Culture’s influence on leadership

Marie Gervais, Global Leadership Associates Inc.

www.global-leadership.ca

Culture is confusing. If you think otherwise this introduction to cultural sensemaking by Osland and Bird (2000) should help:

If U.S. Americans are so individualistic and believe so deeply in self-reliance, why do they have the highest percentage of charitable giving in the world and readily volunteer their help to community projects and emergencies?

In a 1991 survey, many Cost Rican customers preferred automatic tellers over human tellers because “at least the machines are programmed to say ‘good morning’ and ‘thank you’”. Why is it that so many Latin American cultures are noted for warm interpersonal relationships and a cultural script of simpatia (positive social behavior), while simultaneously exhibiting seeming indifference as service workers in both the private and public sectors?

Based on Hofstede’s value dimension of Uncertainty Avoidance, the Japanese have a low tolerance for uncertainty while Americans have a high tolerance. Why then do the Japanese intentionally incorporate ambiguous clauses in their business contracts, which are unusually short, while Americans dot every ‘I’, cross every ‘t’, and painstakingly spell out every possible contingency? (p. 65).

Not confused yet? Let us tackle the subject of culture in business. Hypothetical Company Y is wondering how to appropriately brand their corporate culture and in the process improve their public image. They have spent countless hours reframing their vision, mission, tag line and value propositions and believe their corporate core values have been regularly promoted at all levels of the value chain. But when they hire a consultant to do the cultural audit, the company finds that the corporate “ideal” culture is in reality sabotaged by the corporate “as is” culture. Shocked, Company Y insists that this has to change. But how? Problem indicators might be say, low retention of foreign hires at management levels, shrinking market share, difficulty attracting and retaining qualified candidates, failed acquisition transitioning, poor innovation, inability to adequately predict market trends or clarify target markets. Other difficulties could be slow adopting of new technologies, or negotiating and implementing standardized procedures and policies across global operations.

These problem indicators bring out further questions of culture when you start to think about it.

Is culture in business about creating a business story everyone can agree to align their dashboards to? Do they perceive of the company business culture as being part of who they are or just the C-level executive’s fantasy? Does it matter? What about ethnicity? Or gender? Generational difference? What does culture have to do with breaking the glass ceiling for women and marginalized populations? Or the link between diversity

and creativity for increasing access to new customer groups? Is it about Corporate Social Responsibility, equity or parity? Or is it about organizational structure, global impacts or is culture really all about change management? As was inferred by the Company Y story, these kinds of questions are increasingly important to consider because they point to both direct and indirect effects on the bottom line. If manufacturing leaders want their businesses to stay current, viable and profitable in today’s volatile economy it becomes increasingly important to make some sense out of the influence of culture on business. Ultimately, given the importance of leadership to both corporate culture norms and cultural change, how culture plays out at the executive level matters.

For the sake of context we need a basic understanding of cultural sensemaking. Consider culture as any group. Group members interact with each other. As they interact over time they create norms that define “our” group. Unconsciously, our group becomes known to us by “how we do things” and our sense of who we are and what we do creates a cultural identity. Others recognize the differences between groups by how each variant “performs” their group interaction norms. At that point we have what is referred to as visible culture, the paradox being that although group norms are visible to outsiders, they are usually invisible to those on the inside.

With this understanding of how culture forms, consider that we all belong to a variety of cultures simply by interacting with people in our lives. We are all members of gender culture, age culture, professional culture, social class culture, and linguistic culture. There is: regional culture, urban or rural culture, geographic culture (are you surrounded by mountains, ocean, dessert, prairie, jungle or forest?), ethnic culture, national culture, technological culture, dominant/minority culture, racial culture (with emerges in minority settings under various historical contexts) and traditional/modern culture. This means that unless we have grown up in a cave or a box, we are all, in a sense, multicultural. Given this experience with interactions between groups, we should have some capacity to understand and negotiate across difference. The fact that men and women still don’t understand each other after centuries of interaction, points to the impossibility of assuming someone else’s culture as your own. Equally important is that men and women, in spite of finding each other’s gender mysterious, perplexing and often irritating, have enough common ground to continue finding new ways to understand and enjoy each other.

