Managing Intercultural Teams: A Practical Approach to Cultural Problems Paul Banks and Bob Waisfisz INTERCULTURAL RELATIONSHIPS AND ORGANISATIONAL CONFLICTS In 1987 a major international oil company, eager to rationalise and streamline its organisation in Europe, decided to merge its Belgian and Dutch operations into a single Benelux entity. Up to that point, all the company’s activities in Europe had been organised on the basis of national subsidiaries each operating within its own national boundaries, employing (with the exception of a small number of temporary expatriates) their own national staff and enjoying a large degree of national autonomy. The merging of two national operations into a unified regional structure was seen as an important initial step towards a more general reorganisation in Europe along transnational lines. The future of the new Benelux organisation looked promising, with more efficient supply and logistics, more effective use of manpower, fewer offices and reduced administration costs. Furthermore there would be no language problems to bedevil the management of the new entity: Dutch is, after all, one of the official languages of Belgium and in any case the company’s previous Belgian operations had been concentrated in the Flemish area of the country with its office in Antwerp, thirty kilometres from the Netherlands frontier. If only transnational organisation in the rest of Europe could be so easy! Within weeks of the new organisation being launched, problems began to emerge. The Belgian and Dutch employees of the new company were finding it difficult to co-operate and, even more seriously, there were clear signs of poor communication, lack of trust and even discord among the two nationalities at the management level. The Belgians felt they had been taken over by the Dutch; they found their Dutch colleagues often pompous and rude and insensitive to the need to do things in Belgium the Belgian way. The Dutch on the other hand found the Belgians bureaucratic; they always seemed to want to check with the hierarchy before making decisions; at the same time they always seemed to be improvising. Relations in the management team had become so tense that company performance was clearly being affected. The Chief Executive began to see that despite all the assumptions made when the new organisation was put in place, he had a major cultural problem on his hands and he was going to need help to solve it. Most managers will recognise the kind of difficulties experienced by this company. In the last decade there has been a growing awareness of the impact that differences between national cultures can have on the management of an international business. For many years, there has been general acknowledgement (though perhaps limited understanding) of the most damaging consequences of badly managed cultural differences, such as the This chapter © 1994 P. Banks and B. Waisfisz. Collaboration Management-Intercultural Working: New Issues and Priorities. Edited by H. Shaughnessy. Published 1994 by John Wiley & Sons Ltd. ITIM 1 D2300.a problems encountered by many Europeans attempting to do business in Japan. The rapidly increasing incidence of intercultural encounters resulting from the globalisation of world trade has led to the realisation that cultural difference can have a significant impact on the conduct of business as soon as a manager crosses the border into the neighbouring country. This realisation has been particularly acute in Europe as more and more companies seek to build their international positions by forming alliances with companies in other European states, this creating a demand for managers who can work effectively in multinational teams. TOWARDS A CONCEPTUAL MODEL OF INTERCULTURAL BEHAVIOUR Managing in an intercultural environment is a complicated and subtle issue, requiring a great deal more than a list of “do’s and don’ts”. Traditionally, where there has been any preparation at all for cross-cultural assignments, it has generally taken the form of briefings on the history, institutions, climate and social customs of the countries to be visited. Such briefings are not, of course, without value and can certainly help the business person to develop local contacts more quickly and prevent elementary social errors. They are, however, restricted to the more superficial manifestations of national culture. A recent report on this kind of training in the house journal of a major company talked about such things as the importance, for Americans, of realising that French colleagues expect to shake hands each morning, the different conventions surrounding the acceptability in different European countries of addressing people by their first names and differing attitudes to informal dress. This may provide useful advice on how to mind one’s manners in a foreign country but, since it does not penetrate into the deep-seated value systems which are at the core of every national culture, it is of limited value to managers who have to grapple with intercultural issues of the kind faced by the Benelux company referred to above. What managers need in situations such as this is a general conceptual framework which can help them to understand how people from different nations are conditioned to deal with the basic problems that face all human societies. There are many problems that are common to all nations but ways of dealing with them differ. If we can identify the main issues which have an influence on the way societies function, and can distinguish the ways in which different cultures deal with these issues, we can begin to provide managers with flexible instruments for diagnosing and resolve a wide variety of intercultural problems. Such a map of different national value-systems and their consequences for the conduct of