Making the Business Case for Intercultural Training:

The Hidden Costs of Intercultural Conflicts

Leo Salazar
Senior Consultant
De Baak Management Centrum VNO-NCW


Only about 20% of Canadian technical advisors are highly effective, as measured by their ability to transfer skills and knowledge. The vast majority (65%) was rated as having little impact, being neither highly effective nor disruptive, and 15% were seen as being highly ineffective.
- “Living and Working Overseas”

“Every time I leave the project in Shenzhen for a couple of weeks and then return, nothing gets done in my absence. It’s as if nobody can work there in China without me telling them what to do. I don’t understand why they don’t take the initiative.”
- Senior Project Leader, DSM Engineering Plastics, Heerlen, the Netherlands

Wal-Mart is pulling out of Germany, citing stiff competition and consumers’ rejection of the U.S. retailer’s touches, like stores on the outskirts of town, overly friendly employees and checkout baggers.
- “The Wall Street Journal”

With a rapid increase in globalization, the opportunity for personnel within companies and organizations to come in contact with national cultures other than their own has dramatically increased over the past years. Given changes in global migration patterns (4), the opportunity to contact different cultures occurs even in one’s own community. This contact proportionately increases the chances for an intercultural conflict, meaning some sort of incompatibility with a difference in cultures being the underlying cause.

There are two dynamics that make cultural conflicts problematic for organizations attempting to deal with the issue: 1) the root sources of the conflict may not be readily apparent and 2) the conflicts are very often rooted in basic value perceptions. Even though most people equate cultural differences by what they see on the outside, the symbols, rituals and visible behavior, these are often determined and driven by what is not seen. Emotions, perceptions about oneself and the world, and the norms and values that define one’s culture are what shape and drive the visible behavior. For managers who are not aware of intercultural principles, this means even if they could see and understand what the root of the conflict is, they would most likely be powerless to properly address it.

Exploring the iceberg
For organizations that are doing international business, the benefits of at least becoming acquainted with the surface, visible aspects of a different culture have long been apparent. One only has to visit an average airport bookstore to see evidence of a small industry that thrives on teaching travelling executives the tips and tricks of business etiquette in various countries. But on a deeper level, the invisible aspects of culture are often glossed over or ignored. Or they are neglected out of concerns for budgets or a lack of knowledge as to how to approach the problem. And this despite clear evidence that proves that ignoring the friction that can occur at the interaction between cultures can lead to costly failures: technology projects that fail to be continued because technical assistance workers ignore the skills and competencies of local staff; massive investments in product launch projects in new markets that fail to take hold because the business development staff didn’t consider cultural aspects of their new market; new international executive staff appointments that have to be scrapped because they flew in the face of the host country’s culture; or even, as quoted above, entire merger plans being abandoned because of a lack of attention to the ways of doing business in the host country.

Even on the most basic level of communication there can be hidden dangers of cultural conflict. For example, even though the world’s business language, for good or worse, is English, there can be value judgments inherent in a simple choice of words. For example, very basic business terms such as “effective,” “efficient,” “on time,” or “respect” can have dramatically different meanings in different cultures. By not taking these differences into account there is a dangerous potential for misunderstanding and conflict, ineffective managers, and non-functioning teams.

Proactive skill development
It is well established that the vast majority of companies that have a proactive and comprehensive corporate training program in place realize long term benefits that far outweigh the initial investment of time and resources in the training.

This same proactive approach to developing the people within organizations is also very much necessary on an intercultural level. The simple fact that a company does business internationally should be a clear signal that there are intercultural dynamics at play. Companies that don’t do business in markets outside their home country yet have personnel with their origin, roots or heritage elsewhere are also strong candidates for intercultural training. And not only for those who are in direct contact with the “different” culture, but for the entire organization. Communication, team building and decision-making are three areas that are especially sensitive to intercultural differences, but beginning with an awareness training is a good start. The more aware people in a company are of the world and cultures around them, the better positioned that company is to meet the intercultural challenges of the future.