CH-12-13 HRM in the Local Context: Knowing When and How to Adapt – Multinational Management: A Strategic Approach : Chapter Notes

This Document Contains Chapters 12 to 13 CHAPTER 12 HRM IN THE LOCAL CONTEXT: KNOWING WHEN AND HOW TO ADAPT Learning Objectives •Have a basic understanding of how the national context affects HRM practices •Describe how recruitment and selection practices differ in different national contexts •Identify possible host adaptations in recruitment and selection practices for a multinational company •Explain how training and development techniques are used in different countries •Name sources of high-quality workers in different nations •Understand how training must be adapted to host country workers •Identify how performance evaluation and compensation practices differ in various national contexts •Discuss possible host country adaptations in performance evaluation and compensation practices for a multinational company •Understand how labor costs vary among nations •Appreciate how the national context and historical conditions affect the relationship of management and labor in different countries Introduction •To avoid costly mistakes in HRM, multinational companies need to consider several key questions: •How can we identify talented local employees? •How can we attract these prospective employees to apply for jobs? •Can we use out home country’s training methods with local employees? •What types of appraisal methods are customary? •What types of rewards do local people value (e.g., security, pay, benefits)? •Do any local laws affect staffing, compensation, and training decisions? Why Do Nations Differ in HRM? •National context – national culture and social institutions that influence how managers make decisions regarding the strategies of their organizations Exhibit 12.1 How the National Context Leads to National Differences in Local HRM Practices (Shows a model of how the national context leads to national differences in HRM policies and practices) •Basic norms and values regarding gender, age, and family and friends influence HRM practices •Because countries differ widely with regards to social institutions, multinational must select and implement HRM practices that meet the demands of a society’s social institutions •Resource pool – all human and physical resources available in a country •Five key factors influence the resource pool •Quality, quantity, and accessibility of raw material •Quantity, quality, and cost of personnel available •The scientific, technical, and market-related knowledge available to firms •The cost and amount of capital available to firms for operations and expansion •The type, quality, and costs of supporting institutions such as the systems of communication, education, and transportation •Natural-factor conditions – national resources that occur naturally, such as abundant water supply •Induced-factor conditions – national resources created by a nation, such as a superior educational system •Major issues that affect national differences in HRM •Education and training of the labor pool: The type and quality of labor available to companies is a key issue in HRM. A country’s educational system provides the raw human resource material for companies •Laws and cultural expectations of selection practices: The laws of a country and the people’s expectations tell managers the “right” way to find new employees •Types of jobs favored by applicants: Cultural values and norms regarding the “best” and the “right” places to work •Laws and cultural expectation regarding fair wages and promotion criteria: Values, norms, and institutional expectations influence compensation decisions and the relationship between performance appraisals and compensation •Laws and traditions regarding labor practices: The legal position and power of unions and the historical relationships between management and labor have profound influences on HRM practices in labor relations Recruitment Exhibit 12.2 Steps in the Recruitment Process (Summarizes the major steps in recruitment) •First, managers determine that there are vacancies •Second, employers determine the types of people and skills necessary for the job •Third, employers generate a pool of applicants •Recruitment strategies to generate the applicant pool •Walk-ins or unsolicited applications •Advertisements placed in newspapers or on the Internet •Company Web site job postings – listing of vacant positions on the firm’s Web site •Internal job postings – company listings of vacant jobs targeted at current employees •Public and private personnel agencies •Placement services of educational institutions •Current employee recommendations •National and business cultures determine the “right way” to find employees, but the norms of organizational and occupational cultures also affect recruitment Recruitment in the United States •U.S. companies use all types of recruiting strategies, but U.S. managers do not judge all recruitment strategies as equally effective Exhibit 12.3 Effectiveness of Recruiting Sources for U.S. Companies by Job Category (Shows the relative effectiveness of recruitment strategies in the United States for four job categories) •For all types of positions, U.S. managers see newspaper advertising as one of the most effective recruitment channels •College or university recruitment was judged among the most effective only for professional/technical jobs •Managers believe that employee referrals produce only marginal success •The belief in the U.S., that open and public advertisements are the most effective recruiting strategy, reflects U.S. individualistic cultural values Recruitment •Recruitment in collectivist societies tends to focus on the in-group, such as the family and friends of those already in the organization •Most Korean companies recruit blue collar workers by back door recruitment – prospective employees are friends or relatives of those already employed •Similar to the Japanese system, Korean recruitment of managers emphasizes looking for candidates at prestigious universities, whose recent college graduates are favored over managers with experience •The International Social Survey Program (ISSP) is a cross-national collaboration dedicated to the collection of important data related to work and work orientations •ISSP’s comparisons of the forms of recruitment confirm that both national culture and social institutions influence recruitment practices by encouraging people in a given society to prefer various ways to look for jobs Exhibit 12.4 Preferred Ways to Look for a New Job: Public vs. Private Agency (Illustrates, for selected countries, whether individuals were registered with a public or a private agency in their job-seeking efforts) •Individuals from Sweden, Norway, Hungary and France were more likely to register with a public agency as one way to find a job •Both former communist societies (e.g., Hungary, Slovenia) and socialist societies (e.g., Sweden and Spain) are heavily influenced by governmental regulation and policies and it is therefore natural that individuals from these societies rely on their governments as one of the ways to find a new job •Individuals in countries where governments play a lesser role (e.g., U.S., U.K., and New Zealand) are more likely to rely on private agencies Exhibit 12.5 Preferred Ways to Look for a New Job: Answered Advertisements vs. Advertised in Newspaper (Shows which countries have the highest preference for advertising in newspapers or responding to newspaper advertisements) •Individualistic countries (e.g., U.S., U.K., and New Zealand) prefer open recruitment forms which depend on open competition based on skills and qualifications Exhibit 12.6 Preferred Ways to Look for a New Job: Direct Application vs. Asking Friends or Relatives (Shows, by country, whether individuals prefer direct applications to companies or asking friends or relatives) •Individuals in countries that are high on individualism or femininity (e.g., Canada and Sweden) are more likely to apply directly for jobs •Direct applications are also reflective of open forms of recruitment and cultural norms of individual achievement and equality •Individuals in socialist societies (e.g., Italy, Poland, and Hungary) prefer to ask friends or relatives as a means to get a job Selection Selection in the United States •Experts on human resource management identify a series of steps in the selection process Exhibit 12.7 Typical Steps in U.S. Personnel Selection (Shows steps in the selection process, from the initial application to the final hiring) •The aim of typical U.S. selection practices is to gather quality information on a candidate’s job qualifications •The ideal selection then results in a match between the applicant’s skills and the job requirements •Focus on a person’s achievements (e.g., education, natural