Cultural intelligence and effectiveness in global management leadership

¶ … Management in a Global Environment using Cultural Intelligence

Globalization is accelerating the urgency that individuals from significantly different cultures are facing in their efforts to collaborate with each other to attain common objectives and goals. This urgency to collaborate and attain shared objectives rapidly is exacerbating the need for greater levels of cultural intelligence on the part of managers leading this globally-based projects and programs. Cultural Intelligence is often referred to as a Cultural Quotient (CQ), and is based on empirical measures of a managers' self-perception in four critical dimensions including strategy, knowledge, motivation and behavior (Earley, Mosakowski, 2004). It has been empirically proven that measuring a manager on these four dimensions indicates their ability to correctly interpret unfamiliar and new social and work-based contexts and blend into the social network and more rapidly form productive relationships as a result (Ang, Van Dyne, Koh, 2006). The CQ is based on the three components of cognitive, physical and emotional and motivational aspects, including twenty questions using a seven-point Likert scale to measure attitudinal beliefs and values. The concepts of CQ sound familiar to Emotional Intelligence (EI), yet the former is based on analyzing the behaviors attributable to the culture of the person and less on the attributes that all people share, regardless of cultural differences. CQ then seeks to measure how effective a person is in deciphering and understanding the specific peculiarities of a given national and company culture.

Cultural Intelligence's Influence on Global Management Effectiveness

As globalization is accelerating the need for developing this skill set in managers, there continues to be increasing emphasis on CQ and its associated frameworks. The integration of concepts Hofstede's Five Cultural Dimensions Model (Hofstede, 1983) is foundational to the development of organizational strategies specifically designed to give manager the ability to attain higher CQ scores over time. There are is also a framework specifically designed to take into account the need for Cross Cultural (CC) competence and the ability to attain higher levels of competency through cultural immersion and training programs (Johnson, Lenartowicz, Apud, 2006). Additional studies of CQ have defined five dimensions of cross-cultural leadership intelligence (XLQ) that have contributed to the ability of leaders to function effectively across a broad spectrum of social situations from societal to divisional or business and lastly groups (Grisham, Walker, 2008). Comprised of cognitive, motivational and behavioral constructs as defined initially by Earley (2002) and later organized into a framework for evaluating CQ in managers by Earley & Mosakowski (2004) the predictive accuracy of these techniques for assessing cross-cultural leadership continues to be empirically proven over time (Crowne, 2008). Figure 1, the Theoretical Structure of Cultural Intelligence provides insights into the specific areas within the three constructs. Easley (2002) has defined that on each of the categories of factors within each construct the perception of both a manager being tested for CQ level, in addition to feedback from their subordinates, peer managers and superiors as well. The emphasis on getting 360 degree feedback on a manager's perceived level of CQ is critical for defining their baseline level of abilities in these areas, providing the foundation for defining improvement and growth plans as a result.

Figure 1: The Theoretical Structure of Cultural Intelligence

Source: Easley, 2002

The use of 360 degree feedback in establishing a baseline measure of a managers' CQ levels and then defining action plans to increase their scoring is becoming increasingly used by outsourcing consultancies and companies (Ang, Inkpen, 2008). The development of CQ frameworks specifically aimed at minimizing the disruption of managers to globally-based projects by first ensuring their levels of CQ are high enough to not impact the performance of the project when they take over managing it are gaining acceptance (Ang, Van Dyne, Koh, 2006). These specific studies of how the foundational concepts of CQ relate to outsourcing have validated the following four critical stages of the use of these concepts. Outsourcing as a business model acts as a catalyst for significantly increasing the speed of change that many companies are facing as globalized alliances, partnerships and programs become part of there day-to-day operations. The development of CQ is being defined by the following five stages as a result (Janssens, Brett, 2006). The first stage is typically reactivity to external stimuli, followed by recognition of other cultural norms and rules in one's own mind. Ethnocentrism often plays a large part of this specific step as well. The third stage, accommodation and acceptance of other cultural norms and the association of these concepts with other, related concepts in the person being introduced to the new environment are the next step. The fourth step is a pivotal one where assimilation of the diversity and differences of cultural norms into alternative behaviors is attained. This is often the most difficult phase of any outsourcing managerial role (Ang, Van Dyne, Koh, 2006) as it requires the person going through the transformation to leave their biases and ethnocentric approach to interpreting the environment and willingly create new perceptions. The fifth and final step is the ability to begin perceive changing cues that others do not perceive in the environment and become proactive in the approach to solving more complex problems in a multicultural environment as a result. There are firms managing global projects in the Information Technologies (it) outsourcing industry that rely on the continual maturing of their managers to this final level before giving them leadership of multinational projects that require intensive coordination of development teams in diverse locations. This specific approach to maturing managers to a specific level of CQ competency is becoming more pervasive as outsourcing projects are given increasingly tighter, more demanding timelines with a higher level of sophistication involved in them as a result (Crowne, 2008). The paradoxes of free market growth and the constraints of cultural differences have led to the development of entirely new frameworks specifically for evaluating India as well from the standpoint of CQ levels of leaders (Nair, Menon, 2008).

