Organizational Behavior and Development
Organizational Behavior and Development MAN 6245
University of Central Florida
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BEST FRAETMCE Everyone knows that being fair costs little and pays off handsomely Then why do so few executives manage to behave fairly even though most want to 122 Why It s So Hard to Be Fair byJoel Brockner WHEN COMPANY A had to down size it spent considerable amounts of money providing a safety net for its laidoff workers The severance package consisted of many weeks of pay exten sive outplacement counseling and the continuation of health insurance for up to one year But senior managers never explained to their staff why these layoffs were necessary or how they chose which jobs to eliminate What s more the midlevel line managers who delivered the news to terminated em ployees did so awkwardly mumbling a few perfunctory words ab out not want ing to do this and then handing them off to the human resources department Even the people who kept their jobs were less than thrilled about the way things were handled Many of them heard the news while driving home on Friday and had to wait until Monday to learn that their jobs were secure Nine months later the company continued to sputter Not only did it have to absorb enomious legal costs defending against wrongful temiination suits but it also had to make another round of layoffs in large part because employee pro ductivity and morale plummeted after the rst round was mishandled When Company B downsized by contrast it didn t offer nearly as gener ous a severance package But senior managers there explained the strategic purpose of the layoffs multiple times before they were implemented and ex ecutives and middle managers alike made themselves available to answer questions and express regret both to those who lost their jobs and to those who remained Line managers worked with HR to tell people that their jobs were being eliminated and they ex HARVARD BUSINESS REVIEW oLEc ormruw employees led a 39 Llon lawsult Worker took some Te leagues but they understood why the M quothm m to gene mte support for a new Lmtegy f me n promotes lnnomtlon What s more lt h better than lt had been before the lay off occurred Although Company A spent much more mone B exhlblted much greater ln other words em m any B belleved that they had been nestedlurtly Froml39ml39r P manoe process talrness pays enormous tlonal and peoplerrelated challenges Studlesshowthatwhenman erspracr tloe p rocess talrness thelr employees MARCH me h n sense So why don t more companles pmctlce lt conslstently Thls artlcle exr otters adwoe ness ln your olganlzatlon The Business Case for Fair Process decldes for hlm or herselfwhether a declslon has there are three drlyers of process fair ss One ls how much In ut employr ees belleve they have m the decision 1 39 thelr oplnlons re quested and gwen serlous wnsldemr declslons are made and lmplenented accumte lnformatlon Can mlstalres be corrected Are the personal blases of advance notlce glyen ls the declslon process transparent The thlrd tactor ls employees respectfully actwely llstenr the lr concerns and empathlzrng wlth the lr polnts ofvlew Us worth notlng that process falrness refers to employees Judgment of the ES 51 E E E Q C 3 ways get what they want but lt does 123 BEST PRAEZTliCE s Why it s So Hard to Be Fair mean that they will have a chance to be heard Take the case of an individual who was passed over for a promotion If he believes that the chosen candi date was quali ed and if his manager has had a candid discussion with him about how he can be better prepared for the next opportunity chances are he ll be a lot more productive and en gaged than if he believes the person who got the job was the boss s pet or if he received no guidance on how to move forward When people feel hurt by their com panies they tend to retaliate And when they do it can have grave consequences A study of nearly 1000 people in the mid19 90s led by Duke s Allan Lind and Ohio State s Jerald Greenberg found that a major determinant of whether employees sue for wrongful temiination is their perception of how fairly the ter mination process was carried out Only 1 of exemployees who felt that they were treated with a high degree of pro cess fairness led a wrongful tennina tion lawsuit versus 17 of those who be lieved they were treated with a low degree of process faime ss To put that in monetary terms the expected cost sav ings of practicing process fairness is 128 million for every 100 employees dismissed That gure7which was calcu lated using the 1988 rate of 80000 as the cost of legal defense7is a conserva tive estimate since in ation alone has caused legal fees to swell to more than 120000 today So although we can t calculate the precise nancial cost of practicing fair process it s safe to say that expressing genuine concern and treating dismissed employees with dig nityis a good deal more affordable than not doing so Customers too are less likely to le suit against a service provider if they believe they ve been treated with pro cess faimess In 19 97 medical researcher Wendy Levinson and her colleagues found that patients typically do not sue their doctors for malpractice simply Joel Brockner jb54columbioedu is the Phillip Hettlemon Professor ofBusiness at Columbia Business School in New York 1 24 because they believe that they received poor medical care A more telling factor is whether the doctor took the time to explain the treatment plan and to an swer the patient s questions with con sideration 7 in short to treat patients with process fairness Doctors who fail to do so are far more likely to be slapped with malpractice suits when problems arise In addition to reducing legal costs fair process cuts down on employee theft and turnover A study by manage ment and human resources professor Greenberg examined how pay cuts were Using process fairness companies could spend a lot less money and still have more satis ed employees handled at two manufacturing plants At one a vice president called a meet ing at the end of the workweek and an nounced that the company would im plement a 15 pay cut across the board for ten weeks He verybrie y explained why thanked employees and answered a few questions 7 the whole thing was over in 15 minutes The other plant im plemented an identical pay cut but the company president made the an nouncement to the employees He told them that other costsaving options like layoffs had been considered but that the pay cuts seemed to be the least unpalatable choice The president took an hour and a half to address em ployees questions and concerns and he repeatedly expressed regret about having to take this step Greenberg found that during the tenweek period employee theft was nearly 80 lower at the second plant than at the rst and employees were 15 times less likely to resign Many