1. Introduction2-31.2 Company background 32. A Theoretical framework 43. Hoftstedes theory 4-64. Analysis of HSBC 6-105. Case of Citibank 10-126. Conclusion 137. Reference 14-15

An analysis of the culture of an organization

1. IntroductionCulture, which is a very complex term, has an astounding diversity of meaning. This includes a myriad of concepts related to knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by man as a member of society (Tyler, 1871). Despite its complexity, there is no doubt that culture is an intangible and valuable asset in society as it affects not only the people who live in it, but also the behavior of organizations as well as the operation of any business. Consequently, it is claimed nowadays that possessing a good culture in an organisation can be a critical factor that affects the success of the business (Jackson, T. 1995). In this light, it is not uncommon that tremendous effort is made by many business firms into improving their cultural management so as to improve and develop themselves.

Adam Smith, a Scottish social philosopher and pioneer of political economy, states that every nation ought not to just make it a point to excel, but to also help and not be a barrier to the excellence of its neighbors, out of the love of mankind.

Globalisation, on the other hand, is also a pivotal concept in the world of business. However, if remains an issue of controversy whether globalization is positive or otherwise for the economy of the world (Sparrow, P. Brewster, C. Harris, H. 2004). It is claimed by some that the globalised world expedites economic development, and people of different cultures are brought together. Undoubtedly, in the modern business world, many advantages in dealing with cross-national trading have been achieved. Today, a considerable number of multinational companies have benefited from cross-board advantages when doing cross-national businesses. Therefore, in the present case, many of the worlds greatest cross-national organisations are focusing on intra-cultural management and the cross-cultural management. Economic value and business opportunities are created as a result of a well-managed corporate culture, as claimed by some. (Tjosvold, D. Leung, K . 2003)

In addition, the morale, loyalty and productivity of the staff will be boosted. However, is cultural management the only element of success? Indeed, having good organisational culture is actually one of the many critical factors that accounts for the success of a company. Eventually, the success of its business will be a result of any implementation of appropriate cross-cultural strategies. Although culture is basically defined at a societal level, an individuals behavior is also impacted by his culture. Culture can be mediated by societal culture and specific individual personality (Hofstedes 1991). Building on this concept, this paper aims to explore the interaction of culture in HSBC. The case study is that of HSBCs chief executives relocation from London to Hong Kong. The study will identify national culture characteristics stated in Hofstedes theoretical framework; it will use theoretical frameworks which are developed by Hofestede (1980), and the frameworks are supported by his findings.

1.2 Company backgroundThe Hong Kong and Shanghai Banking Corporation (HSBC) is a well-known global banking and financial services company, headquartered at the famous International Financial Centre in London, UK. According to Forbes (2011), HSBC is the worlds second largest banking and financial company. Running approximately 7,500 offices in 87 countries, HSBC has a great international network all around the world, namely in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

Being one of the most successful banking and financial firms in the world, HSBC always has competitive advantages in this industry. In the third quarter of 2011, it reported a USD7.2 billion profit before tax, and its total assets stood at $2.418 trillion. With a capital ratio of 10.6% (HSBC, 2011), HSBC still runs a brilliant business despite the pressure of the European and Italian economic crisis. However, being an international banking and financial firm, in the 2009 financial tsunami, a big loss was suffered. According to its financial report in 2009, as at 31st December 2009, HSBC suffered a financial deficit of USD 2,058 million before tax. Compared with its deficit in 2008, this was one great loss in its business history. In this tough time, it was announced by its Chief Executive Michael Geoghegan that the CEO office would relocate to Hong Kong. Furthermore, its focus in the Asia-Pacific market would change, so that the difficult economic period could be dealt with. It remains a controversy if the change in business focus as a result of this move from the West to the East would affect its business.

2. A theoretical framework As stated, HSBC is a multinational company that is headquartered in London, the United Kingdom. The relocation of its CEO office was apparently a decision that is related to its cross-cultural issues. This paper uses the Hofstede cultural dimension model to explain the decision of the CEOs move to Hong Kong, and how the companys culture is fulfilled by Hong Kongs culture.

A similar study by CitiBank, a cross-national international bank analysed using Hofestedes theory for the comparison, is made to show culture influences the success of an organisation.

