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

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Oct 3, 2011

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

  • Corporate Culture;
  • Local Culture.

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

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

Mastering corporate vs. local

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

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

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

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

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

Cultural mistakes

Some companies, however, have made mistakes:

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

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

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

Performance Management

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


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


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

The answer of HR

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

HR must trade-off and balance the paradox of:

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

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