Getting the most out of Global and Local teams - the Transcultural approach

By Tim Gittins

A decade into transition, there is increased awareness in Hungary of cross-cultural management issues as Hungarian and expatriate managers constantly come into contact with each other. With declining expatriate employment at multinationals and more local control, national cultural issues might not always be seen as significant any more. But in fact, key senior positions are still predominantly held by foreigners.

Research of international joint ventures in Hungary in the 1990s suggests operational efficiency is improved if both Hungarian and expatriate employees set out to create a teamwork-based organizational culture, aimed at overcoming the misunderstandings that often arise from national cultural differences.

While there's a limit to how precisely you can assess the effects that "soft" cultural issues have on profitability, I performed my own research on cross-cultural working environments earlier this year. In all, I asked over 200 expatriate and Hungarian managers at 32 organizations about their perceptions of each other's training needs. The organizations included multinational companies, language schools, charities and small businesses. The survey was conducted in both English and Hungarian.

Most strikingly, while 83% of Hungarian managers surveyed felt they would "benefit greatly from participating in team-building exercises with expatriate colleagues," only 54% of expatriate managers felt the same was true of themselves. However, 69% of the expat managers felt Hungarians perceived foreigners as "unable to understand local (Hungarian) working practices."

As far as decision-making is concerned, 74% of the Hungarian managers surveyed said that expatriates need training in making "decisions with greater respect to Hungarian cultural norms." In contrast, only 56% of expatriates felt that Hungarians needed to make decisions more "quickly and effectively."

The two results together highlight that Hungarians are more emphatic than their expatriate peers in their wish to improve cross-cultural decision-making when they work together. Among other factors, this might be due to expatriates being more comfortable in accepting transnationally standardized working practices. A transnational firm typically operates as a global series of strategically interdependent local units. Companies that seek to operate across borders in such a way might consider adopting a transcultural training approach that seeks to compromise their global organizational culture with the specific national and cultural conditions in each country of operations.

Another major theme emerging from the survey was that expatriates felt Hungarians are slowly adapting to less bureaucratic organizational structures, but need more specific training in adapting to more flexible working practices.

Here lies perhaps the key challenge of transcultural training: to provide a reconciliatory approach across national boundaries consistently with global organizational cultures. Training therefore needs to focus on mutual understanding of both global and local working practices. One should not prevail over the other, as this can be destructive. To give an international example, last year's sale of BMW's U.K. Rover subsidiary, although largely due to financial difficulties, may have had an underlying cause in British unwillingness to accept the working practices of the German parent company. In this case managers from the host country appeared to reject the presence of foreign managers.

Although failure on this scale has not happened in Hungary, cross-cultural problems might result in high staff turnover, delayed projects with lengthened completion times, and most crucially, reduced profitability.

Percy Barnevik, former CEO of American construction company ABB, was quoted in 1998 as saying: "If a German manager selects four Germans for a task, you will be in a position to suggest an Italian or an American and ask him to think again. There's a disadvantage in doing this because you lose a little since maybe they will all have to speak in bad English instead of German or whatever. But the advantage is that you get the best people in place. And you build a global company."

Barnevik's words imply that companies need to consider other factors than purely technical ones when selecting members of project teams from different countries; they should also seek staffers who can communicate effectively with each other regardless of cultural differences. With English being the "official" language of several companies, the possibility of misunderstanding between, say, Danes and Hungarians might be quite strong although they could be technically well suited to working with each other.

Thousands of small and medium-sized companies account for over half of Hungary's GDP. These firms not only work in outsourcing roles for multinationals, but several of them work with foreign partners. And with large companies like oil and gas company MOL Rt beginning to establish cross-border ventures in the region, and with Hungary's imminent EU entry, the transcultural training approach may become more crucial in the future for an increasing number of local companies.