RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT

Highlight, copy & paste to cite:

Stening, B. W. (2006). Cultural Intelligence: Put it (High) on the Asian HRM Agenda, Research and Practice in Human Resource Management, 14(2), 74-84.

Cultural Intelligence: Put it (High) on the Asian HRM Agenda

Bruce W. Stening

Abstract

HRM practitioners have long understood how important it is that managers, especially senior ones, have the ability to deal with the cultural milieu, both national and organisational, in which they operate. In relation to expatriates, for example, much attention has been directed at selecting and training individuals to work in cultures that are foreign to them. Contrary to the commonly held view, largely as a result of globalisation, that national cultural differences are becoming less important, it is argued in this paper that understanding cultures is becoming increasingly important. Further, it is contended that many organisations in Asia are vastly under estimating the importance of the so-called cultural intelligence among their local workforces, and as a consequence are in danger of compromising their performance.

Introduction

‘Culture’, and its impact on managerial behaviour, has received an enormous amount of attention in the management literature over the past several decades. This long lineage of dialogue dates back to landmark works such as Haire, Ghiselli and Porter (1966) in respect of national culture, and Deal and Kennedy (1982), and Peters and Waterman (1982) in relation to organisational culture. Indeed, this stream of the literature became one of the most heavily researched areas in management, its importance being reflected in the fact that Hofstede’s (1980) book, Culture’s Consequences: International Differences in Work-Related Values, became one of the twentieth century’s most cited works in the social sciences. Attention has not just been from academics, but also practitioners around the world who became keenly interested in how the impact of ‘culture’ on their organisations could either be handled (dealt with reactively, typically in respect of the international aspects of their operations) or manipulated (managed proactively, especially in relation to the internal characteristics of their organisations).

Human resource managers inevitably became active participants in these matters, most often in relation to the selection, training and development of employees. For example, who should be sent on assignment as expatriates?; and what training is required of people interacting with persons of different ethnic, religious, linguistic or other background? Moreover, through all facets of human resource management functions, how can the motivation, commitment and other organisational relevant favourable attributes of employees be ensured in the interests of optimal organisational performance? Such driving forces were important in helping transform ‘personnel management’ into ‘human resource management’ (HRM), and more recently, HRM into ‘strategic human resource management’ (SHRM), providing recognition that the effective management of human resources is a strategic function (Brewster 1994), not a service or support activity in organisations. Specifically, in relation to the international operations of firms, increasing consideration was directed towards considering the importance of strategic international human resource management (SIHRM) (DeCieri & Dowling 1999).

At the same as these developments in HRM were occurring, the world witnessed the emergence of the global economy. While globalisation might be said to create many of the conditions in which SIHRM becomes relevant, especially in firms whose business is truly global in the sense that they have operating personnel in many different countries, there is a view that ‘culture’ is becoming less important in many respects. For example, it is argued that values converge, largely through a combination of globalisation and the advent of new technologies which give almost everyone in the world access to the same information, and in many cases the same products and services. This debate is a variation on a much older one in economic development (Harbison & Myers 1959) in which one perspective was that as countries industrialise they would converge in terms of values and institutions, and would come to have similar ways of managing their economic entities (firms). A contrasting perspective was that because of deeply rooted differences in cultural values, there would be continuing divergence in the way that firms were managed. Since the initiation of these debates around half a century ago, a number of studies have empirically examined for convergence/divergence. On the basis of the accumulated evidence it can be reasonably concluded that despite some convergence in relation to particular things (for example, societies which were traditionally collectivistic tend to become more individualistic as they industrialise), cultural values are very deep seated and much of the convergence that some people believe is being witnessed is only superficial or very limited in effect (Koen 2005).

Contrary to the view, largely as a result of globalisation, that national cultural differences are becoming less important (Featherstone 1990), it is the contention of this paper that understanding cultures is becoming even more important than previously believed; often in ways and for reasons that are not immediately obvious. The purpose of this paper is to explore the importance of cultural differences vis-à-vis the operation of contemporary organisations, focussing on the implications for human resource managers. More specifically, why these issues are more pertinent, and often more problematic in Asia than in many other parts of the world, is examined. It will be argued that many organisations, both local firms and foreign businesses, in Asia are vastly underestimating the importance of cultural skills among their local workforces, and as a result are in danger of compromising their performance. As shall be outlined in the paper, for many organisations, being cognisant of the importance of ‘cultural intelligence’ will be a critical factor in their success.

Intelligence/Emotional Intelligence/Cultural Intelligence

Given their central role in the selection of employees, it is not surprising that human resource managers have needed to be highly familiar with identifying, measuring and analysing the intelligence quotient (IQ) (or surrogates for it) of potential appointees. This measure, and a host of other cognitive tests, is frequently used to assess whether individuals have the capacity to analyse and solve the problems that they will confront in their jobs. IQ tests, as such, are not as common in the private sector firms as they might be in some public sector organisations. Nevertheless, surrogate measures, such as levels and types of formal education, are very often used to make judgements about the cognitive abilities of people.

Though an individual’s IQ may be critical in relation to some jobs, it is known that performance in most roles is a function of many attributes. This has been better recognised in collectivistic cultures than it has been acknowledged in individualistic cultures. In the latter, arguably, there has been a tendency to believe that if smart individuals are chosen the likelihood is that more successful outcomes will be obtained. Gradually, however, it became evident that this was not necessarily true and the reliance on such tests waned. Indeed, there is now a significant body of work that points to the fact that large, diverse groups of people with a wide spread in IQ levels frequently make better decisions than much smaller numbers of very smart individuals who might be considered ‘experts’, a phenomenon that has recently been labelled ‘the wisdom of crowds’ (Surowiecki 2005).

