The case for cultural intelligence

Business interactions in the age of globalisation can be minefields. A glimpse into the world of cultural intelligence offers strategies for fitting in abroad.
The case for cultural intelligence

The nation of Malta spreads across a cluster of Mediterranean islands just off the southern coast of Italy. Despite the proximity, several international business challenges arise from that aquamarine gulf.

In 2014, Nigel Scerri, ACMA, CGMA, found himself in the delicate early stages of a business deal between his Maltese financial services firm, Ennesse, and an Italian insurance company. Several leaders of the Italian company had come to Malta to discuss the new partnership, which had Scerri’s staff overseeing the Italians’ accountants and suggesting business improvements in Malta and Italy alike.

But it wasn’t conflicting accounting philosophies that tripped up this meeting. It was three words from the mouth of a man on Scerri’s team.

Non fa senso,” the staff member told the visitors. He had meant to say “It doesn’t make sense” in Italian, a secondary language for many Maltese people. And while his words were literally correct, the other party’s frozen faces told Scerri something had been lost in translation; they were somehow offended by the wording or delivery.

“First, they looked at us with a serious look,” Scerri recalled. “We said, ‘What have we said?’ ”

The staff member’s words, as it turns out, sounded a lot like an expression of disgust to the Italian party. Laughter punctured the moment as everyone realised the message’s innocent intent. “It was too offensive to do anything else,” Scerri said.

Business interactions in the age of globalisation can be minefields. A perceived slight could broaden into a split between parties in a financial negotiation. Conflicting cultural norms could leave a manufacturing contract unfulfilled months after a supposed deadline. In response, businesses have geared up with a new set of metrics and tools for cross-cultural competence, all in preparation for their own non fa senso moments.

For global management accountants, intercultural business is the new expectation. And while Scerri used instinct and experience to correct a faux pas, some researchers believe that a person’s ability to operate in other cultures can be reliably measured and improved through training programmes.

Culture shift

Building from previous work in management science and emotional intelligence, a cadre of academics and consultants has surveyed tens of thousands of people, largely over the past decade, to build theories about cultural interaction. They have asked how businesses can best cross borders — and why some people are so good at it.

The central danger for these border crossers could be called information asphyxia. Abroad, the mundane is transformed and unfamiliar. Even the smallest details of life abroad — such as greetings or the lettering of motorway signs — can seem new or puzzling.

“When you’re crossing cultures, you have a lack of information. That comes with uncertainty, and with uncertainty comes some sense of anxiety. It creates quite a lot of rigidity in the way you think,” said Soon Ang, a developer of the “cultural intelligence” theory. She leads the Center for Leadership & Cultural Intelligence at the Nanyang Business School of the Nanyang Technological University in Singapore.

And cultural rules are evolving with the world economy, changing expectations for many business interactions. As Eastern countries rise in global commerce, the norms of acceptable business culture are being rebalanced.

“In the past, every other country in the world had to learn the American ways — because if they didn’t, the deals wouldn’t happen,” said Tim Flood, who teaches a course in cross-cultural competence at the University of North Carolina at Chapel Hill. “… Different countries are coming up. It’s a broader deal, and there’s a much more keen sense that you can’t just be on the Western model and get business done.” Some say the ideal is “intercultural competence”. Others look to improve their CQ, or “cultural intelligence”, score. More than rote memorisation of handshakes and bowing techniques, these are philosophies meant to keep people on balance in unfamiliar terrain.

An attuned person might sense a taboo before it strikes, hear the true message behind a counterproposal, or read body language when words fail. A few people are naturals, and the rest just might be able to learn the art.

Eastern vs. Western

Leo Chan, CPA, has a front-row view of culture clash from the offices of Sino-Bridge Consulting, a Hong Kong company that helps international firms do business in China.

“It’s natural for partners to disagree on things — but here, when they disagree, because of all these differences, they tend to be very suspicious of each other,” he said.

Chan believes that Chinese groups, especially in state-owned companies, tend to communicate their goals and needs subtly. Western groups often are more direct, he said — and the resulting trampled toes and missed cues can create mutual distrust.

He has watched visitors to China deal with endless challenges, from a surplus of red tape to a deficit of personal space, at least by Western standards. But he figures that one simple factor best predicts how well foreigners will fare.

“The single most important thing, really, is the mindset,” he said of successful visitors and expatriates. “For some reason, they have the passion; they think there’s a lot for them in China.”

You’ll hear similar assessments from people at all ends of accounting. Scerri, of Malta, can sense in certain employees an enthusiasm for the details of others’ lives and the ability to build foundations of trust from those details.

“You have to get along with people,” he said. “You have to socially interact, understand them, have a good laugh with them as well. It’s not just good to be brilliant at your work.”

This analysis squares with one of the four pillars of cultural intelligence, the theory established by Ang and colleagues Linn Van Dyne and Christopher Earley. Their work describes four “capabilities” for the culturally competent, based on years of survey work by academics.

Among them: “CQ drive” or “motivational CQ”, a measure of how motivated and confident people are to interact with other cultures. Also rated are knowledge of how cultures differ; the ability to plan for cultural interactions; and the ability to adapt behaviour to different situations.

These may seem like obvious measures, but they outline foundational questions for CQ and other theories: Why do we care about other cultures? What draws us towards them, and what makes us afraid?