ability, experience) and not on group affiliations such as the family •Job qualification tests must predict job performance, and personal information collected during the interview must be relevant to the job Selection in Collectivist Cultures •The hiring process in a collectivist society always takes the in-group into account •Preference is given to hiring relatives, first of all of the employer, but also of other persons already employed by the company •In selecting employees, collectivist cultural norms value potential trustworthiness, reliability, and loyalty over performance-related background characteristics •In cases when needed skills are not available inside the family, the selection process still prioritizes personal characteristics over technical characteristics •In managerial selection in the collectivist Korean culture and the moderately collectivist Japanese culture, high school and university ties substitute for family membership Implications for the Multinational: Recruitment and Selection •Recruitment of host country work and managerial talent requires that the managers of a multinational company understand and adapt to local practices •In societies that use backdoor recruitment or personal contacts for recruitment, foreign multinationals may not have access to the appropriate recruitment channels •What happens when a company does not follow local norms in recruitment and selection? •First, they may not get the best potential employees •Second, they may offend local cultural norms or break host country laws •Multinational managers must always assess the tradeoff between following home practices that get what they believe are the “right” people for the job against the costs and benefits of following local traditions •Many companies are now using electronic human resources (e.HR) to manage their human resources Training and Development •Within any country, training and development needs vary widely •The cross-national differences in training and development are most associated with institutional differences in national educational systems •Cross-cultural training and development differences are also associated with the degree of emphasis placed by the national governments •Cultural values regarding types of educational credentials and other personnel practices such as life time employment also influence training and development needs Exhibit 12.8 Training Systems around the World (Gives an overview of work-related training systems in use throughout the world) Exhibit 12.9 Key Specific Training and Development Characteristics of Selected Countries (Presents some specific detail about training in a number of countries) Training and Development in the United States •Companies with over 100 employees invest over $60 billion in training Exhibit 12.10 Skills Taught by U.S. Organizations (Shows the types of skills taught to employees) •The most popular training topics are management development and computer skills •In spite of the billions of dollars invested in training, training in the U.S. does not reach all workers – estimates are that training is provided to only one out of ever 14 workers •Because weaknesses in U.S. secondary education, the pressure on U.S. businesses to supplement basic educational training will increase •The shift in emphasis of the U.S. economy from manufacturing to services areas is predicted to be an important issue in the future •The service sector tends to be very capital and skill intensive and requires that employees have not only the appropriate technical skills but also have critical thinking skills, team building skills, and learning abilities •This suggests that there may be a widening gap between what companies emphasize in their training programs and the skills required for the future •A further issue compounding the problem is that recent pressures to cut costs have resulted in more U.S. companies outsourcing their training needs •Predictions of high needs for training have resulted in some calls from business and government for German-style apprentice programs •In such programs, the government requires industry to provide vocational training to workers in exchange for tax benefits Training and Vocational Education in Germany •Sophisticated and standardized national system of vocational education and training provides a major human resource for German industry •Two forms of vocational education in Germany •(1) General and specialized vocational schools and professional and technical colleges •(2) Dual-system – a form of vocational education in Germany that combines in-house apprenticeship training with part time vocational school training and that leads to a skilled worker certificate o Ultimately, one can achieve the status of a Meister – in Germany, a master technician o Produces a well-trained national labor force with skills that are not company specific o Results from a collaboration of employers, unions, and the state o Recent cutbacks in German companies and high German unemployment have resulted in fewer apprenticeships Exhibit 12.11 German’s Apprenticeship Program Under Pressure (Shows that many firms have cut the number of apprentices to cut costs or have called for more company-specific skills) •Besides their national system of vocational education, German companies invest heavily in training with four out of five workers receiving some in-house training Implications for the Multinational: Training and Development •Before setting up operations in a host foreign country, multinational managers must consider the qualities of the workers and sometimes of the managers in the host country •They must also examine the feasibility of exporting their company’s training techniques to the host country •Adaptation of management development practices to different national contexts depends significantly on the intended use of host country managers •If host country nationals are limited to lower management levels, then multinational companies may follow local management development practices •In situations where multinational companies allow and expect host country nations to rise to higher levels of management, however, the parent company’s corporate culture dominates management development policies Performance Appraisal •All companies at some point must deal with the human resource problems of identifying people to reward, promote, demote, develop and improve, retain, or terminate •The fundamental assumption in the West, and in particular, in the more individualistic cultures, is that performance appraisal systems provide rational and fair solutions to these human resource problems •The cultural ideal is a meritocracy, where good performers get more rewards Performance Appraisal in the United States •The U.S. performance appraisal system represents cultural values that espouse links among individual rights, duties, and rewards as well as a legal system that promotes equal opportunity •The ideal U.S. performance appraisal system is highly rational, logical, and legal. •Four elements to the ideal U.S. system •Performance standards reflect management’s goals regarding acceptable quality and quantity of work output •Performance measures are techniques intended for objective and often comparative assessment of employees on the performance standards •Performance feedback usually occurs in a formal interview between superior and subordinate •Human resource decisions related to the performance appraisal system, in most U.S. organizations, are compensation decisions •Because of the concern in the U.S. that human resource decisions be fair and equitable to all individuals, performance appraisal systems have institutionalized legal pressures to follow similar procedures •The U.S. performance appraisal system is rooted in an individualistic culture and an institutional system that aspires to protect equal rights and equal opportunities Performance Appraisals Around the World •Although performance appraisals practices vary widely among countries, they are undertaken with the common purpose of devising ways to control employees so that they give maximum performance •However, while appraisals are based on similar notions in many countries, there are wide variations in terms of what they are used for Exhibit 12.12 Cross-National Differences in Purposes of Performance Appraisals: Top 5 Countries for Each Performance Appraisal Purposes (Shows the top five countries for each performance appraisal purpose) •In countries high on individualism, performance appraisals are seen as the most effective method to gauge how well an employee is doing and how that person’s performance can be improved •In collectivist cultures, age and in-group (usually family or social status) memberships provide a large component of the psychological contract with the organization •Human resource decisions should take