Why Culture is Important in International Business

Author:
Denise L. Hummel – Universal Consensus

Editor’s Note: We are especially pleased to welcome our first Guest Author, Denise Hummel,
who contributed the piece that follows on the importance of culture in international business

Doing business on a global basis requires a good understanding of different

cultures. What works in your country might not work well in another, and could
even be interpreted as an insult! And in your role as an international human
resources professional, it’s important to raise the awareness of cultural issues
within your organization to ensure effectiveness.

Consider the following basic questions:

When George Bush gave Chinese Premier Li Peng a gift of cowboy boots
embroidered with the American and Chinese flags, was it an appropriate gift?

1. Yes, a thoughtful sentiment and a keepsake appropriate to the occasion

2. No, a significant miss on the part of administration protocol experts
3. Yes, a good choice, if only he had known the Premier’s correct shoe size
Answer: 2.

Unfortunately, in China, the soles of the feet are considered to be the lowliest part of the body
and gifts of footwear, no less embossed with the nations’ respective flag, was a significant miss on
the part of administration protocol experts.

When formalizing a deal in the Middle East, it is imperative to

1. Determine that the contract is iron clad with strict attention to jurisdictional issues of
international law to secure a just outcome should there be conflict
2. Solidify the interpersonal trust relationship as this rapport is critical both during the deal
and if conflict develops
3. Retain legal counsel in the country in which the business undertakings will primarily take
place and ensure that this attorney has a golfing relationship with most members of the
judiciary.
Answer: 2.

When doing business in the Middle East, the surest indicator of a successful business
relationship has very little to do with the content of the contract or the extent to which the
language will hold up in court. Court systems in many of these countries move slowly with
inconsistent results, and your business counterparts in many Middle Eastern countries do not
put their faith in the legal system to determine the outcome of a conflict. Absolutely essential to
the success of the deal is the interpersonal rapport and relationship established during the
negotiation stage and at every point thereafter. Failure to understand and cultivate this aspect of
the deal increases the risk of failure to a critical degree.

In sending an email to a Japanese colleague with whom may wish to collaborate on

a potential business deal, you would be most successful if you

1. Begin the email by addressing the individual warmly and openly, by his first name,
immediately closing the cultural gap
2. Always use Mr. , Miss or Mrs. followed by the last name of the individual, followed by an
embracing and forthright interaction
3. Use the last name, followed by the term “sama” to address your email, followed by clear
text set forth with the utmost formality.
Answer: 3.

The risk of email is that it lacks certain social contextual cues such as body language, eye contact
and intonation and can therefore create misunderstandings. There is also no way to see the
demeanor or reaction of your counterpart and adjust your communication strategy to
compensate for a misunderstanding once it is created. When in doubt, it is always safer to err on
the side of greater formality and deference. The Japanese have become accustomed to making
allowances for informal communication from other countries, but you will proceed with more
credibility if you make a sincere effort to adapt to their customs. The use of the term “san” and,
for those in a position of high authority, “sama” is honorific. Use the last name, followed by the
honorific term, followed by extreme clarity and formality in the text, with as few assumptions for
context as possible.

Summary

The cultural nuances that affect international business obviously go far beyond the ability to greet
your international colleague or choose the correct gift. Issues related to the culture’s time
orientation, whether it is an individualist or collectivist society, space orientation, and power
distance, not to mention conflict assumptions and non-verbal communication all affect
understanding your colleague across the table, as well as your chances of being understood.

Preparation by a trained expert related to these issues not only assures that unnecessary blunders
will be avoided, it brings to each of us a personal knowledge that deepens our understanding of
others, thereby promoting acceptance, understanding, and on the level of international relations,
peace and prosperity.

Everybody Hates Performance Appraisals – What to Do?

Warren Heaps – Birches Group LLC

I read an article today from the Wall Street Journal by Dr. Samuel Culbert of the Anderson
School of Business at UCLA. In the article, the author states:
“This corporate sham [performance appraisal] is one of the most insidious, most damaging,
and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who’s
evaluated hates it. It’s a pretentious, bogus practice that produces absolutely nothing that any
thinking executive should call a corporate plus.”

I recommend you read the rest of the article. You also might want to refer to this video interview
with the author from 2008 – you can find it here.

It is true that most folks dislike the performance management rituals that exist in their
organizations. For the most part, few managers are very good at providing meaningful feedback,
and there is a “check the box” attitude from managers and staff alike. And the problem is with
the whole concept — it’s not just a question of making a better form, or applying the latest Web
2.0 technology to automate a bad process. That just results in a very efficient, but no more
effective, bad process.

I will leave it to Dr. Culbert to describe what else is wrong with performance appraisals. Instead,
I would like to challenge you to think about a couple of concepts which could actually improve
performance management for everyone.

At Birches Group, we did some research a few years ago for a client, which involved interviewing
staff in every corner of the world about their company’s performance management system. We
asked employees if they liked performance appraisals as they were conducted in the organization;
they did not. Then we asked if they could identify the “good” and “bad” performers; without
exception, they could. So we started investigating how it was possible they could figure out who
was a strong performer and who was not, despite the formal performance management system
they disliked so much.

The answer was incredibly simple. For the “good” performers, the answers to these questions
were YES:

1. Do you have good ideas?

2. Do you listen and adapt your ideas to client/customer needs?
3. Can I count on you to deliver?
4. Are you an effective team player?
That’s it. Our research indicated that if we could answer these four questions we would have
enough information to evaluate the performance of an individual in any organization.

Think about it. Apply it to your company. Does it work? Can you think of anyone in your
company that can answer yes to all of these questions? Are they a good performer? Imagine the
implications of such a simple approach.