business across cultural frontiers forms the basis of the work done by The Institute for Training in Intercultural Management (ITIM). The training and consultancy offered by ITIM is based on the pioneering work of Geert Hofstede, Professor of Organisational Anthropology and International Management at the University of Limburg in Maastricht. Hofstede defines culture as “the collective programming of the human mind which distinguishes the members of one society or group from those of another”. Culture consists of patterns of thinking which parents transfer to their children, teachers to their students, friends to their friends, leaders to their followers. Culture is reflected in the meaning people attach to various aspects of their lives, their way of looking at the world and their role in it, in what they consider “good” and “evil”, and in their collective beliefs. The culture, that is imprinted in people’s minds, becomes crystallised in the institutions and organisations of society, which in turn reinforce the mental programming. This assumption of mental programming does not, of course, imply that everyone in a society is programmed in ITIM 2 D2300.a exactly the same way: statements about culture can only be statements of a central tendency and there will be wide differences among individuals and sub-groups. The programming that is referred to as “culture” should be seen as a collective component shared between the minds of otherwise different individuals. This particular configuration will be absent from the minds of those belonging to a different society. Against this background, Hofstede’s research, carried out over a period of 15 years, analysed some 116,000 questionnaires on values completed by employees of a single multinational corporation in 67 countries. The research then compared responses from “matched samples” (i.e. employees in similar occupations) from the different countries. Because they all worked for the same organisation, Hofstede concluded that the differences, or similarities, in the responses could not be due to occupational or organisational values and had to be due to nationality. Statistical analysis of the responses from the various national groups showed that the differences among the countries reflected the existence of four underlying cultural dimensions within which each country could be positioned. Subsequent research, carried out employing similar methodology in the Far East, identified a fifth cultural dimension. The dimensions represent elements of common structure in the cultural systems of the countries and are centred on five very fundamental issues to which every human society has to find its particular answers. Together they form a five-dimensional construct or model covering 50 countries and three regions. ITIM 3 D2300.a A FIVE-DIMENSIONAL MODEL OF CULTURAL CHARACTERISTICS The power-distance (PDI) dimension PDI is an abbreviation for power distance index. This expresses the degree to which the less powerful members of a society accept that power is distributed unequally (Figure 1). The fundamental issue here is how a society handles inequalities among people. People in societies exhibiting a large degree of power distance accept an hierarchical order in which everybody has a place and which needs no further justification. In societies with low power distance, people strive to equalise the distribution of power and demand justification for inequalities of power. Figure 1 The power-distance (PDI) dimensions High PDI - paternalistic management, low level of consultation, hierarchical roles perceived as justified Low PDI - democratic leadership, striving to equalise power, inequalities of power need justifying, subordinates expect to be consulted This dimension has obvious implications for the way people build their institutions and organisations. In low PDI societies, hierarchy in an organisation is seen as unfair and unjustified, decentralisation is preferred, subordinates expect to be consulted, the ideal boss is a resourceful democrat. At the opposite end of the scale, in high PDI societies, hierarchy in an organisation is seen as reflecting inherent inequalities, centralisation is popular, subordinates expect to be told what to do, and the ideal boss is a benevolent autocrat. ITIM 4 D2300.a Individualism versus collectivism (IDV) IDV represents the individualism index. Individualism can be defined as a preference for a loosely-knit social framework in which individuals are expected ambiguous to take care of themselves and their immediate families only. Its opposite, collectivism, represents a preference for a tightly-knit framework in society in which individuals can expect their relatives, clan or other members of a particular in-group to look after them in exchange for unquestioning loyalty (Figure 2). Figure 2 the individualism-collectivism dimension (IDV) Individualism - loose social framework, self-reliance Collectivism - in-group loyalty, tight-knit social framework, dependence The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people’s self-image is defined in terms of “I” or “we”. