Consulting

Global Transformation Services

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context

White Paper

David Sult February 2013

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Table of Contents
Executive Summary ......................................................................... 3 Our Point of View ............................................................................ 4 Cross-Cultural Models......................................................................... 5 GLOBE Framework for Assessing Cultures ............................ 5 Cultural Types The Lewis Model......................................... 6 Trompenaars 7 Dimensions of Culture ................................ 7 Business Model of Intercultural Analysis (BMIA) .................. 8 Organizational Culture Model ......................................................... 9 Personality/Self-Assessment Models.................................................. 10 Facet5 Five Factor Model ................................................. 11 Myers Briggs Type Indicator (MBTI) .................................... 12 Summary of Models ...................................................................... 13 Conclusion ..................................................................................... 14

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Executive Summary

Through the course of organization restructuring and global expansion consulting assignments with clients in the field over the last 20 years, ranging from Fortune 500 to mid-sized companies across a variety of industries, we have seen time and again that a holistic approach to organization design is required to achieve and sustain optimum business performance. As globalization of companies from all regions of the world (not just the United States) has increased through a variety of expansion models (i.e., acquisition, joint venture, greenfield business development), the importance of understanding and incorporating the cross-cultural dimensions of different nations into the operating model and organization design has become absolutely essential. Given the depth of experience and empirical research that has been applied to this topic, companies expanding their global footprint into new and different geographies now have a choice of whether to learn as you go or anticipate and orchestrate. For those companies concerned with achieving their revenue and market share growth targets in the timeframes forecast in their business models, minimizing organization development cost, and minimizing human capital risk, the choice is in most cases clear. This white paper compares the major cross-cultural models and their usability in a business context. There are several models to choose from, but our research and work with clients in the field indicates that the Universal Consensus Business Model of Intercultural Analysis (BMIA) has among the strongest applicability for enhancing global business performance. Of all the models we have worked with and/or researched, the BMIA framework is objective-centric, rather than ethno-centric, addresses operational and communication issues, addresses both individual and performance optimization across cultures, and is purposefully results-driven. For this reason, we find it offers the most value in a business-environment and has been adopted as an important resource within our M&A and organization transformation consulting methodology. The only other cross-cultural models that we rated as high business applicability had flaws that are disconcerting or complexities in usage that run counter to our pragmatic business orientation. For example, the Lewis Model is somewhat limited in its scope and applicability outside of its communications dimensions; and the 7 Dimensions Model is very advanced, but lacks clarity and ease of use necessary to be useful to most of our clients.

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Our Point of View

Before moving on to the comparison of the major cross-cultural models and their usability for the purpose of improving business performance, it may be useful to provide the business context underlying our point of view. Our Organization Transformation engagements align the organization design of the company to achieve targeted and sustained business results. Within the context of organization transformation a core set of activities in a business are to design and align the organization design to the strategy and operating model of the enterprise. Our holistic model of organization design, well known to our clients but perhaps new to other readers of this paper, is shown below:
Business Drivers, Strategy & Operating Context Organization Culture Design Group and Alignment Culture (Company) Organization Structure Governance & Decision Rights Culture Realize Business Impact

values & beliefs

- Vision, Mission, Values - Operating Principles - Business Structure and Strategy

Situation Analysis Companys Internal Factors

- Growth - Customer Satisfaction - Integrated Ops Quality - Efficiency - EE. Engagement

Benefit Increased / Analysis Improved

Culture

- Market Share /
Positioning Dynamics

Companys External Environment

Talent
Business Processes & Systems Information flow

- Customer Insight - Competitive - Gov. Influence - Sensitivity to

Economic Env.

Culture (Country)

- Org. Structure that is effective in enabling the business strategy in an efficient manner - Ensuring availability of the right talent for the right role at the right time

Our talent centric point of view on organization design goes beyond the lines and boxes to consider the inter-related elements of organization structure, governance and decision making, information flow, business processes, talent (leaders, managers, workforce), and culture. The attributes and implications of company cultures in organization design have been developed through years of work in the field. Our assessment instruments, analytic tools, and high performing benchmark databases are mature and quite effective in the context of M&A integration, joint ventures, restructuring, and business model innovation. It is only in the last several years that we have purposefully segmented culture and implications to organization design and transformation into two components: company culture and country culture. The multi-cultural realities and challenges confronting organizations when expanding into new regions and countries are significant. As this dimension of organization performance has increased in frequency and relevance, the imperative to systematically and effectively address these attributes in organization design has increased. The balance of this paper summarizes the findings of our field experience and research on this specific dimension of organization design and performance.