We built a system, called Community™, which is based on this simple model. With just four
questions to evaluate performance, we gather feedback from employee, manager and peers
(inside or outside the company). The system is straightforward and requires no training (it has to
be, since non-employee peers are invited to participate in the process, and there is no way they
could be trained). And, surprise, it actually works!

Another key issue with performance management is how it is used in tandem with rewards –
usually merit pay and short-term incentives. ”Pay for Performance” is the rule now in most
organizations, but stop and think about how performance really influences pay.
In most companies, salary ranges or bands are defined using a combination of external market
data and internal equity issues. Once these bands are defined, the range of base salary is locked
in. Performance management is then used to help determine the following:

 An annual “merit” increase – this is an annual increment based on an employee’s

performance. In many developed countries, merit budgets have been hovering around 3%
or less for many years. So, companies are expending tremendous resources to determine if
an employee should be eligible for 2.5% to 5.0% (approximately) based on their
performance rating. Is it worth it?
 Annual short-term incentives – these bonus payments are likely based primarily on
company financial results. There is usually an individual component too, but often it’s
very small. Again, is it meaningful?
Should all staff be treated equally when it comes to performance management? Certainly all
employees should receive feedback on their performance from their supervisor. But should
performance ratings be used for “pay for performance” across the board?

We sometimes think about this as a wedding cake. As you know, the base of a

wedding cake is tall and wide. Additional tiers of the cake are shorter and narrower, and as you
go higher and higher up the cake the tiers get even smaller. We can draw an analogy between a
wedding cake and broad organizational categories.

For example, the lowest tier might correspond to support staff, for whom rewards
could easily be designed based primarily on basic metrics such as attendance,
coupled with tenure-driven increases. Yes, a lot like civil service, but perhaps more
appropriate for these positions.

The next level of the cake covers core professionals. For this group, the primary
reward mechanism could be related not to attendance or tenure, but the
demonstration of new competencies related to their job requirements. This group
would benefit from clearly defined competency milestones and peer feedback, for
example.

The next level (or two) would be reserved for managers and executives – the folks who are
managing the business operationally and strategically. For this group of staff, some pay should
be at risk, and rewards should be based on how well the company does in meeting it’s overall
performance objectives. Primarily financial objectives, but also consideration of leadership
strengths and other key decisions made by the management team need to be considered. Clearly,
though, it is these groups that have the most direct influence over company results. In other
words, perhaps when it comes to pay for performance, one size does not fit all.

All employees deserve regular, constructive feedback about their performance. This is not a
function of the system you use or the form design; rather, it needs to be embedded into the
culture of your organization, to encourage frank conversation, open and honest exchanges
between managers and staff, with the aim to celebrate the good (as opposed to focusing
exclusively on the best). Rethinking how performance ratings are used to administer pay and
rewards is long overdue in most organizations

How Top Companies Manage Talent Development

Han van der Pool – TNT N.V.
Lex Lindeman – HRBoosters

Globalization, demographic developments, the credit crisis and global warming have all created
the need for a shift in strategic management. Organizations are now faced with the need for
continuous adaptation to changes in the markets and the world in general. Leadership is the
most important condition for success in organizations. Organizations which treat development
of executives and managers as an integrated part of company strategy have a distinct advantage
over those that do not manage leadership development actively.

Together with Dave Ulrich of the RBL Group, Hewitt Associates examined how successful
companies structure their management development practices and identify and develop their
current and potential future managers and leaders. This research is carried out once every two
years, and the outcome and the rankings were published in Fortune Magazine in November,
2009.

A closer look at the research shows a nice overview of the practice of leadership development and
the importance which global companies attach to it. The inventory of the programs and
instruments used by an array of companies operating globally was compared with the financial
results of those companies, and gives some insight into the most effective approaches. The “Top
Companies for Leaders” are the most advanced in talent management and leadership
development, and have a real leadership culture, according to the researchers.

Over five hundred companies have taken part in this research. Every company completed an
exhaustive questionnaire, which was analyzed and compared to other companies by the
researchers. Afterwards, a selected group of companies was more closely studied through
interviews with HR professionals and top managers. To see profiles of the Top Ten, click here.

Main Conclusions
The research shows clearly that successful companies continue to invest in leadership
development despite the economic situation and the enormous strategic issues which companies
face. Here is an overview of the most important elements which make a difference at “Top
Companies for Leaders.”

 Strategy - There is a clear link between the strategy of the company and the strategy of
leadership development. Successful organizations closely examine which talent programs
are needed and which interventions are necessary to realize their company strategy.
 Involvement - The responsibility of talent development lies at the top of the
organization, and top management is also actively involved in the development of future
management. The top managers themselves are frequently active as mentors, coaches or
trainers, and frequently share their experiences and insights. Often the CEO plays a
prominent, active role in training or action learning, i.e., using high potentials coupled
with experienced leaders on essential questions. Also, CEO’s are involved in the programs
by means of internal communication.
 Talent Pipeline – Talent development is considered as a “mission-critical” company
process. The best performing companies see the filling of the talent pipeline organization-
wide as a necessity. They use sharp definitions of talent (high potentials), measurable
criteria and a rigorous process for to determine who belongs in the talent pool and who
does not. The outcomes of this are measured with KPIs.
 Ongoing Processes – The Top Companies for Leaders have incorporated management
development in their business cycles. The companies think about ongoing, recurring
 development processes instead of one-time initiatives. Talent management has a high
priority in these organizations. Much attention is given to identifying high potentials,
determination of specific career paths for these high potentials, coaching and their active
contribution to training and development programs. High potentials are assisted in their
development by means of training, e-learning, coaching and job rotation, as well as action
learning. Thanks to this approach, leadership and company development evolve
continuously together.
 Behavior – In these Top Companies, leaders are significantly more aware of which
behavior is expected of them. This also becomes apparent in all aspects of the organization:
performance management (leaders are rewarded for the degree desired behaviors are
demonstrated), promotion decisions (people are only promoted when the desired
behaviors are shown), recruitment and selection (leadership behavior is an essential
selection criterion) and communication from the top of the organization.
 Critical Objective - High potential talent is considered as a strategic advantage and the
development of this talent is and the development of a robust talent pipeline is considered
a critical objective for the organization’s top management.
 Leadership Programs – Only leadership programs with high added value for talent
development are organized. Programs whose content is linked with organizational needs
are chosen. The leadership programs are fully integrated with other human resources
processes, such as performance management, promotion policy, training and
development, reward, succession and career planning,and are coordinated from one
central point in HR.
 Implementation – Leadership is a mindset. It is included in the day-to-day of the
business. The Top Companies distinguish themselves by making talent management a
regular part of operational management. All the leaders of the company are responsible for
managing talent within the organization. Also, they are responsible for continuing the
implementation of talent management in the organization. This infrastructure is
embedded in the daily leadership culture and managers develop the necessary
competencies to be able execute talent management effectively.
Author’s Observations
Based on the findings of the Hewitt/RBL Study, we at Human Resources Boosters have
developed a model to achieve excellence in integrated talent management. This model comes in
three phases:

