The globalization of business has made it essential for many organizations to conduct their activities on an international scale. Wei-Wen Chang, a professor at National Taiwan Normal University, argues that this new reality requires the executives who oversee these organizations to navigate the complexities of multiple countries effectively. Wei-Wen says those complexities include dealing with multiple sources of sovereign authority and working with different laws and legal systems. Leaders must be able to comprehend the impact of regulations, tariffs, taxes and enforcement practices and work with the officials of host governments to enact and maintain legislation that stretches across countries and cultures. They must also operate in markets with different languages, values, cultures and social systems while overseeing both product diversification and intra-product differentiation by country.
Unfortunately, as Stewart Black, an assistant professor of business administration at Dartmouth College, points out, the skills required for these positions are not gained in the typical working career or as part of normal life for U.S. executives. Black also makes the case that these skills are not taught in the U.S. educational system.
This skill deficiency has business implications. Black, along with other experts in the field of culture and training, has conducted studies that show a relationship between failed business negotiations and differences in culture. The cost of such failures is substantial. In one article for Management Review, researchers Lennie Copeland and Lewis Griggs put the price of failed international business deals at over $2 billion annually. Mark Mendenhall, a professor at the University of Tennessee, Chattanooga, conducted research that revealed that supplying the business executives who oversee international operations with cross-cultural training decreases the cultural gap and produces more efficient cross-cultural interactions.
Accomplishing this cross-cultural education is typically addressed in one of three ways:
- Having the executive live and work in a different country
- Employing a traditional or academic approach
- A combination of the two methods
Proponents of the first technique argue that the best way to prepare executives to oversee multinational assignments is by allowing them to become expatriates and relocating them to the country where they will be doing business. Advocates for the live abroad technique point to the experiences of over 100 global executives from 15 companies and 36 countries who revealed in interviews that the differentiating factor in the cross-cultural development experience is not the lessons learned in a classroom but the experiences of working in a global capacity.
Individuals who support the academic approach point to research that suggests executive should learn the required material in a classroom environment and then be required to demonstrate mastery of global leadership competencies. They suggest that this approach be accomplished by learning global leadership skills from practitioners and professors of the vocation who both understand the concepts and demonstrate the ability to practice it.
The third approach for preparing executives for overseas assignments is perhaps best typified by the work of Teresa Palmer, who recommends a four-phase approach to cross-cultural training. In stage one, the expatriate undergoes a personality assessment to determine both the characteristics he or she lacks as well as the characteristics that will contribute to success in the assignment. The expatriate then develops a self-awareness checklist that includes preferences, likes and dislikes. In the third stage, the expatriate studies the new culture and gains awareness of his or her reaction to it. In stage four, the expatriate reviews potential adaptation strategies. In addition to the cultural training that the executive receives upon arrival, a 360-degree feedback system ensures that the training is a continuous process.
Supplying the business managers who oversee international operations with cross-cultural training decreases the cultural gap and produces more efficient cross-cultural interactions. Failure to provide such programs can have substantial financial implications in the form of failed business negotiations. Training professionals have three options for delivering this cross-cultural education. Many factors go into the decision-making process about which technique to use, including timing, budget and resources. Each of those items must be negotiated. What should not be negotiated, however, is the reality that a cross-cultural program needs to be in place.