How to Make Your Company Culturally Intelligent
We all know that in a foreign culture, one of the most important skills to develop is the ability to translate, to learn to speak the new language — or at least master a few key phrases. You also need to learn to translate your behavior so you don’t end up making cultural faux pas. But one of the most critical (and also most underappreciated) aspect of translation, and the one that we both believe gets companies into the most trouble when operating globally, is the translation of corporate systems, processes, and procedures — in other words, the nuts and bolts of how corporations actually do business in today’s globalized world.
You’ve undoubtedly heard of individual people making mistakes with language or cultural rules and rituals when operating abroad, but you may not be as familiar with cultural gaffes at the organizational level, where companies fail, often mightily, to transfer the basics of their business practice into the new cultural logic of a foreign environment and end up suffering the consequences.
For example, in one case we’re familiar with, a Fortune 100 company implemented expat packages based on the number of people in the household, which meant a lower-ranking employee who was married with children would receive a larger housing allowance (and nicer home) than a higher-ranking employee who was not married or who did not have children. The logic was based on implicit assumptions about what is “fair” based on American culture for someone who is moving their family. But in hierarchical, high-power-distance markets like Asia — specifically Hong Kong, Taiwan, and Thailand — this policy created unintended conflicts among leaders and sent confusing signals to the rest of the organization regarding who was more powerful and higher-ranking within the organization.
In another case, a U.S.-led multinational attempting to align organizational structure, roles, job descriptions, and compensation packages across global markets mistakenly assumed a “one person, one role” mindset. In large markets, it’s common for one person to occupy one job function, but in smaller markets, an individual may have two or even three roles at a time, based on market needs and the amount of work required. Implementing a common structure across all markets meant adding new people and costs in some of the smaller markets, like Costa Rica and Guatemala, and requiring one person to report into multiple people at headquarters. This meant they spent more of their time and focus providing updates to multiple bosses, rather than delivering results locally. By failing to understand the financial realities of smaller markets, as well as what the business in those markets required in terms of structure, and incorporating these dynamics from the beginning of the conversation about converting to a global structure, the actions taken were not useful and did not yield positive results for the organization.
Given the critical importance of these translation efforts — and the propensity for organizations to get it wrong — what can companies do to increase the odds of success?
Make your leaders aware of cultural differences. You’d think that in today’s global economy everyone would be attuned to cultural differences — but as we’ve seen in the examples above, this is not necessarily the case when it comes to underlying processes, procedures, and systems. Just as the way for saying hello or good-bye, or exchanging business cards at a meeting differs by cultural context, so too can these critical underlying processes and procedures. Decision makers at the top of the organization must be aware of these core, underlying cultural differences as the most critical, initial step for building cultural competence and agility at the enterprise level.
Do a cultural inventory. As a company, whenever you undertake any significant, new initiative in a foreign setting, whether it’s developing an HR system, investing in a new technology platform, or scaling up operations that involves hiring new workers, make sure you filter what you’re doing through the logic of the new cultural system. Have cultural translators, people in your organization familiar with both cultures, work to identify which systems, processes, and procedures can be universally applied, and which need “tweaking,” or even more complete reimagining. Some elements may be changeable and some will not be negotiable at all — for example laws around hiring and firing and working after hours, attitudes around conflict of interest in procurement, and accounting practices — but it’s critical to recognize and take this into account when doing your cultural inventory.
Use cultural translation as an opportunity to engage and motivate local workers. When, as a company, you inevitably do need to make adjustments in your processes and procedures on a global stage, set frameworks and ground rules and let the locals work within those. By introducing flexibility and choice (within a range), you can simultaneously globalize your business and at the same time engage and motivate local partners. A good example of this comes from a Fortune100 company based in the US we’re familiar with, which realized that their policy of recognizing — and singling out — individuals for outstanding achievement and recognition didn’t work well in collectivist, group-oriented societies, where it was far more comfortable to recognize an entire group. Without the flexibility to alter recognition policies, organizations can inadvertently demotivate employees and groups without ever understanding why.
In the end, what’s most critical to recognize is that global success is the sum total of local results around the globe. And to achieve these local results, it’s essential to be flexible, thoughtful, and creative, especially around adapting organizational systems and processes.
Originally posted on Harvard Business Review