1. Structure - Companies should introduce functional profiles, competency models,

describe paths for growth, implement a yearly performance management cycle with clear
achievable targets and incentive structures, career- and succession planning and the
maintenance of this system (talent management infrastructure).
2. Process - Companies should embed talent management in the organization. The total
infrastructure should be part of the day-to-day leadership culture. Managers should
develop coaching and training skills and experience to be able to execute talent
management effectively.
3. Selective Development - Successful organizations closely examine which talent
programs they need and which interventions are necessary to realize the company strategy.
Examples of selective development are tailor made leadership programs, management
development initiatives like inter-company exchange of talent, market and product
oriented development, etc.
Conclusion
Hewitt showed with this research that companies, even in time of great uncertainty, are able to
counter market and economical challenges by maintaining or even increasing efforts in talent
management. Most of the companies even invested anti-cyclic, i.e., when markets were relatively
calm companies invested more time and resources in people development. This also anticipates
better times.
When talent development is really embedded in the organization and seen as an ongoing rhythm,
the total processes in an organization will not only run more smoothly, but also more effectively,
generating shareholder and stakeholder value. To become a top listed company may be a bridge
too far for some organizations. However, with relatively simple actions, some investments, and
strong convictions that people development should be part of your routine activities, your
company will develop in a sustainable way.

Delegation: Leadership Development in Africa – Part 2

Authors:
Lex Lindeman – HR Boosters
Dr. Paul Rono – Kenyatta University (Nairobi)

In our previous post Leadership Development in Africa – Part 1, we explored the characteristics
of effective leaders and the way to develop them. One of the important competencies of effective
African leaders is delegation. In many African public and private companies, management asks
us to focus on delgation during workshops we conduct for their staff. It seems to them that
African managers, especially, need to learn to delegate more than they do already.

Delegation

The main purpose of delegation is to make organizations possible. Just as no one person in an
organization or enterprise can perform all tasks necessary for the accomplishment of group
purpose; so is it impossible, as an organization grows, for one person to exercise all the authority
for making decisions.

If managers delegate poorly it will cause demotivation, frustration, slow decision making and the
manager will have no time for his or her subordinates. Good delegation will save time, ensure a
better distribution of workload, and ultimately lead to better decisions. And, effective delegation
will help to develop, empower and motivate subordinates.

Why Managers Don’t Delegate

Some managers think that no one else can do the job the way they want it done, how they want it
done and when they want it done. They think it’s easier and more efficient to do it on their own,
and they believe that they can do it better than their employees. These assumptions are
incorrect!

Managers are not sure how to do delegate correctly. Here are some of the excuses I’ve heard over
the years:

 “My team members lack the experience.”

 “It takes more time to explain than to do the job myself.”
 “A mistake by a team member could be costly for my project.”
 “My position enables me to get quicker action.”
 “There are some things that I shouldn’t delegate to anyone.”
  “My team members are specialists and they lack the overall knowledge that many of my
decisions require.”
I came across this small quote in New African, June 2009 by Akua Djanie:

“I don’t know what it is about Africans, but we are afraid of, and shy away from, the idea of
delegating someone to take our place when we are unavailable, is it because we think the person
we delegate to will do a better job than us? Is it because we want to be seen as the one in charge;
the one that can make or break the company, the project or the team? It is unbelievable, but from
our post offices, to our small-scale businesses, and to the multinationals, it seems that everyone
in Africa is scared to delegate.

Delegation shows the effectiveness of teamwork, because no matter how wonderful someone is at
their job, no person is an island. And no project or company can function with only an individual.
What delegation shows is that even if a particular person is unavailable, the project, team or
company can still proceed because that person has put mechanisms in place to ensure the smooth
running of operations. So rather than see delegation as a threat to their positions, Africans should
embrace delegation as a strength. It simply does not make sense for everything to come to a
standstill because one person is not available or one person is trying to do everything by him- or
herself.”

But delegation is not only an issue in Africa; in institutions in the rest of the world, managers
struggle with the same issues.

The Organization

Every position in a formal organization has a specified set of tasks or “position responsibilities,
authorities and accountability.” Tasks should be delegated (assigned) to the lowest level in the
organization at which there is sufficient competence and information for effective task
performance.