executives turn to money rst to solve problems But my research shows that companies can reduce ex penses by routinely practicing process fairness Think about it Asking em ployees for their opinions on a new ini tiative or explaining to someone why you re giving a choice assignment to her colleague doesn t cost much money Of course companies should continue to offer tangible assistance to employ ees as well Using process fairness how ever companies could spend a lot less money and still have more satis ed employees Considerthe nancial fallout that oc curs when expatriates leave their over seas assignments prematurely Conven tionalwisdom says that expats are more likely to leave early when they or their family members don t adjust well to their new living conditions So compa nies often go to great expense to facili tate their adjustment 7 picking up the tab for housing costs children s school ing and the like In a 2000 study of 128 expatriates human resources consult ant Ron Garonzik Rutgers Business School professor Phyllis Siegel and I found that the expats adjustment to various aspects of their lives outside work had no effect on their intentions to depart prematurely if they believed that their bosses gene rally treated them fairly In other words high process fair ness induced expats to stick with an overseas assignment even when they were not particularly enthralled with living abroad In a similar vein some companies have devised expensive solutions to help employees cope with the stress of mod ern work They ve set up onsite day care centers and sponsored stress manage ment workshops to help reduce absen teeism and burnout Those efforts are laudable but process fairness is also an effective strategy When Phyllis Siegel and I surveyed nearly 300 employees from dozens of organizations we found that worklife conflict had no measur able effect on employees commitment7 as long as they felt that senior execu tives provided good reasons for their decisions and treated them with dignity and respect Of course executives should not sim ply emphasize process faimess overtan HARVARD BUSINESS REVIEW Why lt s So Hard to Be ler 351 PRACTICE ml um n much tanglble support to provlde ls per a sbestcapturedbythe law Ofdlmmr lshlng returns Beyond a mode ate level of hnanclal asslstance pmcucmg pro problem Moreover slnce the oper tlonal managers felt respected the showed a slmllar level of process fair comlngs that could hlnder ltTaslr force members dlstlll the lntormatlon the galn from these lnte mews lnto major thenes an fecuve because although money does tallr lt doesnt say lt all Fair Process as a go more smoothly Mlchael Beer of Harvard Buslness and PH Hm rm V nr r Center for Organlzatlonal Flt h of the d managenent Then they dlscuss how he Lmtegy could be rolled out most effecuvely SFP ls a model for process lrness cludlng Becton chlrlnson Honeywell costs but can also help to lncrease value operatlonal managers Durlng those L man an pra u p tr rocess fair embedded m an actlonrleamlng t ness nLI A39 r I L E plexus Hwy are men lhly to support ramquot than manly comply with I then dodskms hair boss and th ovglnl39nlion as a whole talled to appreclate the magnltude of W F cult pllght V m V Her ne t d or twol l l mllllaua lleut MARCH ms m n lty and lnnomtlon tend to suffer ln haracterlzed by low levels of process talrness such as nlzatlonl ll l n l n u upp l management or when they belleve mused that 125 BEST PRACTICE s Why It s So Hard to Be Fair their supervisor is open to new ideas and that he or she values their contri butions to projects however creativity and innovation are more likely to our ish TWo examples illustrate how pro cess fairness creates value by attracting innovative employees or additional customers The CEO of a renowned electrical engineering rm for instance wanted to change the corporate culture to be more receptive to new ideas so he sep arated a large group of workers into teams of ten asking each team to come up with ten ideas for improving the business Then the team leaders were brought into a room where the com pany s executives were gathered and were asked to sell as many of their team s ideas as possible The executives for their part had been instructed to buy as manyideas as possible The team leaders swarmed like bees to honey to the few executives who had reputations for being good listeners and open to new ideas The other executives stood by idly because team leaders assumed from past experience that they wouldn t listen One company that used process fair ness to create value is Progressive Casu alty Insurance In 1994 the rm began to give potential customers comparison rates from two competitors along with its own quotes for auto insurance Even though Progressive s rates weren t al ways the lowest the very act of deliver ing this information created goodwill Potential customers felt that they were being treated honestly and the practice drew many new sales Why Isn t Everybody Doing It With all that process faimess has going for it one might expect that executives would practice it regularly Unfortu nately many if not most don t They d do well to follow the example of Win ston Churchill who keenly understood the costeffectiveness of process fair ness On the day after the bombing of Pearl Harbor Churchill wrote a declara tion of war to the Japanese ending it as follows I have the honour to be with high consideration Sir Your obedient 126 servant Winston S Churchill After being castigated by his countrymen for the letter s deferential tone Churchill is said to have retorted When you have to kill a man it costs nothing to be polite In a change management seminar I ve taught to more than 400 managers I ask participants to rate themselves on how well they plan and implement or ganizational change I also ask the man agers bosses peers direct reports and customers to rate them The measure ers were lucky enough to still have their jobs But economically support ing those who lost their jobs doesn t can cel out the need to show process fairness to those affectedby the changeiwhich incidentally includes everyone Ironi cally the fact that process fairness is rel atively inexpensive nancially may be why this numbersoriented executive undervalued it Another reason process fairness may be overlooked is because some of its bene ts aren t obvious to executives Instead of wrestling with uncomfortable emotions many managers nd it easier to sidestep the issue and the people affected by italtogether contains more than 30 items and man agers consistently give themselves the highest marks on the item that mea sures process faime ss When managing change I make extra efforts to treat peo ple with dignity and respect Those rat ing them however are not nearly as positive In fact this is the only item in which managers selfassessments are signi cantly higher than the ratings they receive from each of