In every culture there are positive and negative developments. No culture is relative, neutral or free from dysfunction. Cultures have contradictions and paradoxes that neither insiders nor outsiders can explain or solve. Take for example Americans and sex. An hour in front of the television will reveal both extreme prudishness and sexually explicit material revealing an uncomfortable coexistence of conflicting and mutually antithetical views. How is an outsider to understand what the “typical” or “ideal” or “appropriate” sexual cultural norm is within American culture? It is not possible because the situation is problematic and unresolved.

The example of Canadians’ apparent appreciation of diversity coexists dissonantly with overt racism towards Aboriginal people and regular publications about how

‘dangerous’ it has become to populate Canada with undesirable immigrant minorities. Titles such as “Lies, damned lies and multiculturalism,” (Mansur, 2011) make Canadian popular variants of “We are the world,” appear hypocritical.

In the business context, a company that wants to focus on increasing women in upper management may be proud of the fact that a recent survey shows women feel very welcome in the company, however there has never been a female board member and any upper level applications by females are rejected on the basis of “fit” to the company culture.

To understand these and other paradoxes, we need to frame the argument in terms of the influence of national culture on business organizational structures and the dynamics of cultural norming. According to research done by Li and Harrison (2008) on the influence of national culture and the composition and leadership structure of director boards, corporate ownership structures reflect the surrounding national culture’s structure, values and taboos. We prefer organizations that are consistent with our own cultural orientations (another explanation for “fit”). We have shared and usually unconscious beliefs, about what is an appropriate organizational structure and how it should operate. Within the national context, corporations that reflect most closely the national cultural structure will be considered the most desirable and receive the most rewards. This spawns a similarity in corporate boards that allows everyone to understand and agree with one another, but it is not necessarily more efficient, better at innovating or more productive because it promotes a kind of group think mentality.

The same effect has been documented in the GLOBE research on leadership across cultures. Leadership characteristics are valued differently and manifested differently in various cultural contexts (Koopman, Hartog and Konrad, 1999). The authors found that European leadership styles were quite distinct between the North/West and South/East with regard to: achievement orientation, future orientation, assertiveness, collectivism, power distance and uncertaintly avoidance.

In all European countries, administrative competence was perceived of as an important leadership quality while autocratic behavior was perceived of as inhibiting effective leadership. Interestingly, although disliked, autocratic behavior was tolerated more in upper levels of leadership and less in middle management levels. Within similar regions there were also differences. Germanic leadership did not see self-centeredness as inhibiting leadership where as Anglo countries saw participative leadership as the desired norm and self-centeredness as problematic. Political history certainly plays a part in these norms.

Six leadership factors emerged strongly with two as the most universally prominent. Charismatic/value-based leadership and team-oriented leadership were considered the most desirable, even if in the “as is” version, they were not always present to the expected degree. Narcissistic, participative, humane and autonomous leadership styles were country specific with regard to both desirability and practice.

Other influences to both leadership style and organizational structure were: language, proximity, colonization and the effects of various political systems (socialism, capitalism, communism), religion, economic systems, economic development, technological development, political boundaries and historical conflict. Prevailing industry types as well as when various industries emerged in the country’s history, and climate (heat, rain, snow, environmental issues) were all additional factors.

Something to further complicate culture in management is that countries are increasingly influenced by each other and changes to culture are ongoing. In 1999, Serrie documented Chinese cultural values as following these principles:

1. Emphasis of human relationships over legal agreements.

2. Emphasizing correct behavior and social image.

3. Combining merit and sinecure.

4. Emphasizing modesty and humility.

5. Respect for authority.

6. Discouraging initiative.

However Shapero’s (2010) Eckerd College student interviews with Chinese managers revealed that the Chinese are evolving quickly into what they call “modern Chinese” with personal and material aspirations that are no longer as consistent with their Confucian roots as the previous generation’s values. Jack Perkowski who has been living and working in China as the manager of JFP Holdings for 20 years, states that the West ignores Chinese evolving ways of thinking and doing to its own detriment (2011). He explains that to do business with a Chinese target market, one needs to understand the Chinese attitude towards money. Chinese society is divided into those who have more recently acquired means (400 million at a per capita income of $8000) and those who are living in dire poverty on 1/10th that amount (900 million). Two sets of prices would be expected under the circumstances, but both will need to consider the context of limited disposable income. Perkowski also states that the modern Chinese worker is no longer satisfied with a paycheck. Education is better and employees want training and opportunities for advancement. Consequently Chinese management and foreign companies operating in China need to consider the current economic situation, past cultural influences and ways to adjust to new Chinese realities.

