern is with getting the job done and people are very competitive and Criteria of Success: -5.6 - achievement-oriented” A remarkable reduction in expectation is derived from the significant decrement in the concept of leadership style, the leaders should not only be described as “a no-nonsense, aggressive, result-oriented focus” and the management style as “hard-driving competitiveness, high demands, and achievement” should not the only way to manage - In that case, the employees also reduces the role of “competitive actions and achievement, hitting stretch targets and winning in the marketplace are dominant” in criteria of success Strongly develop Clan Culture Dominant Characteristic: +10.2 - In contrary with Market, Clan Culture is mostly welcomed to increase its contribution Leadership Style: +1.8 Management of Employee: +8.4 - Accordingly, the company should be more as “a very personal place, an extended family where people seem to share a lot of Organizational Glue: +7.5 Strategy Emphases: +4.7 - themselves” The significant change comes from the concept of criteria of success that emphases on “development of human resources, Criteria of Success: +9.4 - teamwork, employee commitment, and concern for people” Therefore, employees want to see the improvement in management as “teamwork, consensus, and participation” and organizational glue whereby people hope “loyalty, mutual trust and commitment to this organization runs high” is the motivation help them work together - From above, we can see the main role of Clan is to enhance employee participation which is the strategic point to increase ability for timely respond in a high rivalry market To that point, Clan Culture is the supportive factor for Market Culture in term of customer orientation Therefore Clan Culture does not conflict but indeed goes hand in glove with Market Culture Slightly reduce Hierarchy Culture Dominant Characteristic: -7.0 Leadership Style: +4.5 - - Hierarchy can still remain the current level whereby employees already absorb and get used to the working process Following the rules and process becomes the habit and culture here Among the six categories, the Division should be less described 17 as “a very controlled and structured place where formal procedures Management of Employee: +3.3 Organizational Glue: -3.5 Strategy Emphases: -1.8 - Criteria of Success: -2.5 generally govern what people do” Besides, in organizational glue, the role of “formal rules and policies as well as maintaining a smooth-running organization” should be reduced - However, as a character of the industry, the role of “coordinating, organizing, or smooth-running efficiency” in management needs to be enhance Improve Adhocracy Culture Dominant Characteristic: +5.8 - General employees not yet feel the urge to get more adhocracy level, however, it becomes the demand from the management Leadership Style: +5.7 when they foresee the coming situation where effectiveness and Management of Employee: -2.5 Organizational Glue: +2.5 competency not only base on obeying rules but also requires initiatives and innovation Strategy Emphases: +3.7 Criteria of Success: -1.3 - - Accordingly, the unit should be like a “very dynamic and entrepreneurial place where people are willing to stick their necks out and take risks.” Besides, the leadership style is expected to be extended the level of “entrepreneurship, innovation, or risk taking” 3.4 Operational change for the cultural change 3.4.1 In ABB Vietnam – PP Division 3.4.1.1 Hierarchy Culture gets complement from Clan Culture a) Current status  Policies and procedures are provided to employees through many discrete sources, causing employees feel overwhelmed with information that obstructs employees in updating and implementing Due to the discreteness of the data, policies and procedures are difficult to be managed and updated  With a strict routine, employees not feel they can contribute value-added into their work That also raise concerns about their promotion where they not feel improvement in career path  To improve technical skills, training courses are available (ABB Group build up a global system called “ABB University” which provide online trainings on many fields like finance, technical, sales, working tools…), however, it has not been utilized b) Recommendation  Set up a team to coordinate and migrate all policies and procedure into ONE database that can be accessed by all employees in the company Each policy or procedure can be updated periodically (for every months) or when there is a proposal from employee to update Provide trainings to relevant employees, especially with major policies, provide method to follow up and check to ensure policies are implemented properly  Advise career path for employees, encourage rotating with employees who already gain sufficient skills and experience in their current job However, in order to have a smooth rotation, it requires a strong and effective process that enables the employee and the replacement (for his/her current 18 position) to quickly catch up with their new jobs That underlines the importance of training as well as a clear and effective working process  Utilize internal training programs (through online training and exchanging with other countries) Consider improvement in knowledge and skills of employees and as a key indicator in performance appraisal 3.4.1.2 Market Culture goes along with Adhocracy Culture a) Current status  Management by target or overstretching to meet customer requirement leads to overload in Production (workshop)  Meanwhile, the Sales team has not yet feel an adequate level of market culture in their unit b) Recommendation  Improve in production planning so that the production workload will not have fluctuation depending on orders received (which is not monthly stable) Reduced “management by target” which easily leads to deficiency, health and safety issues  Provide mentoring for potential employees whereby the employees can absorb not only technical skills but also business ethic, strategic thinking and approach, hence productivity is enhanced  Along with training and mentoring, “management by target”, “customer orientation” should be applied in Sales team, concurrently increase