The Necessity for Cultural Diversity and Cultural Competence

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The Necessity for Cultural Diversity and Cultural Competence ...

    COS Round Table 2006

Ethnic communities and work ethos: how to create culturally

    competent firms

    By Sameer Prasad

    Ashridge, UK; November 4, 2006

    Good Afternoon! I am going to attempt to share with you today some of my experiences in

    South and South East Asia during the past 12 years.

    Briefly during this period I worked with Kaybee Corporation a Company

    engaged in the trading of textiles; sourcing products out of the Far East

    and selling to a worldwide customer base. With them I worked at

    Singapore, Korea, Taiwan and Indonesia.

    Since the past seven years, I have been with a South East Asian Retail and

    Distribution Company and managed their operations at Philippines and


    The Necessity for Cultural Diversity and Cultural Competence

    The ‗CUSTOMER‘ in no longer local. The primary need for cultural

    competence stems from this basic fact of today‘s world.

    Thomas Friedman puts it succinctly in his latest book ―The World is Flat‖.

    He describes how with the laying of fibre-optic cables during the dot-com

    bubble years, the world has become incredibly ‗flat‘ more so because the

    cost of connectivity is nearly ZERO.

    What Friedman means by "flat" is "connected". The lowering of trade and

    political barriers and the exponential technical advances of the digital

    revolution have made it possible to do business instantaneously with

    millions of people across the planet.

    An inter-connected world. A world where people traverse the globe in

    pursuit of business or leisure. A world where there are people to people

    exchanges on an amazing array of platforms education, trade, business,

    electronic (via the internet) and within organizations that are, compelled

    by the necessity for growth, truly MULTI-national like never before. People,

    worlds apart, are now interacting without even meeting each other.


Thanks to large scale migration…not only from the two most populous

    countries in the world…the work-force has evolved and is probably as

    diverse as it has ever been.

    Further, due to legal and cost considerations, the bulk of the work-force

    for any multi-national organsiation operating in a given country or region

    has to be comprised of local staff.

    Tesco, the United Kingdom‘s largest grocer (2002), finds the human

    resource aspect of its global expansion strategies one of the most

    challenging hurdles.

    According to David Reid, Tesco‘s Deputy Chairman - ―It‘s been quite difficult orienting our people to work internationally; people didn‘t join Tesco to get sent off to Thailand, say. We need our best people abroad,

    people who are good with people and who can translate into the local

    market Tesco values and the way we work with customers. So this has been a challenge but also a great opportunity to develop wider business


    Tesco relies on relatively few expatriate employees and as a strategy tries

    to build operating platforms that provide the systems and key processes to run the business. These expatriates work with local people who obviously

    understand the local habits and customers much better than someone who has flown in from the UK. This is the only strategy that can really work in

    an alien environment as it is impossible to employ a 40-50 person army of

    expatriate employees.

    Unlike TESCO, many retailers have failed to invest sufficiently in

    intangibles and have attempted to expand across borders in the traditional

    wayreplicating domestic business systems and retaining full ownership,

    an approach that tends to be costly and slow to yield value. But as TESCO,

    Carrefour and Wal-Mart have shown, retailers can succeed in new markets

    by investing in intangibles like IT, people, and unique skills and by

    entering into partnerships to gain rapid access.

    In my own experience working initially with a trading company based out

    of Indonesia, I used to sell textiles to a worldwide customer base

    ranging from Canada, USA, West Africa, South Africa, Brazil, Argentina,

    U.K. and France…amongst others.

    I had to know where each one (customer) was coming from and what

    ‗language‘ and ‗attitude‘ to adapt with each. The ‗I-need-everything-by-tomorrow-morning‘ needs of a New York based apparel manufacturer to

    the intimate discussion about the entire family (his and mine) with the

    customer from Brazil…without any reference mind you to the business-on-

    hand. Meeting these people and blending in to their cultures, rather than


imposing my own on them was something that worked well during my

    trading time…and this is a lesson I have carried through to my present job.