The three concepts of responsibility, authority, and accountability are the major variables in the
theory of delegation:

 Authority: Superiors delegate authority – permission and encouragement to take action

– but they do not delegate responsibility, which they share with their subordinates. Thus
responsibility, as accepted by the one to take action exists and is shared from the point of
acceptance upward, level by level, to the top of the organization.
 Responsibility: Responsibility is an obligation owed and cannot, therefore, be delegated.
No superior can escape, through delegation, responsibility for the activities of
subordinates, for it is he who has delegated authority and assigned duties. Likewise, the
responsibility of the subordinate to his superior for performance is absolute; once he has
accepted an assignment and the power to carry it out, no superior can escape responsibility
for the organization activities of his subordinates.
 Accountability: Since authority is the discretionary right to carry out assignments and
responsibility is the obligation to accomplish them, it follows, therefore, that authority
should correspond to accountability. From this logical analysis emerges the principle that
the accountability for actions cannot be greater than that implied by authority delegated,
nor should it be less.
Advantages of Delegation
Delegation is a powerful management tool. Some advantages of delegation include:
  Efficiency: The more a superior is able to delegate, the more time he has for thinking,
planning, etc.
 Better Decisions: The person who is close to the scene of action should be better able to
make decisions than a distant superior.
 Initiative: Delegation encourages initiative on the part of subordinates so that the
organization can use their skills more fully. Initiative in turn improves morale, because
people take increased interest in their work if they are given an opportunity to use their
own judgment.
 Timeliness: Delegation improves timing of decisions, because it minimizes the necessity
for sending recommendations up the chain of command to decision makers several levels
above the point where the recommendations were initiated.
 Speed: A do-it or-else order eliminates the time-consuming dillydallying of feedback. But
speed may cost accuracy and morale.
Barriers to Delegate

Many managers will find a ‘good’ reason not to delegate; here are some pretexts which can be
found in any work environment:

 The need to be needed: A superior who has an intense desire to make or keep
subordinates dependent will find it difficult to give sincere recognition for job achievement
by them.
 Fear of losing control: When superiors delegate, they run a risk of the subordinates not
doing the job well, and losing control of the performance for which he is accountable.
 Fear of surrendering authority: Whenever you delegate, you surrender some element
of authority (but not of responsibility!) This is inevitable. By effective delegation, however,
you get the benefits of adequate time to do YOUR job really well.
 Perfectionism: Just as you have to develop staff to do jobs quickly without your
involvement, you will have to let people make mistakes, and help them to correct them.
Most people will, with time, learn to do jobs properly.
 The Desire for Reward: Many managers enjoy the rewards and self-fulfillment
associated with achievement of doing work. Delegating to subordinates necessarily means
that the subordinates will get the reward.
 Fear of Competition: Other managers are afraid that if they assign work, and their
subordinates develop, they will someday outperform them, overtake the manager in the
hierarchy of the company.
 It’s a Effort: Delegation takes time. In the early stages, managers need to invest time in
training their people to take over tasks. When coaching and checking are taken into
account, it may even initially take longer to achieve the desired outputs. In time however,
with the right people, your coaching investment will pay back handsomely.
It is common for people who are newly promoted to managerial positions to have difficulties
delegating. Often they were promoted because they were good at what they were doing. This
brings the temptation to continue trying to do their previous job, rather than acting as a manager,
and focus on developing their new subordinates.

How to Overcome Weak Delegation

Here are ten tips for you to help you to delegate more easily:

1. Define assignments in the light of expected results.

 2. Select the right person to which to delegate.
3. Open up the lines of communication with your subordinates for consultation and
counseling.
4. Establish proper controls for proper use of authority.
5. Reward effective delegation and successful assumption of authority.
6. Be willing to give other people’s ideas a chance (never say: “Yes but….” This means NO!)
7. Be willing to release the right to make decisions (we call this empowerment).
8. Allow others to perform even though they make mistakes.
9. Trust your delegated junior. Delegation implies a trustful attitude between the two.
10. Establish and use broad controls. Responsibility is not delegated, hence the need for you to
establish a means of feedback to assure yourself that the authority delegated is being used
in support of the organizational objectives.
Conclusion: Weak Delegation in Africa?

As I said earlier, delegation is a global problem. But a very positive aspect is that Africans are very
keen to learn and to try things out. This attitude toward change allows Africans to learn to adopt
delegation faster and easier. Studies in Africa show that Africans are ready to accept delegation of
duties more easily than in the western world. Many managers in Africa learn easily to delegate
and delegation is readily accepted, respected and honored. Demonstrate how how important the
jobs, the expectations, the goals and tasks are, and the African is keen to accept.

Mike Boon (2007) stated that accountability is one of the key area that must be stressed when
delegating tasks to an African manager:

“Through this accountability, they become leaders and others will follow them.” When a manager
or leader encourages accountability through delegation, the result will be growth and
progression.”

Reverse Culture Shock (or Why Do I Hate Being Back Home?)

Author:
Mary Dougherty – Shepell-fgi

When employees begin an international assignment, they often experience “culture shock” in the
host location. Many companies provide support services to ease the transition for these families,
ensuring a quick adjustment and a productive and satisfying international assignment
experience. But what happens when the assignment is over, and the family heads home?

 25% of expatriates leave the company within 2 years of repatriation (National Foreign
Trade Council survey)
 69% experience significant “reverse culture shock” (Bureau of National Affairs,
Washington)
Coming Home is Not So Easy
Repatriation is not as simple as it sounds. “Reverse Culture Shock” is often experienced by those
returning from an international assignment, and this can have tremendous impact on
professional and personal adjustment. The challenges inherent to living in a different cultural
context for a significant period of time do not end with adapting to the host culture; they
continue through the process of returning home and re-adjusting to what was left behind. In
fact, it is often those who have adjusted most successfully abroad who have the most difficulty
returning home.