About the time that disillusionment with IQ, as a good predictor of employee performance set in, there was growing attention to the ability of individuals to recognise and regulate emotions both within themselves and in others. Initially, this was described as ‘social intelligence,’ but now it is most commonly called ‘emotional intelligence’ (EQ) (Goleman 1995). Fundamentally, the proponents of EQ have argued that an individual’s success in life (including at work) is determined not just by abilities in respect of a fairly narrow range of mathematics and linguistic skills, but by such things as: knowing their own emotions (self-awareness); managing their emotions (handling their feelings in an appropriate manner); motivating themselves (harnessing their emotions in the interests of goal accomplishment); recognising emotions in others (having empathy); and handling relationships (being socially – i.e., behaviourally – competent) (Salovey & Mayer 1990). The academic management literature has empirically examined the many facets of EQ and affirmed its importance in employee effectiveness, while HRM practitioners and managers more generally have become alert to its significance and adept at looking for telling signs to indicate whether individuals have high or low levels.

Most recently, another type of intelligence, cultural intelligence (CQ), has risen to prominence. According to Earley and Ang (2003: 9), CQ is, “A person’s capability for successful adaptation to new cultural settings, that is, for unfamiliar settings attributable to cultural context.” and consists of cognitive, motivational and behavioural elements. In managerial contexts, this calls for the ability, among other things, to identify and solve problems sensitively and effectively in cross cultural situations. These situations are often characterised by considerable complexity and ambiguity. According to Thomas and Inkson (2004), a manager who is high on CQ will, first, be knowledgeable about cultures and fundamental issues in cross cultural interactions; second, be mindful of what is going on in intercultural situations, having a sensitivity to cues and an ability to interpret them; and third, have a repertoire of behavioural skills that enable them to respond appropriately to different intercultural situations. To the extent that their jobs require cultural intelligence, it is important that HRM managers evaluate ways in which the CQ of employees can either be acquired (by careful selection) or developed (by appropriate training) (Earley, Ang & Tan 2006). Before addressing the question of how this might be done, it is important to examine why cultural intelligence is important.

The Importance of Cultural Intelligence

Traditionally, the importance of cultural understanding in international business has been determined by several factors. First, the countries and cultures in which the business has been conducted, in the sense that – as a result of differences in what has been described as ‘cultural distance’ (see, for example, Kogut & Singh 1988) – some countries are more difficult to do business in than others. Second, the areas of the firm’s business that are most directly impacted, the impact of cultural differences in areas such as sales and marketing being greater, say, than on accounting services. Third, whether the firm has sizable numbers of expatriates, in which case it has been recognised by the company to give particular attention to how those persons can best be selected and trained for their assignment in order that their personal adaptation and job performance are ensured. Overall, it might be said that an understanding of how and why CQ is important in international business has been more obvious in relation to some things than to others.

CQ has been of very obvious importance when …

CQ has been of somewhat obvious importance when …

CQ has often not been well understood in relation to …

While it is apparent cultural intelligence is important, and has been seen to be important in relation to many aspects of international business, its application has been undervalued or misunderstood in some respects. Where, previously, information that might have been of only marginal significance in terms of its impact on an organisation’s performance, for the reasons that will now be explained, this is no longer true. For both MNCs and local enterprises in Asia, the environment in which their business is undertaken has changed dramatically as a result of various factors. Consequently, inattention to the centrality of cultural intelligence could have a significantly adverse impact on organisational performance.

How things are Changing for MNCs in Asia

Firms that have had considerable experience in international business, most notably multinational corporations (MNCs), have usually grappled fairly well with the cultural challenges they confronted. However, as alluded to in the previous section, a number of factors have meant that those challenges are considerably greater today than they were even a few years ago.

Emerging Cultural Challenges for Local Asian Enterprises

The circumstances and challenges for both foreign and local enterprises vary enormously across the many different countries in Asia (Lasserre & Schutte 2006) and it would be dangerous to overly generalise. The issues in highly developed countries such as Japan, South Korea and Singapore are vastly different from those in much less developed places. Moreover, within each country, irrespective of its stage of development, there are typically wide variations in the international experience and exposure of local firms. However, it is fair to say that within the majority of countries in Asia, and most particularly those in the ‘developing’ category, there are several very challenging ‘cultural’ issues that have to be confronted by local firms.

Conclusions – and Implications for Human Resource Managers

The need for high levels of CQ in organisations operating in Asia has never been greater. The challenge for corporations is how to first get high levels of cultural intelligence; and then second, how to retain the phenomenon. In these processes HR managers necessarily play a critical role. Clearly, each organisation will have unique problems to be addressed, and for that reason, standard solutions are not feasible. Nevertheless, some broad approaches to the problem can be suggested.

It would be easy to dismiss the argument being made here about the importance of CQ as ‘just another management fad’. Arguably, such action could be a serious mistake. For the reasons outlined, if anything the importance of CQ is likely to grow, not shrink. Furthermore, in the immediate future, its importance is likely to be greater in Asia than in any other part of the world. HRM managers in this region will ignore it at their peril.

Author

Bruce Stening is Professor of Organisational Behaviour and Human Resource Management at UNSWAsia in Singapore. He was previously Professor of Management and Associate Dean (Research) in the College of Business and Economics at The Australian National University, and was for many years executive director of the ANU’s National Graduate School of Management. He has also held various other professorial and senior appointments at universities both in Australia and a number of other countries. He is the author/editor of five books and over fifty academic papers. He completed his PhD in organisational behaviour at the University of New South Wales. His research has focused largely on behavioural issues in international management. Currently he is engaged in several research projects involving the management of foreign enterprises in China.

E-mail: b.stening@unswasia.edu.sg

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