Australia’s business community comprises a rich diversity of cultures. This offers commercial opportunities and the chance to forge relationships globally. Equally, it has complexities.
All of us have committed a cultural faux pas at some point and often these wrong doings remain unknown to us. We leave the situation none the wiser. In business, cultural gaffes are magnified a hundred times over. A soft handshake, too much eye contact, the wrong attire can potentially make or break a deal. With so much at stake, we’ve developed Five Tips to consider when negotiating across cultures.
1. Contract or Relationship?
Dealmakers from some cultures see the goal of a business negotiation as a signed contract between the parties. Other cultures see the primary goal as the creation of a relationship between the two sides. Therefore, determining how your counterpart views the negotiation process can facilitate your communications strategy.
For example, initiating talks with facts about your companies’ ability to deliver a low-cost contract with more efficient time frames may not land you the deal – not at first, anyway. You may need to begin the conversation with a focus on your interest in fostering a long-term and rewarding relationship with the other party. Conversely, if they’re a deal maker, trying to build a relationship may be a waste of time.
2. Informal or formal?
If in doubt, formal, patient and respectful are good starting points
Last week there were rumours that Peta Credlin, Chief of Staff to Tony Abbott, was wandering around a dusty outback community in stilettos, a skirt suit and carrying an excessively expensive clutch. NOT exactly the kind of formality expected in the desert. So, just to clarify; if in doubt wear formal attire within the context of your meeting. If you’re riding camels with an Arab sheikh, don’t turn up in a pair of stubbies and your RM Williams but equally don’t turn up in white robes. ‘Formal’ is not just a reference to your attire, however the examples used paint a picture of formalities across the board including, the way you address the other party, the way you speak, your approach to the conversation, etc. As a general rule, adopt a formal position and move to an informal one, if the situation allows it.
3. Time (in)sensitive?
Negotiating styles invariably raise the issue of a culture’s attitude toward time. It is said that Japanese are punctual but negotiate slowly; Germans are punctual and negotiate fast. In contrast, it is said that Indigenous Australians are habitually late and take a long time to make decisions. None are an indication of more or less value but rather, a distinct cultural conditioning, which influences both punctuality and the negotiating process. For some, time is money, which reduces formalities to a minimum; for others, building relationships is critical, which prompts longer conversations and lengthier time spent on the process. Ultimately, it is a good idea to understand whether your counterpart has a ‘high’ or ‘low’ sensitivity to time and build this into your strategy.
4. Group or individual?
In any negotiation, it is important to know who has the decision making power. Some cultures emphasise one leader and others emphasise a group decision-making process. On the one hand, cultures can be extreme in their approach, like the Americans, with one supreme leader calling the shots. In other cultures, notably Indigenous, there is often an emphasis on consensus decision-making. Understanding these nuances will impact on time and approach to negotiations.
5. Heart on sleeve or Poker face?
In stereotype land, Latin Americans are known for their hot-headed and passionate displays at the negotiating table, whilst the Japanese are quite the opposite. Various cultures have distinct rules as to what they display in a business deal. Negotiators should learn them.
Culture and Business: Five Tips for negotiating effectively across cultures