Managing diversity

In the second part of his article examining the cultural differences that exist between China and the West, Professor Kai-Alexander Schlevogt advocates a new approach to successful management.

Many managers who come to China are initially overwhelmed because of poor preparation. For one thing, they are likely to be indoctrinated by 'crosscultural management' courses that tend to concentrate on stereotypes and superficial formalities that separate Westerners from the Chinese. An example is handing over your business card with two hands and reading the card of your business partner attentively – issues that no Chinese entrepreneur would much care about so long as the business opportunity appeared profitable.

This tendency to search for contrasts is reinforced by regionally specialised academics and journalists who tend to justify their existence by portraying foreign territories as completely different from their home country. Worse, they often assume that Western values and practices are more enlightened and sophisticated. By highlighting the idiosyncrasy of Chinese culture, they also unwittingly provide Chinese business people with the opportunity to excuse their own inefficient management as a special characteristic of their nation.

After coming to China, managers suffer from the self-fulfilling prophecy that they must experience a culture shock. Some become oversensitive and act without confidence; others force their management style on the Chinese. Instead of viewing cross-cultural management as a way of dealing with the 'problems' of perceived differences, in this article I suggest a new approach, which searches for commonality and leverages the remaining differences.

The cultural sensitivity of successful foreign managers in China often changes over time. After high cultural sensitivity at the beginning, many executives in the next stage of the cultural learning process no longer perceive many differences and use their own style of managing. Finally, they start to appreciate and leverage subtle residual differences that escape the eye of the casual observer.

After having inventoried cultural differences and changes, Western managers in China need to develop superior insights and use their newly gained subtlety productively. The move towards unfreezing stereotypes helps them to act more confidently and credespite atively on the ground. The insight that many values are universal helps to defuse tensions that result from distorted perceptions rather than objective facts. Here are some aspects that traditional Chinese culture and Western culture have in common.

Face Concern for one's reputation is widespread in many cultures. After all, the expression 'losing face' is widely used in the Anglo-Saxon culture. In both China and the West, face management may have important managerial implications and turn out to hamper progress. For example, when an electronic umpire system was first introduced at Wimbledon, tennis officials decreed that it only be used on television, and not on the ground. They feared that umpires might lose face in front of spectators if they were seen to give a wrong call.

Relationships Even though personal connections ( guanxi) are regarded as a typical Chinese phenomenon, they matter universally. For example, preoccupation with 'relationship marketing' in the West demonstrates that such networks constitute social capital that increases business effectiveness outside China, too. Putting guanxi into worldwide perspective helps to demystify the concept and focus on the residual difference that still exists, such as the special importance of familyrelations in China.

Male dominance The position of males in Chinese businesses is not necessarily stronger than in the West. For example, there are currently only two female CEOs among FTSE 100 companies.

Patriotism In countries such as the US, national interests often influence business decisions, too. For example, without America's military involvement in many countries, US industrial companies would not enjoy the international market access, privileges and power that they enjoy today.

Search for opportunities

Learning from China instead of just imposing your business approach helps to do something better or differently from the way you do it at home. Evolutionary thinkers would term Chinese cultural values as 'adaptive' – they must serve a function effectively since they have survived for thousand of years credespite myriad external shocks. Cultural levers can afford great impact, since they are areas where you can move a complex system and control uncertainty through shaping instead of merely reacting to seemingly uncontrollable forces.

As a valuable by-product of this exercise in using tensions creatively, foreigners learn to respect Chinese culture instead of trying to mould everybody to their own model. This new attitude will be appreciated by their Chinese counterparts, who resent being told that Western management is superior. The results are better labour relations within the company and more profitable deals outside.

Many overseas Chinese investors whose thinking has not been Westernised can serve as role models. Their behaviour contrasts with some American Chinese and Hong Kong Chinese who look down upon mainland Chinese as 'lazy' and 'unsophisticated'. For expatriates, mingling with locals instead of being secluded in foreigner compounds and clubs, also helps to increase learning from China.

Here are some examples of how to handle stereotypes productively:

Male dictators and bad team workers Many Westerners observe that team discussions in China tend to be less lively and creative than in their home countries. Members often feel that they have an obligation to submit to the will of the team leader, instead of regarding him as a facilitator. The team leader in turn has often made up his mind before the meeting. He uses the team, if it convenes at all, as a rubber stamping body.

Thus, many managers believe that because of residual cultural differences (the importance of hierarchy and seniority), the team technique is less effective in China. For example, core principles of McKinsey & Co, such as the 'obligation to dissent' and 'hierarchy of ideas', appeared difficult to implement in Greater China. This made it hard for the firm to tap local knowledge and the ideas of junior consultants and to check concepts for errors through criticism.

Instead of viewing cultural idiosyncrasy as a problem, managers can reframe hierarchical thinking as an opportunity. For example, in certain situations, the power and moral authority vested in the leader help to implement actions speedily and thoroughly. Thus, you can include powerful Chinese leaders as change champions to effectively transform the organisation, which would not be that easy in the 'democratic'West.

If you require creativity, you may at first assign more Westerners to a team, until they constitute a majority. The Chinese minority will most likely adopt some of the group norms and contribute meaningfully. To make this approach even more effective, you can put in place a Western team leader who 'orders' Chinese members to contribute, which they will most likely do because they find it impolite not to follow the command of the Western expert. In fact, when I was a professor at Peking University, I found that the Chinese students soon became livelier than my Western students at other universities.

