- Spring 2006

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Cross Cultural Management

Everyone has heard some-thing about cross-cultural management, but many dismiss it as no more than a passing fad, as just another set of useless tips on doing business abroad. It’s true that these management fads are a boom industry and many of the handbooks are at best merely entertaining, and at worst downright useless.

After all, a career-minded person is neither an ethnologist studying lost civilizations nor a tourist who is into folklore: you are a business person with one mission — to develop your enterprise; or at least to find a job in a good company.

Does anyone really care if a business card was given out from the ‘wrong’ hand or if a business partner takes off his jacket during negotiations? On the face of it, it’s not worth bothering about such petty things. Business is business after all. A Big Mac is a Big Mac, whether bought in New York, Peking, Paris or Moscow. Or is it? The burger may be the same, but the environment is very different here, and incidentally, whoever saw kvas on the menu at McDonald’s? So, there are local differences and they do actually count.

But count for what? Well, primarilyfor business success. Of course, a company doesn’t necessarily need a marketing department, HR management, a training policy and corporate canteen to make big money. But all these things can give a company the edge over the ones that don’t, and the reason why HR management, a training policy and the like are now common to all large companies in the West is first and foremost because they save money in the long run. But of course, a lot of things that are accepted practice in the West are still a novelty in Russia. Is there really a place for cross-cultural management here?

Let’s say a local branch of a multinational company is doing well, with 20 percent annual growth, is hiring busloads of new employees and has every reason to feel confident about its future. Yet in spite of all this it could still have a higher turnover rate than any other local subsidiary. Operating costs could still be sky-high, even though the company iswell-established. However good the planning, there is still a nasty feeling at the end of the day that management isn’t quite managing to get the message across to its employees.

Actually, this is quite normal — it is the result of a natural discrepancy between two different corporate cultural identities. In other words, the local employees do not share management’s understanding — which comes to them as second nature — of what a company should be. And this is where cross-cultural management comes in.

Each country has differences. Even a multinational corporation is influenced by the corporate culture in the company where its headquarters is located, except for the very few truly trans-national companies. Toyota, Daimler Chrysler, Renault and Ford are all major players in the automotive world, yet each one has its distinct style of working. Based on academic research, cross-cultural management theories help categorize the peculiarities of cultures, and consequently the peculiarities of the companies. The seven dimensions defined by cross-cultural management specialist Fons Trompenaars help to predict how a local business partner might behave during negotiations or simply on a day-to-day basis.

Although this will not be prescribed or defined as such anywhere, an American company’s way of conducting business is influenced by what cross-cultural management specialists call the ‘guided missile’ culture: It is task and project-orientated and the results are the first and last goals. Russia, on the other hand, is sometimes associated with a corporate culture dubbed the ‘Eiffel Tower’ culture (nothing to do with the French, incidentally). This means that a company is tall, strong, task-orientated and extremelyhierarchical. Or else it is associated with a ‘Family’ corporate culture — organic, people orientated and with no precise task assigned to individuals. Therefore, it is more than likely that Russian employees, however hard they try, will run into problems when trying to understand a foreign company’s ‘guided missile’ management from the point of view of someone used to working in an environment with an ‘Eiffel Tower’ or ‘Family’ culture.

But of course, culture is a very broad concept and needs to be pinned down. Culture has three layers. The outer one consists of artifacts, things everyone can take in at a first glance — dress, gestures and so on. The meanings, while not always immediately obvious, are not too difficult to decipher, once you know the key.To take examples drawn from Russia, bouquets of an even number of flowers are only given at funerals, it’s considered bad luck to shake hands across a threshold, whistling indoors is discouraged as it is popularly believed to make all your money disappear, and so on.

The second layer consists of norms and values. A norm is a form of behavior accepted by a group. For instance, we expect presents for our birthday and if nobody brings any gifts to your birthday party you might feel insulted. But do we open the package in front of the guest or later? In Russia, people will usually wait until later. So the accepted norm depends on the culture you represent. Values are types of behavior that are expected from a whole group. In many cultures people are valued for always arriving at a meeting or delivering a job on time, but many Westerners working in Russia quickly notice that deadlines tend to be regarded as fairly elastic.

Deeper down is the core center, the very essence of the culture. For instance, Americans are very fond of contractual relationships; being a plumber is nothing to be ashamed of, you are just a contractor. You deliver a service and you are paid for it. Perhaps it all stems from the veryfounding document of the country, the Declaration of Independence. In Russia, such a document does not exist. Due to climatic and political reasons, the Russian peasant had to work hard just to survive and was thrown back on his own resources. Therefore, when a deal is too easy, a Russian may regard it with suspicion.

Core beliefs also deal with how people treat their environment. Russia is vast and rich in virtually all natural resources. For instance, while leaving a tap running while brushing your teeth would be regarded as terribly wasteful in Holland, where natural resources are at a premium, in Russia such apparently wasteful behavior is a way of life.

However trifling these examples may seem at first sight, they have a direct bearing on foreign companies working in Russia. A Russian candidate needs to be aware that a company from Germany, the United States, France or South Korea is going to be very different in terms of hiring procedures, promotions, training and, of course, corporate culture. So check your potential employer’s web site and don’t hesitate to contact them to ask expect CVs to be written or how interviews are conducted. Some companies have a policy of not asking questions about your private life, while others will actually be interested to know what type of person you are outside work.

And, of course, it pays just as much for employers to know as much as possible about the staff they plan to take on. Our research has shown that the stereotype of Russians as collectivistic falls flat, at least in the business sphere. No one expects anything from the group or takes responsibility for other people in it. There is barely any sense of ‘working for the community,’ and shame and dishonor do not exist in Russian business culture.

Yet Russian leaders are extremely particularistic. This means that interpersonal relationships are stronger than any rules or laws. No surprises here, perhaps, for anyone used to doing business in Russia, but the combination of these two dimensions is problematic: societies are usually either individualistic or universalistic (where the focus on the individual is balanced by clear rules and laws), or, collectivistic and particularistic (where social pressure balances the strength of the connections). Of course, many countries are somewhere in between. But the paradox of Russia (individualistic and particularistic) means that business leaders rely on connections without feeling restricted by ‘golden rules’ of behavior or even the law. It is the individuals with whom you deal who set those limits, and what might sound great in theory often will work against you.

So the value of cross-cultural management is in helping companies to be more aware of these hidden differences in order to work better together and understand better where everyone is heading. If any of the examples above seem oddly reminiscent of familiar, everyday frustrations to a foreign employer, then cross-cultural management, with a good dose of openmindedness, can provide the right professional answers, or at the very least provide a better understanding of the people you work with and the things about them that cannot be changed. Likewise, in order to be able to reconcile the differences between cultures, you first need to be more aware of what constitutes your own.

by Jerome Dumetz,
International Graduate Programs Coordinator, Plekhanov Russian Academy of Economics; Visiting Lecturer, American Institute of Business and Economics, Mirbis and Essec Business Schools.

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