In an increasingly global business environment, only the most culturally intelligent will thrive.
By Deborah Tarrant
Cultural differences show up in infinite ways. After taking on a new role, a Mexican mining company executive observed a major difference, and it was a matter of life and death. Australia was the first country he'd worked in where there wasn't an expectation of tragically 'losing' people on the job, he noted.
In another company, Australian managers sent to run operations in China were stunned by conditions on the factory floor. Labour laws are different there, and occupational health and safety issues proved confronting for outsiders looking in.
Then there was the French-born CEO who felt that the ambience in his southern hemisphere office was cold and unfriendly. Why? Because no one greeted him with a kiss when he arrived at work each morning.
With the globalisation of business, such observations are commonplace. Every day around the globe millions of individuals are grappling with cultural contrasts as they do business in or with foreign locations. The recent growth of international business has delivered, if not a borderless world, then one where geography has far less emphasis, and deals are potentially made or broken on the strength of intercultural harmony.
Once upon a time, seasoned business travellers or those making a move to an offshore location hit the ground with guidebook in hand, a few easy phrases and high hopes of commercial success. But these days the catchphrase is 'cultural intelligence' and it's what business operators need to make it in the globalised 21st century. 'We can't rely on surface knowledge of other cultures any more,' says cross-cultural studies expert Professor Prem Ramburuth, associate dean of the Australian School of Business at the University of NSW. 'A much deeper cultural literacy is now required. You have to be informed and know a lot more about the values, the belief systems and the behaviours of those you're interacting with for business.'
On top of this, a sound understanding of business processes, legal systems and regulations is also crucial. In Arab countries that may mean gleaning the finer points of Sharia law, which governs the profit-sharing principles of Islamic banking. In China, business visitors are grasping the concept and practice of guanxi in networking obligations. Guanxi is the construction of relationships, with the emphasis on the individual and informal groups rather than formal organisations.
Negotiating within the planned economies of emerging markets needs focus and often a government representative on your side. Even in the more familiar English-speaking US misunderstandings arise, and may be as simple as the inappropriate use of self-deprecating humour in negotiations, or as complex as figuring out legislative differences between the 50 US states.
Surveys by Austrade, the Australian government's trade marketing arm, show business culture, regulations and internal market specifics are determining success factors for Australians doing business offshore, well ahead of tariffs and quotas, reports the agency's chief economist Tim Harcourt.
Undoubtedly an eye-opener for many was prime minister Kevin Rudd's impressive demonstration of cultural wheel-greasing by addressing the Chinese president in fluent Mandarin at last year's APEC Conference. A factor that 42 per cent of exporters surveyed believed would help them do business in China. Cultural sensitivity and politeness do go a long way, insists Harcourt, who happily reports the demise of role models for Barry Humphries' grotesque cultural attaché Sir Les Patterson.
Expectations have shifted along with the environment. Fifteen years ago when the international business executive was typically someone who received an overseas posting at the end of his/her career as a reward for a job well done, suggests Associate Professor Kate Hutchings of Monash University's school of business and economics. These days, global operators take many forms and are often 20- or 30-something.
Hutchings identifies a number of new breeds including perpetual expatriates (those who country hop from one foreign posting to the next); and fly in, fly outs (those with short serial appointments as project managers). Also in the mix are locally hired foreign managers who choose to live in another country, but work for a firm that hails from their home base.
Host-country nationals may have grown up in a particular country, but have been educated elsewhere, allowing them insights into a multinational's or global organisation's culture. The advantages delivered by bicultural individuals are being keenly sought by multinational companies in 2008.
Of course, in addition to these more globally adept new breeds are the long-standing business itinerants, such as regular exporters and importers.
The people have changed along with their working ways. Now there's a proliferation of tech-enabled intercultural encounters by phone, email, web conference and instant messaging, all of which demand more than a smattering of cultural insights.
The prerequisite for cultural literacy prevails, whether or not you're packing a bag and boarding a plane, emphasises UNSW's Ramburuth, who also points to Australia's inherent multiculturalism as at least setting the stage for cultural experiences.
Debate over whether or not it's possible to have a truly global manager continues to rage. Can one person have the required breadth and depth of knowledge to truly work across many cultures?
When Fletcher Building chief executive Jonathan Ling recently posed a question about training global managers, Melbourne Business School foundation professor Amanda Sinclair posited the global business leader may not exist. Perhaps bosses would be better fostering good management at global and regional levels, she suggested.
However, Trisha Carter, an organisational psychologist at specialist consultancy Trans Cultural Careers, disagrees. Cultural intelligence demands an openness and flexibility that can be widely applied, she says. 'While many people have a preconceived idea about a culture, there are successful global managers who are adaptive rather than negative,' she says. 'Typically they have experience of a number of cultures and are open to learning so they have the right expectations to adjust to doing business and recognising people behave differently in other cultures.'
