10-15 Slide Powerpoint Human Resources Management

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 intr oduced 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 Agas si, 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 SA P 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 cus tomers’ 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

Pragu e, 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 “Americanizat ion 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 fac t, 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 learne d 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. SOURCE: Based on Phred Dvorak and Leila Abboud, “S AP’s Plan to Globalize Hits Cultural Barriers,” Wall

Street Journal, May 11, 2007, http://online.wsj.com.

Questions

1. In your opinion, what aspects of the changes at SAP would be most difficult for the German

employees? Which would be most difficult for the SAP employees in other countries?

2. What HRM activities or functions were affected by the changes described in this case?

3. Imagine you are an HR consultant called in to advise the leadership at SAP. Suggest a few ways the

company can overcome cultur al barriers that are affecting its efforts to become more creative and agile.