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Transplanting Corporate Cultures Globally

October 1, 1993
Related Topics: Corporate Culture, Managing International Operations, Featured Article
It's midday in Kuwait, but it's unnaturally dark. As far as the eye can see, blazing oil-field fires spew up tornadoes of black smoke. A blanket of sooty, acid clouds seal in hundreds of miles of desert. On the ground, an army of workers toil amid the heat, providing support activities to the actual fire fighters. They construct roads for the trucks, create pipelines for pumping water, build hospital facilities for the workers, and cook and serve meals to the cadre of smoke-coated personnel.

More than 7,000 miles away from the flames and wreckage of the Gulf War, in a 14th-floor office in San Francisco's financial district, men and women of Bechtel Corp. sweat over 30,000 employee files and resumes. Culling through 105,000 phone inquiries, the HR staff works frantically to supply the necessary manpower to the Middle-East operation. The debris here isn't burned rubber and charred metal; it's fax paper and plastic coffee cups used by the HR staff as it dispatches calls from San Francisco to London to Manila to Bangkok, so that it can hire and assign foreign-contract personnel. Gathering and transferring employee information from headquarters to the ground operations in Kuwait, human resources managers mobilize more than 16,000 Americans, Britons, Filipinos, Australians-people from 37 countries in all-to rectify the Kuwaiti disaster.

"We're almost nationality-blind," says Patrick Morgan, human resources manager for special projects at Bechtel, an engineering-construction firm that has offices in more than 70 countries throughout the world. The company has projects that range from restoring postwar Kuwait's oil-production facilities to building the Channel Tunnel between France and England. The company builds airports, power plants, petroleum pipelines and chemical-waste treatment centers. "A person's passport is about as meaningful to us as the name of the bank on their savings-account passbooks," says Morgan.

Call it what you like-global, transnational, international-but when business looks to the entire world for capital and supplies, when there's an official company language, when human resources professionals become interested in work hours in Seoul and Stockholm, and when fluctuation in exchange rates for yen and deutsche marks becomes meaningful, you've entered a global frame of mind.

As noted author and globalist Kenichi Ohmae puts it, free access to information has made this a "borderless world." Political boundaries between countries may remain, but when it comes to finance, industry and even tourism, geographic borders are blurring continually. Information, music and fashion reach Europeans, Asians and Americans simultaneously. There's no lag time; we're all global citizens.

But a borderless world doesn't mean that corporations are without personality. Indeed, corporate culture is the framework of an effective corporation. It's the language that communicates the company's mission and its ways of doing business. It provides guidelines for people to follow and communicates the company's unique identity. The ability to transplant the corporate culture from one country to another-in some form-is critical to the success of most international businesses. Ultimately, it shows up on the bottom line. No matter what the type of corporate culture, when business goes global, the culture is translated overseas. It mixes with the host-country culture and changes, just as translated language undergoes changes from its origins.

HR managers are the translators. They're faced with an array of issues:

  • Is it helpful to have a strong corporate culture abroad?
  • How can HR executives determine and communicate the important elements of the culture in the international arena?
  • How do you know if the communication process is working?
  • How does the corporate culture change as a result of globalization?

A strong corporate culture is an advantage in the global universe.
"It's vitally important that the [transnational] company have a strong company culture," says Calvin Reynolds, senior fellow at the Wharton School of the University of Pennsylvania and senior counselor for New York City-based Organization Resources Counselors. "If you don't have a strong set of cultural principles from which to function, when people get overseas, they're so lacking in clarity that no one knows where they're going."

Asea Brown Boveri, Inc. (ABB), the electrical-engineering giant, is the quintessential global company. It has a clearly defined mission statement and a culture that supports the mission. Owned jointly by ASEA AB in Sweden and BBC Brown Boveri Ltd. in Switzerland, the enterprise purchased U.S.-based Combustion Engineering and a large division of U.S.-based Westinghouse in 1989, which raised its worldwide employee population to 213,000 and its revenues to about $30 billion a year.

