”Den Interkulturelle Leder” A short introduction to the field of Intercultural Management (ICM) Rigét 5 May 2014 Pernilla Rorso ([email protected]) creating cultural competence Pernilla Rorso itim International, MD Copenhagen Office (Currently – Ph. D. Fellow) Ph. D Fellow (Department of Economics, Business & Social Sciences, Aarhus University) M.Sc. in International Business Strategy B. Sc. in International Business Certified in Intercultural Management (ICM) Certified in Organizational Culture (OC) Created Global Virtual Management – Leading & Working at Distance Successfully© AArhus University, Denmark Copenhagen Business School, Denmark Richard Ivey School of Business, UWO, Canada Stanford University, USA 1 Going Global has Potential Problems Challenges US and European senior executives say they face when managing across different countries Changing individual behavior 69 % Cultural differences 65 % Business practice differences 52 % Headquarters too remote Labor law differences Accounting and tax differences 44 % 41 % 36 % Source: PricewaterhouseCoopers Going Global has Potential Problems Issues that causes problems between onshore and offshore workers according to 200 VP and higher-level executives from large ($1 billion+) companies: Different communication styles Different approaches to completing tasks Different attitudes towards conflict Different decision-making styles Other None, have not had any problems Source: Accenture 2 Borderline Cross-Border Merger Outcomes Deals added value 17 % Deals destroyed value 54% Deals produced no discernible difference 30 % Source: KPMG Legal Systems in the World Source: Wikipedia 3 So What is Culture... Human behavior is made up by different types of programming… Personality Inherited + Learned Learned Individual Level Collective By Group Organizational Culture National Culture Human Nature Inherited Common to all Mankind “Group”: i.e. nation, profession, organisation, family 4 Human behavior is made up by different types of programming… Organizational Culture National Culture Means Orientation vs. Goal Orientation Power Distance Internally Driven vs. Externally Driven (Customer Oriented) Individualism vs. Collectivism Easy-going vs. Strict Work Discipline Masculinity vs. Femininity Local vs. Professional Uncertainty Avoidance Open System vs. Closed System Short- vs. Long-Term Orientation Employee-Orientation vs. Work Orientation 6 Dimension Collective By Group “Group”: i.e. nation, profession, organization, family Culture is like an iceberg… Symbols Heroes Symbols Heros Rituals Values 5 Culture Symbols Heroes Rituals Values Practices Practices Symbols 6 Symbols… Heroes… Heroes are more important in some cultures! 7 Rituals… Apr 23, 2013 Koreans Slap Bill Gates for ‘Rude’ Handshake Rituals… What is the purpose of a meeting? 4 Types: A place to prepare for action! A place to come to discuss and reach a joint decision A place where senior person present decisions already made A place where well prepared experts exchange viewpoints to come to an expert decision 8 Defining Values “Broad preferences for one state of affairs over others to which strong emotions are attached” Emotions with Right - Wrong - Professor Geert Hofstede & + poles e.g.: Good - Evil Normal - Abnormal Practices: Moral - Immoral Acceptable – Unacceptable Appropriate - Inappropriate Ways of doing things Can be changed throughout life Defining Culture Two Meanings of Culture… In the narrow sense: “Civilization” (Art, Science, Education, Food…) In the broad anthropological sense: “Collective programming of the human mind” Professor Geert Hofstede family education religion worklife state 9 « We don't see things as they are, we see them as we are. » Anaïs Nin (1903 – 1977) 10 The 6-D Model© +25 years of research - Professor Geert Hofstede IBM Surveys 1967 to 1973 • 116.000 questionnaires, 72 countries, 20 languages Chinese Value Survey 1979 – Michael Harris Bond • 23 countries 6th Dimension – Michael Minkov • World Values Survey WVS Hundreds of replications, 6 major replications • 1995 - 2002 The 6-D Model© identifies cultural differences between countries across 6 dimensions 1 Power Distance Index « PDI » 2 Individualism vs. Collectivism Index « IDV » 3 Masculinity vs. Femininity Index « MAS » 4 Uncertainty Avoidance Index « UAI » 5 Short-term vs. Long-term Orientation « LTO » 6 11 PDI (Power Distance Index) Definition The extent to which the less powerful members of institutions and organizations accept and expect that power and wealth are distributed unequally. Power Distance determines who has the power to decide what; i.e. in other words, the concentration of authority. Institutions = basic elements of society such as family, school, community etc. Organizations = where people work PDI Low 0 25 PDI High 50 PDI (Power Distance Index) Communication 75 100 PDI+ PDI- Decentralized, matrix Centralized, line 12 PDI (Power Distance Index) Some Scores Low PDI Chile Jamaica 63 45 Canada France Total Check Republic Sweden 68 39 57 31 Denmark 18 0 25 Austria 11 High PDI 50 US Canada UK Quebec Germany 40 Japan Costa Rica 54 35 Argentina Australia 49 36 Mexico 81 Philippines China 94 Malaysia 80 104 75 Brazil 69 100 India 77 Russia 93 PDI (Power Distance Index) Illustration Leadership Style = Participative Management! PDI = 18 PDI = 40 Bottom-Up Informal Consultative Leadership Style = Autocratic/Paternalistic PDI = 77 13 PDI (Power Distance Index) Illustration Corruption Perceptions Index Source: DI, 2013 PDI (Power Distance Index) 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 > 100 14 IDV (Individualism vs. Collectivism Index) Definition Individualism: In individualist societies people are supposed to look after themselves and their immediate family only. Collectivism: In collectivist societies people belong to ‘in-groups’ that take care of them in exchange for loyalty, and which continue to protect them in exchange for unquestioning loyalty throughout life . IDV High Individualism IDV Low Collectivism 0 25 50 100 75 IDV (Individualism vs. Collectivism Index) Some Scores High IDV Individualistic countries Low IDV Collectivistic countries Argentina Canada Mexico Japan Czech Rep Quebec 30 Brazil 46 73 58 38 China 20 Costa Rica 15 0 Guatemala 6 25 50 Chile Malaysia Russia India Jamaica 48 26 23 39 Philippines 32 Canada Total 80 USA 91 75 Germany Denmark 67 France 74 71 100 UK Australia 90 89 15 IDV (Individualism vs. Collectivism Index) Communication Maybe… Do we have a deal? No! Yes! I hear what you say Low-Context Communication High-Context Communication IDV (Individualism / Collectivism Index) Communication styles Source: Edward T. Hall - Silent language 16 IDV (Individualism / Collectivism Index) Communication styles "While I have the highest Lowfor context regard your abilities, I regret to inform you that I am not completely satisfied with this proposal. I must ask that you reflect further and submit additional ideas on how to develop this sales program." "I can't accept this proposal as submitted, so come up with some better ideas." If a North American supervisor is unsatisfied with a subordinate's sales proposal, the response will probably be explicit and direct: A Chinese supervisor, in the same situation, Low Context might say the above: High Context IDV (Individualism vs. Collectivism Index) Face - Shame Japan’s Foreign Mister announces his resignation in a televised news conference, March 2011 17 IDV (Individualism vs. Collectivism Index) IDV: Tasks prevail over relationships COLL: Relationships prevail over tasks IDV (Individualism vs. Collectivism Index) Particularism vs. Universalism IDV = LOW IDV = 80 18 IDV (Individualism vs. Collectivism Index) Contracts IDV = 46 IDV = 91 IDV (Individualism vs.Collectivism Index) 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 19 MAS (Masculinity - Femininity Index) Definition Masculine Societies: Emphasize competition, assertiveness, toughness, material success, achievement, success, “making it in life” Feminine Societies: Emphasize cooperation, consensus, modesty, tenderness and quality of life MAS Low Feminine 0 25 MAS High Masculine 50 100 75 MAS (Masculinity - Femininity Index) Some Scores Low MAS Feminine Societies Chile Denmark 23 16 0 Finland France 43 26 25 Sweden Costa Rica 5 Norway 21 8 High MAS Masculine Societies Canada Total Philippines 52 64 Argentina India US Mexico 69 56 62 50 75 Japan 95 100 Russia Canada Brazil Jamaica 36 Quebec 49 68 Australia 45 61 China Germany UK 66 20 MAS (Masculinity - Femininity Index) Proverbs Winning isn’t the most important thing… Low MAS High MAS … it’s the only thing … participating is MAS (Masculinity - Femininity Index) Definition Bjarke Ingels: “I am not used to client meetings