into account personal background characteristics more than achievement •Managers in collectivist societies often avoid direct performance appraisal feedback •Information regarding performance is still communicated to people in collectivist cultures •Because it is important to work for the benefit of the group, members may subtly praise or punish other workers based on work performance •Preference for seniority-based promotions, rather than appraisal-based promotions, is even greater among Koreans •Because of the long term orientation of Korean culture, Korean performance appraisal systems focus on evaluating and developing the “whole man” for the long-term benefit of the company Compensation •Compensation includes wages and salaries, incentives such as bonuses, and benefits such as retirement contributions •Wide variations in how to compensate workers, both among countries and among organizations •Japanese workers earn over three times the wages of the workers in other east Asian countries such as Taiwan, Singapore, and Korea •Although not required by law, Korean and Japanese workers expect bonuses at least twice a year •In Denmark, over 80 percent of employees belong to unions and agreements between unions and employers’ associations determine minimal and normal pay •In the EU, there is a statutory minimum of four weeks vacation Compensation Practices in the United States •Conditions external and internal to the company affect the wages and salaries of workers and managers •Companies develop formal and systematic policies to determine wages and salaries •To establish that their companies’ wages and salaries are competitive in the labor market, the Personnel policies Forum study showed that 94% of U.S. companies used data from comparative wage and salary surveys to determine compensation •In contrast to collectivistic societies where company loyalty prevails, U.S. companies rely on competitive wages to maintain a quality workforce •Most U.S. companies also develop procedures to establish that people receive equitable pay for the types of jobs they perform •Although the worth of a job largely determines the base pay assigned to a certain position, raises in pay are determined mostly by merit •As part of the total compensation package, benefits have grown substantially in the U.S. during the last few decades Compensation Around the World •Researchers investigated cross-national variations in 9 compensation practices in 10 countries (Australia, Canada, China, Indonesia, Japan, Korea, Latin America, Mexico, Taiwan, and U.S.) •Results of the study revealed some convergence of compensation practices •Managers of all countries and regions felt that it was necessary that all but 1 of the 9 compensation practices (pay incentives should be important, pay should be contingent on group/organizational performance, incentives should be a significant amount of pay, job performances should be the basis of pay raises, benefits should be important, benefits should be more generous, pay should be based on long-term results) be used more in the future •These managers also felt that less emphasis should be placed on using seniority as a determinant of pay decisions •All managers felt that a properly designed compensation plan is key to harnessing employee performance conducive to organizational effectiveness •Despite the evidence of convergence in many areas, the study also revealed surprising results •The researchers expected that the more collectivist countries would have higher ratings for the compensation practice “pay is contingent on group or organizational performance.” However, findings show that there were no major differences among collectivistic and individualistic countries in the study •There were no significant variations among countries in terms of the compensation practice of using seniority as the basis for pay decisions Compensation in Japan •As with U.S. firms, Japanese companies determine base salaries to a large degree by the classification of positions •Two effects of seniority on the Japanese compensation system •First, besides educational qualifications, each position has minimum age requirements •Second, seniority factors into pay decisions, but at a declining rate •In more recent times, merit (as the Japanese interpret it) affects pay raises to a greater degree than under the traditional position/seniority system Exhibit 12.13 The Japanese Pay Raise Formula: Changing the Balance (Shows the traditional compensation formula as it is being modified for pay raises in many Japanese companies today) •Economic pressures on the Japanese compensation system are growing •Nenpo system – new Japanese compensation system based on yearly performance evaluations that emphasize goals, although goals are not always the same as in Western companies •Although seniority remains important for holding certain positions, trends in Japanese human resource practices show a convergence with practices used in the U.S. and other Western nations. •Bonus system – in Japan, employees often receive as much as 30 percent of their base salary, usually given twice a year during traditional gift-giving seasons Implications for the Multinational: Performance Evaluation and Compensation •As with recruitment and selection, multinational companies must match their performance evaluation system to their multinational strategies •A multinational company with locations in several nations may need several different compensation systems, especially for host country nations •Eastern European countries and India provide location advantages due to their relatively low cost of labor, managers, and engineers •Some experts argue that competitive advantages based on wage rates are only short term A Comparative View of Labor Relations •The variations of labor relations arise not only from cultural differences but also from the unique national histories of unionization •A major HRM issue is the popularity of unions, as indicated by what is called union membership density Union Membership Density •Union membership density – proportion of workers in a country who belong to unions •Union membership in the U.S. has declined considerably over the last 30 years •European and other industrialized countries still have quite high proportions of workers who are union members •In major industrialized countries, union membership is declining but still averages greater than 50% •In countries like South Africa, unions have more than doubled in size Exhibit 12.14 Union Density in Selected Countries (Summarizes unionization density in various parts of the world) Some Historical and Institutional Differences •British unions began early in the 19th century corresponding to the rise of major factory based industries •The lack of government intervention led management and workers to develop strong adversarial relationships that remain in existence in contemporary Britain •Perhaps because German culture ranks high on uncertainty avoidance, labor relationships have a more orderly tradition •The government recognized the union movement in the mid 1880s •The strong role of the state served to develop more harmonious relationships between labor and management •French unions began much later and developed more slowly than did British or German unions •Many small companies, which fragmented businesses, retarded union growth •Lack of legal protection of French workers and the difficulties of unionization led to highly militant unions •In the U.S., before 1926, there was little legal support for union activity •The Wagner Act, passed in 1935, granted federal protection of the right to organize and bargain collectively •With the decline of many traditionally unionized industries and the movement of U.S. manufacturing offshore, union strength in the U.S. has continuously weakened •In Asia, unionization has taken several different paths •Formerly militant Japanese unions were absorbed in the corporate structure and now largely support management •Korean unions have devolved a more conflictual relationship with industry and government Union Structures •The type and structure of unions also reflect institutional pressures and historical traditions regarding unionization •Enterprise union – represents all the people in one organization, regardless of occupation or location •Craft union – represents people from one occupational group such as plumbers •Industrial union – represents all people in an industry, regardless of occupational type •Local union – represents one occupational group in one company •Ideological union – represents all types of workers based on an ideology (e.g., communism) or religious orientation •White-collar and professional union – represents an occupational group, similar to craft union Exhibit 12.15 Popular Form of Unions in these Countries (Shows selected countries and the