Multinationals That Promote A “Global Mindset” Perform Better

Multinationals with a “global mindset” typically perform better than those that don’t have the same focus, according to RW3 CultureWizard’s Global Mindset Index Study.

RW3, which provides culturally-based training solutions, defines global mindset as the ability to recognize and reflexively adjust to cultural signals so that an individual’s effectiveness is not compromised when dealing with people from different backgrounds.

The study, conducted with market-research firm Seymour Insights, surveyed 1,362 business professionals worldwide, and found that companies that demonstrate a commitment to intercultural skills are far more likely to achieve their most important strategic and business priorities than companies that do not.

For respondents at companies that achieved or exceeded their business targets (deemed “overachievers” in the study), 84 percent say their organization recognizes different cultural values and preferences in business activities. This compares to only 26 percent of respondents at “underachieving” companies who could say that.

“The key differentiator is to actively promote a global mindset as a corporate value. Employees, it turns out, can easily tell the difference, and will work to align their own behavior with corporate expectations.”

“While everyone says a global mindset is important, the data show that only companies that consistently act on that belief gain real business benefit,” the study states. “The key differentiator is to actively promote a global mindset as a corporate value. Employees, it turns out, can easily tell the difference, and will work to align their own behavior with corporate expectations.”

Indeed, the survey found that 81 percent of respondents at overachieving companies believe their organization supports employees developing a global perspective, as compared to only 38 percent at underachievers. Moreover, 87 percent of respondents at overachieving companies agree that their employer values an employee with a global mindset, while less than half of respondents at underachievers state the same.

In an interview last week, RW3’s founders zeroed in on why a global mindset is imperative by giving examples of companies that have really “terrific domestic operations,” but when they began to operate in other cultures, “it didn’t work.”

“For example, Walmart is a great company that knows how to market products in the U.S., but when the company opened a store in Germany, they didn’t understand the cultural expectations of German customers and they made some terrible mistakes,” said Michael Schell, chief executive of New York City-based RW3.

One misstep was that Walmart had greeters welcome customers as they come into the store, but Germans are “a very private people” and they couldn’t quite understand that role, Schell said.

“Some women thought the greeters were flirting, which was totally inappropriate to them,” he said. “German customers also don’t like baggers – it’s much too intrusive for them.”

Walmart had also chosen a store manager from Arkansas who didn’t speak German and didn’t understand the culture, Schell said. The store manager even tried to introduce the typical employee-wide “Walmart cheer,” but found that it was “wholly inappropriate” in the German hierarchical culture. A combination of things caused the German Walmart store to end up failing.

“One of the things we like to remind people is that, what makes you successful ‘here’ doesn’t necessarily make you successful ‘there,’” said Charlene Solomon, president of RW3.

“CEOs are typically very sensitive to people, but there are lots of subtleties that can get in the way of being effective with people globally,” Solomon said. “Also, people mistake etiquette for understanding cultural differences. Understanding how to give out their business card doesn’t mean they’ve got appropriate cultural expectations covered.”

Another example of a cultural mishap: RW3 worked with an American pharmaceutical company conducting clinical trials in Chile, in which volunteer patients had the ability to decline. The doctors were coming across as very authoritarian in their attitude to the volunteers, which almost precluded the patients’ ability to give “truly informed consent” and almost scuttled the trials, she said.

“That kind of cultural misunderstanding, subtle as it is, can derail an important corporate initiative,” Solomon said.

Having a global mindset doesn’t mean that company representatives need to change their values, but it does require them to adjust, Schell said. Understanding culture enables individuals to properly interpret the behaviors of people in other countries, which makes them less likely to misinterpret behaviors and come to the wrong decisions. This is particularly important for company leaders to remember.

“The most universal recognized behavior of a CEO is authenticity and genuineness, so while CEOs may need to adjust their behavior, they need to remain authentic,” he said. “For example, if they are normally blunt and direct in the U.S., they may need to find a more culturally appropriate way to position their vision to engage employees in other cultures.”

Companies can do many things to promote a global mindset in their organization, Schell said. Some organizations celebrate the UN Culture Day, others have diversity events.

“It’s always important for the CEO and the leadership team to overtly recognize that culture can impact a global deal and be sure that their teams are taking culture into consideration when developing strategies,” he said.

Companies not only should promote people who have a global mindset because of their success, but also articulate that as part of their success, Solomon added. Companies need to recognize that throughout the organization.

Global mindsets also need to be continuously reinforced, “as it’s very easy to slip back into our normal parameters,” Schell said, noting that “under pressure, we tend to revert to traditional behavior.”