Culture is defined by Edgar H. Schein ⁽¹⁾ as "a pattern of basic assumptions -- invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration." This pattern of basic assumptions has worked well enough to be considered valid and, therefore, is to be taught to new members as the correct way to perceive, think, and feel in relation to those adaptation and integration problems.

The major dynamic consequence and benefit of culture is that it stabilizes things for group members. Failing to understand how culture works and how to effectively deal with cultural phenomena could result in alienation of new members of a group, loss of productivity, quality, creativity, and personal frustration/unhappiness.

Differences in Business Cultures and Management Styles

During a 15 year stint as Manufacturing and Quality Assurance Director in Europe (The Netherlands and France) I obtained a unique perspective of the differences between American and European business cultures and management practices. Experiencing these cultural differences first hand was very exciting and rewarding. Even today I am still reminded of the unique ways of doing things in Europe such as telephone etiquette, driving habits (European drivers actually use their turn signals and slow drivers stay in the slow lane....), social contacts, personal friendships, handling of conflicts, etc.

The cultural differences encountered in the everyday business environment were even more pronounced. In the Netherlands I found a rather informal, open, and fair business environment in which people are encouraged to communicate freely with one another and to challenge authority (the boss) without fear of negative repercussions.

In the Netherlands management is more accustomed to challenges by employees and employee councils, in particular on decisions that affect the long-term future of the company, its people, and working conditions. In Dutch culture, challenging authority figures whether they are the boss, the prime minister, or a police officer, is a way of life. It is done in an open manner without fear of punishment. The labor laws in the Netherlands are such that it would be nearly impossible to dismiss an employee for conveying his or her opinion to a superior regarding company's business practices, even if this information is not well received (i.e. the bearer of bad news is not shot). Hence, most Dutch employees feel relatively secure in their job. They are not afraid to express ideas, nor are they afraid to report poor working conditions that may impair the quality of products and services.

U.S. management styles are different from their European counterparts in several areas. Many U.S. managers still practice a refined version of a Darwinian management style combined with the confining aspects of Taylorism. This management style is based on the application of strict controls and little regard for the human aspects of a subordinate's life. It is modeled after the principles of Richard S. Sloma ⁽²⁾ , who promotes a "dog-eat-dog" and "survival of the fittest" management mentality, in which workers are not to be fully trusted and seasoned middle managers are placed in "pigeon holes". In some U.S. companies, fear is still prevalent among employees and middle management. Lower level managers and supervisors who have the courage to speak out against such antiquated management practices are swiftly replaced, demoted and placed in a position where they can no longer be a "threat" to the status quo. One of the U.S. management practices that European managers find particularly ineffective is the so called "forced ranking" of subordinates. It requires the manager of an organization to rank the people in his or her organization from zero to one hundred percent. Regardless of the number of people in the department and the quality of these people, the manager is forced to divide the group into four quartiles. The top 25 percent is to be supported, and whenever possible, promoted. The bottom 25 percent is to be replaced and the middle half of the group is simply ignored (according to former CEO Jack Welch ⁽³⁾ at GE the bottom 10% is fired, the next 10% is put on an improvement-or-else plan, and the top 10 to 20 percent is promoted). This practice usually leads to the departure of some competent people who, as a result of forced ranking of a small department, ended up in the bottom quartile of the pile. European managers understand that it is much more effective if management is more supportive in improving the performance and productivity of the less-than-perfect 75 percent of their respective organizations rather than ignoring, or worse, treating them in a demeaning manner.

In the European business environment, people prefer individual conferences or small group meetings to discuss and decide on issues, activities, or projects. The business culture of big U.S. companies promotes large group meetings which are used as sounding boards for "show and tell" presentations with little in-depth interactions between the presenter and his or her audience.

As a whole, the European business culture is more formal and status conscious. Large European companies make use of many status symbols such as offices with closed doors, private dining rooms for senior managers, prominent use of academic tiles, etc. There is also more concern for protocol in Europe companies. European managers view the U.S. business environment as informal and egalitarian (no upper or lower social classes, fewer status symbols). Addressing managers and employees on a first name basis is not very common in the European business culture. However, European managers who have been transferred to U.S. companies quickly find out that the U.S. business culture is not so informal and egalitarian after all. For instance, most U.S. companies also use office space allocation as a status symbol. Offices for clerical staff, engineers, and managers are usually open with partitions only high enough to permit a small sense of privacy when the employee is sitting down. The size of the office or cubicle and the quality of the furniture also vary by job title. The best (private) offices are given to the higher-status people such as directors, vice presidents and senior executives. This aspect of the U.S. business culture is more similar to the more formal, class conscious European business culture than most people realize.

Implications for business leaders.

Business cultures can only be transformed by business leaders who have the will, the power and skills to change an undesirable culture and create a better one. The most powerful mechanism for culture embedding and reinforcement are:

what business leaders pay attention to, measure, control and reward
a leader's reaction to critical incidents and organizational crises
role modeling, teaching and coaching
criteria set for recruitment, promotion and punishment Implications for Employees.

Employees should always be aware of the business culture inherent in the company they work for. They should find out what kinds of behaviors are considered "proper" and rewarded and what kinds of behaviors are considered unacceptable in the business environment of their company (ideally this should be identified and evaluated before deciding to join a company).

Understanding and adapting to the company's business culture is critical, especially during periods of economic uncertainty. Failure to do so will result in alienation of employees and loss of productivity. Sadly, some U.S. managers do not appear to understand the importance of the cultural learning and adaptation process and consequently do not provide for adequate support to their employees.

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