with lawyers present all the time [Denmark]. Over here [New York, US] there are always lawyers present at client meetings.” Source: TV2, 22 October 2011 21 MAS (Masculinity - Femininity Index) US – The Most Litigious Country in the World! MAS (Masculinity - Femininity Index) › GOLDMAN SACHS SHOCKED BY DONG - DEBATE › American investment bank was surprised by the intensity of the Danish debate on the sale of Dong. › “The debate has surprised us a lot. We have not previously seen anything similar”, says Goldman Sachs ' new director of Dong Energy. › According to Hintze, this is the first time that Goldman Sachs have experienced that a government has been busted in connection with an investment from the investment bank . 22 MAS (Masculinity vs. Femininity Index) Illustration U.S. safety rules move into Danish companies where employees no longer have to fill the cup up or walk the stairs without holding on to the banister. Source: Ritzau, 23 April 2012 Source: Ritzau, 23 April 2012 MAS (Masculinity - Femininity Index) Employee of the Month! 23 MAS (Masculinity - Femininity Index) The world legend – the famous Professor Geert Hofstede - Officially received at Copenhagen City Hall by Mayor of Culture Pia Allerslev 25 September 2013 24 MAS (Masculinity - Femininity Index) Law of Jante, (Femininity) 1. You shall not believe that you are somebody 2. You shall not believe that you are as good as we are 3. You shall not believe that you are smarter than we are 4. You shall not think that you are better than we are 5. You shall not believe that you know more than we do 6. You shall not believe that you are superior to us 7. You shall not believe that you are good enough 8. You shall not laugh at us 9. You shall not believe that anyone cares about you 10. You shall not believe that you can teach us anything MAS (Masculinity - Femininity Index) Illustration MAS = 5 MAS = 16 25 MAS (Masculinity - Femininity Index) (Tough vs. Tender Index) 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 UAI (Uncertainty Avoidance Index) Definition What is strange … might be dangerous! The extent to which people feel threatened by unknown or ambiguous situations and have created beliefs and institutions that try to avoid these. Uncertainty Avoidance determines what rules or procedures will be followed to attain desired ends; i.e. structuring of activities (formalization). Institutions and beliefs: technology, law, religion UAI Low 0 25 UAI High 50 75 100 26 UAI (Uncertainty Avoidance Index) Some Scores High UAI Societies uncomfortable with uncertainty Low UAI Societies comfortable with uncertainty Canada Quebec China India USA Australia 60 30 40 46 51 Jamaica 13 Denmark 23 0 25 Singapore 8 50 SwedenPhilippines 44 29 UK Canada 35 Total 48 Mexico 82 Japan 92 Brazil 76 75 Germany 65 Greece 112 100 Argentina Russia 95 Chile Costa Rica France 86 UAI (Uncertainty Avoidance Index) Illustration In Germany everything is forbidden unless it is allowed; i.e. high score on UAI In the UK everything is allowed unless it is forbidden; i.e. a low score on UAI In France everything is allowed, even if it is forbidden; i.e. a very high score on UAI in combination with other values 27 UAI (Uncertainty Avoidance Index) How important is it to have precise answers? Percentage in Agreeement 100 90 80 70 60 50 40 30 20 10 0 73 78 66 53 38 17 18 23 44 46 27 10 55 UAI (Uncertainty Avoidance Index) Managing International Projects Culture X (UAI-) Action B A Planning Culture Y (UAI+) 28 UAI (Uncertainty Avoidance Index) Change Management Project UAI = 86 UAI = 65 UAI = 46 UAI (Uncertainty Avoidance Index) Cultural constraints in mangement theories UAI = 70 UAI = 23 UAI = 65 29 UAI (Uncertainty Avoidance Index) UAI (Uncertainty Avoidance Index) Illustration World Top 10 - Bottled Water Consumer Countries Country France Italy Spain Belgium Germany Switzerland Austria Czech Republic Slovakia Poland Comsumption per Capita(2000)(Litres) UAI 130 115,7 93,1 84,8 74,7 68 61,2 60,4 39,6 34,6 86 75 86 94 65 58 70 74 51 93 Source: Compare Infobase Limited, 2006 30 UAI (Uncertainty Avoidance Index) Illustration UAI (Uncertainty Avoidance Index) 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 > 100 31 LTO (Short-Term vs. Long-Term Orientation Index) Definition Short-Term Oriented Societies: Exhibit a normative, short-term point of view Long -Term Oriented