popular unions in them) •Enterprise unions are most associated with Japanese labor •Most radical Japanese ideological and industrial unions were effectively crushed during the first half of the 20th century and replaced by enterprise unions •German unions favor the industrial form of organization •Works council – in Germany, employee group that shares plant level responsibility with managers regarding issues such as working conditions •Most common objective of French unions is to organize along ideological lines – thus, union structure does not necessarily follow industry, occupation, or enterprise categorization •The local union remains the major structural feature of U.S. unions Implications for the Multinational: The Search for Harmony •When they use local workers, multinational companies have no choice but to deal with local labor practices, traditions, and laws •The impact of dealing with unions and related labor laws must be considered in any strategic decision regarding locating in another country •In the Unite States, Japanese companies have avoided locations in the more union-friendly northern states, favoring instead southern locations with less union activism •Like local wages and worker quality, a country’s labor relations pattern also influence location decisions Summary and Conclusions •This chapter highlighted fundamental national differences in the HRM processes of recruitment, selection, training and development, performance appraisal, compensation, and labor relations •National culture, business culture, and key social institutions – education and the legal system – affect a nation’s dominant HRM practices •Countries with collectivistic cultures were often compared with the U.S. to illustrate the large differences in HRM and also the variety of HRM practices in the world •The chapter noted that training of entry-level workers depends largely on the institutional structure of the educational system •Management-development practices are embedded in cultural expectations regarding the relationship of managers with their organizations •To avoid legal ramifications of race, gender, and age biases, the discussion showed that U.S. performance-evaluation systems tend to be formal and public. In collectivist societies, in contrast, performance appraisal tends to be informal and more secret •Most multinational companies are attracted to production sites in countries where the wages are low but the talent pool is strong •Confronting and dealing with differences in traditions and volatility of labor relationships are unavoidable activities in running operations in overseas operations •Successful multinational manager comes prepared not only with a knowledge of local culture but also with an understanding of how HRM practices evolved to become part of a host country’s business environment Chapter 12 Case Notes People Management, The Mantra for Success: The Case of Singhania and Partners Synopsis This case showcases Singhania and Partners, a full-service national law firm in India, and analyzes their HR practices. Since India’s economic liberalization which began in the 1990s, the Indian legal services industry had been booming. The Indian law practice was restricted to Indian nationals only, and that, combined with the booming economy, was creating a serious labor shortage in the country. Because of the shortage of labor, and due to the fact that law firms gained a competitive advantage based on its human knowledge of law, law firms were in a war for talent, so motivating and retaining employees was becoming a top priority for employers. Singhania and Partners was contemplating their people strategy, and whether they need to be concerned about retention in their firm. Case Discussion Questions 1. Discuss Singhania and Partners’ HR practices. Singhania and Partners have implemented several HR practices aimed at addressing the challenges posed by a competitive labor market in the legal services industry. Key practices include: • Talent Acquisition: The firm has focused on attracting skilled legal professionals through strategic recruitment initiatives, including partnerships with law schools and participation in job fairs. This helps the firm tap into the growing pool of legal talent. • Employee Development: Singhania and Partners likely emphasize continuous professional development by offering training programs, workshops, and mentorship opportunities. This ensures that employees can enhance their legal knowledge and skills, aligning with the firm’s goals. • Performance Management: The firm may utilize performance appraisals to assess employee contributions, set clear objectives, and provide feedback. This encourages accountability and growth among employees. • Employee Engagement: The firm might have initiatives in place to foster a positive workplace culture, including team-building activities, social events, and open communication channels. Engaged employees are more likely to remain with the firm. • Compensation and Benefits: To attract and retain talent, Singhania and Partners likely offer competitive salaries, bonuses, and benefits packages. These incentives are crucial in a labor-short environment. • Work-Life Balance Initiatives: The firm may implement policies that promote work-life balance, such as flexible working hours or remote work options, which are increasingly valued by employees. 2. Evaluate the adequacy of the firm’s HR practices. Use the PCMM for this evaluation. What level does it appear to be at? The People Capability Maturity Model (PCMM) evaluates organizations based on their people management practices, with five levels of maturity: • Level 1: Initial – Ad-hoc practices; no systematic approach to people management. • Level 2: Managed – Basic project management and performance appraisal processes are in place. • Level 3: Defined – Standardized practices are established; emphasis on employee development and career paths. • Level 4: Predictable – Measurement and analysis of practices for continual improvement; strong alignment with business goals. • Level 5: Optimizing – Continuous innovation and improvement in people management practices; focuses on strategic alignment and agility. Based on the description of Singhania and Partners' HR practices, the firm appears to be at Level 3 (Defined). The firm likely has standardized recruitment, performance management, and development processes. However, it may not fully utilize data and analytics for performance measurement or align these practices strategically with broader organizational goals, which would be indicative of a higher maturity level. 3. If the organization wants to improve its PCMM level, what steps should it take? To improve its PCMM level from Level 3 to Level 4 (Predictable) and beyond, Singhania and Partners can consider the following steps: • Implement Data-Driven Decision Making: Develop metrics and analytics to measure HR performance and employee engagement levels. Regularly analyze this data to identify trends, areas for improvement, and to make informed decisions. • Align HR Practices with Business Objectives: Ensure that HR strategies directly support the firm’s strategic goals. This involves integrating talent management, workforce planning, and performance management systems with the firm’s business objectives. • Enhance Employee Development Programs: Introduce a more structured career development framework, offering clear pathways for advancement and skills development. Regularly review and update training programs based on feedback and changing legal industry demands. • Foster a Culture of Continuous Improvement: Encourage feedback from employees regarding HR practices and implement changes based on their input. Create channels for ongoing dialogue about employee experiences and expectations. • Adopt Best Practices and Benchmarking: Study and implement best practices from leading law firms or organizations recognized for their HR excellence. Benchmark against these organizations to identify gaps and areas for enhancement. • Strengthen Leadership Development: Invest in developing leadership skills among existing employees to ensure a pipeline of capable leaders who can align people management with strategic goals and drive cultural change. • Regularly Review and Adapt Policies: Ensure that HR policies remain relevant and responsive to employee needs, changing market conditions, and legal developments. By taking these steps, Singhania and Partners can enhance its HR practices and elevate its PCMM level, leading to better employee retention and a competitive advantage in the legal market. Analysis 1. Discuss Singhania and Partners’ HR practices. Singhania and Partners are doing many of the right things, as outlined below. •Value for HR as a Core Competency – the firm has always viewed people as its core asset, and this has