flexibility to motivate Sales persons 3.4.1.3 Action Plan Summary TABLE 0-3: ACTION PLAN FOR VIETNAM PP DIVISION Step Timing Assignment Responsibilities Success Criteria Migrate Policies and Procedures months for migrating database Update periodically (for every months) - Policy Editing Team to coordinate all policies and procedures - Departments/ Units (Purchasing, Design, Finance…) to set up/ update relevant policies/procedures - All policies & procedures are updated and in one database - Every employee know how/where to get the updated policies/procedures Advise career path Upon each department‟s requirement, should plan ahead one year for headcount and rotating - Set up a team to coordinate and migrate all policies and procedure into ONE database that can be accessed by all employees in the company - Update periodically -Training /inform employees about new coming/updating policies and procedure - Advise career path for employees, encourage rotating already gain sufficient skills and experience in their current job - Department Head to plan for headcount prior to the next year - Human Resources Department to facilitate in conducting training, giving appraisals and advise a smooth rotating process - Upon personal wish, an employee can be advised about his/her career path and it will be stated/reviewed in annual PDA as an action plan for the next year - At first this program can be applied in units applicable for rotating like Design, Purchasing, 19 Utilize internal training programs Upon each department‟s requirement or can arrange periodically (for every quarter) - Utilize internal training programs (through online training and exchanging with other countries) - Department Head to plan for training based on management requirements or employees‟ proposals - Human Resources Department to facilitate in conducting training, searching and introducing training/exchanges opportunities, at first within ABB Group Controlling - Put improvement in knowledge and skills of employees and as a key indicator in performance appraisal (annual PDA) - Every employee has at least training per quarter (a moderate number of training in ABB) - A process to evaluate improvement after training of each employees Improve in production planning so that the production workload will not have fluctuation depending on orders received (which is not monthly stable) Reduced “management by target” which easily leads to deficiency, health and safety issues Provide mentoring for potential employees whereby the employees can absorb not only technical skills but also business ethic, strategic thinking and approach, hence productivity is enhanced Along with training and mentoring, “management by target”, “customer orientation” should be applied in Sales team, concurrently increase flexibility to motivate Sales persons 3.4.2 In ABB Singapore – PP Division 3.4.2.1 Market Culture supported by Clan Culture a) Current status  Production (in office) team feels over-load to back-up the whole working process  As market portion of ABB is expanding along with the increase in market rivalry, Sales teams are aware of the need to have “customer orientation” working culture, however, they encounter difficulties to deal with customers‟ requirements which is getting more and more sophisticated b) Recommendation 20  Increase headcount for Production (in office) group to reduce the workload per headcount Besides, controlling is necessary for errors to be reduces, effective practices to be implemented and productivity to be improved  Empower first-line supervisors by eliminating the layer of supervision directly above them Chart all responsibilities that need to be performed, provide the necessary training, and totally empower the first-line supervisors to make key decision and react quickly to the needs at hand  Divide sales team into smaller groups to help employee improve their management skills Apply mentoring (rather than enrolling normal types of training courses) where supervisors can train subordinates on-the-job for technical skills as well as strategies or methods to deal with each customer type  Delegate to capable employees to help them learn on-the-job and to make the workload be shared among team members It is also a method to have more “leadership excellence” in the unit when employees are empowered and take more responsibly 3.4.2.2 Hierarchy Culture goes along with Adhocracy Culture While Market Culture get a direct complement from Clan Culture, Hierarchy in a harmony balance with Adhocracy Culture with create an environment that nurtures stability, innovation that can create a competitive advantage to expand the market a) Current status  In ABB, as the characteristic of the industry, long-term recruitment is underlined that sometimes overvalues “seniority” and hold back innovation  Procedures and process are smoothly implemented  In ABB, there are many databases implemented where employees update their information and from that managers can have consolidated report which can reflect closely to the fact However, some database like order following up has not been utilized as it is time consuming for employees to update b) Recommendation  In order to promote innovation and initiative, seniority should be valued reasonably in term of knowledge and experience “No seniority” spirit should be applied for leadership development because although technical experience is important but “taking responsibility” attitude, leadership, and “leading change” are counts among the most critical conditions This spirit has been implemented successfully in PPMV and it should be applied for the whole division  Transfer all supporting or administrative processes to back-end team so that front-end team (sales, production whose workload directly depends on customers‟ requirement or orders received  Develop systems to encourage, measure and reward innovative behavior at all level of the system Develop visible rewards that recognize the creativity and innovation of employees, teams and units Recognize good ideas as well as orchestrate and sponsor activities that help new ideas get developed and adopted 21  Forecast customer demand at all points of contact and find ways to exceed those demands Ask a task