Tuesday, 6 November 2007

The Role of Culture in Effective Global Management

'One of the most important rules to remember when working within a multi-national organisation is that there is not necessarily one right way of doing things,'says Professor Geert Hofstede

With developing globalisation of business, the ability of employees to work effectively together across borders has become increasingly critical to business success. Cross-cultural understanding by individuals and the organisation as a whole serves to eliminate misunderstandings that could harm the business and maximise the best attributes each nationality has to offer.
Effective international operators are those with the wisdom to seek competitive edge through intercultural training, thus gaining insightful understanding of their global markets and mobilising the motivation triggers of their staff.

"One of the most important rules to remember when working within a multi-national organisation is that there is not necessarily one right way of doing things," says Professor Geert Hofstede.

Characteristics of National Cultures
Professor Hofstede has undertaken in-depth research on the characteristics of national cultures, providing a wealth of information and insight into how people in different societies function and suggestions as to what benefits those differences can bring to a multi-national organisation.
Each nationality has its own characteristics, which combine to contribute to the strength of the organisation. For example, in countries such as Britain and the US with a culture of small power distance between top management and general staff, organisations benefit from an environment of empowerment and acceptance of responsibility. In countries where management maintains a large power distance, staff will follow a much tighter regime of discipline.

Likewise, in countries in which there is a culture of strong avoidance of uncertainty, such as Japan, people will be more inclined towards detail and precision. Britain and the US are countries which demonstrate the opposite characteristics, with their culture of weak uncertainty avoidance providing more freedom to innovate.

An understanding of what drives and motivates people of different cultures within an organisation can contribute to the development of an organisation's own country- specific internal culture. If a British or American company with a culture of individualistic achievement and empowerment imposes the same values on its staff in an office in the Far East where collectivism and unquestioning respect for authority are valued, it will certainly experience difficulties.

In the same way expatriate managers moving to work in a developing office abroad, need to understand and accept the culture and values of the people with whom they are working. Management practices used in the home country will not necessarily be effective in international business both internally and externally.

An attempt to impose home country values and beliefs will often lead to frustration and an inability to achieve target goals. For example, strict timekeeping is likely to be impossible to implement in Latin countries. Direct criticism of staff in front of others in Asian countries will cause the recipient embarrassing loss of face. And the use of indirect language to soften the impact of what is being said will be met with annoyance by Germanic people who prefer to be direct.

On the surface, an overseas office with an expatriate manager may run smoothly until such time as things go wrong and suppressed local staff discontent begins to simmer.

Similarly, for external business dealings, the importance of understanding the local culture cannot be stressed enough. Examples abound of US and Northern European companies that have not fully appreciated the necessity of forming personal relationships in the Middle East and Asia before entering a business relationship. In these countries a strong network of contacts is indispensable and trust can only be established over time.

What's right - what's wrong?
Other problems can arise through a cultural gulf between the perceptions of what is right and what is wrong. What may be seen through the eyes of a Western European business as bribery and corruption, may be seen by counterparts in the Middle East as a genuine giving of gifts which is a normal part of establishing the personal business relationship.

As important is an understanding of the temperament and the values which local people hold highly. In the Far East, for example, great weight is placed on the maintenance of harmony and humility. The opposite extreme is the assertive, energetic individualism favoured in the United States.

These general differences between personalities of people shaped by their culture are very important in terms of recruiting the right person for an overseas appointment.

Professor Hofstede proposes five personality traits which should be used to create a profile of the type of people who would be successful working in a particular culture.

The three basic characteristics which should be the criteria for selection of expatriate personnel regardless of where they are going are emotional stability, openness and agreeableness. The weight given to the two remaining dimensions of conscientiousness and extraversion depends entirely on the position, country and culture for which the person is being selected.

Organisations - their support & training role
While the matching of the correct personalities to the country and culture contributes significantly to business success abroad, the support and training given by the organisation also plays an important role in the effectiveness of an expatriate assignment.
According to Diane van Ruitenbeek, who presented her initial research findings into expatriate expectations, lack of organisational support, language problems and a poor understanding of the local culture were major factors influencing poor performance.

One quarter of the expatriates who took part in Diane van Ruitenbeek's study indicated that they had been let down by their organisation. Their pre-departure expectations of the job, working and living conditions had not been met and they indicated that their job satisfaction, commitment and performance had correspondingly suffered. These people reported that they were more likely to quit the assignment early.

With the significant expense to a company of sending a person abroad and the cost of a failed assignment, simple investments can be made to avoid such situations. The respondents in the survey indicated that a company should not make any promises it cannot meet and provide a realistic picture of the job and living conditions.

High demand for cross-cultural & language training
Cross-cultural and language training prior to departure featured high on the respondents' list of actions a company could take to assist their adjustment on arrival in the new environment and their on-the-job effectiveness.

The confusion that can arise from being unprepared to deal with the attitudes and behaviour of people of another country can be summed up in the words of one respondent to Diane van Ruitenbeek's research:
"There seems to be a completely different logic to doing things here."

This feeling of utter confusion and helplessness experienced by the expatriate illustrates how a simple investment in improving an understanding of the culture through specialist country-specific training could make the difference between a successful, profitable overseas assignment and an ineffective, long term struggle.

1 comment:

Karma Kitaj said...

I want to call your attention to my blog posting on this article. Good examples of cultural insensitivities rampant in international assignments. See www.MovingAwayOrComingHome.com

Karma Kitaj