Saturday, 19 May 2007

Intercultural Competence

Intercultural Management:
An Integrated Model

For many companies, internationalization is not only a strategic option, but sometimes a necessary step to ensure continued growth and market success. By expanding their business abroad, they are faced with two additional dimensions of complexity: general international regulations and cultural peculiarities.

When international undertakings are unsuccessful or do not perform on the expected level, the difference in culture is often blamed for the failure. However, benchmarks from successful examples of internationalization clearly prove: not the difference in culture is the cause for failure – it is bad management in respect to the cultural dimensions!

While the professionalism in preparing the strategic internationalization processes has increased over recent years, the implications of the different culture(s) are still often underestimated as a decisive factor for long-term success. No matter if it refers to the personal cultural identity of a country, to the working culture in a society or to the corporate culture within a company, they all have one thing in common: understanding and preparing for them is one of the key components of success.

Few companies have understood or learned to adequately prepare their management staff for the new complex tasks they are faced with. Language courses or intercultural trainings are slowly gaining momentum, but in most cases they are individual short-term measures not embedded into a holistic approach to intercultural management. But still today, the staff selection process is often done unprofessionally and without respecting the different requirements managers will have to fulfil. This negligence appears rather grotesque when considering the implications of the possible failure: just the replacement of an unsuitable or inadequately trained manager can easily amount to several 100,000s €! And this estimation does not include the opportunity costs or the negative long-term repercussions on the respective markets...

According to my conviction, intercultural management for international business needs to follow an integrated approach if it is to reach the highest probability of success. This can only be achieved when the processes for selection and empowerment are combined and aligned to mutual objectives. In order to ensure that, I have developed a model to incorporate these two dimensions, which is based on the approach of Prof. Dr. Eckart Koch from the Munich University of Applied Sciences.

During the selection process, firstly the personal disposition of the potential candidates are is probed, including factors like willingness to internationalize, preparedness to endeavour, social competence and other soft skills. Secondly, the management competence with regard to technical knowledge, project experience and hard skills is examined. The assessment can be done on a general level or – where reasonable and practical – already with relation to the requirements of the future assignment in a specific cultural environment. By designing an exclusion criteria catalogue, major gaps can be detected during the selection process, thus avoiding wrong and costly choices.

The empowerment process starts out with providing the theoretical background on intercultural knowledge, with regard to models, methodologies and concepts. This know-how is then actively applied and trained, thereby turning it into intercultural competence. The additional step here (further to the intercultural trainings as they are usually done) is combining the newly acquired skills with the previously assessed hard skills, thereby creating an intercultural management competence.

In difference to other existing models, the focus of the presented approach lies on the personal disposition of the individual manager. Its importance for success can and must not be underestimated in the selection process. Some experts even argue that given the right willingness to go abroad and adapt, the intercultural empowerment can be reduced to a minimum. I would argue that while this might be apt for a handful of natural born intercultural managers, in most cases the intercultural knowledge and training are crucial.

Despite the given facts, many companies are hesitant or even unaware when it comes to the implications of a different culture on management. The increasing professional degree in designing internationalization strategies, also with the help of specialized external consultants, helps to raise the respective awareness.

But without that, every company should perform a simple but blunt risk assessment of its international venture: what are the real costs of possible failure and what is the probability of occurrence – and how much does it cost now to reduce that risk to a minimum?

Andreas Hauser