driven many of their HR practices and management of the firm in general •Meaningful Work – the firm is conscious not to overload their employees with too much work in an effort to maintain an appropriate work/life balance. In addition, they are selective about the work they accept into the firm from clients. They want to be sure the work is challenging and interesting, that their lawyers are not burdened with paperwork and other administrative tasks that would undervalue and bore them. •Environment of Trust – they regularly hold open houses and other forums whereby employee are encouraged to voice concerns and openly discuss issues. They employ an open door policy whereby any employee can walk in and •Employee Development – the firm provides ongoing learning opportunities, such as the legal presentations given in the open houses. They allow opportunities for learning, gaining self confidence, and growing with the organization. •Career Growth – the first has adopted a pay-per-performance philosophy, which encourages a high performance culture due to the rewards received as a result of their efforts. Not only is their salary merit based, but so are the substantial year-end bonuses. •Team Development – the firm goes on annual retreats, which is all designed to unwind, have fun, and bond with one another as individuals Overall, the firm has created an extremely positive environment for their employees. It is one in which employees feel valued, and the company reaps the benefits of a fully engaged workforce. 2. Evaluate the adequacy of the firm’s HR practices. Use the PCMM for this evaluation. What level does it appear to be at? The People Capabilities Maturity Model (PCMM) is a tool used to assess the maturity of its workforce practices, and lay out steps for improvement. The PCMM consists of five maturity levels, each of which defines a foundation for talent capability within the organization, ranging successively from Level One to Level Five. Each level, except for the first, contains several key process areas, which can each be evaluated separately. A great amount of information can be found on the Internet about PCMM, including this one from the Software Engineering Institute: http://www.sei.cmu.edu/library/abstracts/reports/01mm001.cfm. After a more detailed break-down and evaluation of the PCMM tool, it appears that Singhania and Partner is likely operating at a Level 3 - Defined. Below is a summary snapshot of the PCMM as a point of reference. The Defined level has developed workforce competencies and workgroups and aligns with business strategy. Note that a more detailed analysis of each process factor within each level would likely reveal varying results. For example, the workgroup development process might be more evolved than, say, the workforce planning. It should be understood, therefore, that the Level 3 – Defined category identified above is an overall rating for the firm on the whole. Image from People Capability Maturity Model® (P-CMM®), Version 2.0, Carnegie Mellon Software Engineering Institute 3. If the organization wants to improve its PCMM level, what steps should it take? If the organization wants to improve its PCMM level, it should begin to examine the process areas in Level 4 in reference to identifying and setting goals for improvement. Lessons •Students will have seen an example of an effective People Management philosophy •The importance of human resources as a core competency and competitive advantage •An introduction to the People Capability Maturity Model (PCMM) •A better understand of how the labor market is an important factor not to be underestimated in meeting a business strategy CHAPTER 13 INTERNATIONAL NEGOTIATION AND CROSS-CULTURAL COMMUNICATION Learning Objectives •Understand the basics of verbal and nonverbal communication that may influence cross-cultural management and negotiation •Describe the basic international negotiation processes from preparation to closing the deal •Explain the basic tactics of international negotiation •Recognize and respond to “dirty tricks” in international negotiations •Know the differences between the problem-solving and competitive approaches to international negotiation •Identify the personal characteristics of the successful international negotiator Introduction •International negotiation is the process of making business deals across national and cultural boundaries •Without successful negotiation and the accompanying cross-cultural communication, there are seldom successful business transactions The Basics of Cross-Cultural Communication •Successful communication across cultures is a prerequisite for international negotiation •Mistakes in cross-cultural communication often go unnoticed by the communicator, but they can still damage international relationships and negotiations Language and Culture •The interrelationship between language and culture is so strong that some suggest that language determines the nature of culture •Whorf hypothesis – theory that language determines the nature of culture •According to Whorf, all languages have limited sets of words •These restricted word sets constrain the ability of users to understand or conceptualize the world •Some experts argue the opposite of Whorf – that culture comes first and requires the development of concepts and words – but no one debates that there is a close relationship between language and culture High- and Low-Context Languages •Low context language – one in which people state things directly and explicitly •The words provide most of the meaning and you do not have to understand the situation •Most Northern European languages including German, English and Scandinavian languages are low context •High context language – one in which people state things indirectly or implicitly •Communications have multiple meanings that can only be interpreted by reading the situation •Asian and Arabic cultures are among the most high context languages in the world Exhibit 13.1 Country Differences in High- and Low-Context Communication (Shows a ranking of languages by their degrees of high and low context) •Communication between high and low context individuals is a challenge •When negotiations take place between high- and low-context cultures, both sides must realize that communication may have errors Basic Communication Styles •Communication styles can also affect cross-cultural interactions and negotiations •Direct communication – communication that comes to the point and lacks ambiguity •Formal communication – communication that acknowledges rank, titles, and ceremony in prescribed social interaction •US Americans are among the least formal in communication •Other cultures communicate, especially in business settings, with more formality Exhibit 13.2 Cultural Differences in Communication Styles (Shows a ranking of direct communication styles for several countries) Nonverbal Communication •Nonverbal communication – face-to-face communication that is not oral •Body movements (called kinesics) •The use of personal space (called proxemics) •The senses, such as touching or haptics, eye contact (oculesics), or smell (olfactics) Kinesics •Kinesics – communication through body movements •It is easy to misinterpret the meanings of body movements in another culture •Facial expressions occur in every human interaction. People smile, frown, squint, sneer, and engage in a range of facial movements •Body posture relates to the way people stand, walk, and sit. Each culture encourages and discourages different body postures depending on the situation •All cultures use hand gestures to embellish and add emphasis to oral communication Proxemics •Proxemics – the use of space to communicate •Each culture has appropriate distances for various levels of communication •The personal bubble of space around each individual may range from 9 inches (Arab and Latin American cultures) to more than 20 inches (North American cultures) Haptics or Touch, Oculesics and Olfactics •Haptics or touching – basic form of human interaction, including shaking hands, embracing, or kissing when greeting one another •Generally, Latin European and Latin American cultures accept more touching than do Germanic, Anglo, or Scandinavian cultures •Oculesics – communication through eye contact or gaze •Countries like U.S. and Canada are comfortable with an expect eye contact to be maintained for a short moment during conversations •China and Japan consider eye contact very rude and disrespectful •France and the Middle East consider maintaining eye contact for long periods of time as socially acceptable •Olfactics – use of smells as a means of nonverbal communication •Countries like the U.S. and U.K. find body odor offensive •Arabs are much more accepting of them and consider them natural Practical Issues in Cross-Cultural Business Communication •Cross-cultural