It can take up to 18 months to adjust and reintegrate after an international assignment;

adjustment issues effect employees and their families both personally and professionally.
Understanding the problems that they may encounter upon reintegration is the key to a
successful repatriation.

What to Watch For

Here are some common symptoms or situations that repatriating families encounter:

 irritability/ resentment
 sense of difference and disconnect
 disappointment
 inability to concentrate
 low morale
 change in values/attitudes
 marital conflict
 fatigue
 parent/child conflict
 educational/adjustment problems for children
 depression
 feeling unappreciated personally/professionally
 decreased productivity
 loneliness
What Can Employers Do?
One way to lessen the negative impact of repatriation is to provide support to the employee and
their family in the form of a “Repatriation Debriefing.” Skilled repatriation counselors can help
these individuals recognize the symptoms of reverse culture shock, and provide techniques to
manage through it effectively. To support family members, providing an opportunity for the
employee and family to candidly and confidentially discuss repatriation challenges with regard to
both work-related and family experiences is key. This process provides an opportunity to
examine and explore the potential difficulties of returning home, as well as assisting in problem
solving and goal setting.

Employers should also carefully manage repatriation assignments to ensure that expatriates are
retained in their organizations, and that the new skills acquired during the international
assignment are recognized and leveraged.

Finally, don’t minimize the importance of taking care of the family. When an employee relocates,
so does their family, and the impact on a spouse and children can be profound.

These steps will help minimize turnover amongst repatriates, preserving your international
assignment investment, and also ensure that your repatriating employees are quickly and
effectively reintegrated into their home country

Creating High Performance Teams

Lex Lindeman – HR Boosters
dr. Paul Rono – Kenyatta University (Nairobi, Kenya)
What is a Team?
A team is a group of people who work together to accomplish something beyond their individual
self interests. Not all groups are teams. What distinguishes teams from other similar sounding
groups is that a team is not a collection of people simply following orders.

To function effectively, a team needs the following:

 Shared purpose and goals,

 Commitment from the outside,
 Internal rules of operation; and
 Interdependence and trust between the members.
A functioning team must have a purpose, a reason for existence.

Why Organizations Need Teams

Most organizations introduce teamwork because of the perceived benefits of motivation of staff
and reduced costs from more effective working practices or decisions. Where a group of
individuals could share the same purpose, a team with individuals will reach the target faster and
more effectively. Teamwork occurs when the members work together to improve performance
through sharing core values, all of which promote the use of skills to accomplish common goals.
Teamwork is most likely to be successful when it operates in a supportive environment. The
atmosphere within the organization therefore, needs to support cooperation and trust.

When to Deploy Teams?

Teams offer an effective alternative in many situations. Examples of situations for which using
teams instead of individuals is particularly useful include:

 Building houses or other construction projects.

 Organization of ceremonies (values, rituals, symbols).
 Weeding or cultivating farms (clear assignments & tasks).
 Sports and athletics (code of ethics and performance).
 Administration and HR (supportive and communities of practice).
 Marketing and Sales teams (increase performance and goals).
 In a production environment (clear goals and output).
Creating a Team Environment
Effective teams follow a proven pattern with respect to organization and operation of the team.
This typically would include:

 A (multifunctional) problem or project is identified.

 Roles are distributed in terms of existing team relationships and expertise.
 Team members work together to gather data relating to the problems or opportunities.
 Group members collaboratively analyze data and create a plan for improvement.
 The action plan is tested and implemented by the group.
 The group collaboratively evaluates the impact of the new solutions.
 The process is improved.
The process is related to vision, commitment is related to motivation. Team members must be
committed to undertake the task to see the purpose of the team through completion.

Choice of Team Members and Team Cohesiveness

A high-performance team will exhibit a high degree of team cohesiveness. Team cohesiveness
tends to be higher when:

 The team consists of members with similar attitudes, ages, backgrounds, and needs.
 The members respect and use each others abilities.
 They support and share common objectives.
 Team tasks require interdependent efforts.
 Team size is relatively small.
 The team is physically isolated from other groups.
 The team is able to share performance success.
 The team is able to cope successfully with temporary setbacks and failures.
The team cohesiveness can be further enhanced by:

 Rewarding effective team performance.

 Improving the quality of interactions between team members.
 Creating competition and rivalry against other teams and keeping the team together for
fairly lengthy period of time.
Conditions for Teamwork
Elements which courage strong team cohesion are a group language, leadership through role
model or exemplary behavior, play for both relaxation and the stimulation of creativity, and the
development of a group culture through rituals and ceremonies. Managers who are trying to get
their teams to work better, but who ignore the structural, HR, political and symbolic conditions
often find that their efforts come to nothing.

Teams can deliver high performance levels for a long time as long as a number of prior conditions
have been met.

They include:

 Structural conditions (clear task and assignment of authority),

 Human resource conditions, quantitatively and qualitatively (people who like to work in
teams, sufficient staffing and reasonable rewards),
 Resources and time (sufficient means and time to complete the tasks),
 The right political conditions (sufficient power and influence); and
 Symbolic conditions, especially with regard to bringing in and maintaining of a common
culture and language (jargon).
One such symbolic condition is the creation of barriers restricting entry to a group whose
performance level has to be very high. Preventing the group from becoming too homogeneous is
another.

The Role of the Facilitator is Key

Do not underestimate facilitating tasks in teams. When people work together in a team, they
adopt particular roles. For example, one person may be responsible for monitoring progress,
checking the time keeping or acting as the leader. There is a tendency for one member to take on
the task functions and for the others to adopt the maintenance functional role.

Facilitating task functions are those which help the group to get task done as effectively and
efficiently as possible, including:

 Proposing objectives, clarifying goals.