    In Indonesia at the time…majority of our suppliers were of Chinese origin.

    And they have their own ways of doing business. Relationships mean

    more in the Indonesia business scenario than a win or lose on a deal.

    Ippan Ippan…I often heard…or let‘s meet halfway. A good relationship

    could mean the difference between a timely deliver by way of prioritizing

    your orders over others or otherwise.

    Negotiations in the Asian context are a special art and not as direct and

    black and white as probably in the West. Vast cultural differences exist

    between the way Westerners negotiate and how negotiations are carried

    out in Asia. ‗Word‘ has more value than ‗contracts‘ and relationships are

    all important in getting things done.

    As an Indian…my negotiation used to border on extreme persuasion and

    haggling. This worked okay in the Indian dominated textile trading

    business but I realized I was causing affront when I changed jobs and

    moved to the Retail and Distribution industry in the Philippines…where

    incidentally negotiations are handled in an extremely courteous, delicate

    and back-handed manner. My direct and hard negotiation attitude was

    turning people off and luckily we had a local Filipino partner who pointed

    me in the right direction.

    So now I employ a healthy mix of both...subtlety the Philippine way and

    persuasion…the Indian way.

    Challenges in Managing multi-cultural and ethnically diverse

    organizations The organisation I presently work with, P.T.Mitra Adiperkasa is a listed

    Company on the Jakarta Stock Exchange. Its primary shareholders are

    Indonesians of Chinese descent.

    In my opinion ours is an organisation that harnesses the strengths of

    cultural diversity in one of the best manners I have seen practiced

    anywhere is South East Asia.

    The group has been willing to invest in international expertise rather than

    restrict itself to what is available locally in Indonesia. The top

    management of the Company comprises of 9 different nationalities - from

    U.K., New Zealand, India, Scotland, American, Singaporean, Indonesia,

    Philippines and China. The focus being on relevant expertise, skills and

    experience rather than on cost or nationality. The group hires the best

    expertise it can get its hands on and creates a performance driven culture.

    Indonesian managers are highly capable and operate on an equal footing


with an Expatriate Manager making ours a truly diverse and challenging

    work-place; one of the few such companies in Indonesia.

    This strategy brings about an incredible diversity, a feeling of meritocracy (for there are a number of Indonesian Managers in the top management today who have risen through the ranks). The skills and experiences of individuals who have operated in various countries bring an amazing wealth of retail expertise and insights to the table. This helps us benchmark with the best globally, balanced with local insights from Indonesian Managers on the Indonesian market and its idiosyncrasies. I believe this is one of the key reasons why P.T.Mitra has emerged as the leading retailer/distributor of lifestyle products in Indonesia within a

    span of 14 years. The business has grown from a ONE store operation to over 500 including franchise/distribution rights for the leading lifestyle brands in the world such as Starbucks, Marks and Spencer, Next, Zara, Top Shop, Reebok, Wilson, Converse and Puma amongst others. The

    well knit mix of a Management team that has strong local and international flavour, gives such global, confidence in Mitra‘s ability to execute and deliver.

    The diverse workforce helps us generate more ideas and these yield innovative solutions and a better understanding of an increasingly diverse customer.

    I was in Indonesia in 1997-8 when the iron-fisted regime of Suharto was thrown out as a consequence of the krismon or monetary crisis that had

    dealt a crippling blow to the regional economy; the currency in Indonesia devalued overnight from Rp1800-2000 to a US$ to as low as Rp17,000 to a US$. A time of deep economic and political crisis for the nation. And in Thailand 3 months ago I witnessed a coup d‘etat that overthrew the Thaksin led government. Not to say that I court or foment political trouble but I talk about these two historical events to highlight the amazing resilience I witnessed amongst the people of each one of these countries. In Indonesia, while there were politically instigated riots in Jakarta…generally the people went through this period of deep crisis and extreme economic hardship with a great degree of dignity and peace. The coup in Thailand was similarly peaceful and bloodless. The highly revered and loved, Thai King‘s endorsement was enough to calm any

    nerves or quell any riots or protests that could have been expected. To me both instances demonstrate important traits in the South East Asian psyche.