negotiations and communications nearly always face a language barrier •An important preparation for any international assignment is gaining at least rudimentary skills in the local language Using Interpreters •Interpreter’s role – to ensure the accuracy and common understanding of written and oral agreements •Requires specialized knowledge and vocabulary to deal with technical details of business transactions •Use of interpreters may not always means that the intended message is always conveyed efficiently •Tips to help the U.S. negotiators using interpreters •Spend time with the interpreter so that he/she gets to know your accent and general approach to conversations •Go over technical and other issues with the interpreter to make sure that they are properly understood •Insist on frequent interruptions for translations rather than at the end of statements •Learn about appropriate communication styles and etiquette from your interpreter •Look for feedback and comprehension by watching the listener’s eyes •Discuss the message beforehand with the interpreter if it is complex •Request that your interpreter apologizes for your inability to speak in the local language •Confirm through a concluding session with the interpreter that all key components of the message have been properly comprehended •Some multinational companies use one language as the corporate language – increasingly, that is English Communication with Nonnative Speakers •Techniques that make communication easier and more accurate •Use the most common words with their most common meanings •Select words with few alternative meanings •Strictly follow basic rules of grammar •Speak with clear breaks between words •Avoid “sports” words or words borrowed from literature •Avoid words or expressions that are pictures •Avoid slang •Mimic the cultural flavor of the nonnative speaker’s language •Summarize – paraphrase and repeat •Test your communication success – ask if they understand •When your partner doesn’t understand – repeat the basic ideas using different words •Confirm important aspects in writing International Negotiation •International negotiation is more complex than domestic negotiation •Differences in national cultures, political, legal, and economic systems often make it necessary to modify negotiation styles to fit the local country Steps in International Negotiations •Negotiation steps – preparation, building the relationship, exchanging information, first offer, persuasion, concessions, agreement, and post agreement •Preparation is the most important step Exhibit 13.3 Steps in International Negotiation (Shows the seven typical steps in the negotiation process) Step 1: Preparation •Winning international negotiation strategy includes significant preparation •Experts identify numerous essential questions and issues to consider before the negotiation •Determine if the negotiation is possible •Know exactly what your company wants from the negotiation •Be aware of what can be compromised •Know the other side •Send the proper team •Agenda •Prepare for a long negotiation •The successful international negotiator not only prepares for the substance of the negotiations but also does extensive research on the nature and negotiation styles of the foreign culture •Anticipate certain key differences among cultures: •Negotiation goal -signing contract or forming the relationship o Chinese and Japanese – prime objective is forming the personal relationship o U.S. – considers personal relationship less important that sanctity of law/contract •Formal or informal personal communication styles o Australians & U.S. - use first names and informal conversations o Nigerian, Spanish & Chinese – reject use of first names among short-term business acquaintances •Direct or indirect communication styles o The rules of politeness and styles of interaction in different cultures encourage or restrict the ability of negotiators to come directly to the point •Sensitivity to time—low or high o The pace of negotiation and the time given to each phase of it intertwine with the objective of the negotiation o Americans view time as money and want to get down to business and get the contract signed o Asian cultures place value on the relationship and prefer to take time to get to know the other parties better before signing a contract •Forms of agreement—specific or general o Japanese prefer broad agreements, preferably based on strong personal relationships, to allow for fair adjustment if circumstances change o U.S. Americans, typically pressing for legalistic, detailed coverage of all contingencies, leads many people from other cultures to believe that their U.S. partners have little trust in the relationship Exhibit 13.4 Cultural Differences in Preference for Broad Agreements (Shows the differences among nations in cultural preferences for a broad agreement) •Team organization - a team or one leader o U.S. often have a small negotiation team and one negotiator with authority to make commitments for the company to close the deal o Russians, Japanese, and Chinese prefer large negotiation teams and rely chiefly on consensus decision making •Attitude towards negotiation - win-lose or win-win o Salacuse reports that 100% of Japanese approached negotiations with a win-win mindset, while only 33% of Spanish executives surveyed had the same view •High or low emotions o Latin Americans and Spanish are said to usually show their emotions through negotiations o Japanese and Germany tend to be reserved Exhibit 13.5 Preparation: Understanding Negotiators from Other Countries (Contrasts some common U.S. negotiating characteristics with those from other national cultures) •Negotiations styles typical in individualistic cultures seldom works well in collectivist cultures Step 2: Building the Relationship •Building a relationship – the first stage of the actual negotiation process, when negotiators concentrate on social and interpersonal matters •Often takes place at a location outside then formal negotiation site •Duration and importance vary widely by national culture •Building a good relationship among negotiating parties provides foundation for working out eventual deal Step 3: Exchanging Information and the First Offer •Task-related information – actual details of the proposed agreement •First offer – first proposal by parties of what they expect from the agreement •At this stage, national and business cultures influence what information is given and requested, how the information is presented, and how close the initial offer is to the actually expected or hoped-for specifications in the agreement •In the information presentation stage, the negotiator must properly understand the audience and adapt the presentation to the audience’s needs Exhibit 13.6 Information Exchange and First-Offer Strategies (Shows a comparison among nations regarding information exchange and first offer strategies) Step 4: Persuasion •Persuasion stage – stage when each side attempts to get the other side to agree to its position Verbal and Nonverbal Negotiation Tactics •Promise: If you do something for me, I will do something for you •Threat: If you do something I don’t like, I will do something you don’t like •Recommendation: If you do something I desire, good things will happen to you (e.g., people will buy your product) •Warning: If you do something I don’t like, bad things will happen for you (e.g., other companies will know you can not do business here) •Reward: I am going to do something beneficial for you (without conditions) •Punishment: I am going to do something you will dislike – without conditions (e.g., end the negotiations immediately) •Normative appeal: This is the way we do or do not do business here (e.g., “You must learn the Japanese way”) •Commitment: I agree to do something specific (e.g., meet a delivery date) •Self-disclosure: I will tell you something about myself or my company to show you why we need to close the deal •Question: I ask you something about your company or yourself •Command: This is an order that you must follow •Refusal: Just saying no •Interrupting: I talk when you talk Exhibit 13.7 Frequencies of Verbal Negotiating Behaviors: A Comparison of Brazilian, U.S., and Japanese Negotiators (Shows examples of cultural differences in these tactics among Japanese, U.S., and Brazilian negotiators) •Cultural differences in nonverbal communication styles also influences negotiations •Nonverbal communication through such things as body posture, facial expression, hand gestures, and the use of personal space are a natural part of any international negotiation •Different comfort levels with silence – the Japanese take time to think and formulate a proper response, but U.S. negotiators are stressed by the silence Dirty Tricks in International Negotiations •Dirty tricks – negotiation tactics