Culture and Organization

Discuss about the Culture and Organization.

Answer:

Introduction:

The Guy Dolle, chief executive of Arcelor dismissed Mittal as a “company of Indians”. The Spanish, French and Luxembourg government did not support the takeover. The initial fierce French opposition was highly criticised by Indian, American and British media for showing economic nationalism and double standards. Lakshmi Mittal’s Indian nationality was a hindrance for the finalisation of the deal (ArcelorMittal, 2016)

ArcelorMittal had three objectives to achieve with the merger. They are: (1) facilitate rapid integration; (2) effectively manage the daily operations of the new organisation; and (3) speed up profit growth and revenue.

The Environment

Irrespective of all the progress made to achieve better safety for the employees the LTIFR (lost-time injury frequency rate) dropped to 0.74 in 2014.  Thus, it is extremely necessary to continuously keep updating the safety measures, identification of hazards, assessment of risk and encouraging leadership. ArcelorMittal encourages a habit of speaking up in occurrence of risky behaviour and caring for each other in the mining operations (Feldman & Msibi, 2016).

However the management is incompetent. They fail to understand the needs of the employees and act accordingly to them. The management have been moved to different job roles to stop any sort of further damage to the work environment in the organisation. After the merger took place and Mittal became the head, the company did not recruit anyone for audit of the organisation. Those who came were not examined about their skills and capability. The organisation heavily depends on external contractors for providing human resource for imperative roles in the company (Flores, 2013).  Choosing managers only based upon their seniority might prove to be taxing for the organisation.

The Central Issue

The central issue of ArcelorMittal is the cultural problems that the new organisation faced after the merger. The first problem they faced in culture differences is communication. Internal communications are extremely important but there was a hindrance because of different time zones and cultures. There was a need for frequent conference calls between the CEOs, employees and management. Second, redundancies needed to be avoided as the merger took place (Ferraro & Brody, 2015). Rotational shifts, early retirements and voluntary retirement schemes were launched to cope with this problem. Third, a lot of people lost their jobs after the merger, which something very normal. They were dealt with as much care possible and the company took responsibility of them. The voluntary salary deduction of the managers was a necessary step.

Hofestede Model

Masculinity vs. Femininity: This dimension is defined as the preference of people for assertiveness, heroism, achievement, etc. These are known as characteristics of masculine societies. Feminine societies represent caring, modest attitude, etc (Wang & Bansal, 2012).

Long-term orientation and indulgence are another two dimensions of the cultural model of Hofstede.

Comparison Between Hofstede Model with Shein Model

Cultural Issues of ArcelorMittal After Merger

The two steel giant companies Mittal and Arcelor merged in the year of 2006. The merger of the two companies led to several problems that are grouped into several categories. Cultural issues are the areas of discussion in the article. After the merger, the new company is one of the largest steel-making company in the world. The newly merged company ArcelorMittal is facing cultural issues like accessibility, integration, exact problems, personalization, defective training of the employees, etc. Previously the company has provided classroom training to all its vendors and employees (De Mooij, 2013). However, after the merger, the company is operating in multiple countries such as Brazil, Argentina, and other European countries. Classroom training is not feasible for this type of setup of the enterprise. The facilities, vendors that are located in the countries of Brazil and Argentina, are very scattered in nature. Multiple vendors of the company are located in numerous locations (Bakir, Blodgett, Vitell & Rose, 2015). It is the reason of incurring massive losses in the field of training provided to the employees and the vendors. Classroom training for each employee incurs a huge cost per worker while providing training by the company. It is becoming next to impossible for the company for providing training to vendors located at scattered locations (Parry, 2013). Apart from that, the company is facing difficulties in measuring the Return on Investment (ROI) across the whole organization.

Integration management along with its accessibility is a cultural problem encountered by the company. The communication problem is the core issue that gives birth to different cultural and operational problem of the organization. The main issue arises due to lack of knowledge of English language of the vendors. Vendors are not able to communicate with their supervisors that lead to problems in organizational culture and operational issues. English is a universal language, but local people of South America prefer local languages to the English language (Birat, 2013). However, due to deep functional integration, the training provided to the vendors is not correct all time. Moreover, the employees of the organization are not provided with right training about the usage of proper tools and equipment that would help them in improving their English language skills (Friesen, 2013). Due to the above issues, the employee relations of the company with its workforce are at stake. Co-ordination among the employees is almost nil in many countries that results to decentralization of authority among teams. Usually, these problems are evident in underdeveloped countries, which have people of short-term oriented (Leblanc & Normand, 2015).

Relation of the Problem with the Theoretical Model

Uncertainty avoidance is the problem that is faced by the enterprise due to the wrong training program (Hill, Jones & Schilling, 2014). Employees of the organization are suffering from uncertainty in many countries due to the communication problem. People will react in an abrupt manner if they find that there is any difference in the organization culture. This will lead to negative impact on the mind of the workers and vendors of the company (Kinloch & Metge, 2014).

Again, the changed mindset of the people will give rise to a short-term oriented mindset of individuals. It has both positive and adverse effects on the profitability of the company. The numbers of long-term oriented people in the company are gradually decreasing due to the cultural issues and problems.

Conclusion

The study discusses the company background of the merger company ArcelorMittal along with its competitive environment. The business environment of the company is healthy in the perspective of the employees. However, the management of the organization is not so much competent enough to solve the issues of the employees and vendors in different countries. Before the merger, the two steel manufacturing companies have different organization culture which clashes after the merger. The enterprise failed to solve the cross-cultural issues faced by different levels of managers in different countries. After pointing the cultural issues, it is the responsibility of the HR managers of the company to solve various cultural problems. The steel manufacturing company is making losses for meeting the return on investment within a stipulated time. Recently, the merger enterprise is focusing on mitigating the problems faced by it. To solve problems, it is necessary to know the core reasons of the issue. By detecting the core causes of the problems, strategies are to be formulated which will improve the current situation of the company.

References

Chan, W. (2015). Design Project II–ArcelorMittal Recycling.

Cock, J., Lambert, R., & Fitzgerald, S. (2013). Steel, Nature and Society. Globalizations, 10(6), 855-869.

Friesen, E. (2013). ArcelorMittal: Metals & Mining: Equity Investment Report (Doctoral dissertation, NSBE-UNL).

Gaughan, P. A. (2013). Maximizing Corporate Value Through Mergers and Acquisitions: A Strategic Growth Guide. John Wiley & Sons.

Martin, J. (2016). Myths of Renaissance individualism. Springer.

Minkov, M., & Hofstede, G. (2014). A replication of Hofstede’s uncertainty avoidance dimension across nationally representative samples from Europe. International Journal of Cross Cultural Management, 14(2), 161-171.