In the medium-term, you need to convince locals that teams may benefit the company in certain settings, instead of simply asking them to assume that their use is an effective technique. For example, you may explain to the pragmatic Chinese that teams tend to increase innovation and thus may improve the bottom line.

In all cases, you need to use a contingency approach. For example, you may send an experienced, elderly male to a traditional Chinese company in a mature industry, but send younger talents to dynamic enterprises in growth industries. McKinsey's belief that talent is more important than gender and that Chinese prefer to deal with ethnic Chinese led it to make the mistake of sending American- Chinese female consultants to conservative Chinese companies.

Following the herd Closely related to the submission to hierarchy and seniority in China is collective orientation, which prompts some foreigners to criticise their Chinese employees for lack of personality and individualism. Instead, they should try to leverage the advantages of collectivism: goal congruence and the ability to move great masses efficiently in one direction.

Indirect communication Western managers often complain that their Chinese counterparts avoid clear statements, which makes it difficult to gauge their true opinions. Because of the less direct communication style, foreign managers often need to hold more meetings than at home. This cultural phenomenon, which can be traced back to less malleable aspects of social sensitivity including strict rules of politeness, can again be reframed as an opportunity. Instead of simply training the Chinese to 'communicate openly' and 'be direct', the Westerner may learn to reap the benefits of harmony.

Indirectness can be a great approach when the environment is changing rapidly because it helps you to test the water and allows you to amend your position when circumstances change. You may thus avoid painful U-turns, which are so common in the West. An indi rect approach full of subtlety and a healthy dose of ambiguity may also enable you to change things incrementally and harmoniously instead of using a revolutionary approach.

Social baggage In China, authority is always linked to the expectation that leaders are benevolent and concerned about social issues. Culturally grounded entrepreneurial socialism also involves the predominance of personal connections over contracts. By contrast Western managers like to separate both, business issues from private matters, and reason from emotion, and prefer written contracts to trust. Therefore, they regard the social obligations and customs in China as an impediment to effective management.

When Chinese business partners visit them in the West, their hosts may participate in formal meetings, but 'contract out' cultural entertainment to outside companies. Such a practice will be regarded as coldness by the Chinese guest. By contrast, a foreigner who behaves as a caring leader will be perceived as a positive anomaly by the Chinese.

Excessive pragmatism Many Western managers find it difficult to cope with the Chinese mental model of using intuition and short-cuts rather than deductive reasoning and always looking at the bottom line. Should the Chinese be asked to change to linear, 'logical' thinking? Again, the contrast in thinking styles that arises from including Chinese members in teams may be an opportunity for viewing an issue from different angles and obtaining better solutions as a result. Especially in creative processes, a more spontaneous, inductive mode of thinking may prove valuable.

Besides, Westerners may consider China as a testing ground. If you can convince pragmatic Chinese customers, who are not easily deceived by cunning marketing strategies, to buy your product or services, you may well succeed in other less challenging parts of the world. Appreciating this cultural difference will also help managers to adapt their approaches to local circumstances. For example, in sales talks it will be very important to demonstrate benefits visually instead of just exposing them conceptually. An example was the strategy of opening a 'German house' in an exhibition in Shanghai, where visitors could watch a German family using sophisticated German household products – something the locals would not have understood if they had been described in a catalogue only.

Excessive nationalism Western executives often dislike the mixing of patriotism with business issues, such as in the case of policies that promote local suppliers, and the indigovernment's tendency to capture 'windfall profits' if a foreign project turns out to be a winner. But once again, they can gain great leverage if they demonstrate sincere commitment to helping build and defend the Chinese nation. For example, when the US bombed the Chinese embassy in Belgrade in 1999, the China manager of Motorola, an overseas Chinese from southeast Asia, openly criticised the US action, which strengthened his reputation as a friend of China.

Besides, foreigners have to accept the political realities postulated by the Chinese leadership. This includes recognising that Taiwan and Tibet are provinces and that the collective interest always matters more than individual 'human rights'. It is very important that such support for China is honest and not used opportunistically to gain favours, because otherwise it will backfire.

Building cultural bridges

Most executives in China treat the environment as a given and resign themselves to the differences and frictions that they expect will result from them. To avoid this, culture needs to be managed intelligently through three approaches: looking for common elements and establishing a shared platform, learning from China, and leveraging residual differences creatively. Building cultural bridges involves a shift in perspective, trying to see things from the Chinese standpoint.

Excellent cross-cultural management means actively fighting stereotypical differences and becoming ready to learn from China and use the real differences to one's advantage. Along the way, foreign managers need to watch for changes in themselves as they move along the cultural experience curve and for changes in China. Having developed a core competence in cross-cultural management, they may thus create value out of tensions in dealing with all stakeholders, such as employees, customers and politicians, and avoid cultural pitfalls that may undermine business and personal success.

Kai-Alexander Schlevogt (D. Phil. Oxford) is president of the Schlevogt Business School close to Berlin, which focuses on China, and a visiting professor at the Henley Management College in the UK. After serving at McKinsey & Co. and Harvard University, he became the first permanent foreign professor in China (at Peking University) and a senior faculty member at the Australian Graduate School of Management. Website: http://www.schlevogt.com Email: schlevogt@schlevogt.com