 Seeking information and opinions.
 Keeping the group on track.
 Summarizing ideas.
 Suggesting ways forward.
 Evaluating contributions.
 Coordinating the efforts of the team to ensure that it makes best use of its resources in
achieving its goals.
 Setting objectives and priorities and driving the team towards successful completion of the
task.
 Coming up with new ideas and strategies.
 Evaluating and analyzing problems and progress.
 Exploring and reporting on ideas and developments from outside the group.
Further Team Development
Today there are a variety of approaches to team development other than activities during work.
This may involve meetings to discuss insight into non-work related issues or alternatively,
putting the team in a fresh context, e.g., outdoor activities, weekend-based activities on team
collaboration, team development activities with experienced facilitators to give insight into team
dynamics, decision making in teams, etc.

There are a number of aspects of team development, including:

 Helping team members to identify shared objectives and purposes.

 Developing interpersonal skills between team members, e.g., listening skills, supporting
skills, encouragement skills.
 Developing team rewards for supportive behavior.
 Developing collective problem-solving skills.
 Building up a store of personal goodwill to overcome problems.
 Developing team confidence and competence.
 Recognizing personal strengths and weaknesses, functional and personal.
Rituals
It is important how someone becomes a member of a team. He/she may have to undergo some
ceremonies or initiations. Not orders, but behavior models keep teams together. Rituals and
ceremonies rejuvenate the spirit and strengthen values. When the team gets the spirit its
performance will soar. The belief that working in teams makes individuals more creative and
productive is so wide spread that when faced with a challenging new task, leaders are quick to
assume that teams are the best way to get the job done. Leading a team requires enormous
courage because authority is always involved, which could arouse great anxiety in the team.
Dysfunctional Teams
A dysfunctional team is a major problem for any organization because it leads to wasted
resources, particularly to wasted time, and to the demotivation of individuals. Teams are a major
investment of time, money, and resources. The cost of allowing them to falter or under produce
is staggering. Teams also fails for a number of reasons, from lack of clear purpose to lack of
training.

High Performance Teams

The team performance process gives you a purposeful way to look at teamwork and provides a
framework for team development that helps to stay on track. Pay attention to the dynamics. Pay
attention to the mechanics. It is also essential that team members adopt community building
attitudes and perspective. Teams must be enabled to build a trust based environment. Trust is
built by sharing information, ideas and skills also outside the scope of their work. Creating new
challenges helps team members to work together to meet the challenges and tighter bonds of
trust are formed. Teams learn what they are made of; a sense of ownership and pride develops.
They feel like they can accomplish things together and each success builds upon prior successes.

Conclusion
Setting up teams has become a major strategy for getting work done. Modern organizations are
nowadays made up of teams. Blanchard (2010) said that managers typically spend between 30
and 99% of their time in a project team or team setting. He added that teams can execute better
and faster than traditional hierarchy. Teams have the power to increase productivity and morale.
Working effectively, a team can make better decisions, solve more complex problems, and do
more to enhance creativity and build skills than an individual working alone.

A team is the only unit that has the flexibility and resources to respond quickly to changes that
have become commonplace in today’s world. The business and working environment has become
more competitive and the issues it faces are increasingly complex; thanks to high performance
teams these hurdles can be overcome more easily.

Organizations who value their teams create room and provide resources and means to enable
teams to develop themselves in various functional (related to the team goals and objectives) and
non-functional competencies (related to the various facilitating roles). Organizations who
provide this transform their normal teams into high performance teams

International Employment Law “Quick Facts”: Brazil

Mariana Villa da Costa – Littler Mendelson
Happy New Year readers! We are excited to launch a new series of posts on the basics of global
employment law called “International Employment Law Quick Facts.” The series will bring
basic, but important information on what an employer needs to know when hiring someone in a
different country, using an easy to follow Q&A format. We will capture information such as
definition of employer and employee, requirements for written employment agreements,
consequences of discrimination and harassment in the workplace, minimum wage requirements,
etc.
We will kick off 2010 with the first country in the series – my native country of Brazil. I would
be more than happy to get suggestions from you, readers, on which other countries you want to
see next! Add a comment, or send me a note to let me know your suggestion. We will try to
publish upcoming installments in this series based on what you request, so keep checking back!
Q. What are the definitions of employee, employer and independent contractor?
A.
Employee: The legal definition of employee by the Labor Code is every individual (natural
person, never a legal entity) that personally renders services on a non eventual basis (continuity),
under the employer subordination (obedience to rules and orders given by the employer), and
that receives a salary. If one of these requirements is not present in the relationship, it is not an
employment relationship. As in most countries, it is very important to correct classify the
relationship to avoid the common issues with independent contractors vs. employee definition.
Employer: An employer is the sole-proprietorship or joint-proprietorship company that, in
assuming the risk inherent to the economic activity, hires, remunerates and manages the
personal provision of services.
Independent Contractor: The difference between employee and an independent contractor lies
on the requirements that one must have to be an employee. An individual will be considered an
independent contractor and, therefore, will not be covered by the labor legislation, if he or she
has independence to perform the work and it is not subordinate to a company’s directives and
regulations, and there is no exclusivity in the relationship between the parties.
Q. Is it necessary to have written employment contracts in Brazil?
A. According to the Brazilian law, the execution of an employment contract is not mandatory;
however, it is important to note that this is common procedure in Brazil and should be observed
as a good practice.
Q. Are there any specific rules in regards to the duration of employment
contracts?
A. In Brazil, and due to the principle of continuity, the general rule is that the agreement is
entered between the parties for an indefinite term. The agreement for a definite term is an
exception to the general rule and should be entered in writing.
According to the Labor Code, an employment for a definite term can only be executed in a few
circumstances:
 A maximum of two years, provided that the nature of the work justifies the transitory
nature, or the if the contract is for the performance of temporary business activities; or
 A probationary or trial period (cannot exceed 90 days and must be in writing).
Q. Are there any rules in regards to discrimination in employment?
A. Yes, the Brazilian Federal Constitution prohibits discrimination, although it does not define
what that is. It simply says that any difference in salary or unequal treatment in relation to
recruitment and employment is prohibited.
Q. What are the rules regarding working hours?
A. In Brazil, the Federal Constitution and the Labor Code provides that the maximum hours per
week are 44 hours, or 8 hours per day.
An employee cannot work more than two overtime hours per day since the workday cannot
exceed the legal limit of ten hours; however, the law provides some very exceptional situations for
overtime in the excess of two hours.
The minimum additional overtime pay is 50% of the regular hourly rate, but it may be higher if
established in a collective agreement.
Employers must allow an interval of 11 hours of rest between two working days.
Q. Are there any minimum wage requirements in Brazil?
A. Yes, the Brazilian Federal Constitution has established a system of national minimum wages.
The minimum wage is fixed every year by law, but some categories also put in place their own
professional minimum wage that cannot be inferior to the national one.
Q. What are the rules regarding the terminations of contracts?
A. Employers in Brazil may terminate contracts in Brazil with or without a cause, provided that
all termination and severance amounts are paid.
The only exception is that the employer cannot terminate an employment contract when the
employee is under a provisional job tenure, for example, female employees during and after
pregnancy, and employees who are union leaders.
In Summary
I hope this quick summary can be used as a road map for employers doing business in Brazil.
Please post your questions and comments

