HBR's 10 Must Reads on Managing Across Cultures (with featured article "Cultural Intelligence" by P. Christopher Earley and Elaine Mosakowski)Text

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HBR’s 10 Must Reads series is the definitive collection of ideas and best practices for aspiring and experienced leaders alike. These books offer essential reading selected from the pages of Harvard Business Review on topics critical to the success of every manager.

Titles include:

HBR’s 10 Must Reads 2015

HBR’s 10 Must Reads 2016

HBR’s 10 Must Reads on Change Management

HBR’s 10 Must Reads on Collaboration

HBR’s 10 Must Reads on Communication

HBR’s 10 Must Reads on Emotional Intelligence

HBR’s 10 Must Reads on Innovation

HBR’s 10 Must Reads on Leadership

HBR’s 10 Must Reads on Making Smart Decisions

HBR’s 10 Must Reads on Managing Across Cultures

HBR’s 10 Must Reads on Managing People

HBR’s 10 Must Reads on Managing Yourself

HBR’s 10 Must Reads on Strategic Marketing

HBR’s 10 Must Reads on Strategy

HBR’s 10 Must Reads on Teams

HBR’s 10 Must Reads: The Essentials


On Managing Across Cultures

HARVARD BUSINESS REVIEW PRESS

Boston, Massachusetts

Copyright

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Copyright 2016 Harvard Business School Publishing Corporation

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First eBook Edition: May 2016

ISBN: 978-1-63369-162-9

eISBN: 978-1-63369-163-6

Contents

Copyright

Cultural Intelligence

by P. Christopher Earley and Elaine Mosakowski

Managing Multicultural Teams

by Jeanne Brett, Kristin Behfar, and Mary C. Kern

L’Oréal Masters Multiculturalism

by Hae-Jung Hong and Yves L. Doz

Making Differences Matter: A New Paradigm for Managing Diversity

by David A. Thomas and Robin J. Ely

Navigating the Cultural Minefield

by Erin Meyer

Values in Tension: Ethics Away from Home

by Thomas Donaldson

Global Business Speaks English

by Tsedal Neeley

10 Rules for Managing Global Innovation

by Keeley Wilson and Yves L. Doz

Lost in Translation

by Fons Trompenaars and Peter Woolliams

The Right Way to Manage Expats

by J. Stewart Black and Hal B. Gregersen

About the Contributors

Index

Cultural Intelligence

by P. Christopher Earley and Elaine Mosakowski

YOU SEE THEM AT INTERNATIONAL airports like Heathrow: posters advertising the global bank HSBC that show a grasshopper and the message “USA—Pest. China—Pet. Northern Thailand—Appetizer.”

Taxonomists pinned down the scientific definition of the family Acrididae more than two centuries ago. But culture is so powerful it can affect how even a lowly insect is perceived. So it should come as no surprise that the human actions, gestures, and speech patterns a person encounters in a foreign business setting are subject to an even wider range of interpretations, including ones that can make misunderstandings likely and cooperation impossible. But occasionally an outsider has a seemingly natural ability to interpret someone’s unfamiliar and ambiguous gestures in just the way that person’s compatriots and colleagues would, even to mirror them. We call that cultural intelligence or CQ. In a world where crossing boundaries is routine, CQ becomes a vitally important aptitude and skill, and not just for international bankers and borrowers.

Companies, too, have cultures, often very distinctive; anyone who joins a new company spends the first few weeks deciphering its cultural code. Within any large company there are sparring subcultures as well: The sales force can’t talk to the engineers, and the PR people lose patience with the lawyers. Departments, divisions, professions, geographical regions—each has a constellation of manners, meanings, histories, and values that will confuse the interloper and cause him or her to stumble. Unless, that is, he or she has a high CQ.

Cultural intelligence is related to emotional intelligence, but it picks up where emotional intelligence leaves off. A person with high emotional intelligence grasps what makes us human and at the same time what makes each of us different from one another. A person with high cultural intelligence can somehow tease out of a person’s or group’s behavior those features that would be true of all people and all groups, those peculiar to this person or this group, and those that are neither universal nor idiosyncratic. The vast realm that lies between those two poles is culture.