Societies: Exhibit a pragmatic, future-oriented perspective LTO Low Short-Term Oriented 0 25 LTO High Long-Term Oriented 50 75 100 LTO (Short Term vs. Long Term Orientation Index) Business and Way of Thinking 0 Low LTO Short-Term25Orientation 50 High LTO 75 Long-Term Orientation 100 - Only one absolute TRUTH; concern with possessing the TRUTH - No absolute truth; concern with respecting the demands of VIRTUE - If A is true, its opposite B must be false; analyze - If A is true, its opposite B can also be true; synthesize (holistic approach) -Priority is given to abstract rationality - Priority is given to common sense and circumstances, pragmatism -Why? - How, what? -Tradition - Change - Government by Law - Government by Man - Focus is on the bottom-line; importance of this year’s profits - Focus is on market position; importance of profits 10 years from now - Personal loyalties vary with business needs - Investment in lifelong pers. networks (guanxi) 32 LTO (Short-Term vs. Long-Term Orientation Index) Illustration LTO = 29 LTO = 118 LTO (Short-Term vs. Long-Term Orientation Index) Some Scores High LTO Long -Term Oriented Low LTO Short-Term Oriented Pakistan 0 France Canada Singapore 39 23 UK Belgium Norway 48 38 44 25 0 25 Spain 19 50 USA Finland 41 29 Australia Denmark 31 46 Japan 80 Brazil 65 75 India 61 South Korea 75 100 China 118 33 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 > 100 LTO (Short Term vs. Long Term Orientation Index) IVR (Indulgence vs. Restraint Index) Definition Indulgent societies: a tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun. Restrained societies: a conviction that such gratification needs to be curbed and regulated by strict norms. IVR low Restriction 0 25 IVR High Indulgence 50 75 100 34 IVR (Indulgence vs. Restraint Index) Very Happy Internal vs. External Locus of Control Leisure very important IVR (Indulgence vs. Restraint Index) High IVR Indulgence Low IVR Restriction China Russia 24 Germany France 48 40 20 0 25 Brazil 59 UK 69 50 India 26 Japan Philippines 42 Sweden 78 75 Denmark 70 USA Canada Chile 68 Mexico 97 100 Nigeria 84 Venezuela 100 Puerto Rico 90 35 IVR (Indulgence vs. Restraint Index) Illustration Is the glass half full or half empty? IVR (Indulgence vs. Restraint Index) Illustration 36 IVR (Indulgence vs. Restraint Index) Illustration IVR (Indulgence vs. Restraint Index) Illustration 37 IVR (Indulgence vs. Restraint Index) 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 > 100 CULTURAL DIMENSIONS A first-class scandal for 'Luxury Lars' Opposition leader Lars Løkke Rasmussen has used hundreds of thousands of taxpayer kroner while travelling on behalf of climate organization Lars Løkke Rasmussen, the former PM and the leader of opposition party Venstre, has come under fire after it was revealed that he has spent hundreds of thousands of taxpayer kroner by flying first-class around the world while chairing the international climate organization, Global Green Growth Institute (GGGI). Danish ministers usually travel in business class, which is far less expensive, but Rasmussen travelled on lavish first-class tickets 15 times at an average price of 64,000 kroner per ticket. Source: The Copenhagen Post, October 12, 2013 38 Key Take Aways “WHAT managers do is the same the world over…” “HOW they do it is embedded in their tradition and culture.” Peter Drucker “Culture may be a soft factor”, but it has a very hard effect on the bottom line!” Pernilla Rorso Intercultural Management is a management discipline, which is crucial to master in a global business environment. Management techniques and philosophies are culture-specific! - what is appropriate in one culture may not necessarily be appropriate in another! The profile of the successful global manger is someone, who is able to identify best practices everywhere and able to adapt them to the local context. Reward results! Not how people work! Professor Geert Hofstede 39 Disclaimer Culture is not an exact science! One can never say never! & One can never say always when it comes to culture! Be aware of the limits of your expertise 40 Q&A Pernilla Rorso itim International, Managing Director, Copenhagen Office M. Sc. International Business Strategy www.geert-hofstede.com [email protected] [email protected] creating cultural competence 41
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