their groups It s not entirely clear why this percep tual gap exists Perhaps managers are tuned in to theirintentions to treat oth ers respectfully but they aren t as good at reading how those intentions come across to others Or maybe it s just wish fuli and selfserving 7 thinking Some managers wrongly believe that tangible resources are always more meaningful to employees than being treated decently At a cocktail party the CEO of a major intemational bank proudly told me about the hefty sever ance pay his company gave to its laidoff employees I expressed admiration for his organization s show of concern to ward the people who lost their jobs and then asked what had been done for those who remained Somewhat defen sively he said that it was only necessary to do something for the employees who were affected by the layoffs The oth Social psychologist Marko Elovainio of the University of Helsinki and his col leagues recently conducted a study of more than 31000 Finnish employees examining the relationship between employees negative life events such as the onset of a severe illness or death of a spouse and the frequency of sickness related absences from work for the sub sequent 30 months The study showed that the tendency for negative life events to translate into sicknessrelated ab sences depended on how much process faimess employees experienced before the events occurred That is not being pretreated with process faimess led to absences waiting to happen Sometimes corporate policies hinder fair process The legal department may discourage managers from explaining their decisions for instance on the grounds that disclosure of infomiation could make the company vulnerable to lawsuits Better not to say anything at all the thinking goes than to risk having the information come back to haunt the organization in the court room Clearly legal considerations about what to communicate are important but they should not be taken to unnec essary extremes All too often organiza tions withhold information such as the altematives to downsizing that have HARVARD BUSINESS REVIEW Why it s 50 Hard to Be fair n51 PRACTICE been considered when revealing it n rim HMS with intern Legal and medical advocates in H ii r rm r n re iirr mi dm r ii n rn ii Rm ii ii ll the practice i n N ing a statute that would allow health ofprocess fairness increases powerand in this situation have to manage their care professionalstoapologize ferneds in uence When employees feel that owninternal dmmasincluding feelings they are heard lawsuits Doctors often refrain from process they are more lilrely to supporte decisions that led to the downsizmg api till i r iiutai mull the fear that admitting them will anger their patients who will then be more lilrely to le malpractice suits in fact they ve been treated disrespectfully le more malpmdice suits t an t who feel they have been treated dignity By malnng apologies for ical mistalres inadmissible during a trial the wrth ne dr decisionstheirbosses andthe ol39ganlzas tion as hole The desire to avoid uncomfortable mana r fail to practice process fairness As E ft tral Florida has suggested ma who plan and implement tough deck Managers who unwaveringly be lleve lh al but the desire to avoid them ls also terpersonal sensitivrty to accomplish the taslrgmoefullylnste ad ofwre stling with those uncomfortable emotions the issuemandthe people affectedbyltm gether Emotional contagionquot also comes into play in these situations Just as we 6 ose around us th feel that way and that s uncomfona ble No wonder so i n nan naua l a m e memo engagingin processfairnesswillwealren yersity and Harvard Business School s tional pain Unfortunately such void in irn r n r ii ir mni h Joshua anoe malres it very unlilrely that they ayoioeind mm u mu u ulu Tuck Executive Program July ZZrAugusf 1 leading nignpotential and senior performance Septemberimis New Branding imperatives May 79 o i liuaiiii Inice lie Ludwig executlves to new ieveis of business Gateway to Business Management Navembyl 7 Delivering skills and perspective functional rrianagers need for advancement Finance Essentials for Senior Managers Offering greater accountability and transparency in your organization Presenting strategies for malelZlng brand equity and competitive s tioning g Tuck Execmiva Edummn a Damnnuih Thwditludenhipalu w WWW tuck daitmoutli eduexec 603764672539 tuck execedcadaitmoutn edu BEST PRAEZTiiCE s Why lt s So Hard to Be Falr I can understand how managers feel Several years ago I was working with a telecommunications organization after the rst layoffs in the company s history The CEO and his senior man agement team wanted me to talk to the midlevel managers about how the lay offs would affect the people who re mained and what they could do to help their direct reports get over it Feel ing betrayed and fearful however the midlevel managers were in no mood to help others return to business as usual They identi ed me with the problem and implied that I was partly responsi ble for the decision to downsize That was a moment of real insight for me Trying to counsel this unhappy and suspicious group I completely under stood the discomfort that managers ex perience when they re called on to act compassionately toward people who feel aggrieved It was much harder than I expected The senior managers of the com pany admitted to me that they were tempted to avoid the rank and le 7 partly out of guilt and partly because they doubted whether they would be able to keep a cool enough head to prac tice process faimess That s a natural re sp onse but ignoring negative emotions only keeps them swirling around longer When senior managers made them selves more accessible to their work force employees reactedpositively and the organization developed a renewed sense of purpose Toward Process Fairness Companies can take several steps to make fair process the norm Address the knowledge gaps Man agers need to be warned about the negative emotions they might experi ence when practicing fair process Merely acknowledging that it is legiti mate to feel like eeing the scene can help managers withstand the impulse to do so Studies have shown that people can tolerate negative experiences more easily when they expect them Just as forewamed surgical patients have been found to experience less postoperative pain forewarned managers maybe bet 128 ter able to cope with and hence not act on their negative emotions Furthermore managers are more likely to endure a dif cult process when they know that the effort will have a tangible payoff But it s not enough for managers to be vaguely aware that pro cess faimess is cost effective Corporate executives should educate them about all the nancial bene ts using charts and gures just as they would when making a business case for other impor tant organizational initiatives Invest in training Study after study has shown that fairprocess