"We think about ABB as a company without any regard to national boundaries," says Richard P. Randazzo, who, as ABB's vice president of HR, works out of the company's Stamford, Connecticut, base and oversees the company's HR operations in the U.S. "We just operate on a global basis. A lot of other companies see boundaries and barriers, but from a business standpoint, this company is intent on transcending those boundaries." Indeed, more than 50% of its sales are in Europe, 20% are in North America, 20% in Asia, and the rest are in South America and Africa. The official language is English; the official currency is the dollar.

"By recognizing that there are cultural differences in the way the two companies manage and operate, we'll be more successful as we work together."
Ollie Lawrence Jr.

It's easiest to think of the ABB Group as a federation of national companies-1,300 in all. ABB uses a matrix structure with worldwide business activities grouped into seven business segments that comprise 65 Business Areas. Some of these business segments include Environmental Control, Transmission and Distribution and Financial Services. Each Business Area is responsible for global strategies, business plans, allocation of manufacturing responsibilities and product development. Then, there are geographic subgroups or companies. In other words, employees are likely to have two supervisors: the local-country supervisor, who's responsible for employees and customers; and the Business Area supervisor (of which there are 65), who's responsible for regional profits, research and development, capacity, product design and more.

It's a highly decentralized business (the U.S. alone has 50 companies, each with its own president). Divisions treat each other as vendors and customers, invoicing one another and maintaining accounts payable and receivable from other divisions.

Characterized by Forbes as a company that has no discernible national identity, ABB's corporate culture is one of its strong defining features. The company embodies the phrase think globally, act locally.

According to Randazzo, ABB's culture is focused tightly on making money. Its personality profile is a hands-on, action-oriented, travel-to-the-opportunity kind of business. Each division acts locally in response to customers and employees. But managers are required to think globally about sourcing. For example, if the dollar is strong relative to the Swedish krona, then the company sources more from Sweden because goods and services are cheaper there. When that changes, sourcing also changes.

Corporate culture mixes with the culture of the country in which ABB operates. "There's no attempt by the corporation to tell us in the U.S. how we should behave relative to our customers or to our employees," says Randazzo. (Other HR executives oversee ABB's HR operations in its different business segments and the different countries in which the company operates.) The senior management team is composed largely of Europeans, so at times they give Randazzo quizzical looks when he says that they can't ask a person's age or marital status when recruiting. "They don't understand some of the affirmative-action targets we have, but they don't attempt to influence any of that. The motivation is that we know more about the U.S. marketplace than the Germans, the Swedes or the Swiss will ever know, and therefore, we're better able to deal with it."

Although the U.S. business culture emphasizes such concepts as individual empowerment and the appropriate way to hire and terminate people, the Swedish, Swiss and German HR professionals have their own issues to deal with. For example, Germany and Switzerland have particular HR issues regarding women.

There have been laws passed recently in Sweden and Switzerland that require some dedication and affirmative action with respect to employment of women. Therefore, companies in those countries must dedicate resources to see that they're complying. American firms can help them understand the new laws.

But cultures aren't static. They influence each other. For one, HR management plays a much more significant role in the U.S. than it does in Europe. According to Randazzo, this is the arena in which Americans have had significant influence on ABB's Europeans, addressing such issues as employee involvement, empowerment and total quality. In fact, the U.S. HR staff developed materials for conducting management training, some of which were translated into German.

Likewise, the Europeans have influenced the Americans. They've brought a sense of business urgency to the company. They helped with downsizing, lowering the break-even point and getting the organization focused.

Understanding local attitudes helps corporate cultures take root.
Not all corporate cultures transplant well overseas. Companies that try to graft the Stars and Stripes forever in a foreign location will likely encounter resistance. Those that are sensitive to local attitudes and customs are bound to be more successful.

"The HR executives I find most effective do a good job of listening," says Reynolds. "They take the time to understand local problems and learn why something may or may not work. Having listened, they come up with a fairly clear statement of where they're going."

Just ask Shirley Gaufin, vice president of human resources at San Francisco-based Bechtel Corp. She oversaw a massive companywide employee-satisfaction survey, administered to 22,000 people worldwide.

