Mind the Culture Gap

By Adrienne Fox Jun 17, 2013
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Despite evidence that cultural awareness and preparation can improve the success of cross-border ventures, many international companies still fall short in developing their employees’ global competencies. Nearly half (47 percent) of 572 executives in more than 40 countries said their companies do not offer enough training to hone their employees’ language and communication skills to “address the root causes of misunderstandings,” according to the Economist Intelligence Unit’s 2012 Competing Across Borders: How Cultural and Communications Barriers Affect Business survey.

Respondents cited “differences in cultural traditions” (51 percent) and “different workplace norms” (49 percent) as the greatest threats to the smooth functioning of cross-border relationships. An overwhelming majority believe that an improvement in cross-border communications with customers and colleagues would have a beneficial impact on financial indicators, such as profit (88 percent), revenue (89 percent) and market share (86 percent).

Companies have known from decades of research that approximately 70 percent of cross-cultural ventures fail because of cultural differences, said Mercedes Naficy D’Angelo, director of business development at Cultural Awareness International (CAI) in Morristown, N.J.

This failure rate has remained unchanged even though many global companies provide some kind of cultural training, she added. Timing, scope and sustainability of the training can make a difference.

Timing

In D’Angelo’s experience, most companies seek her organization’s advice and intervention only after cultural issues arise in a cross-border venture or within a multicultural team.

“Cultural issues need to be considered and developed before expansion,” she emphasized. “I’m amazed when I hear that because someone has traveled on business to China seven times, he doesn’t need cultural training. My response is that he should have had this training before those seven trips because he’s probably made costly mistakes he’s not even aware of.”

Costly Misunderstandings

To the best of your knowledge, have communication misunderstandings or problems ever stood in the way of a major cross-border transaction (e.g., sale, contract with a supplier, merger, acquisition, foreign direct investment)?

(% respondents)

Yes, it has happened several times, and we have suffered financially as a result.

6%

Yes, it has happened a few times, and we have incurred some financial setbacks as a result.

43%

No, it has never happened to my knowledge.

38%

Don’t know/not applicable.

13%

Source: Economist Intelligence Unit’s 2012 Competing Across Borders: How Cultural and Communications Barriers Affect Business.

Vicki Flier Hudson, chief collaboration officer at Highroad Global Services, a cross-cultural training firm in Atlanta, said assessment tools, such as the Intercultural Development Inventory, can measure an expatriate’s cultural expertise and identify gaps. “Most people overestimate their intercultural competence, and a scientific assessment tool can gauge objectively what training the expatriate needs.”

“Just because someone has traveled extensively or speaks another language or has successfully completed several expatriate assignments doesn’t mean he has the right competencies for this particular assignment,” she said. “The analogy I use is, just because someone can play one song on the guitar doesn’t mean he can play every song on the guitar.”

Flier Hudson emphasized that these tests should be administered well before the worker’s departure date to accommodate the training needs and because stress can affect the results.

Being proactive with cultural training can make a difference of years. “Projects take three to five times longer in other countries,” said D’Angelo. “Without cultural training, the duration of the project is on the higher end of the estimate. With cultural training, the project will still take longer than what we are accustomed to in the United States, but it will be reduced to the smallest duration possible.”

Three years ago, Anadarko Petroleum Corp., an oil and natural gas firm based outside of Houston, sought the CAI’s help in preparing for an opportunity in Mozambique, Africa. Before the firm’s first meeting with government officials, the CAI arranged for country experts to coach and train Anadarko’s geoscientists, executives, salespeople and anyone else who would be working on the project.

Two years later, in December 2012, Anadarko announced plans to build the world’s second-largest liquefied natural gas plant, in partnership with the Mozambique government and other international companies. In preparation, the firm is developing cross-cultural training for Mozambicans hired for the project. Anadarko takes this proactive approach with every new market it enters, said D’Angelo.

Loomis, Sayles & Co., an investment management company based in Boston, announced the opening of two global offices (London and Singapore) in March 2012. But that was a year after the CAI began cross-cultural training.

“Loomis isn’t waiting until there are issues to do the training,” said D’Angelo. “That’s HR’s job to alert executives that this training is necessary to do before the company expands to a particular country.”

Even though they recognized the benefit of being proactive, “executives weren’t convinced that they needed any training for the United Kingdom because, how different could it be? They were stunned at how different the two cultures are,” D’Angelo recalled.