training can make a big difference Subordinates of the trained managers for instance are When I was working with an execu tive at a utility company several years ago for example I noticed that she made a common mistake She didn t tell others that she had seriously consid ered their opinions before making her decisions even though she had 1 ad vised her to preface her explanations by saying explicitly that she had given their input some serious thought Six months later she told me my advice had been priceless She learned that it s not enough for executives just to be fair they also have to be seen as fair Training is most effective when it s delivered in several installments rather than all at once For example one suc lt s not enough for executivesjust to be fair they also have to be seen as fair not only signi cantly less likely to steal or to resign from the organization but they are also more likely to go the extra milei aiding coworkers who have been absent helping orient new employees assisting supervisors with their duties and working overtime Several studies by Jerald Greenberg have even found that employees whose managers under went process faimess training suffered signi cantly less insomnia when coping with stressful work conditions Daniel Skarlicki of the University of British Columbia s Sauder School of Business and Gary Latham of the University of Toronto s Joseph L Rot man School of Management have identi ed some factors of an effective process fairness training program Par ticipants respond better to active guid ance than to a lecture on the bene ts of improved process fairness That s why it s particularly effective to give trainees speci c instructions on what they need to do and how they need to do it such as how to detect resistance to a new strategic initiative After the par ticipants have practiced these behav iors give them feedback and let them try again cessful program consisted of a twohour session each week for eight weeks along with assigned roleplaying home work That way participants could re ceive feedback from instructors during the formal training sessions and from their peers in between meetings As with most constructive feedback re ferring to behaviors You never ex plained why you made this decision rather than to traits You came across as condescending proved to be most compelling Both the process and the outcome of the training need to be communicated to participants 7 but not at the same time Before the sessions begin focus on the outcome Participants are likely to be far more engaged if they are told that the program will help them gain their employees commitment to strat eg implementation than if they are told it will help them communicate that they ve seriously considered other peo ple s points of view During the course however focus on process Thinking about expected outcomes improved strategy implementation for instance can distract people from leaming the speci c practical skills they need such HARVARD BUSINESS REVIEW as how to lnvolve people ln declslon so The message they sent was that lt Rlnally lt ls lmportant tor tralnees o should help people leel posltlve about M l can lnlect reallsm by tocuslng on the ers to have mlxed emotlons but at the v mzatlon l worlred wlth one company r r l ofthe month based on process ralrness process Behavloral charge ls dlmcult slrllls as well as bottomrune results 1mm M t better at pro l 39 quot cess talrness day by day but lt they ona odeglee leedbaclrabouthowthey Tab15m DEM wwwmnl YneManaLMonWy lreep worlrlng at lt they wlll lmprove plan and lmplement declslons ln whlch peroeptlons months alter the program If they are promlnently practlclng process talrness more on avr Recent corporate scandals show that emge h hey wer t t glvlng workfowe outco only three prlor to lt Condudlng alteractlon re tl I dont care howyougettherelust vlews also hel s man ers co tlnue t Lhere n be d rous Rorwa r R hone thelr slrllls lorg alterthe tralnlrg sesslons are over 39 2 top priorr ity Lllre most managerlal behavlors r process ralrness must l rs why the have made certaln Lmteglc declslons malre themselves clt catlon wlth the ranlr and le lnvolve m ample advance notlce of change and out the outconesthelrmanagers pro prooe ss they use to achleve them Thls ls aca mlcromanagenentJustas than one wayto lnvolve people ln deck m practloe of process talrness ls lllrely to spread lllre wlldhle throughout the rest of the organlzatlon mes to practlce process talrness lt ls slmply put the rlght thlng such process talrness ls the responslbllr v H l l and m o D o a nlcate olganlzatlonal values lt also sends a nessa e about 1he art ofthe posslblequot people are more lllrely to try to taclrle dlmcult challenges when they HR Butwlth that moral responslblllty cones buslness opportunlty An execur tl slons that mlght threaten employees mm umnlm Illmm mdx W Should Anyone Be Led by mumell Rah Salk samh Juno n1 WW 2 senlor executlves ettectlvely served as mlxed feellng they had about pmcucr latlng the process they went through that ultlmately convlnoed them to do MARCH me Mr mlnmhml n m ll M Mr cess ralrness wlll help get you there m n n r w you and your company wlll be Re prlnt R0603H To order see page 151 by mu m m mp 1 ml my c Pnymel Chalmem plumemmcnnpee tm AVAHAnEWNEREVERIUEMSARESDW WEWDWG m WMAWS we quotmun nuamm SUIme Muss wwasvlgnu Ll nu Pun n u L i J grani permission u access or H An uni quot 39 39 LI through 39 quot 39 transmission 4 quot 439 usage contact permissionshbspharvard2du UL39TO B E R 2004 Cultural BEST PRACTICE Knowing what makes groups tick is as important as understanding individuals Successful managers learn to cope with different national corporate and vocational cultures Intelligence by P Christopher Earley and Elaine Mosakowski You SEE THEM at international air ports like Heatltrow posters adv vertising the global bank llSliC that show a grasshopper and the message quotUSArPestChinael et Northern l hai landAAppetiIerquot 39l axonomists pinned down the scien ti c de nition of the family Acriclidae more than two centuries ago But cul ture 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 for eign business setting are subject to an even wider range of interpretations in cluding ones that can make misunder standings likely and cooperation im possible But occasionally an outsider has a seemineg natural ability to inter pret someone39s unfamiliar and ambig uous gestures in iust the way that per son s compatriots and colleagues would even to mirror them We call that culr lural intelligence or 0 In a world where crossing boundaries is routine CQ becomes a vitally important apti tude and skill and not just for intema tional bankers and borrowers Companies too have cultures often very distinctive anyone who joins 2i new company spends the rst few weeks de ciphering its cultural code Within any large company there are sparring sub