Economist Intelligence Unit 2012

Economist Intelligence Unit 2012

Competing Across Borders:

How Cultural and Communication Barriers Affect Business

A survey of 572 global executives in 2012, with almost 50% of them 

being C-level or Board level executives, found that:

 

♦”Most companies understand the cost of not improving the cross-border skills of their employees, yet many are not doing enough to address the challenge. Despite acknowledging the direct impact of effective cross-border communication on their fortunes, a significant proportion of companies, by their own admission, are not taking sufficient remedial action to address the root causes of misunderstandings.  Some 47% say their companies do not offer enough training to hone their employees’ language and communication skills, and 40% believe there is not enough emphasis placed on recruiting or selecting people who are suited to cross-cultural environments.”

♦”Misunderstandings rooted in cultural differences present the greatest obstacle to productive cross-border collaboration. Respondents regard ‘differences in cultural traditions’ (51%) and ‘different workplace norms’ (49%) as the greatest threats to the smooth functioning of cross-border relationships.”

♦”An  overwhelming majority of executives surveyed also believe that an improvement in cross-border communications with customers and colleagues will have a beneficial impact on financial indicators, such as profit, revenue and market share.  While most companies focus quite sensibly on getting their strategy right on products, costs, sales and the other building blocks of business, the research done for this report suggests that the interpersonal and communication skills of their employees can have an equally critical impact on an international company’s bottom line.”

The Report’s Conclusion

♦”The senior executives and management experts surveyed and interviewed for this report have made it clear that the task of overcoming cultural and linguistic barriers is a difficult but not an impossible one.  It may have to be done differently at different organizations, but the risks posed by ineffective or less than ideal cross-border collaboration and communication can be measured, and the impact on financial performance can also be quantified.  That being said, the risks can be minimized by smarter recruitment and a workforce that is trained to handle the rigors of operating on an international stage.  Companies just need to face up the challenges, recognize the dancers of inaction and be innovative in their approach to solving problems that involve their most precious resource: their people.”

See the full report at:http://www.managementthinking.eiu.com/sites/default/files/downloads/Competing%20across%20borders.pdf

                                          

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