Hofstede Cultural Model of Fannie Mae
Posted by Matthew Harvey on Feb-04-2020
1. HOFSTEDE CULTURAL MODEL AND DIMENSIONS OF NATIONAL CULTURE
Businesses and companies often need to change their business and marketing strategies and communication campaigns based on the needs and demands of the local culture. The local culture – which comprises of the values, norms, and traditions of a specific region, country, or community, often dictates and influences the purchase decisions, and consumer behaviour and buying patterns. Based on the strong influence held by culture, companies like Fannie Mae often localize their campaigns and strategies to cater to local whims better.
1.1. Understanding the Hofstede model of national culture
The Hofstede model of national culture helps companies, brands, and businesses such as Fannie Mae to understand the culture of a specific country better. The Hofstede model focuses attention on six specific factors of culture that helps organizations and businesses take important strategic decisions, and design optimal marketing plans and activities.
The cultural dimensions under the Hofstede model have also been used by Fannie Mae in its expansion and internationalization processes. The Fannie Mae has also changed and altered its marketing strategies and campaigns to meet the local cultural standards, and values. In doing so, the company has practiced localization – but at the same time, maintaining alignment with the overarching, and the broader global strategy.
1.2. Hofstede model of national culture in an organizational context
Fannie Mae has used the Hofstede cultural model, and its various dimensions frequently. More importantly, the organizational culture at Fannie Mae reflects the broader international and global culture followed by the company, which is also present and practiced internally in all its various locations and offices.
Figure 1Hofstede cultural dimensions
2. POWER DISTANCE INDEX (PDI)
Power distance refers to the intensity and degree of inequality that exists between individuals, and different groups of individuals within an organization based on the power they hold. This inequality is accepted by the people. Fannie Mae has a low power distance culture at large.
2.1. Organizational hierarchy
Fannie Mae has a flatter organizational hierarchy. The flatter organizational hierarchy allows more visibility and easier access to management. This promotes a sense of trust and belonging in the employees, and increases their motivation towards optimal performance.
2.2. Organizational decision making
The organizational decision making practiced at Fannie Mae is more decentralized. This means that regional teams have the authority, for example, to localize a global strategy to meet the needs and demands of local culture. Similarly, teams within a regional district or office have the authority to make decisions pertaining to meeting a goal – while staying within the prescribed values and norms of the organization.
2.3. Compensation bands
The compensation bands are not placed at a distance from each other. Rather, the pay scales and bands overlap as per job roles and descriptions. The compensation is largely based on a pay-band system that takes into account flatter hierarchies and provides more options to individuals for improved compensation opportunities.
2.4. Power delegation
Since Fannie Mae has a low power distance in its organizational culture, the company sees managers and leaders delegating power without any restraint and concerns. The delegation of power increases responsibility and accountability, enhances work performance, and increases loyalty and organizational commitment for the employees. Moreover, the delegation of power creates a sense of ownership in employees.
The Fannie Mae enjoys a charismatic leadership style. The leader is visionary and motivates employees by instilling in them a sense of self-belief and self-appreciation. The leader works with employees personally and professionally to help in their growth, as well as help them work towards the broader and the bigger business growth. Moreover, the leadership at Fannie Mae is visible and accessible, which makes it easier for employees to walk the talk.
2.6. Supervisory staff
With a low power distance organizational culture, there is a lower need for supervisory staff. Employees are trusted with responsibilities and are often allowed to determine their own goals and targets within their job needs and tasks. This affords them with greater motivation to work towards the achievement of their goals and targets – without the need for direct, and constant supervision.
3. INDIVIDUALISM VERSUS COLLECTIVISM (IDV)
This refers to the nature of job tasks and activities in an organization. Individualistic organizations focus more on individual achievements, and employees prefer to work competitively with each other for challenging tasks towards similar goals. This is done with the motivation of not only performing better but also for monetary gains where available. Collective organizations, in turn, work more with teams and groups towards a shared goal that must be achieved by working together. Fannie Mae maintains a healthy mi between individualism and collectivism in its organizational culture to promote optimal performance in employees, as well as fuel the business growth appropriately.
