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By Rick Vollmar
March 16—Being aware of cultural differences is not the same thing as knowing how to deal with them, Dean Foster, president of DFA International, told Bloomberg BNA, a theme that was repeated numerous times by numerous speakers at the 17th annual conference of the Intercultural Management Institute at American University in Washington March 10, and the facility to manage these differences often varies by country. Europeans, for example, are well aware of the differences between national cultures and often assume this knowledge is enough to enable them to deal effectively with nationals of other European countries, which often is not the case. The most adept at both understanding and adapting to cultural differences are the Japanese, Foster said, who after World War Two had to reestablish themselves in world markets whose national cultures were often radically different from their own.
Introducing a panel discussion on The Global Market Place and the Global Organization, Fanta Aw of the School of International Service at American University made the point that a business entering the international market must rethink its policies and practices, which are often culture-specific and can get in the way of successful cross-cultural operations.
Intercultural differences affect the day-to-day lives of employees posted abroad, Foster said, and intercultural competence is crucial to effective performance in international markets. Companies whose employees are well versed in intercultural competence will thrive in the international market, Foster said, while others “fade away.” The key, according to panelist Ian Oliver, director of client services for International Strategy and Implementation Consultants, is “knowing what you don't know” and filling that gap.
International ventures cost more and take longer than domestic initiatives, and roughly 30 percent of them fail, Foster said, largely because of unmet cultural challenges. In this environment, the question is not so much what it will cost to develop intercultural competence as what it will cost not to.
The average foreign assignment can cost $1 million per assignee and with a failure rate of 30 percent can represent a large potential loss for an employer. If employees have received cultural competence training, however, the failure rate drops to 6 percent. Even if employees finish their foreign assignments, if they don't know the language and customs, they are unlikely to see business opportunities. To establish effective business relationships, it is crucial to communicate in culturally appropriate ways, noted Josebe Bilbao-Henry, manager for the language and culture program at the World Bank.
Expatriates who have successful foreign assignments bring their cultural knowledge back to their companies to be shared with other employees, but only if they stay with their employers, Foster warned. Roughly 50 percent of foreign assignees leave their employer within two years of returning from a foreign assignment and take their skills to competitive companies. Retention must be a key concern during the repatriation process.
According to Bilbao-Henry, success in international business markets requires a “culturally agile team” that can think across different cultural mindsets. Culture affects all aspects of business, including decision making and the process of conducting daily business, Bilbao-Henry said, because it provides the mental framework within which individuals conduct their daily lives.
Echoing Foster, Apoorva Gandhi, vice president for cultural affairs at Marriott International, said that cultural competence provides a competitive advantage in establishing a business and cultivating a client base in the assignment country. It is important for a foreign assignee to be able to view any given situation from both his or her own cultural perspective and from the cultural perspective of the individual being dealt with.
Summing up, Foster said that the first step to cultural competence is “cultural humility” and an understanding of how one's own culture affects attitudes and perceptions. One must step back, Bilbao-Henry added, and see one's own culture in perspective and understand that it's different from but not superior to other cultures. From there, Foster said, one can analyze the differences between one's own culture and the culture of the assignment country and determine how the latter must influence one's behavior if the assignment is to be a success.
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Additional information on the Intercultural Management Institute is available here.
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