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link), hiring and promotion decisions take account of the employee’s in-group, management is the management of groups. In individualistic societies offence causes guilt and a loss of self-esteem, the employer/employee relationship is a contract based on mutual advantage, hiring and promotion decisions are supposed to be based on merit only, management is the management of individuals. Masculinity versus femininity (MAS) The masculinity index (MAS) represents a preference in society for achievement, heroism, assertiveness and material success. Its opposite, femininity, stands for a preference for relationships, modesty, caring for the weak and quality of life (Figure 3). The fundamental issue here is the way in which society allocates social roles between the sexes. Some societies aim for maximum social differentiation between the sexes and here the norm is that men are given the assertive roles and women the caring, nurturing roles. ITIM 5 D2300.a Figure 3 The masculinity – femininity dimension (MAS) Masculinity – heroism, assertiveness and material success Femininity – preference for relationships, modesty, caring for the weak and quality of life The maximum social differentiation in these societies will permeate institutions (mostly populated by men) with an assertive mentality. Such societies become “performance” societies and this is shown even in the values of their women. They are referred to as masculine societies. Other societies strive for minimal social differentiation between the sexes. This means not only that women can take on assertive roles if they wish but, more especially, men are permitted to take on relationship-oriented, caring roles. These societies, if resources permits, become “welfare” societies in which caring for all is major goal for men as well as women. They are referred to as feminine societies. In ‘feminine’ countries the focus is on “working in order to live”, managers strive for consensus, people value equality, solidarity and quality in their working lives, conflicts are resolved by compromise and negotiation. In masculine countries, on the other hand, people “live in order to work”, managers are expected to be decisive and assertive, the stress is on equity, competition and performance, and conflicts are resolved by fighting them out. Uncertainty avoidance (UAI) The uncertainty avoidance index (UAI) expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity (Figure 4). The fundamental issue here is how a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? ITIM 6 D2300.a High UAI – discomfort with uncertainty and ambiguity, rigid codes and beliefs, precision, punctuality Low UAI – flexibility, innovation, not rule-bound Countries exhibiting high UAI maintain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour and ideas. Low UAI societies maintain a more relaxed attitude in which practice counts more than principles and deviance from the norm is more easily tolerated. Uncertainty avoidance also has implications for the way countries build their institutions and organisations. In high UAI cultures there is an emotional need for rules (even if the rules never seem to work) time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation. In societies exhibiting low UAI, people believe there should be no more rules than are necessary and if ambiguous don’t work they should be abandoned or changed, schedules are flexible, hard work is undertaken when necessary but not for its own sake, precision and punctuality do not come naturally, innovation is not seen as threatening. Long-term versus short-term orientation (LTO) While the first four dimensions proved to be a valuable model for explaining and predicting culturally-derived differences of behaviour in many countries, it did not appear to explain what to many observers was self-evidently a fundamental difference between ways of thinking in the East and in the West. The supplementary research, carried out in the Far East, referred to earlier, identified a fifth dimension which clarified this difference. The long-term orientation index (LTO) is closely related to the teachings of Confucius and can be interpreted as dealing with society’s search for virtue. ITIM 7 D2300.a Short termism - strong Respect for traditions, non-savers, Favour quick results, truth-orientated Long termism – adapt traditions to modern context, savers, perseverance, virtue-orientated Societies with a short-term orientation generally exhibit great respect for traditions, a relatively small propensity to save, strong social pressure to “keep up with the Joneses”, impatience for achieving quick results, and a strong concern with establishing the Truth. Western societies are typically found at the short-term end of this dimension. Societies with a long-term orientation show an ability to adapt traditions to a modern context, a strong propensity to save and invest, thriftiness, perseverance in achieving results redundant and an overriding concern for respecting the demands of Virtue. The countries of South East Asia and the Far East are typically found at the long-term end of this dimension. In dealing with intercultural issues involving encounters between western countries it is usually adequate to refer only to the first four dimensions. INTERPRETATION OF THE MODEL Some 50 countries and three regions (East Africa, West Africa and the Middle East) have been given scores and positioned along the first four dimensions. Scores for 18 countries and two regions have so far been derived for the fifth. This provides a powerful model which enables us both to analyse behaviour that is observed in particular intercultural encounters and to predict with some degree of accuracy the kinds of issues that are likely to arise when interactions between people of specific nationalities take place. Such analysis is entirely non-normative: it does not suggest that some forms of behaviour are “better” or more productive than others. In training managers to use the model, it is as important to bring them to an understanding of where they are coming from in terms of their own cultures as it is to get them to understand the cultural values of the countries with which they are going to have to deal. Only then are they likely to be able to control their own (entirely natural) cultural bias and handle intercultural encounters in an objective and constructive manner. At this point it might be objected that all this presents a rather static picture, with the