A whole series of articles could be devoted to explaining pan-regional, ethnic and national differences in leadership style preferences, ownership patterns, chief officer appointments, board membership and organizational structure. Suffice it to say that the over arching themes that most concern us are:

a) Organizations form around expected national norms and these norms are rewarded to the degree that they mirror norm expectations. This is significant

in that it forms institutionalized (on both corporate and national levels) barriers to any change.

b) Global interactions across cultural difference will be successful to the degree they are responsive to tiered, confusing or paradoxical cultural value responses. Osland and Bird (2000) explain this via the metaphor of a succession of card games. With each new game the players are dealt a new hand and have a new context in which to make decisions. This means values choices at one level will be trumped at another level because of contextual change.

c) Although there will always be differences in corporations and their cultures around the world, research on the future of work (Frank and Moore, 2010) shows we are generally moving towards a globalizing structure that is becoming the international business norm. This structure has been identified as a tendency towards team work, increased interactivity, and a flattening of hierarchical structures due to increasing interdependence on each other’s skill sets. It will have high interactivity through sophisticated technological interaction. And it will require a culture of ongoing learning and responsiveness to change that has been unprecedented. This means that whatever our national and regional cultural preferences, we will all need to change at least some past behaviors to work within these parameters, or risk becoming redundant in the global economy.

One way we can deal with the complexity of cultural context is to create new corporate cultural stories and to keep telling them until they become part of who we are. Peter Bregman (2009), writes that cultural change comes with doing story-worthy things that represent the culture we want to create. Then we let other people tell the story and watch its influence spread. A second way to influence corporate change is to tell the stories of what other people did to create the kind of changes we want to see. Perhaps it is not possible to change a culture with stories, but it may be possible to create the corporate “climate” that will encourage the growth of what we would like to see. Jack Welch (2005) and other highly successful managers have found cultural change possible when they focused on the end user and walked backwards through the company to see how focusing on that final goal would change “the way we do things around here”. This is a third way to build a cultural story.

A fourth way is to consider who is not at the table and how to get them there. How do you know? One way is by asking the missing group members for their stories. Another way is by matching the story to the results and then reflecting on how to reach different results. The Bay Area study of Asians as Corporate Executive Leaders (2009), showed that people’s stereotypes of Asians as upwardly mobile, hard working achievers needed a reality check with who was actually at the table. Researchers Gee and Hom found that of the 100 largest companies in an area of the highest Asian population in the USA (41% undergraduates, 23% overall Bay Area population and 30% in San Francisco and Silicon Valley) there were 13 Asian CEOs, which looked reasonable at first glance. When this was further analyzed, the group of 13 was

composed of Indian, Pakistani, Bangladeshi, Japanese, Filipino, Koreans and Vietnamese. Actual Asian CEOs were now 6 of the 100. A discussion with 50 mixed Asian and non-Asian executives revealed their perceptions of the root causes:

1. A common misconception that there is “no Asian problem”, when in fact there is a large gap between entry level employees and opportunity to advance to management.

2. No leadership from the Asian executive community to help Asians advance since it is culturally assumed that hard work will always result in appropriate advancement.

3. Fear that Asians raising the question of advancement will be considered troublemakers.

4. Lack of Asian enrollment in executive networks.

5. Passive deference to hierarchical authority, which is viewed as incompetence by non-Asian decision makers. This means Asians are usually passed over at promotional opportunity moments.

6. Poor or only adequate mastery of English.

7. Lack of political managerial initiative for networking especially outside of Asian circles.

8. Aversion to risk and tendency to avoid challenging assignments where there is a possibility of loss of face or failure.

A Canadian study (Hong, 2009) revealed similar findings with regard to integration of immigrants into corporate business management. When participants told the story from their perspective, they believed that “insufficient English, ethnicity, cultural differences, incompetence with regards to leadership management skills, and the lack of socialization into Canadian management expectations” (p. 179) were the main factors for lack of immigrant advancement.