An American expatriate manager we know had his cultural intelligence tested while serving on a design team that included two German engineers. As other team members floated their ideas, the engineers condemned them repeatedly as stunted or immature or worse. The manager concluded that Germans in general are rude and aggressive.

A modicum of cultural intelligence would have helped the American realize he was mistakenly equating the merit of an idea with the merit of the person presenting it and that the Germans were able to make a sharp distinction between the two. A manager with even subtler powers of discernment might have tried to determine how much of the two Germans’ behavior was arguably German and how much was explained by the fact that they were engineers.

An expatriate manager who was merely emotionally intelligent would probably have empathized with the team members whose ideas were being criticized, modulated his or her spontaneous reaction to the engineers’ conduct, and proposed a new style of discussion that preserved candor but spared feelings, if indeed anyone’s feelings had been hurt. But without being able to tell how much of the engineers’ behavior was idiosyncratic and how much was culturally determined, he or she would not have known how to influence their actions or how easy it would be to do that.

 

One critical element that cultural intelligence and emotional intelligence do share is, in psychologist Daniel Goleman’s words, “a propensity to suspend judgment—to think before acting.” For someone richly endowed with CQ, the suspension might take hours or days, while someone with low CQ might have to take weeks or months. In either case, it involves using your senses to register all the ways that the personalities interacting in front of you are different from those in your home culture yet similar to one another. Only when conduct you have actually observed begins to settle into patterns can you safely begin to anticipate how these people will react in the next situation. The inferences you draw in this manner will be free of the hazards of stereotyping.

Idea in Brief

In an increasingly diverse business environment, managers must be able to navigate through the thicket of habits, gestures, and assumptions that define their coworkers’ differences. Foreign cultures are everywhere—in other countries, certainly, but also in corporations, vocations, and regions. Interacting with individuals within them demands perceptiveness and adaptability. And the people who have those traits in abundance aren’t necessarily the ones who enjoy the greatest social success in familiar settings. Cultural intelligence, or CQ, is the ability to make sense of unfamiliar contexts and then blend in. It has three components—the cognitive, the physical, and the emotional/motivational. While it shares many of the properties of emotional intelligence, CQ goes one step further by equipping a person to distinguish behaviors produced by the culture in question from behaviors that are peculiar to particular individuals and those found in all human beings. In their surveys of 2,000 managers in 60 countries, the authors found that most managers are not equally strong in all three of these areas of cultural intelligence. The authors have devised tools that show how to identify one’s strengths, and they have developed training techniques to help people overcome weaknesses. They conclude that anyone reasonably alert, motivated, and poised can attain an acceptable CQ.

The people who are socially the most successful among their peers often have the greatest difficulty making sense of, and then being accepted by, cultural strangers. Those who fully embody the habits and norms of their native culture may be the most alien when they enter a culture not their own. Sometimes, people who are somewhat detached from their own culture can more easily adopt the mores and even the body language of an unfamiliar host. They’re used to being observers and making a conscious effort to fit in.

Although some aspects of cultural intelligence are innate, anyone reasonably alert, motivated, and poised can attain an acceptable level of cultural intelligence, as we have learned from surveying 2,000 managers in 60 countries and training many others. Given the number of cross-functional assignments, job transfers, new employers, and distant postings most corporate managers are likely to experience in the course of a career, low CQ can turn out to be an inherent disadvantage.

The Three Sources of Cultural Intelligence

Can it really be that some managers are socially intelligent in their own settings but ineffective in culturally novel ones? The experience of Peter, a sales manager at a California medical devices group acquired by Eli Lilly Pharmaceuticals, is not unusual. At the devices company, the atmosphere had been mercenary and competitive; the best-performing employees could make as much in performance bonuses as in salary. Senior managers hounded unproductive salespeople to perform better.

At Lilly’s Indianapolis headquarters, to which Peter was transferred, the sales staff received bonuses that accounted for only a small percentage of total compensation. Furthermore, criticism was restrained and confrontation kept to a minimum. To motivate people, Lilly management encouraged them. Peter commented, “Back in L.A., I knew how to handle myself and how to manage my sales team. I’d push them and confront them if they weren’t performing, and they’d respond. If you look at my evaluations, you’ll see that I was very successful and people respected me. Here in Indianapolis, they don’t like my style, and they seem to avoid the challenges that I put to them. I just can’t seem to get things done as well here as I did in California.”