The people are generally very accepting, polite, have a great respect for

    authority and a …what the Thais call…mai pen rai…or ‗it-does-not -matter‘

    attitude to life.

    Kreng-jai (considerate / care for feeling of others) is a core value of Thais

    and is perceived to be the core characteristic for civilised people. Kreng-jai

    means you should not criticise someone if he says something wrong in

    order to save face (hai kiat) for the speaker. You should be sam ruam

    (self-controlled) when sitting in public.

    On a more specific level when working in the region:

    - Language and Communication

    Language difference is probably the first challenge one has to deal with.

    In my experience working in the region, this is more pronounced in

    Indonesia, Thailand, South Korea and Taiwan than in English speaking

    countries like Philippines, India, Hong Kong and Singapore for instance.

    There are no easy solutions to this really except to dig-in and familiarize

    oneself with the basics such as numbers, days of the week, business lingo

    relevant to ones organisation, key words for negotiation and such

    functional words in the local vernacular.

    At the work-place, a team of key local employees who speak English is

    always useful. However, on a cautionary note language abilities do not necessarily imply good work-skills. Expatriate managers often make the

    mistake of hiring English speaking people mis-judging language skills for

    capability to perform and the vice versa…when they sacrifice skills for

    language capabilities.

    Language and communication are extremely important at another level

    that is not so black and white. In the Asian context…very often the spoken

    word is not the ‗real‘ meaning and expatriates will need to develop an

    understanding of the subtle cultural and social nuances that come in to

    play in Asia.

    For instance in Indonesia, when someone says yes, does he or she mean yes or no? Indonesia is a gracious culture that is polite. Wanting to be

    agreeable and never wanting to embarrass another, the native language

    Bahasa Indonesia has 12 words that "say yes but really mean no. Unless

    you are fluent in Bahasa Indonesia, using English or another language will

    not convey the correct message. Even with a correct translation, though

    the literal translation for these 12 words would be yes, the culture requires

    a polite, agreeable response. Since saying no to someone is impolite, don't assume a positive response means you have agreement.


Similarly in Thailand to keep face or Kreng jai no one will say ‗no‘ to

    your face…in order to save your face and their own. Consequently, tasks will not get accomplished yet there will be no acknowledgement or communication that there is a problem. That is left for you to figure out and conclude. At one time or another, all expatriates working in Thailand have learned this lesson and its folklore now.

    Managers will do well to know that an instruction conveyed is not necessarily an instruction UNDERSTOOD. Handy tools to resolve this are asking staff to repeat instructions received and what they are expected to do.

    - Religion

    Religious influences impact people‘s beliefs, behaviour and attitudes


    Indonesia is a predominantly Muslim country with the largest population of Muslims in a single country, in the world. A typical office in Indonesia will have a ‗Mushola‘ or a prayer room and most workers pray five times a day.

    In Thailand about 95% of the population is Buddhist and most Thais adhere to the dictates of Brahmanism and Animism. A lot of them do not differentiate among Buddhism and the other two beliefs.

    One of the prides of Thais is the fact that their country has never been colonised. Even the name of the country reflects this. ``Thailand'' means the Land of the Free and demonstrates a Thai characteristic that emphasises liberty in both the personal and national levels…and Thais take great pride in their heritage and culture.

    Thais welcome foreigners as their guests and peers. But foreigners might perceive that Thais, by the way they behave, feel they are inferior to foreigners. Actually, humility and modesty are inherent parts of the Thai culture. Thais show humble manners to their guests because they are taught that polite people should honour their guests.