If we place this research next to the research on organizational culture it becomes obvious that there is a dual concern with regard to capacity building for “the future of work”. On the one hand the cultural influences of corporations are rarely responsive to initiatives for change and reward and replicate those people and structures that are most like them. On the other hand, those who wish to be sitting at the table are also practicing the norms of their cultures in ways that limit their capacity to advance and/or influence corporate culture. We may be so busy trying to categorize and stereotype each other that we miss the important information coming to us from the exercise of cultural sensemaking. We dismiss, ignore or neglect to reflect upon the complex cues coming from cultural interaction and do not see the opportunities for responsiveness. Maybe we are simply not interacting enough; there has been an evolution of cross-cultural interactions that has progressed from killing people who

are different from us, to tolerance, to working and living next to each other. But that does not mean we are really interacting.

Another consideration is that contextual circumstances make it difficult for various cultures to even come close to sitting at the table, which is where equity, parity and CSR come into the picture. Transearch International (2009) research on women and the glass ceiling found that while men have a long and continuous career path, women who stop to give birth and care for the children along the way have interrupted career trajectories. Those few female CEOs who operate at the highest echelons either don’t have children or have a husband who stays at home with the children. Very few women are willing to sacrifice their children for their career. This translates into women taking lower risk positions, lower pay, less hours and less demanding career opportunities so as to better juggle the responsibilities of motherhood. Biology and societal expectations of mothers adds a barrier to upward mobility that cannot be explained away.

Consider the immigrant scenario again. If you come from a country where you are technologically far behind your new country, it can take a while to catch up. Add to that the difficulties of trying to understand the complexities of operating in English as your third or fourth language, and the fact that very few “locals” offer to take immigrants under their wing to mentor them on what is culturally appropriate. This means that it is not so simple to “interact more with people who are not from your culture”. After a number of cool responses and outright rejections, it becomes harder and harder to make the effort.

Additionally visible minorities in the USA and Canada are not being hired at parity with their educational attainments (Konrad, Maurer and Yang, 2005; Catalyst, 2009) in spite of speaking English as a mother tongue and being culturally congruent with their white peers. Fortune 500 Black CEOs in the USA were only 10 in 2009. In 2011, six remain. We cannot rule out the persistent history of discrimination that taints all countries and which is the cause of unconscious bias whether or not individuals consciously value diversity and inclusion. Gladwell’s book “Blink” (2005) documents this tendency to bias against minorities (including minorities unconscious bias against minorities) so clearly and in so many different contexts that it cannot be ignored as a factor in getting a seat at the table.

One corporate mentorship study (Ragins and Cotton, 1999) showed that no matter what the formal mentorship arrangement, the same consistent results placed women at a disadvantage and men mentored by women at a disadvantage. A man mentoring a man resulted in both promotions and salary increases. A man mentoring a women resulted in promotions but no salary increase. A woman mentoring a man resulted in neither promotions nor salary increase and neither did a women mentoring a woman, although women mentorships resulted in increased confidence in the mentee. Both women and men preferred a male mentor because systemic bias favored the advancement of men or brought women closer to opportunities for promotion no matter how qualified the female mentors were.

On a less depressing note, there is the subject of game changers. The volatile economy, lack of manpower globally due to shrinking workforce, severe talent shortages, informed and engaged customer demand, the rise of the BRIC and other developing economies as forces to be reckoned with, and the exponentially growing capacity to communicate anything faster than the speed of light through technology, have created an environment for cultural change. Windows of opportunity are appearing and the resilient and visionary few who see them are providing others with role model examples.

Heather Riesman, owner and CEO of Indigo books who aggressively took over her main rival, Chapters while they were attempting to sue her, is a successful woman with children and a husband who works outside the home. Ursula Burns is the first fortune 500 black female CEO in the USA at the head of Xerox. Indra Noovi as CEO of Pepsico was able to effect so significant a cultural change in the company’s corporate structure as to have it embrace a measurable outcomes target of no environmental footprint anywhere in the world where it has operations. While creating that change she became the richest woman in the US. Game changers are starting to show up from unexpected places and when they make new rules and create new growth structures, national cultures will be affected. The history of cultural change is one of ongoing interaction between structure and agency. We can only hope that this interaction will become more and more interactive and responsive as the world struggles to adjust to increasing challenges.

