The failure of international projects causes companies enormous costs every year, in some cases even running into billions. The question of why arises. Are the causes really bureaucratic hurdles and poor planning, as is usually cited, or can the answer also be found in the lack of recognition of cultural differences and therefore a lack of intercultural competence?
The challenge of foreign investment
For German companies, foreign markets in particular have offered the greatest growth potential in recent years. In 2016, 47% of German industrial companies stated that they were investing abroad (see DIHK n.d.; n.p.). In general, cross-border business activities can be seen as a driver of the inexorably advancing globalization process, the consequence of which is the increasing internationalization of cultural and economic areas. This means that global thinking and action are increasingly becoming buzzwords in business and politics (cf. Thomas 2003: 15).
The success of cross-border projects is particularly dependent on the right personnel management. It is necessary to react to the dynamic developments in the work areas and the resulting changing demands on employees (cf. Ringwald 2011: 403). In addition to the right products, companies that want to be successful in the long term need capable staff. In addition to professional, social, individual and strategic skills, the intercultural competence of the applicant should also be considered when recruiting new employees (cf. Kinast/Thomas 2003: 245). Behavioral characteristics such as: Openness, empathy, tolerance of ambiguity and cultural sensitivity, which play a major role in connection with intercultural action competence, can be studied and evaluated (cf. Kinast 2003: 168 f.). There are figures circulating that put the failure rate of international projects at 40 to 70 percent. With regard to the drop-out rate of specialists and managers sent abroad, the figure is said to be between 10 and 40 percent, and far higher in the case of developing countries. It is extremely difficult to provide exact figures, as companies tend to keep a low profile in connection with these failures (cf. Kinast/Thomas 2003: 243). As mentioned at the beginning, bureaucratic hurdles, national legislation and poor planning are often cited as reasons for failures in international projects. However, there is a suspicion that not enough attention has been paid to one factor: culture and the lack of intercultural competence of internationally active players.
Intercultural competence – a criterion for global success
Modern managers can be seen as network architects in an increasingly globalized business world. In addition to professional and social competence, intercultural competence is therefore increasingly in demand. This term, which is often understood as a one-dimensional skill, is much more complex and far-reaching than it appears at first glance. What characterizes an interculturally competent person? Language skills, culture-specific knowledge, these are things that are usually mentioned in this context, as well as knowledge of the much-cited do’s and don’ts. Of course, these basics are essential, but intercultural competence is actually much more complex and far-reaching. Reflectively dealing with one’s own cultural imprint and the deeply rooted ethnocentric attitude towards other cultures is essential for successful intercultural action. However, this is usually not mentioned in connection with intercultural competence. Intercultural training enables participants to recognize intercultural competence in its entirety and to work on their own cultural imprint. In the case of culture-specific training, the particularities of the target culture are of course also dealt with.
The example of international assignments clearly shows that many companies often succumb to a fallacy. It is often assumed that an employee who is successful in their home country can automatically build on this success abroad. It is above all professional expertise that is the basis for a secondment project. The costs for this can be estimated at around three times the expat’s annual salary (see Fischlmayr/Kopecek 2012: 28). Proper preparation and support for this employee and any accompanying family members is of enormous importance, as an assignment is always an emotionally stressful situation that can be significantly mitigated with the right preparation and support, as shown in the following graphic (culture shock model according to Oberg).
Preparatory and accompanying measures are often omitted, especially in countries with a similar cultural outlook, such as the USA. This can jeopardize the success of the entire project. Even seemingly banal statements such as: “The Americans lack common sense” contain more than enough explosive material. Such statements are based on a high degree of the aforementioned ethnocentrism. This exaggeration of one’s own culture is of course unconscious and not malicious. However, such an attitude is proven to damage any intercultural (working) relationship. Targeted intercultural training makes precisely these invisible traps clear and constructively develops ways to deal with them consciously.
The world of work and life is changing rapidly and intercultural teams and their management are no longer only relevant in the case of international assignments. Rather, the daily working environment in Germany is also becoming increasingly globalized. Culturally diverse teams are shaping the picture and companies are confronted with great opportunities as well as challenges. Intercultural competence cannot and must not be neglected as a factor in personnel decisions and also in the training and further education of specialists and managers.