Diversity within organisations

Ang started her work on cultural intelligence in the shadow of a scourge: the Y2K bug. She was tasked in the late 1990s with assembling international teams to update computer systems on the island city-state of Singapore. She made her first selections by conventional standards, such as experience and IQ.

“It really didn’t work,” Ang said. Culture clashes frustrated an already complex process of updating legacy systems. In particular, the foreign teams had trouble matching Singaporean expectations of timeliness and efficiency, she said.

With the new millennium threatening major computer problems, Ang turned in 1998 to a new standard. She created a test to rate applicants’ “practical intelligence”, a concept that had emerged 13 years prior, to assess how adaptable candidates might be. Her selections got better, and she and her colleagues began to extend the concept to test intercultural competency. The result would be “CQ”, as described in the foundational 2003 book Cultural Intelligence: Individual Interactions Across Cultures, which Ang co-authored with Earley.

Today, the concept has reached deep into the world of business. Ang is working now with the Society for Human Resource Management and the Chartered Institute of Personnel and Development to fit cultural intelligence into larger frameworks. For an accountant, cultural intelligence can give new insight into how various cultures affect management and financial structures, such as incentive models.

“There’s actually an increasing trend toward acknowledging the importance of culture, whether it’s a country’s or a company’s, to impact performance,” she said. The concepts, according to its practitioners, apply just as much to cultural diversity within companies as within industries.

Surveys and other personal assessments are an obvious starting point. Metrics offered by the Cultural Intelligence Center in Michigan and other groups rate people in various categories by comparing their responses to those of tens of thousands of earlier respondents.

New methods of training and assessment are evolving, too. Ang has helped to develop videos that present viewers with tricky scenarios and “micro-aggressions”. Their responses can both predict their performance in real life and help them to prepare for a trip, she said.

Meanwhile, Chan reports that several of his clients have encouraged cultural immersion, bringing people from China into Western offices in order to learn their subtleties.

Comfort with the unfamiliar

For all its metrics and strategies, the idea of cultural intelligence comes back to a simple difference between those who succeed and those who don’t in unfamiliar environments.

“Usually, there are two kinds of emotional experiences that one has when they cross cultures,” Ang said.

One is positive: curiosity. Some people seem to embrace the swell of new details, searching zealously for new neighbourhoods and underrated restaurants.

Flood suggested that travellers take a taxi ride; drivers often are sources of information about news, customs, and cuisine. David Livermore, president of the Cultural Intelligence Center in Michigan, tells clients to find a local cultural adviser — anyone who can fill in the gaps.

“The mindset going into a culture is actually very crucial,” Ang said. “Your authenticity and willingness to learn from the other side — it will come out unconsciously, and it will be picked up by the other party.”

But some people, understandably, stick to the more familiar confines of the international average. In fact, globalisation has made it possible to cross the ocean without changing much more than the scenery outside the boardroom window.

Livermore put it this way: “If you travel business class and you stay in the business class lounges in various airports, and you go to the Marriott or to the Intercontinental, and you just go to your own local office in a different place around the world, it’s pretty easy to start saying the world’s all pretty much the same.”

But your intercultural advisers wouldn’t endorse that assumption.

Fundamentals of cultural intelligence

The Cultural Intelligence Center in Michigan offers four metrics, based on numerous academics’ research into the idea of cultural intelligence.

CQ Drive How much do you want to adapt to other cultures?
CQ Knowledge How well do you understand the differences between cultures?
CQ Strategy Can you predict and plan for multicultural interactions?
CQ Action Can you adapt your words and actions?

6 steps for natural success at intercultural business

International assignments are costly and intense. A lucrative deal or untapped market may be at stake. But employees also face the psychological stresses of an unfamiliar environment. The field of intercultural competence aims to guide businesses through every culture imaginable with a common set of strategies. Here are some strategies to prepare for intercultural business:

Make friends

People familiar with local culture can circumvent a faux pas or highlight hidden opportunities for a team working abroad. A local consultant often can fill this role, but intelligence comes in many forms. Tim Flood, a professor at the University of North Carolina at Chapel Hill, suggests that taxi drivers can be invaluable sources of information.

Take a test

Business leaders may institute metrics such as CQ and the Lewis Model to analyse personalities and predict how employees might react to different cultures. (Founder Richard Lewis offers the assessment through his firm, CrossCulture. See Some types of training, particularly simulations, can improve scores on these assessments. More than a means of selecting staff for assignments, a test can highlight areas for improvement.

Observe social structures

Some cultures prefer highly ordered hierarchies. It may be inappropriate for a junior member of your team to address another group’s leaders. They might prefer subtle signs to direct declarations. Specific research into an area’s culture can inoculate against this problem.

Don’t focus exclusively on studying

Some degree of preparation is wise. The more unfamiliar you are with a culture’s taboos, the more preparation is suggested. But Soon Ang of Nanyang Technological University in Singapore suggests that many cultural guidebooks and other study materials oversimplify cultures and encourage assumptions. They’re an aid, not a replacement.

Defuse assumptions

People in certain cultures tend to laugh when they are nervous, rather than when they’re amused. An off-colour joke might be getting chuckles for the wrong reason. To avoid these traps, travellers should learn to read body language and consult with local experts.

Keep an eye on emotions

Unfamiliar circumstances can lead to anxiety, which in turn causes people to become more judgemental and less accepting of their host culture, Ang said. Try to maintain curiosity.