In April 1992, Chairman Riley P. Bechtel issued the company's new strategic plan called Toward 2001. In it, he articulated his global vision and core values, making a commitment to analyze and change the corporate culture within a global context. To be most effective, it was essential to learn about employees' beliefs and attitudes. Gaufin's HR staff issued a 102-question survey to 22,000 employees. Questions asked employees about communication, training-and-advancement opportunities, the work environment and the importance of international and domestic field experience to professional development. The staff followed up with more than 200 focus groups at the firm's domestic and international locations.

In response to the results, each large office developed specific action plans to address employee concerns, which included communication between management and employees and the availability of training programs for people at field locations. Corporatewide priorities address the areas of reward and recognition, training and development and employee participation, among others.

"I think we learn a lot from folks who don't do it the American way. I don't care where the good ideas come from. We all get credit when things go well."
John Fulkerson
Pepsi-Cola International

For example, the company is developing a communication plan to disseminate information more effectively throughout all locations, including field operations. It's reinstating a companywide newsletter that will go to all employees worldwide to help improve communication between the company and its employees. Performance appraisals are being revised to reflect the kind of culture that Bechtel wants to become. Rather than have a report-card-like performance-review form, it will be a tool to increase communication between supervisors and employees, and also help each employee reach his or her objectives. The review promotes better communication because it requires employees to take the initiative to communicate with their managers. It addresses on-the-job and outside training needs.

"The survey is a way of listening to employees. It gives us ways to implement the corporate culture more effectively," says Gaufin. The 1992 survey is the baseline. Periodic surveys will provide means of measuring progress.

There are a lot of challenges when it comes to implementing some of the changes, says Gaufin. For example, different cultures perceive performance reviews in different ways. "We have to be sure that we're not going against accepted practices in other parts of the world," she says. Furthermore, part of the new strategic plan focuses on empowered teams. Gaufin says that that will be a challenge, too.

The 1992 survey wasn't translated into other languages, but Gaufin says they'll consider translating the next ones into Spanish and other major languages. There are just too many instances when English doesn't communicate adequately.

The survey and the desire to translate it into other languages attest to a change in corporate culture at Bechtel. "We're trying to be more open and communicative-internally as well as externally," says Morgan. "We need to understand the environment in which we operate."

In the 20 years since Morgan joined Bechtel, he's seen dramatic changes. It used to be that the company operated almost as if it were two entities-one group of employees in the U.S., another who worked internationally. Today, that's totally different. It's much more integrated. Many more U.S. employees have taken overseas assignments, and foreign nationals frequent the U.S. offices.

"The barrier has come down, and an international assignment is part of the career progression," he says. People are trying to get overseas as part of their career development. In general, they're more exposed to the global workplace.

Of course, state-of-the-art telecommunications facilitate the cultural exchange. Many employees have considerable international phone contact with each other. Video conferencing and in-person meetings with foreign colleagues build social relationships. The company also televises major company meetings to Europe.

These are key ways to convey corporate culture. In Bechtel's case, this is particularly important. As the speedy mobilization to help fight the Kuwaiti fires attests, employees sometimes are called on to move to another location on a few days' notice. A highly decentralized, flexible structure makes this rapid response possible. Work often is done with project teams. They form to accomplish specific tasks. U.S. expatriates, other expatriates and local nationals do the job and then demobilize. This type of work arrangement, the speed at which the company can respond, and the company's flexibility also make it imperative that employees fully comprehend the company's mission.

"Obviously, you have to communicate the company's purpose and its objectives," says Morgan. "The culture provides guidance for the employee on how the company wants to achieve those objectives. When you're given the responsibility to do these kinds of jobs, you have to mobilize very, very quickly and operate quite independently."

In addition, the HR staff (which includes 45 people in Bechtel's corporate offices in San Francisco and 340 people in regional and area offices, and many field locations) uses preemployment interviews to communicate some of the company's culture, particularly when hiring managers. The issue of fit not only involves technical skills and qualifications, but also in knowing that the employee will be comfortable with Bechtel's way of doing things. For example, all new employees sign a Standard of Conduct agreement.