Intercultural training: a building block for international success
Intercultural training is a proven method of expanding and improving intercultural competence. These programs must be tailored to the specific needs of the participants and the respective company (cf. Kinast/Thomas 2003: 250-253).
The objectives for the training are clarified and defined in advance with both sides. Although many companies are already aware that intercultural competence is of great importance, intercultural seminars are still relatively rarely included in the portfolio of in-house training measures for various reasons. The arguments often cited here are lack of time, excessive costs, no necessity, cultural differences are not serious (as in the case of Germany/USA, for example). In many cases, however, as already mentioned, HR management simply fails to make instinctively correct and appropriate decisions on the part of the employee (cf. Fischlmayr/Kopecek 2012: 172). As explained in this article, however, this is not necessarily the case and intercultural training and further training of specialists and managers is absolutely essential. With the right mix of methods, intercultural training achieves a high cognitive learning effect that can be practically applied in everyday working life. Various modules are used, for example Culture-Specific-Assimilator, culture-specific training units with (everyday) historical content and the changing values of a cultural area, case study processing, self-assessment questionnaires, as well as simulations and role plays. Of course, the reference to the participants’ working environment must always be established and maintained. Leadership style and successful team building are also important topics. Here too, in-depth culture-specific knowledge is required. Knowledge of both one’s own and other people’s cultural backgrounds leads to greater understanding, empathy and tolerance and therefore to successful leadership and team building. Intercultural training also helps to break down prejudices and stereotypes and thus develop tolerance of ambiguity and culturally sensitive behavior.
The participants’ previous knowledge and experience are always clarified in advance and a tailor-made program is developed.
Final chapter
Many companies have tried to impose their own culture on foreign subsidiaries, employees, customers and cooperation partners. In most cases, they have paid for this bitterly. One example is a well-known US retail chain that failed miserably in Germany. Its withdrawal from the German market alone cost more than half a billion euros. The main reason for the failure here, as in many other cases, is ignorance of the cultural characteristics of the customers and employees.
It is a misconception that internationally active managers act with intercultural competence and make appropriate decisions based on their experience alone. Rather, it is extremely important to support and promote these employees through intercultural training. This is the only way they can operate successfully in their international working environment.
Global companies require the overcoming of (cultural) boundaries. Intercultural training is a helpful tool in this respect. Every company should create the still relatively unnoticed competitive advantage of an interculturally competent workforce. Intercultural training is the right measure to achieve this.
by Amelie Kreiter, trainer at Lorenz-Seminare
List of sources:
Foreign investments online at: http://www.dihk.de/branchen/industrie/auslandsinvestitionen/auslandsinvestitionen
Fischlmayr, Iris / Kopecek, Andrea (2012): The professional expatriate assignment. Legal, HR and tax aspects of expat management. Vienna: Linde.
Kinast, Eva-Ulrike (2003): Diagnosis-Training-Evaluation-Coaching. In: Kinast, Ulrike / Schroll-Machl, Sophie / Thomas, Alexander (eds.) (2003): Handbook of Intercultural Communication and Cooperation. Volume I: Fundamentals and fields of practice. Göttingen: Vanderhoeck & Ruprecht, pp.167-226.
Kinast, Eva-Ulrike / Thomas, Alexander (2003): Intercultural personnel development in international companies. In: Kinast, Ulrike / Schroll-Machl, Sophie / Thomas, Alexander (eds.) (2003): Handbook of Intercultural Communication and Cooperation. Volume I: Fundamentals and fields of practice, Göttingen: Vanderhoeck / Ruprecht, pp. 243-256.
Nowak, n.d. (2014): Culture shock: The economic consequences for companies. Online at: http://www.expat-news.com (26.04.2015)
Ringwald, Nadine (2011): Intercultural perspective of employee management, identification of influencing factors and classification of expatriates. In: Stock-Homburg Ruth / Wolff, Brigitta (eds.) (2011): Handbuch Strategisches Personal-Management. Wiesbaden: Gabler, pp.401-419
Thomas, Alexander (2003): Culture and cultural standards. In: Kinast, Ulrike / Schroll-Machl, Sophie / Thomas, Alexander (eds.) (2003): Handbook of Intercultural Communication and Cooperation. Volume I: Fundamentals and fields of practice. Göttingen: Vanderhoeck & Ruprecht, pp.19-31.