Hofestedes theoretical framework, instead of others, is used because it clearly recognizes that national culture and organisational culture are different in nature (Hofstede, 1991). The five dimensions of the theory show the differencesof cultures from different countries. This is appropriate to be applied in the study of HSBC to analysis the multinational company with regard to the cross-cultural issue. The use of a national culture can be explained using this theory. On the other hand, the theoretical framework of Harrisons model is inappropriate to analysis the case study involving HSBC because of the weakness in this model. The dimensions of Harrsions model are summarised by Charles Handy. They are power culture, role culture, task cultureand person culture. Harrsions model is more aptly used for the analysis of family-owned businesses, which can either be extremely large or small, for the purpose of strengthening their organisational culture. Furthermore, this model is unable to classify the culture of multinational companies. Rather, it is more apt for the analysis of the operation of an organisation that enjoys a stable environment.

3. Hoftstedes theoryHofstedes framework evolved out of a research done at IBM from 1973 to 1980. Hofstedes (1980) study focuses on its employees by nation rather than individuals, to assess their job satisfaction and attitudes toward work. It is found that national cultures vary on five dimensions - power distance, individualism, uncertainty avoidance, masculinity and long term orientation.

Power distance refers to how power distribution in an organisation is accepted and expected. It is shown that countries with lower power distance will accept and expect power relations to be more consultative or democratic. The relationship among people will be regarded as more equal regardless of formal positions. In contrast, there is a tendency for the less powerful in cultures that advocate high power distance to be more autocratic and paternalistic. It is noted that in most societies, ones social class, level of education and job are closely related (Elisabeth Liger, 2002).

Individualism is the opposite of collectivism. It refers to the degree in which an individual is integrated into a group. In this sense, the higher the individualism index is, the more emphasis is placed on personal achievements and individual rights. People are expected to stand up for themselves and to choose their own affiliations.

For uncertainty avoidance index, it indicates the degree in which society tolerates uncertainties and ambiguities. It reflects the extent in which members attempt to cope with anxiety by minimising uncertainties. There is a tendency for people with high uncertainty avoidance index to be more emotional. The do their best to eliminate the occurrence of unknown and unusual circumstances. Conversely, a lower uncertainty avoidance index indicates that people have a higher acceptance level for uncertainties and ambiguities. In other words, unstructured situations and changeable environments are more acceptable.

Masculinity, as opposed to femininity, refers to the gender distribution of roles in society. People from masculine cultures will be more aggressive, assertive and materialistic. Conversely, for those from feminine cultures, relationships and the quality of life will be valued more.

As for long-term orientation, if a country is geared towards that, it is more likely to practice thrift and perseverance. Its people will pay more attention to the future. On the other hand, if a country is more short-term oriented, there is a tendency for it to respect its traditions, and fulfill its social obligations. The traits of a country that is short-term oriented include the emphasis on quick results, protection of ones face, investment in mutual funds, and belief in the absolutes of good and evil with no grey areas.

For limitations, it is stated by Hofstede that the dimensions of national cultures are not relevant for comparing organisations within the same country. The Hofstede culture dimension model is not the best in the analysis of company cultures. However, in comparing and commenting on issues related to cross-national business firms, Hofstedes dimension of national culture model is the best model. In this regard, Hofstedes model is chosen to explain the cross-cultural management in HSBC.

4. Analysis of HSBC As stated, HSBC has located its headquarters from London, UK. The British culture must have more or less influenced its organisational culture.

From the website of HSBC, it is stated that its company culture is a combination of healthy entrepreneurial spirit and the highest standards of professionalism and ethical business principles, emphasising equality, respect and responsibility.

CountryPDIIDVMASUAILTO

UK3589663525

Hofstede (2009) shows that UK scores low on power distance, uncertainly avoidance and long term orientation. However, it scores high on individualism and masculinity.

The scores indicate that in the UK, there is more emphasis on the individual instead of the group. The low power distance index means that people will be more equal and democratic. Also, the high individualism score means that people are more self-oriented, and focus on personal benefit rather than the groups. The high masculinity score, on the other hand, is indicative that people are more aggressive, assertive and materialistic. The low uncertainty avoidance index means that they have higher acceptance of uncertainties and ambiguities. In other words, they are more comfortable in changeable environments. The low long-term orientation index means that the people are more present-focused, and have more respect for traditions.