that pressure opponents to accept unfair or undesirable agreements or concessions •Some examples of common ploys in international negotiations (that some may consider dirty tricks) follow, with possible response tactics •Deliberate deception or bluffing: Negotiators present flagrant untruths either in the facts they present or in their intentions for the negotiation o Possible response: Point out directly what you believe is happening •Stalling: Negotiators wait to the last minute before the international negotiation team plans to go home. They then push for quick concessions to close the deal o Possible responses: Do not reveal when you plan to leave. When asked, say “as long as it takes.” Alternatively, state when you will leave with or without the deal •Escalating authority: Negotiators make an agreement then reveal that it must be approved by senior managers or the government. The objective is to put the other team under psychological pressure to make more concessions o Possible response: Clarify decision making authority early in the negotiation process •Good-guy, bad-guy routine: One negotiator acts agreeable and friendly while his or her partner makes outrageous or unreasonable demands. The good guy suggest that only a small concession will appease the unreasonable bad guy o Possible response: Do not make any concessions. Ignore the ploy and focus on mutual benefits of the potential agreement •You are wealthy, and we are poor: Often used by negotiators from developing countries, this tactic attempts to make concessions seem trivial. Smaller companies may also use this tactic when dealing with larger companies o Possible response: Ignore the ploy and focus on mutual benefits of potential agreement •Old friends: Negotiators act as if the companies and their negotiators have long enduring friendships. They feign hurt feelings if their partners disagree or do not bow to their requests o Possible response: Keep a psychological distance that reflects the true nature of the relationship •General tips •Stick to your standards and don’t use dirty tricks •Point out dirty tricks or ploys when they are used •Avoid fighting back directly •Be ready to walk out of the negotiation if the other side fails to play fairly •Realize that ethical systems differ by culture Steps 5 and 6: Concessions and Agreement •Final agreement – signed contract, agreeable to all sides. •Safest contracts are legally binding in the legal systems of all the signers •Concession making – process requiring each side relax some of its demands to meet the party’s needs •Usually means giving in on the points of less importance to you to achieve major objectives •Sequential approach – each side reciprocates concessions made by the other side •Often used by North Americans, who have a norm of reciprocity •Holistic approach – each side makes very few, if any, concessions until the end of the negotiation •More common in Asia •Note to Instructor: See Chapter text for a study on concession-making styles of executives from 21 regions around the world Basic Negotiation Strategies •Competitive negotiation – each side tries to give as little as possible and tries to win for its side •Begin with high and often unreasonable demands •Make concessions only grudgingly •Use dirty tricks and any plot that leads to their advantage •Problem solving negotiation – negotiators seek mutually satisfactory ground that is beneficial to both companies •Defending their company’s position is not he major goal •Avoid dirty tricks and use objective information whenever possible •Seek out mutually satisfactory ground that is beneficial to both companies Exhibit 13.8 Competitive and Problem-Solving Negotiation (Summarizes and contrasts how the competitive negotiator and the problem-solving negotiator differ in their approaches) •Three important points regarding the use of competitive or problem-solving approaches •First, in cross-cultural bargaining, the ease of misreading the other side’s negotiation strategy increases dramatically •Second, cultural norms and values may predispose some negotiators to one of the approaches Exhibit 13.9 Cultural Differences in Preference for a Problem-Solving Negotiation Strategy (Shows some recent evidence from a cross-national study on cultural differences in the preference for a problem-solving negotiation style) •Third, most experts on international bargaining recommend a problem-solving negotiation strategy Step 7: Post Agreement •Post agreement – consists of an evaluation of the success of a completed negotiation •The post agreement stage can be very beneficial as it allows garnering of valuable insights into the strengths and weaknesses of the approach that was used during the negotiation •Beyond information critical to learning, post agreement analysis can also enable members of a negotiating team to develop a closer relationship with their counterpart The Successful International Negotiator: Personal Characteristics •Personal success characteristics – tolerance of ambiguous situations, flexibility, creativity, humor, stamina, empathy, curiosity, and knowledge of a foreign language •Tolerance of ambiguity •Even if they are familiar with the culture of their counterpart, an international negotiator is still a cultural bridge between national cultures and organizational cultures •Flexibility and creativity •The international negotiator must expect the unexpected •Humor •Situations arise in intercultural exchanges that are sometimes embarrassing or humorous •Stamina •Long travel, jet lag, different foods, different climates, hotel living, and culture shock stress the physical stamina of even experienced international negotiators •Empathy •Empathy means putting yourself in the place of your foreign colleagues – understanding the world from their perspective •Curiosity •Managers with a genuine curiosity and respect concerning other cultures often discover subtitles that a more task oriented negotiator misses •Bilingualism •Knowing the partner’s language is an asset. However, sometimes linguistic ability alone is not enough Summary and Conclusions •The negotiating process involves preparation, building relationships with counterparts, persuading others to accept your reasonable goals through verbal and nonverbal negotiating tactics, making concessions, and finally reaching an agreement •Successful negotiators prepare well, understand the steps in the negotiation processes, and avoid the use of dirty tricks and competitive negotiating strategies •Successful negotiators are bilingual and have good cross-cultural communication skills •Oral cross-cultural communication demands that one learn the language or use interpreters •Nonverbal communications through body movements, proxemics, and touching vary widely for different cultural groups •Avoiding attribution errors is a key to cross-cultural communication Chapter 13 Case Notes Cross-Cultural Negotiation: Americans Negotiating a Contract in China Synopsis This case deftly illustrates the serious consequences that can occur when two people from very different cultures attempt to negotiate—even when they both think they’ve done their preparatory research and understand how the other side operates. It touches upon some of the fundamental issues common to all negotiations such as preparation, customs, trust, relationships, honesty, pride, strategy, communication, expectations, and more. Students may find some humor in the internal dialogue of the two negotiators, although the case describes an eventual breakdown in communications with disastrous results. Case Discussion Questions 1. What are the different approaches both parties take toward business negotiations? In this case, the American negotiators and their Chinese counterparts exhibit distinct approaches to business negotiations that reflect their respective cultural values: • American Approach: • Direct Communication: Americans tend to favor direct and straightforward communication, focusing on clear and explicit terms. They often prioritize getting to the point quickly and expect transparency in negotiations. • Individualism: The American negotiators may emphasize individual achievements and assertiveness, viewing negotiation as a competitive process where winning is a primary goal. • Task-Oriented: They typically focus on the details of the contract and the specific terms, often approaching negotiations as a transactional exchange. • Time Sensitivity: Americans usually value efficiency and may push for quick resolutions, often placing a premium on meeting deadlines. • Chinese Approach: • Indirect Communication: Chinese negotiators often utilize a more indirect communication style, relying on subtlety and non-verbal cues. Building rapport is crucial, and they may avoid confrontational dialogue. • Collectivism: The emphasis is often on group harmony and relationships rather than individual gains. Decisions are made with a focus on consensus and long-term partnerships. • Relationship-Oriented: The Chinese approach prioritizes establishing trust and relationships before delving into contractual details. Negotiation is seen as a process rather than a transaction. • Flexibility with Time: Chinese negotiators may not feel rushed and are often willing to extend discussions to cultivate relationships and foster a sense of trust. 