force of first-line people to conceptualize new strategies for expanding markets and developing new businesses  Utilize the systems which support to understand and analyze customer groups based on huge amount of information on database It even helps forecast from that timely actions are taken Reexamine or reinvent the processes associated with customer contacts and the flow of information from the customer through the organization  Customer analysis can be shared among groups to enhance customer in-sight Constantly analyze the evolution of the market by holding exploratory focus group sessions with the people most closely associate with the market  Make a conscious effort to move from an orientation of giving customer “what they need” to giving customers “what they would like”, to surprising and delighting customers with products and services that solve problems that they not expect to be solved 3.4.2.3 Action Plan summary for Singapore PP Division TABLE 0-4: ACTION PLAN FOR SINGAPORE PP DIVISION Step Timing Assignment Responsibilities Success Criteria Increase headcount for Production (in office) group 3-6 months Increase headcount for Production (in office) group to reduce the workload per headcount Proper headcount is added within 3-6 months Tighten controlling Monthly Empower - 1-3 months for simple/routine tasks - 3-6 months for transition in more complicated tasks - months to divide sales team - Mentoring will be applied on case by case basis Tighten controlling for errors to be reduces, effective practices to be implemented and productivity to be improved - Empower first-line supervisors by eliminating the layer of supervision directly above them Business Unit Manager to propose headcount increase to Group for approval based on business plan Human Resources Department to assist in recruitment Controlling Team to coordinate the process Operational Team to follow the process - Divide sales team - Apply mentoring - Divide sales team into smaller groups to help employee improve their management skills - Apply mentoring where supervisors can train subordinates on-thejob 22 - Business Unit Manager to monitor the process - Department Head to mentoring/ direct subordinates Sales Manager Periodically control over key procedures to ensure management is provided timely (from weekly to monthly) information and people follow process correctly Employees to be empowered can be handle new tasks to enable their supervisors move to higher priorities Transfer all supporting or administrative processes to back-end team months Transfer all supporting or administrative processes to backend team Develop systems to encourage, measure and reward innovative behavior at all level of the system - months for setting up the process - Implement on case by case basis but at least for every months - Develop visible rewards that recognize the creativity and innovation of employees, teams and units - Recognize good ideas and orchestrate and sponsor activities that help new ideas get developed and adopted Forecast customer demand at all points of contact and find ways to exceed those demands Customer analysis can be shared among groups to enhance customer insight Constantly analyze the evolution of the market by holding exploratory focus group sessions with the people most closely associate with the market Seniority should be valued reasonably in term of knowledge and experience but should not be imposed for leadership “No seniority” spirit should be applied for leadership development 3.5 Back-end team to takeover all process Front-end team to ensure the process are handed over correctly Management to supervise and control the overall for a smooth transition and reducing overlap Sales Team Ask a task force of firstline people to conceptualize new strategies for expanding markets and developing new businesses Sales Team Project Team All supporting and administrative are handled by back-end team without disrupting current working process A database (upon provided databases like CCP or NSP) can give timely information for management to update bi-monthly about orders in pursuit and on-going projects Management (Divisional Managers, Business Unit Managers) to train successors Human Resource Department to facilitate in training and mentoring International cooperation and global resource utilization It is interesting to note that the ABB Group‟s top executive officers are comprised of an American, a Belgian, two Swiss and a German With a multi-cultural history, a significant global reach and a culturally diverse leadership – ABB is truly an international company Besides, with the awareness that competent leadership is a common ingredient in successful international companies (as those companies who continue to invest in leadership training and development reap the benefits of continued growth and success into the future), ABB Group was ranked 15th among the world‟s “Best Companies for Leadership” as reported in an annual BusinessWeek.com/Hay Group survey (2010) ABB was given as an example of the third category described as “collaboration for innovation” companies that “work through self-organizing project teams 23 and encourage employees to seek new approaches to solving problems” This collaborative style of leadership works well for multi-national companies who integrate leaders and employees from several different cultures to accomplish their corporate objectives ABB Group has been building a system that nurture a strong cultural sensitivity for employees, especially managers In that case, to develop culture in each unit, ABB‟s specific and special resources should be utilized 24 ... COMPARISION VIETNAM VS SINGAPORE CULTURE COMPARISON AND CULTURE CHANGE – CASE STUDY OF ABB VIETNAM AND ABB SINGAPORE Nguyen Thi Hong Lien MBA Candidate, 2008 – 2010 School of business Vietnam National... CHAPTER 2: CULTURE ANALYSIS IN ABB PP DIVISIONS 2.1 Introduction about ABB Singapore and ABB Vietnam 2.1.1 Introduction about ABB Group 2.1.2 Introduction about ABB Vietnam (VNABB) and ABB Singapore. .. Structure of the thesis Literature Review Culture analysis in ABB PP Divisions Definitions of Culture and Organizational Culture Recommendation Introduction about ABB Singapore & ABB Vietnam The