Peter’s problem was threefold. First, he didn’t comprehend how much the landscape had changed. Second, he was unable to make his behavior consistent with that of everyone around him. And third, when he recognized that the arrangement wasn’t working, he became disheartened.

Peter’s three difficulties correspond to the three components of cultural intelligence: the cognitive; the physical; and the emotional/motivational. Cultural intelligence resides in the body and the heart, as well as the head. Although most managers are not equally strong in all three areas, each faculty is seriously hampered without the other two.

Head

Rote learning about the beliefs, customs, and taboos of foreign cultures, the approach corporate training programs tend to favor, will never prepare a person for every situation that arises, nor will it prevent terrible gaffes. However, inquiring about the meaning of some custom will often prove unavailing because natives may be reticent about explaining themselves to strangers, or they may have little practice looking at their own culture analytically.

Instead, a newcomer needs to devise what we call learning strategies. Although most people find it difficult to discover a point of entry into alien cultures, whose very coherence can make them seem like separate, parallel worlds, an individual with high cognitive CQ notices clues to a culture’s shared understandings. These can appear in any form and any context but somehow indicate a line of interpretation worth pursuing.

An Irish manager at an international advertising firm was working with a new client, a German construction and engineering company. Devin’s experience with executives in the German retail clothing industry was that they were reasonably flexible about deadlines and receptive to highly imaginative proposals for an advertising campaign. He had also worked with executives of a British construction and engineering company, whom he found to be strict about deadlines and intent on a media campaign that stressed the firm’s technical expertise and the cost savings it offered.

Devin was unsure how to proceed. Should he assume that the German construction company would take after the German clothing retailer or, instead, the British construction company? He resolved to observe the new client’s representative closely and draw general conclusions about the firm and its culture from his behavior, just as he had done in the other two cases. Unfortunately, the client sent a new representative to every meeting. Many came from different business units and had grown up in different countries. Instead of equating the first representative’s behavior with the client’s corporate culture, Devin looked for consistencies in the various individuals’ traits. Eventually he determined that they were all punctual, deadline-oriented, and tolerant of unconventional advertising messages. From that, he was able to infer much about the character of their employer.

Body

You will not disarm your foreign hosts, guests, or colleagues simply by showing you understand their culture; your actions and demeanor must prove that you have already to some extent entered their world. Whether it’s the way you shake hands or order a coffee, evidence of an ability to mirror the customs and gestures of the people around you will prove that you esteem them well enough to want to be like them. By adopting people’s habits and mannerisms, you eventually come to understand in the most elemental way what it is like to be them. They, in turn, become more trusting and open. University of Michigan professor Jeffrey Sanchez-Burks’s research on cultural barriers in business found that job candidates who adopted some of the mannerisms of recruiters with cultural backgrounds different from their own were more likely to be made an offer.

This won’t happen if a person suffers from a deep-seated reservation about the called-for behavior or lacks the physical poise to pull it off. Henri, a French manager at Aegis, a media corporation, followed the national custom of greeting his female clients with a hug and a kiss on both cheeks. Although Melanie, a British aerospace manager, understood that in France such familiarity was de rigueur in a professional setting, she couldn’t suppress her discomfort when it happened to her, and she recoiled. Inability to receive and reciprocate gestures that are culturally characteristic reflects a low level of cultural intelligence’s physical component.

In another instance, a Hispanic community leader in Los Angeles and an Anglo-American businessman fell into conversation at a charity event. As the former moved closer, the latter backed away. It took nearly 30 minutes of waltzing around the room for the community leader to realize that “Anglos” were not comfortable standing in such close physical proximity.

Heart

Adapting to a new culture involves overcoming obstacles and setbacks. People can do that only if they believe in their own efficacy. If they persevered in the face of challenging situations in the past, their confidence grew. Confidence is always rooted in mastery of a particular task or set of circumstances.

A person who doesn’t believe herself capable of understanding people from unfamiliar cultures will often give up after her efforts meet with hostility or incomprehension. By contrast, a person with high motivation will, upon confronting obstacles, setbacks, or even failure, reengage with greater vigor. To stay motivated, highly efficacious people do not depend on obtaining rewards, which may be unconventional or long delayed.