Training and development are other areas in which Bechtel communicates its goals and values. Morgan, who is Australian and has lived in a variety of off-shore settings, says that international training is heightened when you teach mixed groups of U.S. expatriates and local nationals. The training goes both ways. U.S. expatriates communicate the company's ideals and personality to local nationals, and the nationals transmit the host culture to the Americans.

Communication helps USAir and British Airways integrate corporate cultures.
You don't have to speak different languages to need an interpreter. The USAir-British Airways partnership is an example of that. What happens when two English-speaking groups get together and have to learn each other's way of doing business? Culture shock.

In January 1993, London-based British Airways and Arlington, Virginia-based USAir formed an alliance designed to benefit both companies financially and operationally. USAir wanted an international presence over the long term, but lacked the resources to purchase international routes. The airline was looking for a strategic partner. The alliance allows USAir access to the strong international presence and markets of the British company while giving British Airways entry to the U.S. domestic market, so that it can continue its expansion throughout the world.

Now, the Britons and Americans have to transmit their values and blend their corporate cultures as well as their work forces. "The mission we have essentially is winning the hearts and minds of our employees-at both companies-with respect to the benefit of the alliance," says Ollie Lawrence Jr., vice president of employee communications at USAir (and previously assistant vice president of employee relations). "We need to develop an understanding of each other's cultures."

The companies are in the process of doing that. First, there's an exchange program in which management personnel from one company shadow a counterpart at the other company to learn how they do business, make decisions and manage employees. For example, an individual from British Airways will work side by side in Washington, D.C. with USAir's director of employee relations, learning how the company makes key personnel decisions. In turn, the USAir individual will then go to London to spend several weeks at British Airways' headquarters. It's one way for people to begin to understand and be sensitive to the internal workings of the other company.

Second, there will be corporate training programs so that key individuals will be able to recognize cultural differences and deal with them. And, third, they're developing working committees within major departments of both companies, such as operations, marketing and sales, to hammer out programs and procedures by which both carriers can work as partners.

"We recognize there are some cultural differences between the two companies in the way they operate and manage," says Lawrence. "By recognizing those differences, we'll be more successful as we work together."

One of the more surprising differences is language. Although both groups speak English, vocabulary and style can cause problems. Cautions Lawrence, these can be very subtle but can contribute to creating stubborn barriers. For example, he says, the British tend to be more conservative and straightforward than the Americans. They're deliberate in the way in which they communicate and do business.

"We want to identify those significant cultural differences so they don't get in the way of our being able to manage this alliance effectively," he says. "With respect to this partnership, each company has to appreciate that the other has its own culture. We're not a merger. But we also want to recognize the shared vision that created the alliance and identify mutual values so both groups of employees will rally behind that vision."

How does the HR staff plan to go about that? Once management establishes a clear vision statement, the staff will create a focused message to communicate with employees. Already, both companies use the weekly employee newsletters and E-mail to tackle corporate-culture issues head-on. Internal company handouts detail the benefits of the USAir-British Airways alliance to passengers, to local communities and to USAir and British Airways workers. A handout of Interesting Facts underscores the independence and interdependence of each carrier in the alliance.

The way in which each enterprise communicates the alliance to its work force is different. "At USAir, we believe this alliance is going to help the long-term future of the airline. Ultimately, by entering into a strategic alliance to be part of a global airline network, it will help with the job security of our employees," says Lawrence.

British Airways will have to communicate its rationale a little differently since it already is an international carrier. It wants to be a predominant international carrier through the development of partnerships around the world.

In addition to the more-formal communications, the companies are developing a line of apparel for employees that will heighten awareness of the alliance. They're also cohosting special events, such as fish-and-chip parties.

How does the HR staff know if the cultural communications are working? It measures employee reaction. USAir conducts random telephone interviews and leads focus groups. An outside consultant meets with a cross section of employees to learn about their understanding of the alliance. The feedback provides management with information about where to put more emphasis or provide more explanation.

Equally important, simply by concentrating on these questions, it reinforces the message that management is trying to convey to the workers. In other words, employees know that the company doesn't measure something that isn't important.

"I think human resources professionals need to recognize that messages are sent not only through formal communications. They're sent through management action or inaction-how an organization rewards its employees, what's rewarded and what isn't. It's reinforced through what's measured," says Lawrence. "If the company measures productivity, that tells employees that the company is concerned about how many units get out. If it measures service, that tells employees service is important."