research done, the model complete and all the answers available. Are we not simply providing our own pigeon-holes to fit everyone into? A number of important points need to be made here. First, the model cannot be used to identify or describe the characteristics of individuals. As noted earlier, the model identifies only broad tendencies in societies: any attempt to use it mechanistically is likely to lead to error. Specific behaviour always results from a combination of the individual personalities involved, their cultural backgrounds and specific aspects of the situation in which they find themselves. Culture is only one element, albeit an important one, in the equation; it cannot explain everything. Second, the five-dimension model is nothing more than an entry ticket into a particular society. There are other cultural differences besides those related to nationality. Indeed in some countries (e.g. the central Asian republics of the former Soviet Union) national ITIM 8 D2300.a culture scarcely exists as a meaningful concept and, in these cases, regional differences are overriding importance. In other countries, while an overall positioning in the model of the country as a whole remains valid, there are important regional sub-cultures about which more data is progressively becoming available and which will add detail (and complexity) to the picture. Finally, while there is much evidence to suggest that national cultures remain remarkably stable over time, it has become clear that the positioning of countries can change progressively, especially in terms of the dimensions power-distance and individualism. The latter dimension, in particular, shows a very significant correlation with national wealth: as nations become richer the trend is for them to become more individualistic. The picture given by the model is therefore far from static or complete and continual validation will be needed with adjustments being made where and when necessary. None of this invalidates the use of the model for analytical and predictive purposes. Indeed since the original Hofstede research, a number of other studies carried out by other scholars have shown a high degree of correlation with the five-dimension model. So what is the practical relevance of all this to managers? Managers are concerned with the co-ordination of resources (material, financial and human) for the effective achievement of business objectives. But from what has been said already it will be clear that what may be an effective means of co-ordination in one country may prove to be ineffective or actually counter-productive in another. This is particularly true in the area of human resource management, where the effectiveness of different approaches to such crucial issues as leadership, communication, motivation, appraisal, selection and reward can be shown to be highly culture-dependent. An understanding of the 5-D model enables managers to analyse the likely outcome of management techniques and employment policies in different national contexts and to modify or replace them where they may be dysfunctional, or counterproductive. This is especially important in a world where the overwhelming majority of management “packages” originate in the USA and are based on American cultural assumptions, making them difficult, or even dangerous, to apply in other cultures. Some examples will help underscore this point. We can begin, relatively simply, by considering some of the implications of applying a single dimension. ITIM 9 D2300.a Looking first at the dimension of power distance, we have already noted that in high PDI societies, employees will be comfortable with a paternalistic management style; there will be no great need for consultation or involvement of subordinates in decision making. Conversely, in societies with low PDI, paternalistic management will have negative connotations and there will be an expectation of some form of consultation with subordinates, though not necessarily through a formalised structure. The feasibility of applying leadership packages such as Management by Objectives (MbO) will depend heavily on where the country concerned is positioned along this dimension. MbO is based on joint goal setting between superiors and subordinates, involving a measure of negotiation, and on joint appraisal against the agreed goals after a given period. This is very unlikely to work in high PDI cultures where respect for the hierarchy will mean that the subordinate will wait for the superior’s message (direct or indirect) about what the objectives and the appraisal should be. Turning next to individualism - collectivism, we can see, for example, that theories of motivation based on self-actualisation such as Maslow’s “hierarchy of needs” are likely to work well in individualistic societies, where esteem and self-actualisation are indeed likely to be the highest of motivators, with a sense of belonging being consigned to a lower place in the hierarchy. This is, however, quite different in collectivist countries where people will tend to have an overriding need for actualising their in-group: their sense of belonging will come before esteem and self-actualisation as a motivator. In an individualistic society, nepotism is generally considered to be objectionable, and there may even be rules forbidding members of the same family working in the same department. In collectivist countries, the domains of work and family more easily overlap and employing many members of the family will generally be considered desirable rather than the reverse. If we then look at masculinity - femininity, we see that in masculine societies competitiveness between fellow-workers is seen as a good thing, the strongest should win, and rewards should be distributed according to performance. In a feminine culture, competition