Outsourcing as a business model requires intensive levels of Cross Cultural (CC) competence (Johnson, Lenartowicz, Apud, 2006) as project management tasks often form the foundation of what clients pay for in terms of services. This correspondingly forces any director or manager running a project to concentrate on how to manage staffs of working professionals that have vastly different perceptions of time as well. Being able to intermediate these differences in the perception of time and its value across cultures is also critical for the effective management of outsourcing projects over the long-term. Given the intricacies of outsourcing alliances, partnerships and relationships, CQ continues to be relied on intensively in this industry (Ang, Inkpen, 2008). Media planners who create advertising campaigns aimed at global markets also concentrate on CQ as the foundation for creating more relevant campaigns by first taking into account cultural differences, and then creating messaging strategies that have a higher degree of relevancy to their intended audiences (Melewar, Vemmervik, 2004). The use of CQ as the basis of these advertising strategies often begins with the creative directors who must take into account the differences in perception in product, services, messaging, and the approach taken to define the benefits of specific products in the target markets of interest.

Hofstede's Contributions to Cultural Intelligence

In analyzing how country cultures vary on the five cultural dimensions Hofstede uses in his Cultural Dimensions Model there are insights for managers looking to increase their CQ levels as well. As a result of its insightful analysis of cultural dimensions, the Five Cultural Dimensions Model (Hofstede, 1983) quantifies the differences between two or more national cultures. Geert Hofstede specifically created this framework to measure cultural variations between nations with the intent of assisting IBM executives assimilate faster into other cultures. The implications of his Five Cultural Dimensions however have become much more pervasive in the study of emerging economies, specifically Asian and Indian-based ones where outsourcing partners are pervasive (Hofstede, 2007). The Five Cultural Dimensions of Power Distance Index (PDI), Individualism (IDV), Masculinity, (MAS), Uncertainty Avoidance (UAI), and Long-Term Orientation (LTO) comprise the index and when the United States is compared to India for example the following results are produced. Using the scaling application provided on http://www.geert-hofstede.com/Figure 2 was produced. The United States and India are compared on the five dimensions.

Figure 2:

The Five Cultural Dimensions Analysis Applied to the U.S. And India

The most significant differences are in the IDV Dimension, which is the extent to which individuals are integrated into groups. In India affiliation and collectivism is much more important than in the U.S. For example. According to Hofstede (1983) the lower the IDV score the more there is a strong sense of individuality throughout the given country while the higher the score the greater amount of collectivism or strength of group affiliation. In the case of the differences between India having a high level of collectivism, products would need to be launched and positioned as contributing to the greater good. There is a definite egalitarian type of dynamic in India as evidenced by the Hofstede data. Conversely in the U.S. The sense of individuality is quite strong ands the level of affiliation is low. As a result, the leadership strategies aimed at increasing and sustaining the level of EQ needs to concentrate on managing Indian subordinates to their specific unique strengths while concentrating on their need for a degree of latitude and egalitarianism in how they are managed.

While the level of affiliation need vs. individuality is the most significant across the two countries used in this example, there are significant differences to their Power Distance Index (PDI), while similarities in Masculinity, (MAS) and Uncertainty Avoidance (UAI) scores. This translates into managerial approaches on the part of American managers leading Indian-led teams to pay particular attention to alleviating or at least significantly reducing uncertainty combined with a long-term orientation in how they manage these Indian subordinates. On these factors the cultures of the U.S. And India are congruent. The critical focus on long-term value and risk avoidance on the part of a U.S.-based management team would do better than one that promised fast yet unsustainable results.

The critical aspect of using the Hofstede Cultural Dimensions Model is the focus on being able to align management strategies to the specific needs of each specific subordinate. While this discussion has concentrated on American managers responsible for leading Indian subordinates, the converse is certainly seen in the analysis as well.

Summary

Cultural Intelligence (CQ) is essential for any manager or professional to continue growing their career in the 21st century as globalization has become a market dynamic influencing nearly everyone daily. The need for cross-collaboration with companies whose internal organizational cultures and national cultures vary significantly from each makes CQ a critical prerequisite for anyone looking to make contributions in a global working environment. The focus on outsourcing providers and clients, paralleling the myriad of relationshuips between India and the U.S., has been used as the basis of comparison throughout this paper. The use of Hofstede's Five Cultural Dimensions Model (Hofstede, 1983) for providing insightful analysis to managers looking to optimize their levels of CQ as they interact with other nations' organizations is critical. Variations in the perception of the five dimensions as evidenced by how foreign companies interact with each other, communicate both verbally and non-verbally, and work to accomplish key tasks are all based on cultural variations in communication. Having insights into how these variations influence management and the attainment of CQ over time is critical for collaboration to accomplish shared objectives.