Understanding Foreign Culture Can Boost Productivity

A multinational corporation’s managers—at an overseas operation or at the firm’s headquarters—who learn the details of the local cultures where work is being performed will likely have a more productive workforce, says an intercultural expert.

Most people who are new to a culture—including a multinational organization’s expatriate managers—and who remain unaware of a culture’s customs and practices will find that such cultural unawareness will have an impact on an international operation’s productivity, Dean Foster, president of Dean Foster Associates of Brooklyn, N.Y., a consultancy focused on intercultural business issues, told attendees of the Global Workforce Symposium held Oct. 30, 2008, in Washington, D.C.

Cultural differences are usually rooted in different world views, and foreigners to a culture usually do not realize that maintaining a world view dramatically different of that of a foreign enterprise’s workforce will likely have an adverse impact on productivity, he said. When a global company’s managers who deal with the staff of a foreign enterprise remain culturally unaware, those managers will not understand that a culture is like an iceberg; 90 percent of a nation’s culture is submerged and unseen, while the 10 percent of culture that is visible usually is the least important part, he added.

In addition, the HR departments of leading multinational corporations are aware of the need for managers to possess multicultural skills, says a survey of 100 senior human resource managers conducted by ORC Worldwide, a global HR consultancy, and RW-3 LLC, an intercultural trainer, issued Nov. 17, 2008. The survey report—The Importance of Cultural Skills in Senior Managers—says 81 percent of HR departments believe that global and multicultural experience are crucial for leading international organizations.

Shared Cultural Understanding

Multinational corporations seeking to become transnational organizations need to understand the cultures of their overseas operations and that such cultural understanding is not limited to the expatriate managers at the site. It is needed by managers who remain at the headquarters as well, Foster said. The goal of transnational organizations is to diminish headquarters control of overseas operations, he said. “The hallmark of a truly global organization is [that] headquarters becomes more and more invisible,” he added. The role of a global organization’s headquarters is to become “a broker of best practices” to all the overseas operations, he said.

Traditionally, the way multinational corporations share best practices with an overseas operation is for headquarters to tell overseas operations “this is the best way to manage employees, and to do it that way everywhere else,” Foster said. However, transnational organizations realize that imposing the company’s way of doing things on an overseas operation is not an effective practice, he said. Practices that are gaining acceptance among transnational organizations have the headquarters develop a global strategy that allows for the implementation of corporate policies and employee management based on local tactics, he said. Such global strategies allow for headquarters practices to “be interpreted and done differently at each location,” he said.

Yet, transnational organizations attempting to share global strategies collected from some of its foreign operations with other foreign operations face challenges such as time, language and cultural differences, Foster said. Multinational organizations that have adopted a “24/7 approach” (meaning that a multinational corporation has acquired or established enough foreign enterprises that the company operates 24 hours a day, seven-days per week), will find that an employee is going to be inconvenienced at some time, he said. Headquarters staffers who are aware of overseas location time differences and who practice “time-zone management” not only reduce the inconvenience to employees but also show that an effort is being made to bridge that gap, he said.

However, while it is a positive strategy for a company’s headquarters staff to practice time-zone management when dealing with overseas’ employees, the headquarters staff needs to avoid becoming overly dependent on technology as a means to bridging the time differences, Foster said. Should a company’s headquarters staff become too dependent on technology to communicate with overseas employees, the “high touch” of human communication could be lost, and that could impact headquarters staffers’ cultural understanding and their human relationships with foreign workers, he said.

Building Relationships

When establishing a relationship with an overseas operation’s workers, multinational and transnational organizations need to understand that the values and customs practiced by the local employees are going to be present at the workplace, Foster said. “There are cultures that value individual action, while others value consensus,” he said. A location where the workers are from a mostly consensus-oriented culture is going to impact how decisions are made, he said. Before any action is taken on a problem, the managers leading an organization should ensure that the local workers agree with the decision, he added. Conversely, managers operating in an individualist culture will often make decisions without the need to build a consensus among the staff, he said.

In addition, just as culture can impact decision making on a project, culture can impact when to start work on a project, Foster said. There are cultures that will direct staff to begin work on a project and then hold some type of celebration once the project is complete, while other cultures will hold the celebration before work begins as a way to strengthen the staff’s resolve for the project, he said. The HR departments of multinational corporations might have to deal with employees from both extremes, and it will require a high comfort level of professional trust and personal knowledge to be successful with either, he said.

J.J. Smith is an online editor/manager for SHRM.

Related Resource:

The Importance of Cultural Skills in Senior Managers