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Most chief executive officers (CEOs) consider foreign markets to be a key factor in their company’s future success. When expanding operations globally, these multinational companies face many challenges. Communication – the means of understanding and relating to each other becomes very complex in these companies due to diverse workforce with different social, cultural and educational backgrounds. Communication gaps create problems in decision-making, human resource management practices, supervisor-subordinate relationships and other critical operational areas.

When recruiting executives for international postings, although technical expertise certainly is important, it should not be the only one. Industry experience shows that expatriates fail not because of technical incompetence but because they (or their accompanying family members) have not adjusted to the foreign culture. Hence, their professional effectiveness is diminished due to culture shock or they are unable to get along with their local business associates. Thus, expatriate selection must be made on a number of criteria that go beyond technical competency and serve as effective predictors of cultural adjustment and consequently expatriate success. 

Why is cultural adjustment important? Our culture shapes the way we see the world. How we see the world shapes what we regard as proper or important and hence, how we organise our society and evaluate the propriety of actions, in everyday life, in business and maintaining law and order. Where cultural values differ, the same comment, concept, text or act may be understood completely differently. For this reason, the ability to appreciate cultural differences is essential for successful international commerce and to ensure law and order that support it.


Businesses culture killed  
Some costly examples of business failures, around the world, due to ignorance of cultural sensitivity include: 

• In Thailand, when an eye glass company attempted to sell its product using images depicting cute, little animals wearing glasses, the advertisement was rejected by the target population - reason - animals are viewed as a low form of life there.
• In India, a company used an owl as part of its promotional strategy. Though the owl is seen as a symbol of wisdom in some cultures, in India, it is believed to be a symbol of bad luck. 
• In the Japanese market, Lotus 1-2-3 spreadsheet package had to be changed due to negative feedback received. Since many Japanese did not want the entire office to know every time they made a mistake, Lotus had to modify the programme and remove all the audible beeps that sound when a user makes a mistake. 
• In the Middle East, they read from right to left, rather than from left to right. In this situation, a billboard in North America with pictures from left to right in the order of a man with a headache looking sad and in pain, a man taking a pill and a man smiling without a headache will have a totally negative advertising effect in the Middle East. 

Increasingly, CEOs believe that developing global managers must be an integral part of their long-term globalization strategic plan. This involves taking very purposeful steps to develop future executives with appropriate global perspectives and the experience to implement competitive strategies. Developing global leaders for the 21st century involves having a long-term strategy - a well-integrated system for dealing with selection, training, overseas support, inculcating cultural sensitivity, appropriate appraisal, suitable compensation packages and a deliberate process of repatriation.

Organisations and multi-national companies (MNCs) need to realize that methods adopted to motivate staff are deep rooted in their own culture. Different cultures have different styles of thinking, perceptions, learning styles, creativity stimulants and decision-making processes. Leaders need to manage multicultural teams and learn how to address these issues to make their teams productive. They should create inclusive and cohesive teams, to build on shared values and to communicate effectively with limited-English-speaking employees or business partners.

Funnily enough, either senior leaders are not clear of their changing active role in globalization or delegate part of their responsibilities to subordinates who may not have a broader vision. Generally leaders tend to see their role in defining the strategy and priorities, in clarifying the decisions taken, but for the execution they expect their line managers to take it over. Maybe that is why companies today are struggling with change fatigue? Senior leaders expect too much from line managers to implement change without appreciating and facilitating change management and cultural adaptation as a key strategic imperative. Today, leading cross cultural relationships require a firm commitment from the top management and facilitate long-term human 
resource development to cater to those challenging needs. 

MNCs are often interested in promoting their pre-established corporate culture to improve control, coordination and integration of their foreign subsidiaries. However, the biggest mistake would be to adopt a strident or aggressive tone that focuses purely on corporate goals and ignores local values. The existing values of a strong corporate culture can also be more costly (unless otherwise seamlessly integrated) when employees are required to internalize a set of values to guide their behaviours. 

In addition, it has been argued that the deployment of too many expatriates is dysfunctional to the multinational corporation as a whole and inhibits the development of the local national managers. Therefore, a long-term investment should be put in place to train a local leader. This will prevent possible threats of disengagement, regrettable departures or even value destruction of the subsidiary company. Furthermore, it will cultivate the subsidiary’s entrepreneurial culture including global vision, entrepreneurial orientation and entrepreneurial network management. Whether at the company headquarters or a global office, culture impacts performance and should be expressed by leadership, linked to business strategy, supported by performance and work systems and measured repeatedly. Because compensation is so sensitive, many companies fail to link performance and rewards with the embodiment of culture values, despite the fact that well managed cultures out-perform other companies. Culture must be measured often to capture changes in human behaviour, as well as misperceptions by management. 

The integrated systems approached adopted by companies for developing cross cultural leadership include: 1) Senior management sponsorship on change management 2) Measure high potentials’ performance in line with cultural adaptation 3) Develop pervasive mentoring relationships 4) Reinforce company values on cross cultural sensitivity. French-American Microbiologist, Environmentalist and Humanist René Dubos summed this up saying - “Human diversity makes tolerance more than a virtue; it makes it a requirement 
for survival.”  

(This is the 29th column of the leadership series by Eng. Gamini Nanda Gunawardana [BSc Eng (Hons), MBA, CEng, FIE (SL), MCS (SL), MIDPM (UK), FIAP (UK), MBCS (UK)], a Management, HR, OD and ICT Consultant, Corporate Trainer, Executive Coach, Consultant - HRD - Goodhope Asia Holdings Ltd. He can be contacted at [email protected])