    The unique Thai language is the official language in education, business or government services. This explains why Thais are relatively less fluent in terms of English language skills compared to their neighbours.

    Buddhists believe in the karma; what goes around will come around. The mai pen rai (it doesn't matter) attitude is influenced by this belief. It helps to calm down a situation with a lot of flexibility and forgiveness. However, foreigners might perceive that Thais lack ambition.

    Such social and cultural practices impact the work-place in a significant and often complicated way.


- Personality Traits

    Keeping a COOL demeanour in Asia …especially in Indonesia, Philippines and Thailand…pays rich dividends and a failure to do so could spell

    problems for an expatriate manager.

    Someone who loses his temper often and fails to smile, will not retain good

    employees for very long as there is an overwhelming consideration for


    My biggest ‗cultural‘ challenge was interestingly in the Philippines…where

    there were no language barriers to speak of, no communication problems

    as such. If I may say so myself..I adapted myself quite well with the staff

    and working conditions in Indonesia, Singapore, Taiwan and South Korea

    during my stints there.

    So what was different about Philippines? As I look back and introspect

    perhaps my main weakness was my ‗cultural‘ fit. I was trying too hard to

    impose tough policies, negotiating too hard (with vendors and

    employees...amongst others) and was being generally very suspicious

    about everything. During this time, I lost good people and the general

    motivation level in the office slipped drastically. Naturally this impacted

    sales. I couldn‘t sleep nights. As I spent more time and learned about the people there….I realized the

    problems with my initial approach. Filipinos are a fun-loving lot with a

    manyana attitude to almost everything in life. I was being too serious and

    needed to relax….and get a manayana attitude myself a little. I did and

    things improved almost overnight.

    Perhaps the most stressful period of my life taught me the most important

    ‗people‘ lesson I would ever learn….a cultural one.

    - To manage and work with Indonesians and Thais, one needs to

    understand their mind-set and behavioral traditions. All the successful

    expatriates here have learned the art of ‗politeness‘, which is a culture

    here. To address everyone as ‗khun‘ ‗phi‘ ‗nong‘ ‗ba‘ ‗pak‘ and ‗maas‘ is

    inborn, as is saying ‗thank you‘( tehrima kasih or kahpunkrub) and ‗maaf‘

    ( sorry).

    Women are very much and a dominant part of the work force. They are

    highly capable, reliable and pro-active. Which is why some of the top

    executive jobs go to women in this part of the world. While assigning

    corporate responsibilities one must keep that in mind.

    Teaching the sales-personnel customer-relationship can be challenging

    because they don‘t want to maintain eye-contact. They are inherently shy

    and love beating around the bush, and will not come straight to the point.


Cultural competence a source of competitive advantage in the

    lifestyle/retail industry

    A product without cultural relevance is not likely to succeed.

    Understanding of the religious beliefs and dogma of the people of a

    particular country is one of the most important aspects of the retail


    The reason why the Mc Donalds BIG MAC version in India is christened

    Chicken McMaharaja and why the Aalloo Tikki (potato patty) burger is the

    top selling burger there…is that Mc Donald‘s wants to succeed in India

    where beef is taboo and almost half the population is vegetarian. This is

    cultural relevance.

    I site to you an excerpt from an interview that Jean-Luc Chereau,

    President of Carrefour China gave recently, sharing his ‗cultural

    experiences‘ in China:

    In response to the question: How has Carrefour had to adapt to Chinese


    Jean-Luc responded: ―Take the example of fish. When I am in San Francisco and I visit a store, the fish is filleted and packed; its dead.

    When I am in France, the fish is dead but its whole; its on ice. I can see its

    eyes and see if its fresh or not. Each place has its own way of selling fish.

    If you are in China, you have two ways of selling fish. The first is to

    display live fish. When we entered Taiwan, we went to fresh markets in

    Taipei and Kaohsiung to see what kind of products they had, how they

    were displayed, and how customers bought those products. Carrefour

    decided to adopt this fresh-market style and to display the same products

    at lower prices in a better, cleaner environment. And we were very, very

    successful. When customers are in the fresh area, they recognize the

    fresh market they are accustomed to. And now most of our competitors

    are following the Carrefour way.