Using the Hofstede model, it is seen that in the British culture, there is an emphasis on equality, respect and responsibility. Compared with HSBCs company culture, the British culture corresponds with it. Moreover, in Grays (1988) cultural value, it is stated that the higher a country ranks in terms of individualism and the lower it ranks in uncertainty avoidance and power distance, the more likely it will rank in professionalism. Hence, with its organisational culture corresponding with British culture so perfectly, HSBC headquartered itself in the London.However, as previously stated, the economic crisis lead to a loss in profit for HSBC. Thus HSBC faces the challenge to remain customer-focused, community-driven and economically profitable, all of which are different from its original culture. the 2009 crisis, HSBC suffered a deficit of over USD 2,000 million. Because of the loss, it was then decisively decided by the CEO to have himself relocated to Hong Kong, and concentrate on the Asia Pacific market. Bearing in mind that the company has now moved from the West to the East, does the culture in Hong Kong then complement HSBCs?

CountryPDIIDVMASUAILTO

HK6825572996

Hofstede (2009) has shown that Hong Kong scores a low index in individualism and uncertainty avoidance index. In addition, it scores moderately on masculinity, and is high on power distance and long-term orientation.

The low individualism index means that Hong Kong people are more group-oriented, and more effort is made with regard to relationships. There is a tendency for people to respect one another more. In addition, societal benefits are being focused on more. For the low uncertainty avoidance, similar to the British, HongKongers have high acceptance of uncertainties and ambiguities. They are comfortable even in unstructured situations.

For the high index in terms of power distance, Hong Kongers are more acceptive of unequal situations regardless of their positions. They are more autocratic and paternalistic. For the high long term orientation index, people in Hong Kong are more likely to be thrifty and future-oriented.

CountryPDIIDVMASUAILTO

UK3589663525

HK6825572996

Comparing the score of the five dimensions in the Hofstede model, Hong Kongs individualism index is far lower than the UKs. The low Individualism ranking means that there is more emphasis by Hong Kongers themselves as members of a close and committed group. They are loyal to the group that they are committed to, and are also responsible for fellow members. As such, Hong Kongers are more respectful towards one another and caring towards their colleagues. Also, the long-term orientation index of Hong Kong is far higher than the UKs. As opposed to the latters score of 25, Hong Kong scored 96. This means that people in Hong Kong are more future-focused, and that more effort is made for the future. Therefore, in the 2011 HSBC intermittent financial report, it is stated that Hong Kong is one of the most profitable regions for HSBC. Earning US$4,369 million before tax, compared with USD$5,817 million from the global market, Hong Kong is a brilliant market for HSBC.

Hong Kongs culture is in line with HSBCs organisational culture as respect and responsibility are highly valued by both. Also, Hong Kong is known as a professional financial city in Asia, so the professional image of HSBC can be retained in Hong Kong. Besides, Hong Kongs long term-focus culture is also deemed as very important in HSBC. Thrift and perseverance are seen as key factors in staying afloat in times of difficulty. Therefore, the relocation of the CEOs office to Hong Kong is a critical decision that marks its success in the milestone of HSBC. In the 2010 financial report, its profit before tax rose to USD 19,037 million. This was an increase of USD 11,958 million compared to end 2009. This increase in profit happened after the CEOs relocation to Hong Kong. It is thus believed that the decision to relocate was a very sound one. Also, an environment that values respect, responsibility and focus on the future has helped HSBC Hong Kong to become a star player. It therefore is not surprising that the Hong Kong market brings in the most profit for HSBC.

Furthermore, it is expected that the economies of Asia and the Middle East will continue to grow. It is a known fact that HSBC wants to expand its Asian market (Lee, P. 2009). The culture of Hong Kong is Asian, and is thus suitable for HSBC to apply in the Asian market. It was stated by its Chief Executive Michael Geoghegan that Asia and China were at the heart of HSBCs business (The Guardian, 2011). It was also stated by analysts that HSBC could generate 60% of profit from Asia alone in 10 years (The Guardian, 2011). Geoghegan then made the decision to relocate his office from London to Hong Kong. In applying Hofestedes theory, it is shown that the value of culture in Hong Kong is the great cross-cultural interaction of HSBC. The organization uses its valuable organisational culture to maintain itself as one of the leading international banks.