Hyong Moon had experience leading racially mixed teams of designers at GM, but when he headed up a product design and development team that included representatives from the sales, production, marketing, R&D, engineering, and finance departments, things did not go smoothly. The sales manager, for example, objected to the safety engineer’s attempt to add features such as side-impact air bags because they would boost the car’s price excessively. The conflict became so intense and so public that a senior manager had to intervene. Although many managers would have felt chastened after that, Moon struggled even harder to gain control, which he eventually did by convincing the sales manager that the air bags could make the car more marketable. Although he had no experience with cross-functional teams, his successes with single-function teams had given him the confidence to persevere. He commented, “I’d seen these types of disagreements in other teams, and I’d been able to help team members overcome their differences, so I knew I could do it again.”

How Head, Body, and Heart Work Together

At the end of 1997, U.S.-based Merrill Lynch acquired UK-based Mercury Asset Management. At the time of the merger, Mercury was a decorous, understated, hierarchical company known for doing business in the manner of an earlier generation. Merrill, by contrast, was informal, fast-paced, aggressive, and entrepreneurial. Both companies had employees of many nationalities. Visiting Mercury about six months after the merger announcement, we were greeted by Chris, a Mercury personnel manager dressed in khakis and a knit shirt. Surprised by the deviation from his usual uniform of gray or navy pinstripes, we asked him what had happened. He told us that Merrill had instituted casual Fridays in its own offices and then extended the policy on a volunteer basis to its UK sites.

Diagnosing Your Cultural Intelligence

THESE STATEMENTS REFLECT DIFFERENT facets of cultural intelligence. For each set, add up your scores and divide by four to produce an average. Our work with large groups of managers shows that for purposes of your own development, it is most useful to think about your three scores in comparison to one another. Generally, an average of less than 3 would indicate an area calling for improvement, while an average of greater than 4.5 reflects a true CQ strength.

 

Rate the extent to which you agree with each statement, using the scale:

1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree.


______Before I interact with people from a new culture, I ask myself what I hope to achieve.
______If I encounter something unexpected while working in a new culture, I use this experience to figure out new ways to approach other cultures in the future.
______I plan how I’m going to relate to people from a different culture before I meet them.
+ ______When I come into a new cultural situation, I can immediately sense whether something is going well or something is wrong.
Total______ Total ÷ 4 = Cognitive CQ
______It’s easy for me to change my body language (for example, eye contact or posture) to suit people from a different culture.
______I can alter my expression when a cultural encounter requires it.
______I modify my speech style (for example, accent or tone) to suit people from a different culture.
+ ______I easily change the way I act when a cross-cultural encounter seems to require it.
Total______ Total ÷ 4 = Physical CQ
______I have confidence that I can deal well with people from a different culture.
______I am certain that I can befriend people whose cultural backgrounds are different from mine.
______I can adapt to the lifestyle of a different culture with relative ease.
+ ______I am confident that I can deal with a cultural situation that’s unfamiliar.
Total______ Total ÷ 4 = Emotional/motivational CQ

Chris understood the policy as Merrill’s attempt to reduce hierarchical distinctions both within and between the companies. The intention, he thought, was to draw the two enterprises closer together. Chris also identified a liking for casual dress as probably an American cultural trait.

Not all Mercury managers were receptive to the change, however. Some went along with casual Fridays for a few weeks, then gave up. Others never doffed their more formal attire, viewing the new policy as a victory of carelessness over prudence and an attempt by Merrill to impose its identity on Mercury, whose professional dignity would suffer as a result. In short, the Mercury resisters did not understand the impulse behind the change (head); they could not bring themselves to alter their appearance (body); and they had been in the Mercury environment for so long that they lacked the motivation (heart) to see the experiment through. To put it even more simply, they dreaded being mistaken for Merrill executives.

How would you behave in a similar situation? The sidebar “Diagnosing Your Cultural Intelligence” allows you to assess the three facets of your own cultural intelligence and learn where your relative strengths and weaknesses lie. Attaining a high absolute score is not the objective.