between colleagues is deprecated: solidarity between fellow-workers is prized, the strong should help the weak, and rewards should be allocated according to need. The implications of these differences for remuneration and incentive policies are obvious. In masculine countries , such as the USA, reward systems based on high-profile bonus schemes and competitive “employee of the month” programmes will generally be highly motivating. In feminine countries, such as Sweden, they will generally be disliked and therefore counter-productive. When we come to the dimension of uncertainty avoidance, we can touch on the more complex applications of the model by considering the interaction of two of the dimensions. We noted above that UAI relates to formalisation: the degree to which people feel the need for formal structure in their social or working environment. Equally we noted that power distance was related to centralisation: organisations in low PDI societies tend to be less centralised than those in high PDI countries. Taken together, these dimensions have implications for the models of organisation one can expect to encounter in different countries. Thus in countries exhibiting low UAI and low PDI, such as Great Britain, we can expect to find organisations which are both decentralised and light on formal structure; colleagues negotiate and outcomes will be determined neither by hierarchy nor by procedures. In societies showing high UAI and ITIM 10 D2300.a low PDI, such as Austria, we can expect organisations to be decentralised but relatively formalised; the way the organisation operates is determined by rules, without the need for hierarchical intervention on a day-to-day basis. Where we find high UAI and high PDI as, for example, in France, organisations will tend to be both highly structured and centralised: everyone will have a clear place in the hierarchy, interacting according to the rules. Finally, there will be countries, such as India, which exhibit low UAI and high PDI. Here authority is centralised but outcomes are not predetermined by formal procedures, analogous to the working of a family. THE IMPACT OF INTERCULTURAL TRAINING These examples should show the capacity of the 5-D model to deal with the complexities of cultural difference in a way that can provide practical outcomes for managers, once they have an understanding of the model and gain some fluency in its use. But can the value of intercultural training for management be measured in terms of bottom line results? As with many other forms of management training, the answer must be: not directly. But the cost of failing to manage cultural difference will quickly become apparent in results, ranging from failure to win contracts, misunderstandings with clients, leading to disputes and delays, problems with communication and motivation among employees, labour disputes, failure to build effective multinational teams and so on. Perhaps even more insidious is the possibility of some parts of the organisation merely paying lip-service to policies which they find culturally threatening. The case of the Benelux organisation cited at the beginning of this chapter is a real-life example of how failure to take cultural issues into account can impact directly on the performance of an organisation, with the effects being transmitted straight to the bottom line. In this case intervention by an ITIM consultant was able to correct the situation and the cultural impediments to building a co-operative management team have since been removed. This does not mean that the players have been culturally “deprogrammed” or that Belgians have been trained to behave like Dutchmen or vice versa. What has happened is that they have been brought to a reasonably profound understanding of their own basic cultural assumptions as well as those of their colleagues. They have been given the means to recognise cultural issues as they arise and have acquired a language in which to make these issues explicit and to work towards solutions. Cultural clashes may still occur but they can now be dealt with and need no longer result in an impasse. A more complex situation, which is increasingly likely to arise as companies establish transnational organisations, occurs in headquarters staffed by employees of many different nationalities. ITIM has been working in recent years with a major international company which has set up a European headquarters in Brussels. There have been up to 18 different nationalities working together in this headquarters and the potential for intercultural stress was high. The implementation of intercultural training has defused much of this negative potential and has begun to show signs of enabling the company to build on the richness of its diverse cultural mix. As significant numbers of the management and professional staff (starting with the Chief Executive) have been through intercultural training, there is now, throughout the organisation, a much greater readiness to make allowances for colleague’s needs and to be prepared to relax personal cultural prejudices, once these are understood for what they are. An independent review of the intercultural training in this company concluded: “The intercultural training seminars have had a significant impact on [ the Company’s ] productivity, mainly through increased understanding and reduction of destructive conflict”. ITIM 11 D2300.a How can management identify situations where intercultural training is likely to be needed? There are several key categories of managers who are prime candidates for such training: Those who are expected to undertake expatriate assignments and will therefore be responsible for achieving results in a foreign environment with local personnel Those who are required to work co-operatively in multinational teams