Interviews

Diversity contributes to firm-wide success – but SMEs should keep cultural differences in mind

6 min read

13 October 2015

There has always been potential for SME bosses to expand their horizons and trade across the globe. But with mobility so often being inhibited due to the lack of knowledge about a country, its time that SMEs get a better grip on the cultural differences found in various countries.

The latest edition of Margaret Thatcher’s official autobiography contains a revealing anecdote about what she thought about her German opposite, Helmut Kohl. “My God, that man is so German!” she is supposed to have said after Kohl tried to charm her with a dinner of pig’s stomach. Fast forward 30 years and one sees Thatcher’s successor, David Cameron, attempting to schmooze one of Kohl’s – Angela Merkel.

The world might have contracted and English might be the lingua franca of business, but cultural differences are still as important as ever. What is acceptable in the UK would be frowned up in Korea, while a working practice in France wouldn’t go down well in the US.

According to Erik van der Meijden, CEO of business software provider Exact, if large companies are still not sufficiently attuned to this, then SMEs are even less aware of the detrimental effect that doing or saying the wrong thing with an international client can have.

“To avoid clashes in an international team, business leaders need to ensure those playing their part in a global workplace are given an understanding of the possible cultural differences between people, and how to ‘read’ specific behaviours,” he said. “Providing the tools to help employees adapt or modify behaviours and communications are therefore vital to ensuring a more connected workforce – something that you simply cannot avoid when adding globalisation to your business’ agenda.”

According to research from The Economist Intelligence Unit (EIU), cultural diversity can contribute to the success of a business by bringing in-depth local cultural understanding that bosses can use to their advantage. “The lack of initiatives to integrate corporate culture properly is a contributor to the failure of 70 per cent of all mergers and acquisitions (M&As), while 30 per cent of integration failures are attributed to culture,” said the EIU.

But it added: “Cultural diversity can contribute to firm-wide success by bringing in-depth local cultural understanding that organisations use to their advantage. Multicultural workforces also contribute to creativity and innovation thanks to diverse perspectives and experiences. Seeking talent worldwide provides a broader recruitment pool than one with a restrictive, domestic focus. Similarly, global sourcing provides better opportunities for purchasing as well as access to new products and markets.”

If success hinges on the cooperation of this global workforce, it’s business critical that an international team is aligned and that people doing business with those from another country are culturally aware, claimed van der Meijden. He said: “Often when there are instances of miscommunication, it can cause frustration and annoyance between team members. This emotional reaction can be incredibly damaging to personal drive, job satisfaction and team morale.”

Sending and perceiving communications is key, he argued. “Without facial expressions and body language to help portray a message, team members can often misunderstand the tone or the message itself, leading to confusion and frustration.”

Read more about business etiquette in different cultures:

He offered an example. People from the Netherlands are frank and open in emails, whereas Brits are veiled and use lots of words to shield what they are saying out of a need to be polite. If a British employee is not aware of this difference, they might consider their Dutch colleague to be rude. The Dutch might think that British suppliers or customers are waffling on or sending an email that’s not clear.

People from different cultures perceive time and the importance of time versus relationships in different ways. “For example, in some cultures it’s considered rude or disorganised if someone is late for a conference call, where in others this would be rationalised as the person being caught up in dealing with an important enquiry from someone who takes priority,” said van der Meijden.

In this instance, the fact that they put relationships above time is not personal – instead it’s based upon cultural differences.

What van der Meijden calls “space perception,” is another issue. “It’s well known that some cultures are more tactile than others, but what is really meant by ‘space perception’ is personal thinking time,” he said. “When you direct a question to a European team member, they would usually answer within seconds, whereas an Asian team member is more likely to pause for thought, maybe even deferring input for a day or two to have thinking time.

“Understanding this difference means that meetings can be put in the diary for a longer period of time, and information can be shared ahead of deadlines to make sure everyone is comfortable with decisions.”

As more SME bosses trade internationally they need to remember that even in this increasingly global business environment taking into account those quirky little details of human existence can be the difference between failure and success.