Fannie Mae values the privacy of its employees in their workspace as well as personal life. The organization does not encroach an employee’s personal matters, and gives them the needed privacy as and when required, and also offers assistance where needed.
Fannie Mae also values the time of its employees. All tasks and job activities are planned so that an individual’s social and personal life is not impacted, and a work-life balance is maintained. This work-life balance is important for the emotional and physical wellbeing of the employees, and Fannie Mae ensures that employees are valued for their time as well.
3.3. Challenging tasks
Fannie Mae regularly and frequently engages its employees with challenging tasks and goals. The purpose of these tasks and goals is to engage the employees and keep them motivated to perform optimally. Fannie Mae invests in ensuring that all its employees are challenged so as to not get bored, and dissatisfaction from their job roles.
3.4. Individual accomplishments
Individual accomplishments at Fannie Mae are celebrated. Employees are recognized for their performances and individual accomplishments – professional as well as personal. The appreciation and celebration are made through intrinsic as well as extrinsic benefits which helps spike the motivation of employees further toward improvement.
3.5. Work-life vs. social life
Fannie Mae maintains a clear demarcation between an employee’s personal and social life, and ensure that the workplace culture is not infiltrated with social relationships and social contracts. While the Fannie Mae values, and encourages an employee’s social life and social relationships, it deems it against the workplace ethics to encourage social relations and social contracts infiltrating the professional workspaces of employees
Fannie Mae encourages creativity and celebrates it in individuals. Fannie Mae frequently encourages and engages employees in challenging and problem-solving tasks to enable them to enhance the use of their creativity and develop creativity further. This is important for Fannie Mae for encouraging an overall culture of innovation and flexibility – needed for organizational growth and development.
All decisions undertaken at Fannie Mae are based on merit. All promotions, as well as compensation management activities, are governed on rules of merit and are based on employee performance strictly. As such, Fannie Mae finds it only fair to use these benchmarks for facilitating employee growth as well as a culture of honesty and transparency within the organization – to avoid and contain conflict.
4. MASCULINITY VERSUS FEMININITY (MAS)
This refers to how the job roles and tasks have been distributed between the male and female members of the organization. Fannie Mae has a low MAS score – which means that the job responsibilities in the organization overlap frequently between men and women, and job descriptions and nor gender-biased or stereotyped.
4.1. Money orientation
The overall organizational culture is driven more by the quality of life, and quality of life in the workplace. There are less competition based on compensatory factors, and benefits, and more competition based on the nature of tasks allocated.
The Fannie Mae encourages and promotes an organizational culture that is less egoistic in nature. This has worked in favor of the organization as it has allowed skillful women to come to the forefront as well – without hurting the team dynamics and employee relationships within the organization. Women are equally celebrated for their achievement, just as men in the organization are.
4.3. Motivation factors
Success within the Fannie Mae is more likely to be achieved through collaborative means that on negotiation. The company does not encourage or support success based on rigid competition that can hurt the wellbeing of individuals – physically, mentally, or emotionally.
The company encourages a focus on work-life balance and work flexibility to suit and meet the needs of employees. This, in turn, allows the organization to optimally manage the employee performance levels.
4.4. Gender role differentiation
Fannie Mae does not support differentiation and stereotyping in its job responsibilities and tasks, as well as job descriptions based on gender differentiation. All roles and tasks at Fannie Mae are designed to be equally allocated and to encourage workplace equality between men and women. Additionally, Fannie Mae also prides itself on being an equal opportunity employer and provides men and women equal chances of growth within the organization as well.
5. UNCERTAINTY AVOIDANCE INDEX (UAI)
Organizations that have a culture of high uncertainty avoidance tend to have a more controlling perspective where the organizations have a higher need to be in control and knowledge of everything. These cultures do not promote innovation and creativity at large, and would rather have tighter risk controls. Lower uncertainty avoidance scores indicate a more relaxed, and open culture. Again, Fannie Mae practices a mix of both in its culture, with an inclination towards having lower uncertainty avoidance scores.
