During the course, Management, Leadership, and The Organization, I was given an assignment which I had to choose two companies with distinct organizational cultures for comparison.
For this report, I have chosen two Airline companies; Emirates and Delta Airline. I believe that their conflicted history makes it an interesting choice in contrast of how each CEO manages their airline, and how they deal with the other airline in competition.
Using Hofstede and his six cultural dimensions, I was able to compare the two airlines and their countries; the United Arab Emirates and the United States. Using Hofstede as a tool for comparison enabled myself to understand why they have chosen certain actions and their business strategy/management.
Emirates is an Airline based in Dubai in the United Arab Emirates. They are a leading airline for international travel and has dominated the competition due to the vast amount of Government Subsidies they have received from the Investment Corporation of Dubai (Investment Corporation of Dubai, 2018). Emirates and the other leading Gulf Airlines such as Etihad and Qatar Airways, has infuriated airlines from other countries such as the United States’ Delta Airline due to the unfair competition.
Current chairman Sheikh Ahmed bin Saeed Al Maktoum has inherited the role as CEO (Hall, 2010) and additionally, is chairman of Dubai’s largest bank, Emirates NBD (Arabian Business, 2018). Emirates decided to outsource the position of President for the airline, giving Sir Tim Clark the position.
Delta Airline is a major American airline with its Headquarters at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia. They are one of the well-known American airline companies in the United States due to their frequent routes to Europe. Additionally, they are member of SkyTeam Airline Alliance meaning they have partnerships with airlines such as AirFrance, KLM, Alitalia, AirEuropa and many others (SkyTeam, 2018). Delta Airline released a 15-minute video striking Emirates and the other Gulf airlines for their unfair advantages which demonstrates the management culture Delta has within their company. (Zhang, 2017)
The current chairman of Delta is Edward H. Bastian, an American citizen, who received the role in May 2016. Mr. Bastian joined Delta in 1998 as Vice President and in 2000, was promoted to Senior Vice President. Mr. Bastian’s “primary responsibility is to champion the company’s employee-driven, customer-focused culture and inspire the spirit of innovation” (Delta Airline, 2017). The current President of Delta is Glen Hauenstein, who received the position in May 2016. (Delta Airline, 2017)
Hofstede’s 6 cultural dimensional-model will be used in order to compare the two airlines and their countries. Geert Hofstede is a Dutch organizational psychologist who is most famous for his development of the Hofstede Cultural Dimensions (Vilet, 2009). Geert Hofstede has “sought dimensions to cover all cultures” and his dimensions “included Power Distance, Collectivism versus Individualism, Femininity versus Masculinity, and Uncertainty Avoidance. Later he added Long-term versus Short-term Orientation”. (Lewis, 2016) Moreover, Hofstede then added Indulgence versus Restraint.
Power Distance: United States
Using Hofstede’s 6 cultural-dimensions it was evident to identify why the CEO released the video attacking the gulf airlines including Emirates and the overall behavior of Ed Bastian. The confidence the CEO has influenced his followers to agree in what he was implying about the competition. The reason in which he felt confident enough to do this may be influenced by his culture and how members in this society accept and expect the distribution of Power.
In order to measure this using Hofstede, Power Distance would be the appropriate dimension to use in order to examine and inspect this sort of behavior. This is due to the reason that Hofstede defines Power Distance as “the degree to which the less powerful members of a society accept and expect that power is distributed unequally. The fundamental issue here is how a society handles inequalities among people” (Hofstede Insights , 2018). Using Power Distance would enable an understanding on how employees behave towards management in a typical hierarchical company.
Moreover, The United States scored a 40 in Power Distance which is a relatively low degree. After calculating every country’s Power Distance, the United States score was below the World’s Average of 60. In comparison, developed countries such as the Netherlands, Sweden, Finland, Norway and other European Countries also scored below the world’s average.
Furthermore, having a low Power Distance indicates that people expect power to be distributed equally and would be considered a Collectivism Society (Biddle, 2014). Collectivism indicates that employees are expected to have a long-term commitment towards the company and that everyone takes responsibility for fellow members of their group (Hofstede Insights, 2018).
The majority of employees in businesses and companies in the United States express dissatisfaction whilst working. An article from Forbes stated that “the majority of Americans- 52.3%- are unhappy at work”.
However, employees at Delta Airlines are quite satisfied working for the company which demonstrates Mr. Bastian fulfilling his responsibility as CEO to champion the company’s “employee driven and customer-focused” (Delta Airline, 2017) environment. Most companies in the United States do not take into consideration the attitude towards Power Distance which results in the low satisfaction of employees, making Delta Airline a role model as a company in the way in which they treat their employees. The way in which they are able to satisfy their employees are through the benefits they receive working for the company. Delta Airlines give their employees free health and life insurance, dental insurance, retirement plans, performance bonuses, maternity and paternity leave, vacation and paid time off, sick days, job training, tuition assistance and many other benefits (GlassDoor, 2018).
To conclude, satisfaction of employees contributes to the low power distance due to the fact that Americans expect to have an equal distribution of power. The reason in which most workers in America are not satisfied is because they do not accept the large distance in power, expect leaders to be less formal and have a looser communication protocol. Their needs and wants as employees should be heard and considered in management which results in mutual respect from employees to management and vice versa, achieving this would complement Hofstede’s power distance of 40.
Delta Airline were able to achieve this because the management within the company respected the concerns of their employees through the use of benefits. They were able to communicate to management what their needs and wants are and as result they were able to receive a “justification for the inequalities of power” (Hofstede Insights , 2018). Management was perceived to have their employees best interest.