Despite this, there are common oversights. Australians, for instance, tend to have a strong task focus, and often don't take the time to build relationships in business expected by people from Asian and Arab nations. Australians may also trip over their own egalitarianism, she says. 'With Asian cultures there's often a gap in understanding the way status is awarded. The I'm just one of the guys' approach fails to recognise that hierarchies do exist in business and many Asian cultures interpret that as a lack of respect.'
This also presents a problem for incoming managers who can't understand why their Aussie boss is sitting with them in the open-plan office. There's a space differential, too. Australians express difficulties with how close people from more populous nations will stand. While the more finite rules of behaviour and business practices are easier to glean, often such nuances are missed, Carter explains.
At IBM, there's no question about the existence of the global manager, according to Lorraine Farah, Asia-Pacific leadership executive for the technology behemoth that operates in 174 countries as a 'globally integrated' company. Collaboration between people who are not in the same office, region, country or time zone is continuous.
Bringing together people from different backgrounds and expertise highlights varying communication styles and ways of working including decision making and how they handle conflict, Farah says. One way of dealing with this and helping managers to learn is ensuring there's plenty of feedback from team members.
A cornerstone of global management development at IBM is the internal two-day intensive Shades of Blue program for team leaders. Shades of Blue is preceded by a self-awareness exercise. 'Global managers need to understand their own style of thinking, interacting with people and managing work,' Farah says. 'In the program, they can map their styles with people in Japan, Manila, New York; to see where gaps exist. It raises awareness that people in different cultures like to work in teams in different ways.' All employees can access a Going Global intranet that outlines how people in particular countries like to work.
Farah manages a multicultural team spread from India to Australia. The way she deals with her direct report in India nightly by phone is vastly different to her instant messaging with her Korean colleagues with whom she's learned to cut the small talk and get down to business. Australians speak very quickly, and sometimes things can be quite literally lost in translation, she says.
Inevitably, the world is developing an international business culture, says Sally Kincaid, head of human resources for the institutional clients group at financial services firm Citi, where a matrix structure means many employees are already reporting to both a local and an offshore boss. Those who are making a career move to another country, the company operates in 100 countries, and are offered tailored assimilation packages through a range of external providers. 'We're dealing with people's cultural knowledge on a case-by-case basis,' Kincaid says. 'Often they will have been doing business with another location long before they move there,' adds Kincaid, who points out that those doing business internationally and selected for overseas postings are part of a high-performing talent pool and tend to quickly pick up on what's required.
Carter recommends her clients find themselves cultural mentors in each location 'someone who knows the systems and practices and perhaps has made the mistakes before you'.
While the rise of English-speaking international business communities in Singapore and Dubai (with its 80 per cent expat population) are often considered the way to rise above cultural dislocation, this may be deceptive. 'Just because English is spoken, you can't assume that western business practice is the modus operandi,' says Monash University's Hutchings. 'Perhaps it is on a superficial level, but beyond that are multiple layers which form a fusion business culture.' In Singapore, she points out, international business is a blend of influences from the British colonial times to more recent US activity, along with Chinese, Indian, Malay and the expats.
There's also the irony that westerners tend to expect not to have to adapt too much in English-speaking environments such as the UK, the US, Canada and New Zealand, and often have a rude awakening. Austrade's Harcourt mentions instances where people have decided against doing business in Asia because they think it's risky, only to 'lose their pants' in the US.
The future is bright and global, with the next generation of employees currently growing up in a multicultural environment, the UNSW's Ramburuth believes. 'Older managers have to learn about cultural values and differences and intercultural communications but this new generation is immersed in it,' she says. With a UNSW student population that's 25 per cent international, and a far larger percentage recording ethnically diverse backgrounds, she is currently collaborating with several Australian universities on a project designed to embed intercultural competency in business learning.
In her own teaching, Ramburuth, who is a South-African-born, British-educated Australian resident of Indian background, calls on students to draw on their direct cultural influences for case studies. 'How many of us get up in the morning and think, "What's my culture? What are my cultural norms and behaviours?"' she asks. 'The only time we do it is when we are confronted with difference ... And, it's hard to tell whether the world is coming closer together or is more divided, because the closer we get, the more aware we are of the differences,' she muses. 'On the other hand, the more we come together the more we learn about each other.'
CPA Australia has introduced CPA 114 International business as part of the CPA Program. This segment provides candidates with an understanding of the concepts, practice and real-world knowledge necessary to conduct business in an international environment and considers the impact of forces that influence the global business environment.