5.1. Opened to change
Fannie Mae encourages a culture internal to the organization that is open to change. The company frequently engages in change management programs to improve its processes, cultures, as well as work activities through team building activities. The frequent changes have allowed the organization to become more adaptable to changes in the internal and external environments without affecting the performance of employees. Moreover, this has encouraged innovation in the organization as well.
5.2. Learning and decision-making processes
The learning and decision-making processes are more open-ended in nature. There is less rigidity, and employees are encouraged to engage in fruitful debates and discussions to weigh the pros and cons of various decisions before reaching a unanimous decision that is agreeable by all groups present and needed in point.
5.3. Sense of urgency
Fannie Mae encourages a flatter hierarchy within the organization, and as such, does not place much importance on tiles. Instead, the company focuses more on merit-based behaviour, and celebrates employees who do not break under pressure. Moreover, there is a lower sense of urgency in the organization, and employees enjoy a more relaxed internal culture.
Fannie Mae is can fairly be seen as a risk-taking organization. The company’s ability to take risks highlights its need to explore, and benefit from opportunities – as well as avoid failure. The company’s readiness and motivation to take needs also highlight it to be more inclined towards lower uncertainty avoidance.
Fannie Mae is flexible in its strategies as well as various departmental activities – to meet the needs and demands of the organizational goals as well as country-specific needs. In doing so, Fannie Mae has become an avid practitioner of localization – which is based on principles of flexibility and adaptability.
6. LONG TERM ORIENTATION VERSUS SHORT TERM NORMATIVE ORIENTATION (LTO)
Cultures displaying higher long term orientation are more thrifty and pragmatic in nature. They display their understanding of time as having long term implications – well spread out over the future. In contrast, cultures displaying short orientation are more nationalistic and values-driven. Fannie Mae operates with a long term orientation in this strategic focus and development, while execution and related activities of the same are driven more by short term orientation.
6.1. Focus on thrift and education
Fannie Mae place sigh importance on education and merit of its employees. Not only does the company hire the best and the most educated class for its various positions and jobs, but the company also ensures that employees are continually in the learning cycle through job tasks, engagement, and training.
6.2. Values and rights
Fannie Mae places high importance on the values and rights of the people and various groups in societies and communities – including minority groups. The company is an equal opportunity employer, and as such, provides equal opportunities to all groups in all processes related to the firm and its staffing polis.
6.3. Obligations and virtues
The Fannie Mae is equally careful, and mindful about its obligations and cities. The company engages in CSR cities regularly for example, as an obligation it holds towards the broader society in which it operates. The CSR activities of the company are ongoing, and carefully planned and executed to represent the aim and philosophy of the company.
6.4. How vs. why
The Fannie Mae and its employees are generally more interested in the how and what, rather than the why of the problem. This indicates a more problem-solving attitude and an inclination towards long term orientation. This allows the people to be able to understand the cause, rather than symptoms to be able to completely solve problems, and improve personal and organizational performance.
7. INDULGENCE VERSUS RESTRAINT (IVR)
A higher indulgence score indicates a culture to be more affording towards people’s personal gratification as well as their happiness and needs. A more restraining culture, on the other hand, indicates a culture governed by social norms and rules. For Fannie Mae, the organizational culture is a healthy mix between the two, with an inclination toward indulgence.
The overall culture at Fannie Mae is optimistic, where employees are treated with respect. All employees are also trained frequently to remain calm and work with a focus – even in situations of worry. Moreover, employees are also trained towards personal emotional wellbeing and offered counseling in dealing with personal troubles if needed. These indicate that while the organization works in the best interest of its employees, it also projects a fairly optimistic image.
7.2. Personal happiness
Fannie Mae values the happiness of its individuals. The culture and internal organizational environment are relaxed and vibrant. Employees feel at ease with each other and are comfortable in the presence of their colleagues. As such, the organization enjoys happiness and values the happiness of employees over everything else. For the same reason, the organization also offers training and opportunities for cultivating personal goals and targets that are not professionally measured.
7.3. Freedom of speech
Fannie Mae offers freedom of speech to its employees. The organization allows employees to speak what is on their minds in a reasoned and well-behaved manner. Moreover, the organization also encourages debate, and regular feedback from employees to continually enhance and improve the organizational products as well as the internal culture and environment.
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