Managing Cultural Diversity In A Global World*

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1. Introduction and background

For telcos with global ambitions, success in the next twenty years will stem from successful joint ventures and alliances. But while it is a simple matter to draw lines across the globe in the manner of the nineteenth century colonial powers and to devise a Concert, an Atlas, or a Unisource, there is no guarantee that such alliances will thrive - or even endure. Where once a global company such as Coca-Cola simply sold its product or imposed a taste, and multinationals geared the names or colours of identical products to the results of market research, the survival of transnational telcos will depend on flexibility in managing cultural diversity.

Primarily, this entails the successful management of a multi-cultural workforce in a global context. But it also means being able to vary services across cultures: not simple marketing ploys imposed from outside, but an understanding of how culture drives differences from within. A simple example of this is the way in which different cultures use the phone: an American walks into his appartment after a week away and switches on the answerphone; an Italian rings his mother. One requires an add-on device; the other needs single number dialling and favoured-number discounts. These differences may appear trivial, but they are profoundly culture-driven.

The development of genuinely transnational business organizations therefore requires managerial approaches and systems which allow for variations deriving from such diversity. This might be "national" cultural diversity between nations, races or ethnic groups (eg. in a two-nation joint-venture), intra-national diversity involving the range of cultures within a single nation (eg. in the USA), or internal cultural diversity where managers need to deal with foreign-owned transnational companies in their own country (eg. a British telco manager dealing with a Korean manufacturer in the UK). All this is well known, and there is indeed a burgeoning literature on the management of cultural diversity. But the problems go deeper than is often appreciated: it is not simply a matter of minding manners or learning to deal with varying attitudes to punctuality. These are the surface manifestations of much deeper differences in mental structures.

A few examples will make this clear.

# Negotiating Alliances

In a world in which cross-cultural joint ventures and alliances are essential, problems of ethics and trust will loom large. How is it possible to achieve a balance between the necessary and the contingent in business ethics, or in other words to allow for flexibility between a strong corporate ethic and the need to adapt to difficult local conditions? And how can we learn to build a lasting trust relationship with people from a different culture? How can managers going to the negotiating table be prepared for the very different styles they will face? It is not merely a question of setting bargaining ranges, toning down confrontational styles, or following pre-established rules. That is sufficient for making a deal, but not for setting up a permanent alliance. It is essential to grasp the deep structures - religious, social, ethnic and ethical - which influence the way the opposite party will reason, the way they will react to different presentational styles, what they expect and how they listen.

This requires a level of genuine understanding which goes beyond rapidly-acquired skills. Recent studies have shown how an inherent sense of cultural superiority is often enough to undermine European joint-ventures in Third World countries even when extensive training has been provided. Such "superiority" emanates from non-verbal aspects of behaviour like the tone of voice and body language, which few people other than accomplished actors are able to control. If, then, as this would suggest and has recently been asserted in telco documents on cultural diversity (eg. by BT and France Telecom), humility is a key factor, how is it possible to inculcate this quality in managers whose education has often prepared them for anything but humility?

# Human Resources

The global operator obviously needs managers capable of working globally. Some European telcos are now recruiting "non-nationals" in order to resolve their problems quickly, but how does a human resource specialist trained in his own culture, who can make a rough assessment of a candidate's capabilities in a brief interview, deal with the problems of recruiting staff in other cultures? How valid is psychological testing when applied cross-culturally? How much do most human resource managers know about other school and university systems? Suppose a German manager needs to choose between, say, a Finn, an Italian and a Portuguese. That would require an awareness not only of the very different education systems in European countries but the ways in which educational background influences patterns of thought and managerial style: how, for example, education underlies the way in which the same conflict might be addressed in France by seeking orders from a superior, in Britain by sending the people in conflict on a management course, and in Germany by employing a consultant.

Assuming for a moment that these problems can be resolved, how might the issue of dual allegiance be tackled? For the employment of local managers necessitates the creation of loyalty on their part to a distant entity with culturally diverse norms and assumptions. Even a long-term expatriate who is nominally still of the same nationality but has in fact "gone native" might respond to an order in this way: "I'm sure my local employees won't like this, so I won't tell them and try to smooth over the issue in some other way." It can be much more difficult for the locally employed manager, especially under stress.

# Everyday Work

Then there is the nitty-gritty of everyday working together, the problem of creating the rituals, the back-room humour and the "off-stage" relationships which are so vital to harmonious corporate life. Company jokes and in-group stories, for example, are notoriously difficult to translate into other cultures: what sounds laudable to a Briton can seem risible to an Italian. Companies which contrived to impose a global corporate culture, such as IBM, did not face the insidious cultural problems of a transnational organization.

Language is another problem. Although it might appear that the use of English as the common working language of the international teleco community favours native English-speakers, this can turn into a disadvantage when one of them is unaware of the problems that a regional accent or rapid speech might create, and how linguistic confidence can be perceived as a manifestation of quasi-colonial arrogance. Non-conformity with what might be termed the "industry pidgin" can also generate unexpected tensions.

Worse still, behind the words on the surface lurk centuries of cultural and ideological rivalry which has often exploded into war. At moments of strain, when a minor conflict might have irreversible consequences, simmering stereotypes and prejudices boil up. Studies of cross-cultural teams indicate that often it is the most superficially similar cultures which in the end experience the greatest traumas: while differences such as those between the US and Japan are obvious, serious problems often occur where they are least expected - say, between Britain and Denmark - and warning signals are neither perceived nor acted upon. In a world as competitive as that of the telcos will be in coming decades, nothing may be taken for granted.

2. The Way Forward

Cultural training is essential to avoid potential conflict, and to improve the disastrous failure rate of joint-ventures in the recent past. In fact, most telcos with global ambitions now provide cross-cultural training in order to create genuinely international managers. This sometimes involves in-house training, and is also provided by consultants and business schools. Yet much of this training deals with the traditional, superficial problems without seeking to explore the deep causes of underlying cultural differences. Another problem is that much of the research and background material is rapidly out-dated as the pace of change accelerates.

An innovative approach has been taken by the collaborative venture known as "Euroteam". This was started in 1991 by the five main European operators (BT, Deutsche Telekom, France Telecom, STET and Telefónica de España) with the aim of contributing by means of the organization of regular workshops and exchanges to the internationalization of telco operators. Euroteam was later expanded to include all European operators who were members of ETNO (the organization of European Telecoms Network Operators), and at present has about eleven members ranging from Finland, Norway and Denmark to Portugal. It runs a series of international workshops - hosted alternately by the members - whose focus is on Europe and Telecommunications. There is a regular programme called "Working Across Cultures", and there has been a successful pilot version of a more theoretical workshop called "Understanding Cultural Diversity" which may be run again in the future. Other programmes also include at least one session on cultural diversity. These workshops allow managers from member companies to learn and work together, and thus facilitate cross-cultural personal networking even within the ambit of fierce competition.

The problem of devising some form of training within the industry has also been recognized at the inter-governmental level, where "Cross-Cultural Training and Education" has been included among the Global Information Society projects of G-7.

3. Conclusion

No comprehensive solution to the problems of cultural diversity in the context of the telecommunications industry has yet been conceived. Indeed, there has been little specific research. Yet it is clear that preparation for the successful management of such diversity in all its ramifications will be a vital component of long-term success in the global market.

For while business is already global, management remains culture-bound.

* Reprinted by permission of the editor of MCE