cultures as well The sales force can t talk to the engineers and the PR people lose patience with the lawyers Depart ments divisions professions geograph ical regions each has a constellation of manners meanings histories and val ues that will confuse the interloper and cause him or her to stumble Unlessthat is he or she has a high CQ Cultural intelligence is related to emotional intelligence but it picks up where emotional intelligence leaves off 39 BEST PRACTICE Cultural intelligence A person with high emotional intelli gence grasps what makes us human and at the same time what makes each ofus different from one another A person with high cultural intelligence can some how tease out of a person39s 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 idio syncratic The vast realm that lies be tween those two poles is culture An American expatriate manager we know had his cultural intelligence tested while serving on a design team that in cluded 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 reaction to the engineers39 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 idiosyn cratic and how much was culturally de termined he or she would not have known how to in uence their actions or how easy it would be to do that One critical element that cultural in telligence and emotional intelligence do share is in psychologist Daniel Gole man39s words a propensity to suspend judgment to think before actingquot For someone richly endowed with CO 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 in teracting in front of you are different from those in your home culture yet similar to one another Only when con duct you have actually observed begins to settle into patterns can you safely begin to anticipate how these people Cultural intelligence an outsider s seemingly natural ability to interpret someone s unfamiliar and ambiguous gestures the way that person s compatriots would between the two A manager with even subtler powers of discernment might have tried to determine how much of the two Germans behavior was or guably 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 criti cized modulated his or her spontaneous P Christopher Earley is a prorirssnr and the chair ol the dupnrtmenl of orgnni alinnul behavior at London Business School Elaine Mosakowski is a professor rg mnnagmwnl a the University t1fCol omdn at Boulder 140 will react in the next situation The in ferences you draw in this manner will be free of the hazards of stereotyping The people who are socially the most successful among their peers often have the greatest dif culty 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 peo ple 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 t in Although some aspects ofcultural in telligence are innateanyone reasonably alert motivated and poised can attain an acceptable level of cultural intelli gence as we have learned from survey ing 2000 managers in 60 countries and training many others Given the num ber of crossfunctional 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 in herent 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 1 sales man ager at a California medical devices group acquired by Hi Lilly Pharmaceu ticals 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 sal ary Senior managers hounded unpro ductive 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 com pensation Furthermore criticism was restrained and confrontation kept to a minimum To motivate people Lilly management encouraged them Peter commented l3ack in LAl knew how to handle myself and how to manage my sales team l39d push them and con front them if they weren39t performing and they d respond If you look at my evaluations you39ll see that l was very successful and people respected me Here in lndianapolisthey don t like my style and they seem to avoid the chal lenges that I put to them I just can t seem to get things done as well here as i did in Californiaquot Peter s problem was threefold First he didn39t comprehend how much the landscape had changed Second he was unable to make his behavior consis tent with that ofeveryone around him And third when he recognized that the arrangement wasn t working he be came disheartened HARVARD BUSINESS REVIEW l oat iv Peter s three dif culties correspond to the three components of cultural in telligence the cognitive the physical and the emotionalmotivational Cul tural 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 bee liefs customs and taboos of foreiin cul tures the approach corporate training programs tend to favor will never pree pare a person for every situation that arises nor will it prevent terrible gaffes However inquiring about the meaning of some custom will often prove Lin availing 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 Al though most people nd it dif cult to discover a point ofentry into alien cul tures whose very coherence can make them seem like separate parallel worlds an individual with high cognitive CQ notices cities to a culture s shared under standings These can appear in any form and any context but somehow indicate a line of interpretation worth pursuing An lrish manager at an international advertising rm was working with a new client a German construction and engineering company Devin39s experi ence with executives in the German re tail clothing industry was that they were reasonably exible about deadlines and receptive to highly imaginative propose als for an advertising campaign He had also worked with executives of a British construction and engineering com pa ny whom he found to be strict about dead lines and intent on a media campaign that stressed the rm s technical exper tise and the cost savings it offered Devin was unsure how to proceed Should he assume that the German cone struction company would take afterthe German clothing retailer or insteadthe British construction company He re solved to observe the new client39s rep resentative closely and draw general con clusions about the rm and its culture LlC39l39U ll l39 R 2004 Cultuial intelligence 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 dif ferent countries Instead ofequatingthe rst representative39s behavior with the client s corporate culture Devin looked for consistencies in the various individ uals traits Eventually he determined that they were all punctual deadline oriented anti tolerant of unconveir tional advertising messages Irom that he was able to infer much about the character of their employer Body You will not disarm your for eign hosts guests or colleagues simply by showing you understand their cule t81 PRAETIILL39 ture 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 un derstand in the most elemental way what it is like to be them They in turn become more trusting and open Uni versity of Michigan professor Jeffrey Sanchezrl urks39s research on cultural barriers in business found that iob can didates who adopted