Scope

At both Loomis, Sayles & Co. and Anadarko, global competency training doesn’t stop with expatriates; it’s extended to managers at headquarters and host-country staff. At some companies all staff members receive cultural training.

“Traditionally, companies have provided cross-cultural training to a small subset of their talent—expatriates,” D’Angelo explained. “For years the expats have carried the burden of cultural competency, and no one else has bothered to develop it. But in this ‘flatter world,’ everyone needs global competencies no matter where they work or at what level or what their tasks are.”

Indeed, Flier Hudson has found herself ditching her general training agenda in favor of more specific techniques. “In the past two years I’ve noticed that more corporate employees have direct experience working on global teams or supporting overseas projects, and they come to the general training with real challenges that they need addressed.”

General training is still useful, she said, but HR should communicate that this is the beginning of the journey and more specific training will be provided based on business and employee needs.

“You have to align the training appropriately to the recipient’s needs,” said D’Angelo. “The receptionist may only need one two-hour etiquette e-learning course. If the organization is expanding to one country, then the training could be narrowed down to that country.”

She recommends that HR practitioners identify the specific needs of each population in the workforce to determine the medium of the training, the content and the time commitments. “You can find the solution that best matches each type at the most effective cost.”

Boston Scientific, a worldwide medical-device company based in Natick, Mass., with 24,000 employees in 40 countries, brought in the CAI to replace its unsuccessful e-learning cross-cultural program, which was used infrequently. “On its own, e-learning can’t answer a user’s specific questions,” D’Angelo observed. “It can’t address the user’s unique challenges. It also can’t create a development plan after the session for the user.”

However, e-learning does provide a consistent overview of issues that a user can review when necessary. The CAI introduced a one-on-one coaching program conducted via phone or videoconferencing in conjunction with an e-learning program.

After the employee completes the e-learning session, a CAI coach speaks with him about the lesson, answering questions and developing strategies to overcome the participant’s specific challenges.

The coaching sessions cost only marginally more than the e-learning sessions, D’Angelo said.

Companies are also expanding cross-cultural training to include host-country staff, as Anadarko is planning in Mozambique. “In the host country, cultural training for the expatriates’ direct reports is valuable so that the employees understand what it’s like to work for an American supervisor or a German supervisor or a Brazilian supervisor,” said D’Angelo. “Keep in mind that the local team the expatriate is managing also could be multinational. In China it is becoming more common to manage a team of Chinese, Taiwanese, Japanese and Filipino nationals.”

Regardless of the home-country headquarters, we are all global players. HR professionals need to develop a global mindset among themselves, their leaders, managers and employees. That requires a systemic and thoughtful talent development strategy that is tailored to each person’s job and duties.

Sustainability

One mistake D’Angelo said companies make is to offer cultural training to an expatriate and then never follow up. “Some argue that the best time for the training is after the expat has been on the job for six months or longer,” she said. “You can’t predict every issue that is going to arise, and you want to provide specific coaching for the expatriate once he’s there.”

Flier Hudson, who coaches expatriates while they’re on assignment, said many are more willing to share specific struggles with her than with their managers or HR. “For fear of being nicked on their performance review or being pulled from the assignment, they confide in us instead.”

Expats go through a lot of different stages during an assignment—emotionally, psychologically—around cultural adjustment. The best combination is to do training before and during the assignment, Flier Hudson suggested.

To make sure people are leveraging the training and the experience, D’Angelo said managers should measure success, just as they do project outcomes. Add cross-cultural communication and understanding to the expatriate’s project goals and performance review.

Repatriation is another way to sustain cross-cultural skills for the returning expatriate. In 2009, Boston Scientific implemented repatriation training that identifies the skills gained while on assignment and ways to use those skills in the home country. The repatriated employee’s manager is measured on how well those skills are applied in the new role. From 2009 to 2012, turnover of returning expatriates dropped from 11 percent to 2 percent.

“Cultural competency is not event-based; it’s a process. And for most people, it’s a lifelong process,” said D’Angelo. “You have to make an effort to make it sustainable, and that's up to HR. Cultural training needs to be a part of the project outcomes. If this is measured, it will be sustained.”

Adrienne Fox, a freelance writer in Alexandria, Va., is a contributing editor for HR Magazine.

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