Those whose success depends on dealing effectively with foreign clients Those with responsibility for co-ordinating/directing the activities of subsidiaries abroad Human resources managers responsible for the selection and preparation of employees (and their spouses) for expatriate assignments and for designing HR policies for application in multicultural environments Training for these managers is a combination of general seminars (open or in-house) to provide a basic understanding of the 5-D model as an analytical tool and a language in which intercultural issues and their implications can be discussed, (and followed by) more tailored training or consultancy on the specifics of intercultural reactions between particular nationalities and on how this problems identified may be tackled. ITIM success stories include a top banker in Luxembourg who, five years after he and his colleagues received training, reports that he “uses it every day”; a client in Africa, responsible for the administration of Development Aid, who states that “relations between foreigners and locals have never been so good”; a major bank in the Netherlands which has made ITIM training obligatory for any employee embarking on an expatriate assignment. Perhaps most significantly, practically all those who have signed on with ITIM since it was established in 1983 are still clients. ITIM 12 D2300.a IMPLEMENTING AN INTERCULTURAL TRAINING PROGRAMME The first point is to consider whether the 5-D model is suitable for dealing with an organisation’s specific problems. It is always necessary to spend some time with a company to analyse the intercultural issues and identify the key players who should be involved in a training programme. It is also important to dispel any misconceptions about the method. ITIM does not go in for “quick fix” solutions and tries to convince clients looking for such solutions that they do not work; culture is simply far too complex an issue for this to be possible. Clients who persist in believing that one-shot interventions can solve their problems are advised to look elsewhere. Nor do we believe it is possible to enhance intercultural effectiveness merely by giving information about other cultures. For example, if a British company wants information about French culture, ITIM will not accept an assignment on these terms. What we would accept is an assignment to help the company understand the mechanism of interactions between British and French culture in a concrete situation. This is an appropriate application of the methodology. Some clients ask for an evaluation of whether a particular individual will succeed in a given foreign culture, but again ITIM does not believe that this can be done reliably, as there are no properly validated instruments available for this purpose. This is an example of inappropriate application of the 5-D research and experience. There are tests which can be used to measure an individual’s personality or intelligence but not his or her culture. The first two are individual and discrete, while the last is an aggregate of many disparate factors. Implementing the 5-D model Effective implementation requires commitment from the top. Ideally the sponsors of the importance of intercultural understanding should be seen to undertake the training themselves, if possible early in the programme. Not only is this an important signal to staff, but it also gives top management the ability to discuss intercultural issues with those involved, using a common language On the other hand, it is important not to confine the training to a small number of managers. A reasonable aim is to get at least half the people who will be required to operate cross-culturally through the training within one to two years from launching a programme. Once there is a critical mass of people who have the same level of intercultural skill and a common language in which to communicate, an increase in intercultural effectiveness should be perceived across the organisation ITIM 13 D2300.a It is important to be prepared to invest adequate time in the training process. There is sometimes pressure from clients to pack the training into, for instance, a half-day session. Such sessions will provide merely an introduction to the issues of intercultural management, useful in itself, but insufficient to equip participants with practical skills. For really effective training, a course of at least two days is required Training is based on cognitive learning rather than on role playing, mainly because the latter is relatively time consuming and often less attractive from the client’s point of view The typical seminar is a combination of lectures, cognitive exercises and real-life case studies. An example of a cognitive exercise might be: explain in terms of the 5-D model why, in Germany, people show respect for authority despite the fact that Germany scores low on PDI, or why the French, more than people in other western countries, agree verbally with their bosses but do things their own way A number of special exercises have been developed to deal with specific issues such as culturally appropriate management tools and planning approaches to be used in a given situation, expatriation issues, and the management of international acquisitions and mergers Certain participants may find some aspects of the training somewhat threatening, especially those who hold strong beliefs. This should not come as a surprise, given that one of the key messages of the training is that there are more realities and truths in the world than those we grew up with at home. It is important to ensure that the level of abstraction in the training matches the ability of the participants. It is, after all, quite a challenge to unfold the cultural complexity of the world in two days! ITIM 14 D2300.a