What the HR staff communicates and how it communicates the message builds an understanding of the company mission. That's one reason these business partners stress personal communication along with the more-formalized ways. Executives have adopted cities that they must visit three or four times a year. They reinforce the alliance, answer questions and explain some of the specifics of the partnership in employee meetings.

Communication and information-sharing can empower employees.
It's high levels of communication and information-sharing that make the difference. The executives at Pepsi-Cola International know this firsthand.

Pepsi-Cola International is another company in a period of rapid growth and international expansion. It's becoming involved in more joint-venture positions with businesses around the world. Primarily, though, it operates as a franchise system.

According to John Fulkerson, vice president of organization and management development, the company is trying to ensure that it has plenty of skilled and empowered people in the organization as it expands. It's emphasizing customer service, innovation and marketing even more than before. Most important, though, is the ability to maintain a consistently high-quality product. This is challenging in an environment in which franchise bottling facilities are as diverse as their locations in Uruguay, Hong Kong and Pakistan.

"How do you go about building a business and a superior organization on the inside that's customer-focused as opposed to internally focused?" asks Fulkerson. "It's more complicated when you're working in the international arena because of cross-cultural differences."

What do you have to do to make this an effective working arrangement for all? You create HR systems that allow flexibility on a local basis but maintain consistency with the headquarters. Like USAir and British Airways, Pepsi-Cola uses such communication tools as newsletters, video conferencing and internal publications to convey these messages.

"Number one, you have to talk about what it is you're trying to communicate," says Fulkerson. "We're trying to convey how we provide value and the best product in the marketplace. So, we try to transfer knowledge through lots of discussions and personal conversation."

In addition, every few years, there's a management conference in which senior employees gather for two to four days. The Pepsi-Cola International Management Institute is another way to disseminate ideas. It's a place in which employees learn skills and absorb cultural information. The Institute delivers skilled training programs throughout the world.

Every year, there's a formal meeting for the human resources planning process. At the meeting, the HR staff determines the human resources activities that will support the business plan. Then staff members discuss it with their employees.

"Building trust across borders is very critical to getting things done," says Fulkerson. "We might have a person spend six months to one-and-a-half years in the U.S. before they ever go back to their native country and start running their operation. Although they might know something about the beverage business, we want to help them understand how we function. We want them to build a network of people they can talk to when they call from Moscow, for example."

This network is important when there are operational changes. If you want empowered people, then you can't make all the decisions from headquarters. You have to teach foreign nationals who work in the U.S. the best operational practices and help them understand the Pepsi-Cola way of doing things. You can do this most effectively if the business plan is clear.

"What are you really trying to accomplish?" asks Fulkerson. "What does it take to be successful? You have to be very clear about the strategic advances for the business, and once everyone understands the strategic plan, everybody is pulling in the same direction."

However, with such a decentralized operating structure, flexibility is crucial. Take a concept like innovation. Being innovative in Argentina is very different from what it is in Norway. "I think we learn a lot from folks who don't do it the American way," says Fulkerson. "I don't care where good ideas come from. In the long run, we all get credit when those things work well."

Non-U.S. ways of doing things can bring a lot to the home company. For example, the plastic returnable bottle is being used in Europe. Developed outside the U.S., it first hit the market in Europe, and then the company moved it to Latin America. Operational practices can vary widely, too. Not only do they reflect the host culture's personality, but they offer other alternatives to the parent company.

"Corporate culture isn't an export," sums up Bechtel's Morgan. "It isn't one-way. Companies don't realize it, but they're also importing from overseas." It penetrates through returning expatriates and senior management from abroad.

Morgan offers an example. When he first came from Australia to the U.S. approximately 20 years ago, he used the English form of spelling-labour instead of labor, checque instead of check, advertizement instead of advertisement. It was frowned upon then, and often corrected. "No one notices anymore," he says. "It's just an alternative way of spelling, and now it doesn't even get retyped."

Personnel Journal, October 1993, Vol. 72, No.10 pp. 78-88.

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