Archive for September, 2012

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collaborating across cultures with Berlitz

Friday 28 September, 2012

I attended a seminar Managing Global Teams in High Growth Regions hosted by Berlitz, most widely known as a language training company, which is placing an increasing focus on cultural training for global leadership.  The seminar was led by  Tracy Xu, a senior cultural consultant @ Berlitz with contributions from Marcelo Roman, Chairman/CEO of  Training Management Corp (TMC).  We led off with defining intercultural challenges:

  • market-different markets have diverse needs & dynamics which require different styles & approaches.  Partner alignment is an issue
  • organizational-optimizing resources cross-culturally can be a problem, as are different organizational structures & relationships in different places within those structures
  • individual management-workforces are becoming more diverse, & successful firms leverage the differences in this diversity.  Communications can be a problem within multicultural teams as is performance management which varies widely across cultures.

We then moved into objectives for our program:

  • common understanding
  • models/frameworks to create common understanding
  • addressing differences/making adaptions

Next, culture was defined with the old iceberg analogy, indicating what you see explicitly, the above-water iceberg, is much less influential than what you don’t see implicitly, the ice below water.  In an intercultural context this includes values, norms, beliefs, expectations, assumptions, etc.  This led to the presentation of a model which showed that behavior leads to cultural norms, which are a sum of beliefs, assumptions, values, & emotions important in that culture.

Did you know grasshoppers are kept as pets in China & are eaten in Thailand?  This illustrates the difference between perception & reality, in the what is commonly known as a pest in America has much greater value elsewhere.  There are also differences between stereotypes & generalizations.  The former are formed based on unobserved behavior while the latter is based on observed behavior.  Regardless, cultural profiles can be constructed to reflect different nationalities, family orientations, corporations, functions, & host countries.

Joerg Schmitz of TMC (Thunderbird uses their  Cultural Orientations Indicator®) wrote  Cultural Orientations Guide-roadmap to cultural competence (btw-a pretty good book) which seemed to be the basis of the rest of the presentation.  Their Cultural Orientations Model was presented, which includes 10 dimensions on how cultures differ on how they view & use:

  1. environment
  2. time
  3. action
  4. communication
  5. space
  6. power
  7. individualism
  8. competitiveness
  9. structure
  10. thinking

In our seminar, we focused on communications, & the differences between hi & low contexts, implicit vs. explicit, & direct vs. indirect communications.  We expanded a bit on the action dimension, noting that those who focus on “doing” usually think short-term & are focused on completing a specific task while those who focus on “being” think longer term & focus on relationships.  We contrasted Americans, who value individuality, equality, directness, a can-do attitude, competition, materialism, informality, & freedom with Chinese, who value relationships, harmony, & guanxi.  The implications are that the Chinese are less concerned with how long a task takes (time) than the relationship to get it done, all of which is fluid & not concrete.

Narrowing down our topic to managing teams, culture impacts upon groups, hierarchy, seniority, age, etc.  When dealing with eastern cultures, it helps to get & give indirect feedback, build consensus, be less dynamic.  Leadership in those places is more of a benevolent dictatorship from the top down & more hands on than in the west.

The last topic of discussion was the difference between a local vs. a global mindset, generally, from an organizational point of view, as well as from a management perspective.

Intercultural adaptability requires 4 key skills:

  1. cultural due diligence-assess/prepare for impact of different cultures
  2. ability to switch styles-to take different approaches when required
  3. ability to create dialogue-to be able to adapt conversations in negotiations
  4. cultural mentoring-to help others with adaptation & integration
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Harvard economist Martin Feldstein on US & Europe

Friday 14 September, 2012

The Chicago Council on Global Affairs kicked off it’s fall program schedule by hosting Harvard economist Martin Feldstein, who was the Chairman of Reagan’s Council of Economic Advisers & served on Obama’s Economic Recovery Advisory Board.  He opened by stating that Europe’s a mess, & that it’s difficult to even consider it as a whole because it’s countries differ so much.  The problems are concentrated in the periphery in Italy, Spain, & Greece, which is the most extreme basket case & probably will leave the Euro zone.  Europe suffers from 4 problems:

  1. fiscal deficits-originally high interest rates brought inflation down, but then governments borrowed to expand social programs.  When interest rates rose, the debt problem traveled down an unsustainable path.  Debt/GDP ratios of 100+% are too high & banks in Spain & Ireland have capitalization problems.
  2. recession/low growth-government’s responses directed from Brussels have been to raise taxes & curtail spending, which has depressed demand, bringing on recession & unemployment rates of 11-20+%.  The fiscal contraction has led to slow growth, which is reflected by strict labor markets & over-regulation, resulting in decreasing competitiveness.
  3. banking crises-extensive borrowing led to housing bubbles, & when repayments declined, bank capitalization fell along with bond values.  Government assistance created more deficits.  Bankers became nervous about their own capital & stopped lending, which makes depositors nervous, so other Europeans are sending their money to German banks.
  4. current account deficits-Europe as a whole has a surplus, only because Germany’s surplus is so large.  The rest of the continent is in deficit.  These imbalances reflect the constraint of the fixed exchange rate of the Euro within Europe.  Less competitive countries cannot devalue their currencies vs. other European competitors.  Theoretically the Euro was supposed to bring convergence to rectify these imbalances, but it hasn’t happened yet.

So what to do to solve these problems?

The IMF has imposed austerity programs in Greece, Portugal, & Ireland, but they still can’t devalue their currencies to export more within Europe.  Angela Merkel of Germany posed the crisis as a European problem, but Greece is in far worse condition than the other countries.  There is no European solution:  it hurts Spain & Italy to even be compared with Greece.  The fiscal compact has had no effect. Germany will not agree to Europe-wide deposit insurance or a banking union.  Progress is being made.  Italy has implemented pension reform, which is bringing those costs down.  The IMF reported that if Italy were @ full employment, they would have a surplus this year.  Italy’s deficit will shrink from 3% of GDP to 1.5% next year.  The European Central Bank will buy country bonds in unlimited amounts as long as these countries abide by the rules, which will bring down interest rates.  The problem is this takes the pressure off of governments to reform & leaves open the question “How much should the ECB buy?”  So the likelihood in addressing the above-mentioned 4 problems:

  1. depends on the ECB’s strategy & if countries will accept their conditions
  2. these are of no help
  3. there is a little hope of improvement
  4. nothing addresses trade & current account deficits

A devaluation of the Euro of 25-30% would enable Europeans to increase exports to the rest of the world, & decrease imports, which would spur domestic demand.  Bank losses would dissipate, which would push up wages & prices.  If the Euro rises, that becomes a  more difficult problem to solve.

On the U.S., the outlook for America is better than that for Europe because there is no monetary problem with the Euro.  America needs to solve 2 problems:

  1. accelerate the recovery-GDP growth is less than 2% & we need 2.5% growth just to absorb new workers entering the labor force.  We need 4-5 years of 4% growth to get unemployment down to 5%.   The fed can do very little & neither Obama (focusing on education & the environment are too long-term to help right now) nor Romney (tax reform would bring rates down but it’s open to question whether this would provide a stimulus) seem to have a plan.
  2. avoid increases in debt-it’s worrying that debt/gdp ratio is rising from 40% to 70% & is projected to surpass 100% soon.  Social security & medicare are problems which must be slowed.  Neither presidential candidate has made a promise not to make cuts or modify benefits.  The bigger problem is to slow the rise in the cost of care.  Obama’s advisory board can revise rates down.  Ryan’s plan supposedly leverages competition to produce efficiencies.  This will be a work in progress regardless.