Reviews from GlassDoor©
Power Distance: United Arab Emirates
The United Arab Emirates scored a high degree of Power Distance with a result of 90. Using Hofstede Insights, the high dimension means “that people accept a hierarchical order in which everybody has a place and which needs no further justification” (Hofstede Insights , 2018).
The reason in which the United Arab Emirates has a high power distance index as many other countries in Asia is maybe due to the social norms and the religion of Islam enforced in its strict laws. For example, during the Holy month of Ramadan, non-Muslims and Muslims are “prohibited from eating, drinking, and smoking in public during the fasting hours” (The Official Portal of the UAE Government, 2018). The strict laws have resulted in people accepting the unequal distribution of power.
Emirates demonstrates typical hierarchical behavior in its company and in regard to the high-power distance, it is expected that the management do not interact with their employees as other countries do with a lower power distance degree such as Germany; they have a strong belief of equality and benefiting their employees as much as they can through the use of training programs in order for them to progress within the company (ClearlyCultural, 2018). This differs to the United Arab Emirates as it is hard to progress in a company as an employee’s age increases, which is evident through their retirement age of only 60 years old and the “UAE law bans those who are over 60 years of age from being issued with employment Visas” (Thomson Reuters, 2016).
Furthermore, it is evident to see from employees from Emirates of the inadequate listening skills from management through the use of the site GlassDoor. GlassDoor, is a site where employees can rate the companies they work for in order to assist future employees in additional information. A few reviews from employees’ states that it is “a little bit hard to connect with the management team”, “management doesn’t listen to crew”, and under Advice to Management an employee stated that they should “keep listening to employees”.
This type of behavior is typical in the Middle East due to religion shaping the social norm in both business and living and people should have this expectation when working here. However, the population of the UAE was recorded as 9.2 million in 2013. “Out of 9.2 million, the expatriates contributed to around 7.8 million with the Emirati Nationals holding a population share of 1.4 million” (Guide2Dubai, 2016). Since the majority of people living in the UAE are expatriates yet the laws are based around Islam and the Royal Family, it is only expected that there would be friction when communicating across cultures.
In conclusion, the large power distance of 90 is mainly due to the Islamic Culture which has influenced their strict laws and it makes it clear that people are just afraid to express their concerns and disagreements to higher officials. Since management style is not questioned from employees working within the company, makes it interesting to witness how these middle eastern companies such as Emirates react to accusations from external foreign companies abroad such as Delta’s video.
Cultural Determinants that Effect Business Practices
Cultural determinants differ between the United States and the United Arab Emirates. Culture from both countries affect factors such as human resources, mentoring and support, qualification of leaders, working conditions and may cause conflict within the workforce.
Qualification of leaders is an appropriate example to use with Delta and Emirates as both CEOs were chosen for different reasons. The CEO of Delta, Ed Bastian, has a Bachelor’s Degree of Business Administration (Delta Air Lines, 2017). This is in comparison to the CEO of Emirates, Ahmed bin Saeed Al Maktoum, with a Bachelor’s Degree in Political Sciences (Dubai World, 2018). What’s interesting with the CEO of Emirates is that he is the uncle of the ruler of Dubai, Mohammed bin Rashid Al Maktoum, which may be the reason to why and how he received the position to begin with.
This displays that the United Arab Emirates have similar comparisons to the Typical Family-owned Gong-Si where if one is not part of the family, one will not enhance in the company. The rulers of the United Arab Emirates treat the country as a business which is clear when researching the CEOs for all the major companies in the country are connected through family or personal connection, making it difficult to progress in the company.
On the other hand, the United States has a different culture where it is possible to progress in the company. Using the current CEO for Delta Air Lines as an example, Ed Bastian began working in Delta in 1998 as Vice President – Finance and Controller and was able to progress in 2000 to Senior Vice President. Mr. Bastian left Delta in early 2004 to work for another company and through his qualifications and years of experience, he was able to become Chief Financial Officer upon his return to Delta (Delta Airline, 2017).
Currently he is Chief Executive Officer of Delta Air Lines which demonstrates how much an employee can progress within an American Company. Mr. Bastian’s progression may be the reason why he was in the top 100 CEO’s voted by employees on GlassDoor, because he was able to understand the needs and wants of his employees’ due to being in the same position only a decade ago.
To conclude, the organizational structure in the determinants of culture is affected, in this case, through social norms. The social norm in the UAE is religion and the royal family which is evident through the high-power distance in comparison to the social norm of the United States where the power distance is significantly lower of 40 which signifies that the power distribution should have justification. This may also be the reason why Delta feels threatened by Emirates due to the fact that they find it unfair for the CEO to have that amount of power and funding with the government as they stated in their video.
Conflict in Culture
In 2016, Delta released a 15-minute video attacking Emirates and the other Gulf airlines of unfair competition. Emirates has received 30 Billion USD to 40 Billion USD of Government Subsidies from the Investment Corporation of Dubai which Delta believes breaches the Open Skies Agreement (Zhang, 2017).
The United States and the United Arab Emirates are polar opposites in Hofstede’s 6 cultural-dimensions in exception to Masculinity and disregarding Long-Term Orientation and Indulgence.
Figure 1: United Arab Emirates vs. United States
It is evident to see that the two countries would have conflict not only as discussed for Power Distance but as well, Individualism. The United Arab Emirates has a score of 25, where-as the United States has a score of 91. Hofstede describes individualism as the “degree of interdependence a society maintains among its members” (Hofstede Insights, 2018).
The low Individualism score of 25 means the United Arab Emirates is a collectivism society which includes long term commitment whether that being from family, extended family or extended relationships.