In summary, leadership is influenced by the national cultural norms that surround it. As we learn to embrace the complexity of cultural paradox we will make more responsive decisions with regard to incorporating cultural knowing into corporate decision-making. All cultures have a rocky road ahead in this journey because there is a tendency to do what we already know and to reject what seems unfamiliar. Mainstream society and its representatives in C-level corporate teams have a responsibility to consider who is not at the corporate table and to work to remove barriers to get those seats filled. We need to do this because the world is increasingly volatile and it will take all brains at the table to deal with it. As we become more skilled at interacting at a higher, more culturally responsive level, the collective diversity of experience combined with an improved human relations climate will create a context conducive to more solid problem solving, decision-making and increased profits. This is the story we can start to tell ourselves. As it spreads, it will replace the old stories and create new cultural corporate learning until the culture we desire becomes the culture “as is”. Manufacturing executives can lead the way. Spread the word.

References

Black Profiles, Entrepreneurs and Executives. http://www.blackentrepreneurprofile.com/fortune-500-ceos/. Correct on July 10, 2011.

Bregman, Peter. (2009, June 25). A good way to change a corporate culture. HBR blog network. http://glogs.hbr.org/bregman/2009/06/the-best-way-to-change-a-corpo.html. Correct on July 10, 2011.

Mansur, Salim. (2011). Lies, damned lies and multiculturalism. Calgary Sun, February 12. http://www.calgarysun.com/comment/columnists/salim_mansur/2011/02/11/17246941.html. Correct on July 10, 2011.

Catalyst. (2008). Career advancement in corporate Canada: A focus on visible minorities; workplace fit and stereotyping. Toronto: Catalyst. www.catalyst.org/file/211/cat_vm_workplace.fit_final-2.10.pdf. Correct on July 10, 2011.

Frank, Malcom; Moore,Geoffrey. (2010). The future of work: A new approach to productivity and competitive advantage. Teaneck, NJ: Cognizant.

Gee, Buck., Hom, Wes. (2009). The failure of Asian success in the Bay Area: Asians as corporate executive leadership. CEI: A Joint Project of Ascend and Asia Society. www.ascendleadership.org/resource/.../the_failure_of_asian_success.pdf. Correct on July 10, 2011.

Gladwell, Malcolm. (2005). Blink: The power of thinking without thinking. New York: Black Bay Books.

Hong, Thomas. (2009). An exploratory study of visible minority leadership in major Canadian corporations. Published doctoral dissertation. University of Phoenix. http://thomas18.com.

Konrad, Alison M., Maurer, Cara., Yang, Yang. (2005). Managing for diversity and inclusiveness: Results of the 2004-05 Ivey Strategic Diversity and Inclusiveness Survey. London, Ontario: The University of Western Ontario, Richard Ivey School of Business. www.ivey.uwo.ca/faculty/Konrad_Report_07.pdf. Correct on July 10, 2011.

Koopman, Paul L., Den Hartog, Deanne N., Konrad, Edvard. (1999). National culture and leadership profiles in Europe: Some results from the GLOBE study. In Peter Herriot and Fred Zijlstra (Eds.) and Karel De Witte and Japp J. van Muijen (Guest Eds.), The European Journal of Work and Organizational Psychology, Special Issue on Organizational Culture. 8(4):503-520.

Li, Jiatao and Harrison, J. Richard. (2008). National culture and the composition and leadership structure of boards of directors. Corporate Governance, 16(5):375-385.

Osland, Joyce S. , Bird, Allan. (2000). Beyond sophisticated stereotyping: Cultural sensemaking in context. Academy of Management Executive, 14(1): 65-79.

Perkowski, Jack. (2011). Creating a Chinese company. http://businessforum-china.com/article_detail.html?articleid+48. Correct on July 10, 2011.

Ragins, Belle Rose; Cotton, John L. (1999). Mentor functions and outcomes: A comparison of men and women in formal and informal mentoring relationships. Journal of Applied Psychology, 84(4):529-550.

Serrie, H. (1999). Training Chinese managers for leadership: Six cross-cultural principles. Practicing Anthropology, 21(4):35-41.

Shapero, Morris A. (2010). The evolving mindset of the Chinese manager. Eckerd College. www.eckerd.edu/academics/internationalbusiness/.../china_research08.pdf. Correct on July 10, 2011.

Transearch International. (2009). Scratching the surface: Women in the boardroom. Why companyier must help women leaders shatter the glass ceiling. Perspectives from TRANSEARCH International. http://www.transearch.com/press_room/display2.asp?nID=218. Correct on July 09, 2011.

Welch, Jack. (2005). Winning. New York: Harper Collins. Hong, 2009, 179