some of the mane nerisms of recruiters with cultural back 141 BESI PRACTICE Cultural Intelligence grounds different from their own were more likely to be made an offer This won t happen if a person suffers from a deepseated reservation about the calledfor behavior or lacks the phys ical poise to pull it off Henri a French manager at Aegis a media corporation followed the national custom of greet ing his female clients with a hug and kiss on both cheeks Although Melanie a British aerospace manager under stood 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 the ability to receive and reciprocate ges tures that are culturally characteristic re ects a low level of cultural intellia gence s physical component In another instance a Hispanic com munity leader in Los Angeles and an AngloAmerican businessman fell into conversation at a charity event As the former moved closer the latter backed away it took nearly 30 minutes of waltz ing around the room for the commu nity leader to realize that Anglos were not comfortable standing in such close physical proximity Heart Adapting to a new culture in volves overcoming obstacles and set backs People can do that only if they believe in their own ef cacy if they persevered in the face of challenging situations in the past their con dence grew Con dence is always rooted in mastery of a particular task or set of circumstances A person who doesn39t 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 con fronting obstacles setbacks or even fail L1rereengage with greater vigor To stay motivated highly ef cacious people do not depend on obtaining rewards which may be unconventional or longdelayed Hyong Moon had experience leading racially mixed teams of designers at GM but when he headed up a product design and development team that in cluded representatives from the sales production marketing RampD engineer 94 l42 ing and nance departments things did not go smoothly The sales manager for example objected to the safety en gineer s attempt to add features such as sideim pact air bags because they would boost the car s price excessively The Chris understood the policy as Mer rill s attempt to reduce hierarchical dis tinctions both within and between the companies The intention he thought was to draw the two enterprises closer together Chris also identi ed a liking People who are somewhat detached from their own culture can more easily adopt the mores and even the body language of an unfamiliar host con ict became so intense and so pub lic that a senior manager had to inter vene 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 crossyfunctional teams his successes with single function teams had given him the con dence to persevere He commented quotl d seen these types of disagreements in other teams and l d been able to help team members over come their differences so l knew i could do it againquot How Head Body and Heart WorkTogether At the end of 1997 USbased Merrill Lynch acquired UK based Mercury Asset Management At the time ofthe merger Mercury was a decorous understated hierarchical company known for doing business in the manner of an earlier generation Merrill by contrast was in formal fastp39aced aggressive and en trepreneurial Both companies had emf ployees of many nationalities Visiting Mercury about six months after the merger announcement we were greeted by Chris a Mercury personnEI manager dressed in khakis and a knit shirt Sur prised 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 Fri days in its own of ces and then ex tended the policy on a volunteer basis to its UK sites for casual dress as probably an Ameri can cultural trait Not all Mercury managers were re ceptive 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 careless ness over prudence and an attempt by Merrill to impose its identity on Mer cury 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 ap pearance body and they had been in the Mercury environment for so long that they lacked the motivation heart to see the experiment throughTo put it even more simply they dreaded being mistaken for Merrill executives How would you behave in a similar situation The exhibit Diagnosing Your Cultural intelligencequot allows you to as sess the three facets of your own cul tural intelligence and learn where your relative strengths and weaknesses lie Attaining a high absolute score is not the objective Cultural Intelligence Pro les Most managers t at least one of the fol lowing six pro les By answering the questions in the exhibit you can decide which one describes you best The provincial can be quite effective when working with people of similar background but runs into trouble when venturing farther a eld A young engi neer at Chevrolet s truck division re ceived positive evaluations of his tech llARVAKD BUSIVESS REVIEW Diagnosing Your Cultural Intelligence These statements re ect different facets ofcultural 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 Generallyan average of less than 3 would indicate an area calling for improve ment while an average ofgreaterthan 45 re ects 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 Total Before i interact with people from a new culture ask myselfwhatl hope to achieve Ifl encounter something unexpected while working in a new culture I use this experience to gure 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 l meet them When I come into a new cultural situation I can immediately sense whether something is going well or something is wrong 4 D Cognitive CQ Total It39s 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 leasin change the way I act when a crosscultural encounter seems to require it 4 D Physical CQ Total OCTO E ER 2004 I have con dence 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 ofa different culture with relative ease lam con dentthat I can deal with a cultural situation that s unfamiliar 4 Emotional motivational CQ Cultural intelligence BEST PRACTICE nical abilities as well as his interper sonal skills Soon he was asked to lead a team at Saturn an autonomous divi sion ofGM He was not able to adjust to Saturn s highly participative approach to teamwork he mistakenly assumed it would be as orderly and deferential as Chevy s Eventually he was sent back to Chevy s truck division The analyst methodically deciphers a foreign culture s rules and expectations by resorting to a variety of elaborate learning strategies The most common form of analyst realizes pretty quickly he is in alien territory but then ascer tains usually in stagesthe nature ofthe patterns at work and how he should interact with them Deirdre for exam ple works as a broadcast director for a London based company Her principal responsibility is negotiating contracts with broadcast media owners in June 2002 her company decided that all units should adopt a single negotiating strat egy and it was Deirdre s job to make sure this happened