2. What are the mistakes both parties have committed in this cross-cultural negotiation process, and what should they have done better? • Mistakes by American Negotiators: • Overemphasis on Speed: They may have pushed for rapid conclusions, misinterpreting the Chinese need for relationship-building as indecisiveness. They should have been more patient and allowed time for rapport development. • Misreading Indirect Signals: The Americans might have failed to recognize the subtleties in Chinese communication, leading to misunderstandings. They should have paid closer attention to non-verbal cues and indirect feedback. • Lack of Cultural Sensitivity: They may not have fully understood the importance of face (dignity) in Chinese culture, leading to confrontational moments that caused embarrassment. Greater awareness of cultural norms would have been beneficial. • Mistakes by Chinese Negotiators: • Ambiguity in Communication: They might have been too vague in expressing their needs and expectations, causing confusion. They should have strived for clarity while still maintaining their indirect communication style. • Failure to Acknowledge American Values: The Chinese negotiators could have shown more recognition of the American focus on deadlines and explicit terms to facilitate smoother discussions. • Lack of Proactive Relationship Building: If they did not engage in sufficient relationship-building activities early in the negotiation, it could have hampered trust. They should have invested more effort in establishing personal connections from the outset. 3. What are the key characteristics of a successful cross-cultural negotiator? Successful cross-cultural negotiators typically possess the following characteristics: • Cultural Awareness: An understanding of cultural differences and the ability to adapt communication and negotiation styles accordingly. • Empathy: The capacity to understand and appreciate the perspectives and emotions of counterparts from different backgrounds. • Flexibility: Willingness to adjust strategies and approaches in response to evolving circumstances and cultural cues during negotiations. • Patience: Recognition that cross-cultural negotiations may require more time to build relationships and achieve mutual understanding. • Strong Communication Skills: Proficiency in both verbal and non-verbal communication, along with active listening skills to interpret subtle signals. • Problem-Solving Ability: An aptitude for finding creative solutions that accommodate the interests of both parties while respecting cultural norms. 4. How could both sides have prepared better to anticipate the problems faced in the negotiation? To better prepare for the negotiation and anticipate potential problems, both sides could have taken the following steps: • Conduct In-Depth Cultural Research: Both parties should have invested time in understanding each other's cultural values, negotiation styles, and business customs. This could involve reading literature on cross-cultural negotiations and engaging cultural consultants. • Engage Local Intermediaries: The American negotiators could have benefited from engaging a local expert or consultant familiar with Chinese business practices to navigate cultural nuances. Conversely, the Chinese team might have consulted with someone knowledgeable about American negotiation expectations. • Establish Clear Objectives: Both parties should have defined their goals and non-negotiables clearly before entering discussions, while remaining open to understanding the other party’s objectives. • Practice Active Listening: Training in active listening techniques could have helped both sides ensure they fully understood each other’s perspectives and concerns, fostering clearer communication. • Simulate Negotiation Scenarios: Role-playing potential negotiation scenarios, including cultural missteps, could prepare negotiators to handle unexpected situations effectively and reduce the likelihood of misunderstandings. • Set Ground Rules for Engagement: Prior to negotiations, both parties could agree on the rules of engagement to clarify expectations about communication styles, timelines, and decision-making processes, thereby reducing friction during discussions. By taking these steps, both parties could have minimized the risks of misunderstandings and improved the overall negotiation process. Analysis 1. What are the different approaches both parties take toward business negotiations? The American negotiator, Mr. Jones, proudly describes his American negotiating style as “no-nonsense, straightforward, and sometimes even aggressive.” His objective was to quickly work out and confirm the deal, and he believed the key was to be open and direct about his company’s expectations and needs. Another aspect of his belief in honesty was his desire to offer “constructive criticism.” The Chinese negotiator, Mr. Wang, believes that it is rude to be so direct and critical. Typical of the Chinese style, his goal was to extend the negotiations, allowing time for both sides to build trust and establish a friendship with each other. Both of them lack trust and respect for the other’s cultural and personal styles. 2. What are the mistakes both parties have committed in this cross-cultural negotiation process, and what should they have done better? Both parties made the significant mistake of researching each other’s companies without doing any research or preparation regarding each other’s cultural styles and preferences. Thus, the Americans’ drive to secure a deal efficiently seemed rushed and suspicious to the Chinese, who wanted to take time to build a trusting friendship between the two parties. The Chinese process of revealing their desired outcome slowly over time, on the other hand, seemed deceptive and frustrating to the Americans. Similarly, the Americans’ bold and direct manner was rude and insulting to the Chinese, while the Chinese tendency to continuously review and revisit related aspects of the negotiations seemed like “game playing” to the Americans. 3. What are the key characteristics of a successful cross-cultural negotiator? Students should be able to draw several important conclusions from this example of “what not to do.” They will see the value of being culturally sensitive, since both Mr. Jones and Mr. Wang became frustrated, insulted, and confounded by their differences. Students will also see the value in having the ability to do real research and preparation that enables the negotiator to predict and understand his or her negotiating partner’s behavior, words, and actions. Patience, flexibility, and respect would also have been useful characteristics for these negotiators. Finally, students might mention that Mr. Jones also had a hidden agenda (“boosting his career”) that may have put unnecessary pressure, thereby hindering his ability to reach the stated goals of the negotiations. 4. How could both sides have prepared better to anticipate the problems faced in the negotiation? Both Mr. Jones and Mr. Wang, as well as their team members, need to develop a deeper understanding of the other culture involved. If the Americans truly understood the Chinese desire to build a friendship, they would have had greater patience for the time devoted to getting to know one another. If the Americans could have appreciated the Chinese focus on the whole, as opposed to the individual parts, they would not have been confused or frustrated by revisiting parts they thought had been decided. And of course, if Mr. Jones understood the collectivistic society better, he would never have shamed Mr. Wang by criticizing him in front of his co-workers. Conversely, if the Chinese had a better appreciation for the American-style directness, they would not have been surprised or offended by the Americans’ push to get things done or by their criticism. Better preparation would have allowed both sides to adapt and have patience with their differing styles. Lessons •Students will see an example of an actual cross-cultural negotiation •Students will have a better understanding of the need for preparation before such negotiations •Students will have a greater appreciation of the need for patience and flexibility in this type of situation Instructor Manual for Multinational Management: A Strategic Approach John B. Cullen, Praveen K. Parboteeah 9781285094946