5. Case of CitiBankCitiBank, a cross-national international bank headquartered in New York, USA, runs more than 1,400 offices, and operates its business in over 100 countries around the world.

Similar to HSBC, CitiBank also suffered from the financial crisis in 2009, and huge losses in the subprime mortgage assets were reported. The profit before tax in 2008 and 2009 was USD -27,684 million and USD -1,606 million respectively (Citi Group, 2011). Based on this, it is found that Citi suffered a huge loss in the crisis.To solve the problem, help from the US government was even sought. In the aftermath of the financial crisis, the financial system in the West found itself in a mess. Experts advised that investing in the East was a way to recovery.

Although Citi suffered a loss, there was no decision made to move its business to the worlds future star market Asia.

CountryPDIIDVMASUAILTO

HK6825572996

US4091624629

From Hosftede cultural dimension model, it is found that the culture in the US is similar to that in the UK. It scores low empower distance index, uncertainty avoidance, and long term orientation indices. Moreover, the individualism, and masculinity indices are high in the US.

The individualism index in the US is 91, the highest in the world. This indicates that the American society is more individualistic, and bonds with others are relatively weak. The next highest Hofstede Dimension in the US is the masculinity index which is 62, compared with the world average of 50. This indicates that a higher degree of differentiation with regard to gender-related roles is practised.

The long term orientation index in the US is low. Compared with the world average of 45, the US only scored 29. This low score indicates that the belief in meeting its obligations is deeply rooted in the American society. It also reflects the Americans appreciation of culture and tradition.

The power distance index in the US is also low, being ranked only at 40. This means that greater equality among different societal levels are seen as important by the Americans.

Finally, the uncertainly avoidance index in the US is low, ranking at 46, compared with the world average of 64. It is believed that the low uncertainty avoidance index is indicative that the Americans have fewer rules, and do not attempt to control all outcomes and results. Furthermore, they have a greater level of tolerance for a variety of ideas, thoughts, and beliefs.

Being open is emphasised by the company culture at Citibank. Open and honest dialogues are strongly encouraged by the bank in its fair and inclusive work environment. The growth of its staff members is also strongly supported. The cultivation of the future life can create advancement and personal well-being through its training programme. Moreover, there are equal opportunities at the workplace. The company offers Equal Employment Opportunity to everyone, and aims to create a working environment that is free from discrimination and harassment. In addition, everyone regardless of diverse conditions disability, ethnicity, gender and race - is encouraged to join the company.

Being the second largest banking and financial firm in the US, equality, openness and long term growth are emphasised in the company culture. With any doubt, it has been shown that the American society is equal and open. However, with regard to the long term growth and development of the company, the Americans are still not on par with the Hong Kongers.

After the financial crisis, unlike HSBC, Citi did not put more effort in the Asian market. The 2010 financial report states that the profit before tax in Hong Kong was only USD 137 million (Citi Group, 2011), more than 25 times less than HSBCs. Even though the profit before tax of Citis rose back to USD 13,184 million in 2010, it was nonetheless still far lower than HSBCs.

6. ConclusionIn conclusion, managers always believe that their company culture is best. Even in cross-national business firms, managers think that a generic culture can increase their efficiency and effectiveness.

However, in dealing with cross cultural issues, do generic cultures really work? In Hofstedes point of view, culture is affected by local elements, so ones national culture also has to be a factor when business culture is considered. In the case of HSBC, as Asia and China are in the core-emerging market, the culture of Hong Kong is thus more suitable when it comes to expanding its market share in Asia. As such, HSBC can continue to be one of the leading banks, and be in a better position than any other Western banks. Value is created in the company as a result of the complementary nature of both the British and Hong Kong cultures. Together with the CEOs understanding of cross cultural differences, HSBC is now one of the worlds largest banking and financial institutions. Unlike HSBC, Citibank US also experiences a different national culture in the UK. However, the macro environment cannot be disregarded by the bank. The mismatch between the long term orientation of the company and the nation leads to a loophole. Therefore, it is concluded that any company culture is limited from nation to nation. There is no one generic company culture that is able to fit into an international or cross national firm. Therefore, as a manager of a multinational company, possessing the knowledge of cross cultural differences is the best way to implement a suitable company culture.