Instead of forcing a showdown with the managers who resisted she held oneonone meetings in which she probed their reasons for resisting got them together to share ideas and revised the negotiating strat egy to incorporate approaches they had found successful The revised strategy was more culturally exible than the original proposal and the managers chose to cooperate The natural relies entirely on his in tuition rathet than on a systematic learning style He is rarely steered wrong by rst impressions Donald a brand manager for Unilever commented As part of my job I need to judge people from a wide variety of cultural back grounds and understand their needs quickly When i come into a new situa tion I watch everyone for a few min utes and then I get a general sense of what is going on and how I need to act l m not really sure how I do it but it seems to workquot When facing ambigu ous multicultural situations that he must take control of the natural may falter because he has never had to improvise learning strategies or cope with feelings of 143 New titles In the Leadershlp for the Commaquot Good series lll39l39 I A Input and Want Inkquot Mickey Edwards former us Congessmaii and Lecturer oi Public and International Affairs Woodrow Wilson School omn SHHIJHIEEE THE DISASTERS VOU SHOULD HAVE SEEN COMING AND How To PREVENT THI LM MllXH HAZEHMA N MIliHiElllWiiKlll5 A fascinating new perspective on planning and maria an a M W h muslin handy James Lee Wilt farmer director ol the Federal Emergency Management Agency Changing Minds ii u Howard Gardner h burla II ilch an Wquot Warren Bennis Nil remu mu rillllil mntuww Available wiiemrm bunks aw suiii w HARVARD BUSINESS SCNDOL PRESS www HBSPiess 01 The ambassador like many political appointees may not know much about the culture he has just entered but he convincingly communicates his cer tainty that he belongs there Among the managers of multinational companies we have studied the ambassador is the most common type His con dence is a very powerful component of his cul tural intelligence Some of it may be derived from watching how other man agers have succeeded in comparable situations The ambassador must have the humility to know what he doesn39t know that is to know how to avoid underestimating cultural differences cliquishquot ing exercises to Munich Con dence Training Helmut was a manager at a Berlinbased hightech company who partic ipated in our culturalintelligence training program at London Business School Three months earlier he had been assigned to a large manur facturi rig facility in southern Germany to superwse the completion of a new plant and guide the local staff through the launch Helmut came from northern Germany and had never worked in southern Germany his direct reports had been raised in southern Germany and had worked for the local business unit for an average ofseven years Helmur was good at developing new learning strategies and he wasn t bad at adapting his behavior to his surroundings But he had low con dence in his ability to cope with his new colleagues To him southern Germans were essentially foreigners he found them quotloud brash and To capitalize on his resourcefulness and build his con dence we placed Helmut in heterogeneous groups of people whom we encour aged to engage in freewheeling discussions We also encouraged him to express his emotions more openly in the manner ofhis southern com patriots and to make more direct eye contact in the course of roleyplaya Helmut s resourcefulness might have impelled him to take on more ambitious tasks than he could quite handle It was important he get his footing rst so that some subsequent reversal would not paralyze him To enhance his motivational CQ we asked him to list ten activities he thought would be part of his daily or weekly routine when he returned By the time Helmut returned to London for his second training ses sion he had proved to himself he could manage Simple encounters like getting a coffee shopping and having a drink with colleagues So we suggested he might be ready for more challenging tasks such as provid ing facetoface personnel appraisals Even though Heimut was skilled at analyzing people39s behavior he doubted he was equal to this next set of hurdles We encouraged him to view his analytic skills as giving him an important advantage For example Helmut had noticed that Bavarians were extroverted only with people familiar to them With strangers they could be as formal as any Prussian Realizing this allowed him 10 re spond flexibly to either situation instead of being put off balance By the time he was asked to lead a qualityimprovement team he had concluded that his leadership style must unfold in two stages vcom manding at the outset then more personal and inclusive On his third visit to London Helmut reported good relations with the quality im provement team and the members corroborated his assessment HARVARD BtislNliSs REVIEW even though doing so will in ict a de gree of discomtort Hie Hillillt39 has a high degree ofcotr trol over his act ions and behavior ii not a great deal of insight into the signi cance of the cultural ties he picks Lip Mimicry definitely puts hosts and guests at ease facilitates communication and builds trust Mimicry is not however the same as pure imitation which can he interpreted as mocking Minga many ager at the Shanghai regional power authority relates quotWhen I deal with toreigners I try to adopt their style of speaking and interacting I nd that simple things like lteeping the right dis tance from the other person or making eye contact or speaking English at a speed that matches the other person39s puts them at ease and makes it easier to make a connection this really makes a difference to newcomers to China be cause they often are a hit threatened by the placequot he t39liuiiieleoii possesses high levels ot39all three CQ components and is a very lll39iii l iiiiellnieiiiw uncommon managerial type lie or she even may be mistaken for a native of the country More important chaine leons don39t generate any of the ripples that unassiniilated threigners ine itath do Some are able to achieve resultsthat natives cannot due to their insider39s skills and outsider39s perspective We found that only about 5 of the mati agers we surveyed belonged in this re markahle category One or39them is Nigel a British entree preiieur who has started businesses in Australia lrance and Germany the son ot39diploniats Nigel grew tip all over the world Most of his childhood however was spent in Saudi gti39abia Alter several successes of his own some venture cap italists asked him to represent them in dealings with the founder of a money losing Pakistani sltll39lrllp lo the founder his company existed chieily to employ members of his ex tended family and secondarily the citi7 zens of Lahore the V0 naturally had a different idea they were tired of Hl si mmrtict