International Employment Law “Quick Facts”: India

Hello Readers! Sorry about the radio silence, but I am back with another edition of our
”International Employment Law Quick Facts”! Based on our readers requests, I have chosen
India for the next in this series.
India is a place of exotic food, beautiful architecture and Bollywood! But, it’s also a developing
country with the world’s second largest labor force and an economy that is taking over many
others, and becoming one of the best places for global companies to invest. One important
observation – Indian Labour and Employment Law is among one of the most complex in the
world, so while I know the outline that follows is a good start, it is always a great idea to consult a
lawyer.
Q. What are the definitions of employee, employer and independent contractor?
A. In India there are different definition of employer and employee depending upon the piece of
legislation at issue.
If we consider the IDA (Industrial Dispute Act, 1947) the employer will be either the authority
that is the head of a Central Government or a State Government, mainly for public employment.
Or in relation to a local industry, the chief executive officer of that authority.
An employee for the IDA, called a workman, will be any person (including an apprentice)
employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or
supervisory work for hire or reward, whether the terms of employment be express or implied.
But it is important to mention that under the IDA, a person who is employed mainly in a
managerial or administrative capacity, or a supervisor who draws a monthly salary exceeding
Indian rupee (INR) 1,600 will not be considered a workman.
Also, in 2009 a new bill was introduced to widen the definition of “employee” and bring in more
people under the ambit of the Payment of Gratuity Act. (a new amendment was done to this bill
in 2009). In both the bills, the definition of “employee” has been widened to include any person
who is employed for wages, other than an apprentice.
There is no separate definition of an independent contractor under Indian labor laws. The
relationship with an independent contractor will therefore be governed by the provisions of the
Indian Contract Act, 1872 (ICA).
Q. Is it necessary to have written employment contracts in India?
A. There is no particular requirement under the centrally enacted labor laws to have written
employment contracts. However, certain state-specific statutes require the employer to issue an
appointment order. The appointment order primarily includes the name and address of the
establishment and the employer, name of the employee and the employee’s postal and permanent
address, father’s/husband’s name, date of birth, date of entry into employment, designation,
nature of work entrusted to the employee, serial number in the register of employment and the
rates of wages payable.
We would definitively advise companies to execute employment contracts with their employees,
especially with the most senior employees and executives.
Q. Are there any specific rules in regards to the duration of employment
contracts?
A. Most likely in India, employment contracts will be for an indeterminate period of time.
However, it is also feasible to have employment contracts that are either project-specific or for a
fixed period, depending on the necessities of the companies. However, employers should be
ready to justify to the courts the necessity of a fixed-term contract as opposed to a contract for
continuous employment
Q. Are there any rules in regards to discrimination in employment?
A. In addition to the constitutional provisions under articles, an important statute is the Equal
Remuneration Act, 1976 (ERA). The ERA provides for payment of equal remuneration to men
and women workers. The ERA also states that no employer shall, while recruiting for the same
work, discriminate against women except where the employment of women in such work is
prohibited or restricted by or under any law.
However, it is still common in India to have discrimination against women.
We do advise that companies doing business in India take strict precaution and necessary actions
against any discrimination in the workplace - on the basis of race, religious creed, color, age, sex,
sexual orientation, gender identity, national origin, religion, marital status, medical condition,
disability, pregnancy, childbirth and related medical conditions, or any other similar
classifications. Company policies, codes of conducts and manuals are great instruments to have
those discrimination issues delineated.
Q. What are the rules regarding working hours?
A. The maximum number of working hours for an adult worker should not exceed 48 hours in a
week and nine hours in a day, while for a child the working hours should not exceed 4-1/2 hours
in a day. No child below the age of 14 years can be employed in a factory. In addition, no worker,
whether an adult or child, can be employed on any day on which he has already worked in any
other factory. Any worker working for more than the maximum prescribed time is entitled to
wages in respect of such overtime work at twice the ordinary rate of wages. Total working hours
should not exceed 60 in a week and the total overtime hours should not exceed 50 in a quarter.
Every worker must be allowed one holiday in a week, on any day. Whenever a worker is required
to work on a weekly holiday, a compensatory holiday is provided for each holiday so lost, within
the same month or within two months immediately following that month. Every woman
employee is entitled to a maternity leave of not more than 12 weeks
Q. Are there any minimum wage requirements in India?
A. Yes. The State Government is responsible for the administration of the minimum rates of
wages for different classes of employees.
Q. What are the rules regarding the termination of employment?
A. Indian labor law does not envisage an “at-will” employment relationship. Dismissal of an
employee’s employment may be for a reasonable cause or on account of misconduct.
Q. What benefits must employers furnish to employees?
A. There are many important regulations that determine the benefits that should be provided to
employees. Some of the most important ones include:
1) The Employees’ State Insurance Act, 1948 (the “ESIA) seeks to guarantee reasonably good
medical care to workers and their immediate dependents.
- applies to all factories and establishments where 10 or more persons are employed and to such
other establishments as are notified by the Central Government in the official Gazette.
- wage limit for coverage under the ESIA is INR 10,000 per month (proposed to be increased to
INR 15,000 per month). The contribution payable to the Employees’ State Insurance Corporation
with respect to each employee shall be comprised of the employer’s contribution and the
employee’s contribution at the specified rates, which are revised from time to time.
2) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (the “EPFA”) – this
is the social security legislation to provide for a provident fund, family pension and insurance to
employees. EPFA is probably the most important social security legislation in India.
- EPRA is applicable to establishments where 20 or more employees are employed, as specified in
the schedule to the EPFA and also to establishments that are voluntarily covered under the EPFA
by a Central Government notification.
- Both the employer and employees are required to contribute a certain percentage of the wages
to the Provident Fund Commissioner for deposit to the respective accounts of the employees.
3) Payment of Gratuity Act, 1972 (POGA): The POGA provides for the payment of gratuities
(lump sum payment to the employee when the employee resigns or retires, or the employee’s
services are terminated by the employer) to employees in certain establishments.
In addition to the above-mentioned benefits, companies usually provide for several other
allowances/benefits in order to reduce the tax burden on employees; for example medical
reimbursement/allowance.
Q. What kind of a visa should a foreigner obtain to work in India?
A. A foreign national can work in India only if he or she has a valid Indian employment visa (“‘E’
visa”), unless the foreigner is already holding a valid Person of Indian Origin (PIO) card or a
Overseas Citizen of India (OCI) card.
I hope this quick summary can be used as a road ma

