When Air France and KLM merged in 2004 they seemed destined to become one of the world’s most powerful airlines.
Thirteen years on, the business’s future looks uncertain after a report leaked in July revealed a divided company brimming with distrust and resentment between French and Dutch staff.
Air France managers feel they try to do what’s best for the whole company but that KLM staff focus on their own sector and are money-obsessed; the Dutch consider the French aloof and don’t trust their economy. The “extent to which employees are disillusioned is shocking”, says the report, which was compiled by trades unions surveying members within the company and finally questions “whether the alliance can survive given the long-standing mutual incomprehension between the Dutch and French camps within the group”.
Jean Vanhoegaerden has kept a close eye on the saga. As a Professor of Practice at Ashridge Executive Education, part of Hult International Business School, the Belgian academic is an expert in helping businesses handle cross-cultural collaborations.
“I don’t say that culture is the most important aspect of doing business, but it’s the most ignored one,” he says. “The problem in mergers is that there’s not a lot of thought given to culture before they merge – it’s very often a problem afterwards. Probably the big difficulty here is the Dutch are very direct in the way that they do business, and the French are much more: ‘We will talk and, in the end, we get to the point.’ These are called ‘low context’ and ‘high context’, in academic terms.”
The other main problem is conflicting attitudes towards power and hierarchy.
“I remember working with a French company and when the CEO came it was almost like God had arrived: everyone had to sit up. While in the Dutch culture you can challenge the boss, not just intellectually but also: ‘Why should I do that just because you told me to?’ – and that is an important difference.”
Air France-KLM’s troubles highlight how significant cultural differences can prove in business. Every country has cultural norms that seem… well, normal, to people of that nationality. But to outsiders seeking to build business relationships there, they form a minefield with the possibility of misunderstanding and offence at every step.
China, for example, is a country many Western businesses wish to penetrate better but whose business etiquette is rife with potential pitfalls. Meetings are often planned months in advance, all overtures should be conducted in written Chinese, and bureaucracy is unavoidable – decisions will not be made in the meeting but passed slowly through the hierarchy. The Chinese fear of ‘losing face’ means you should never criticise someone in person; tactful silence is the preferred option. And you should research any gifts you intend to bring as some might seem unlucky – for instance, flowers, which are associated with funerals. Roy Chua is Associate Professor of Organisational Behaviour and Human Resources at Singapore Management University and knows its business culture well.
“My advice to CEOs doing business in China is to study and understand some Chinese history, literature and philosophy,” he says. “The Chinese thinking is greatly shaped by their history. Their language itself often makes reference to stories from thousands of years ago. It’s hard to truly understand them if you don’t know where they are coming from.
“In general, it’s important to gain deep knowledge about an unfamiliar culture that you are working in. However, knowledge itself is not sufficient. One also needs to develop cultural meta-knowledge,” he adds – that is, become aware of the gaps in your understanding and when you are making assumptions, then work to address these.
There are many organisations – in business, academia and the not-for-profit sector – whose purpose is to enable smoother cross-cultural trading. For instance, Business Data Processing introduces companies to Eastern European IT firms. Its director, Elena Kozlovskaya, has often seen “business parties being very harsh, demanding and outsmarting each other”, she says, and “in the end, these projects didn’t go long-term. In Eastern Europe we care about building relationships with business partners: sometimes a sincere promise is valued more than a long business agreement, and established relationships are valued more than a sophisticated proposal.”
The UK India Business Council, meanwhile, exists to improve working relationships between those two countries, though its advice on Indian business etiquette should prove valuable for anyone. A guide on its website gives many tips, including how to receive a business card, address people and phrase your questions to best effect.
Anglophones are at an advantage in India, as English is its official language of business. But what if you travel somewhere where it’s less widely spoken? Prof. Vanhoegaerden is fluent in English but even he finds himself baffled on occasion by idiomatic phrases; he was perplexed the first time someone in the USA closed a meeting by saying: “Let’s call it a day.” So he advises avoiding lingo and slang and speaking in literal terms. “It’s about making your language understandable to the non-English-speaking people,” he says. “That is, I think, the responsibility of the English speaker.”
Ultimately, it’s all about being respectful and considerate. Master that and you’ll be fluent in a business language that’s understood in every country in the world.
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