    But there is another method we neglected when we moved away from the

    coast: frozen fish. Why would frozen fish be important in China? Because

    the distance between the area where they have fresh fish and the stores in

    middle and western China is so vast that customers are more confident of

    frozen fish than of unfrozen dead fish, even if fresh. So we changed our

    product offering and we saw a 30 to 40 percent increase in fish sales

    throughout China.‖

    Different strokes for different folks summarises it aptly.

    Tastes of people in even the somewhat homogenous South East Asian

    region are vastly different.


Thailand is majority Buddhist, Indonesia majority Muslim and Philippines

     majority Catholic. The tastes, preferences, culturally and socially correct

    clothing norms …just to name a few are bound to be vastly different. And

    they are.

    In the retail business one of the important considerations for us are the peaks and valleys in the business…another way of saying…the seasonal

    fluctuations. In Indonesia we need to stock-up for the peak during

    Ramadan the traditional Muslim holiday, in the Philippines its Christmas

    and in Thailand there is no Christmas (or one relevant to the retailers) and

    January is the peak selling month.

    On the personnel side it is important to be mindful of your sales staff‘s

    capabilities and tailor training programmes to instill international best

    practices…all the time being respecting local beliefs and traditions.

    Magic Mantra?

    So is there any ONE solution or recommendation that fits all? I think not.

    Every expatriate manager will learn her or his own lessons depending upon

    the environment presented; the country one finds oneself working in and

    to a large and important extent the team of colleagues, their attitude

    and prior experience in dealing with an expatriate.

    There are some useful lessons I learnt though and these can be applied to

    any working situation almost anywhere in the world where there is a

    diverse mix of people from various cultural backgrounds:

    Personal strategies for coping with cultural diversity

    1. Learn more about the people and culture represented in the Country.

    Speak with people who have experienced the culture as outsiders.

    2. Understand your own subtle stereotyping: Assess and correct your

    pattern of stereotyping. Surface differences don't make a difference in


    3. Deal with people equitably: See people as individuals rather than

    members of a group. Resist the mental exercise of putting people in

    buckets. Understand without judging; be honest with yourself.

    4. Balance people processes: Defeat unintentional inequalities. Drive

    programming to provide equal information, challenging tasks, and skill-

    building opportunities to everyone.

    5. Diversify: Interact with people in your organization, neighborhood, or

    place of worship who are different from you in some way. Visit ethnic

    festivals; vacation in ethnically diverse areas; travel to areas where you

    are in the minority or don't speak the language

    Strategies for creating culturally competent firms


    1. While making adjustments for cultural differences, there need not be

    any compromise on the quality of performance that you can demand. I

    find, in my experience, that people respect this in any ‗cultural


    2. Provide equal opportunity: Realize that equal opportunity may mean

    differential treatment. Make adjustments in order to level the playing

    field for those who may be (or may have been) disadvantaged. I often

    help translate the ‗meaning‘ of communication from overseas Principals

    to one of my Thai Managers whose English skills are not very good.

    However, I let her respond and take decisions…rather than decide for

    her. Often I would even help articulate a response and guide her where

    necessary but I let her take full ownership to the response and


    3. Apply the same standards to everyone: After providing differential

    treatment to balance a disadvantage, the playing field should be equal.

    When given equal opportunity, equal performance is the desired result. 4. Minimize deference to differences: Diverse teams are generally more

    creative and innovative. Statistically, however, differences (gender, age,

    ethnicity, etc.) are not important to getting the job done. 5. Put diversity to the test: Attack problems with diverse task forces.

    Assemble the most diverse team you can with the skills to do the task.

    Spend more time around people who are different from you to gain a

    broader perspective.



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