Base Salary – Not So Basic!

Chuck Csizmar – CMC Compensation Group
Ever find yourself confused when asked to provide an international employee’s annual rate of
pay? Compared to the US, you will find scant uniformity between countries as to when and how
monies are paid to employees, and this diversity can lead to confusion, misreporting of data and
the potential for internal equity squabbles. It is especially a concern when a US Manager
attempts to hire a foreign local national without being certain of country-specific pay practices.
To a US employer, the term “annual base wage” or “annual salary” is simply the cumulative
amount of payroll dollars (regular paychecks) dispensed over a twelve month cycle. However, in
many parts of the international community, it’s a bit more complicated.
Numerous countries consider statutorily required or common practice holiday (vacation) pay and
Christmas (December) payments as part of what they term “basic salary” – which they report as a
monthly calculation. So what is the annual salary?
Defining Your Terms
In the US, annual salary is a common reporting term, an identifier to the company and the
employee of the value paid to each position. To quote an annual salary is common practice.
The trick when considering global practices is to remember the distinction between the two
annual terms:
 Base pay – the amount of non-incentive wages or salary paid out over a twelve month
period for work performed
 Basic pay – the amount of non-incentive wages or salary paid out over a twelve month
period for work performed, but including additional payments (usually in monthly
increments) not directly related to the work effort
Some US companies prefer not to deal with the issue, relying instead on the US model of quoting
an annual salary – then dividing by the total number of monthly payments due in order to
calculate the monthly gross paycheck.
A client of mine once insisted on offering a candidate 75,000 euro, but no more for
a key position. When informed that in Belgium an extra month (13th) is common,
and in fact mandated in many collective agreements, the response was “fine, as
long as the total base pay isn’t higher than 75,000 euro.”
That candidate did not accept the position.
Here are a few representative examples to illustrate the diversity of practices across the globe.
 Singapore: While a 13th month payment (Annual Wage Supplement) is not mandated, it
is common practice. Executives typically receive 1 to 2 months pay as an additional bonus.
 Mexico: Companies are mandated to give employees a Christmas bonus equal to 15 days
pay. Common practice is to grant 30 days.
 Peru: Employees are entitled to a 13th and 14th month bonus; the 1st extra month is paid in
July and the 2nd in December
 Italy: In December, employees are paid a Christmas bonus equal to a month’s salary. In
many contracts a 14th month’s salary is included and is paid in June.
The extra payments are not rewarding work performance, but typically provide extra monies for
either vacation time or Christmas. These practices are not commonly followed in the US.
What to do
To avoid confusion when dealing with local national employees it is helpful to talk in terms of
monthly pay, the term commonly used by the employees. No matter how many monthly
payments are made, for whatever reason, simply multiply the payments to reach the annual
figure. To your international employee that is considered an annual pay entitlement, though not
an annual salary as practiced in the US.
When reading compensation surveys make sure to check the definitions used; oftentimes the
survey will report both an annual salary and a “guaranteed annual cash” – the latter inclusive of
holiday bonuses and extra month’s pay.
Avoid setting a US-style annual salary and then dividing by the number of required payments to
derive a monthly pay. Instead, determine what you will pay on a monthly basis and multiply
those payments by country-specific statutory requirements and common practice to derive
(build-up) the annual salary. It’s a bit more confusing for US companies, but it will be more
meaningful for your international employees and likely save you employee relations issues down
the road.