losses and wanted Nigel to persuade the founder to close down the business Upon relocating to lahore Nigel re alized that the interests of family and community were not aligned So he called in several community leaders who agreed to meet with managers and try to convince them that the larger community of Lahore would be hurt it39 potential investors came to view it as full ot businesspeople unconcerned with a company s solvency Nigel s hatidi tilt bringing had made him aware of tslamit principles of personal responsihility to the wider community while his British origins tempered what in another POIquot son s hands might have been the me chanical application of those tenets Throughout the negotiations be dis played aii authoritative style appropri ate to the Pakistani setting in relatively short order the managers and the fam ily agreed to terminate operations Many managers oI39 course are a hy brid oftwo or more ot39the types We dis covered in our survey of more than quotCompaniesti investnin communication ahead of th will stay oe ste Paul Argenti f f Discover tow to deliver messages that boost your bottom line Let Tuck Executive Education create a high impact customized learning titionquot solution for your comp 11 6036462839 wwwtuckdartmouthaeduexet ick Executive Education at Dartmouth Thought lead whip Business results BEST PRACTICE Cultural Intelligence 2000 managers that even more prevae lent than the ambassador was a hybrid of that type and the analyst One exam ple was a female AfricanAmerican man ager in Cairo named Brenda who was insulted when a small group of young wellmeaning Egyptian males greeted her with a phrase they d learned from rap music I turned on my heel went right up to the group and began upbraiding them as strongly as my Arabic would allow she said when I d had my say I stormed off to meet a friendquot After I had walked about halfa block I registered the shocked look on their faces as they listened to my words I then realized they must have thought they were greeting me in a friendly way So I went back to talk to the group They asked me why I was so angry I explained they apologized profusely and we all sat down and had tea and an interesting talk about how the wrong words can easily cause trouble During our con versation I brought up a number of examples of how Arabic expressions uttered in the wrong way or by the wrong person could spark an equivalent reaction in them After spending about an hour with them I had some new friendsquot Brenda s narrative illustrates the com plexities and the perils of crosscultural interactions The young men had pro voked her by trying ineptly to ingrati ate themselves by using a bit ofcurrent slang from her native land Forgetting in her anger that she was the stranger she berated them for what was an act of cultural ignorance not malice Cul turally uninformed mimicry got the young men in trouble Brenda s and the men secognitive exibility and will ingness to reengage got them out of it Cultivating Your Cultural Intelligence Unlike other aspects of personality cul tural intelligence can be developed in psychologically healthy and profession ally competent people In our work with Deutsche Bank we introduced a pro gram to improve managers work rela tionships with outsourcing partners in 146 India We developed a two and a haf day program that rst identi ed a par ticipant s strengths and weaknesses and then provided a series of steps which we outline below to enhance their CQ Step 1 The individual examines his CQ strengths and weaknesses in order to establish a starting point for subsequent development efforts Our selfassessment instrument is one approach but there are others such as an assessment of a person s behavior in a simulated busie ness encounter and 360 degree feed back on a person s past behavior in an actual situation Hughes Electronics for example staged a cocktail party to evale unit provide support for it A realistic assessment of her workload and the time available for CO enhancement is important Step 5 The person enters the cultural setting he needs to master He coordi nates his plans with others basingthem on his CQ strengths and remaining weaknesses If his strength is mimicry for example he would be among the rst in his training group to venture forth If his strength is analysis he would rst want to observe events uni fold and then explain to the others why they followed the pattem they did Step 6 The individual reevaluates her newly developed skills and how effece You will not disarm your foreign hosts simply by showing you understand their culture your actions must prove that you have entered their world uate an expatriate manager s grasp of South Korean social etiquette Ideally a manager will undergo a variety of as sessments Step 2 The person selects training that focuses on her weaknesses For ex ample someone lacking physical CQ might enroll in acting classes Someone lacking cognitive CQ might work on developing his analogical and inductive reasoning by for example reading sev eral business case studies and distilling their common principles Step 3 The general training set out above is applied If motivational CO is low a person might be given a series of simple exercises to perform such as nding out where to buy a newspaper or greeting someone who has arrived to be interviewed Mastering simple activities such as greetings or transactions with local shopkeepers establishes a solid base from which to move into more demanding activities such as giving an employee a performance appraisal Step 4 The individual organizes her personal resources to support the ap proach she has chosen Are there people at her organization with the skills to conduct this training and does her work tive they have been in the new setting perhaps after collecting 360degree feedback from colleagues individually or eavesdropping on a casual focus group that was formed to discuss her progress She may decide to undergo further training in speci c areas In the sidebar Con dence Training we describe how we applied these six steps to the case of Helmut one of ve German managers we helped at their employer s behest as they coped with new assignments within and outside of Germany Why can some people act appropri ately and effectively in new cultures or among people with unfamiliar back grounds while others ounder Our anecdotal and empirical evidence sug gests that the answer doesn39t he in tacit knowledge or in emotional or social in telligence But a person with high CQ whether cultivated or innate can un derstand and master such situations persevere and do the right thing when needed Reprint R0410 To order see page 159 HARVARD BUSINFSS REVIEW Ll nu Pun n u L i J grani permission u access or H An uni quot 39 39 LI through 39 quot 39 transmission 4 quot 439 usage contact permissionshbspharvard2du
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