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Cross-Cultural Models

Hofstedes Cultural Dimensions Description Geert Hofstede, a Dutch cultural anthropologist, did a seminal cultural study among 116,000 IBM employees in the early 1980s. He surveyed employees across international IBM offices and found that he could map national culture along four dimensions. Hofstede rated 40 countries on each dimension on a scale from 1 to 100. The dimensions were: Power Distance (PDI) Individualism versus Collectivism (IDV) Masculinity versus Femininity (MAS) Uncertainty Avoidance (UAI)

A fifth dimension, Long-Term Orientation (LTO), was added in 1991 based on further research by Michael Bond who conducted an additional international study among students. Business Applicability Hofstedes model has significant scientific backing and a huge survey population, but the work is very specific to IBM the tech industry and the corporate culture at IBM. Nearly 3 decades have passed since Hofstede (1980) collected the data used to classify countries by their underlying work-related structures, and much has changed in cultural classifications. As an anthropological model, Hofstedes research is the basis for many subsequent models, but as a stand-alone tool, it provides limited business relevant insight. GLOBE Framework for Assessing Cultures Description Begun in 1993, the Global Leadership & Organizational Behavior Effectiveness (GLOBE) framework is an ongoing research program using data from 825 organizations in 65 countries. Rather than replacing Hofstedes model, it expanded it. The output is similar to Hofstede but with more dimensions added the dimensions were: Assertiveness Future orientation Gender differentiation Uncertainly avoidance Power distance Individualism / collectivism In-group collectivism Performance orientation Humane orientation

Business Applicability This is also a scientific and anthropological model, not necessarily tied to business objectives and performance. It added some additional dimensions and provided an updated measure of where countries rate on each dimension.
A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Cultural Types The Lewis Model Background Richard D. Lewis is a British linguist, cross-cultural communication consultant, and author. He has developed a model that puts cultures on three dimensions: linear-active, multi-active, and reactive.

Business Applicability Lewis model is relatively comprehensive and good for an initial overview of where cultures fall on each axis. Unlike Hofstede and the GLOBE model, it does not require reading of multiple uncorrelated dimensions. It has most applicability in understanding cross-cultural communications, but limited usefulness in other areas. Being high-level, it is somewhat restrictive, which stops it from providing the full spectrum cross-cultural factors, and it may be too limited to help provide useful business optimization insight.

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Trompenaars 7 Dimensions of Culture Background The Seven Dimensions of Culture were identified by management consultants Fons Trompenaars and Charles Hampden-Turner, and the model was published in their 1997 book, "Riding the Waves of Culture." Trompenaars and Hampden-Turner developed the model after spending 10 years researching the preferences and values of people in dozens of cultures around the world. As part of the study, they surveyed more than 46,000 managers in 40 countries. The dimensions are: Universalism versus particularism Individualism versus communitarianism Specific versus diffused Neutral versus emotional Achievement versus ascription Sequential time versus synchronous time Inner direction versus outer direction

Business Applicability The model is very comprehensive with significant data to back it up. Although the model was developed for business application, it is highly complex. The model is most useful as a general guide when dealing with people from different cultures. As with previous models, it distinguishes the differences between cultures, but provides no recommendations on how to solve cultural disconnects.

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Business Model of Intercultural Analysis (BMIA) Background The BMIA model has been developed over the last two decades by Denise Pirrotti Hummel, J.D., a cross-cultural business thought-leader and the CEO of Universal Consensus, a cross-cultural management consulting and training firm. The model is objective-centric (focused on the business objective at hand), rather than ethnocentric. It has been developed, empirically tested, rolled out, and honed by working with global corporations and organizations globally. It assesses cross-cultural issues on an individual and organizational level through six comprehension lenses that are robust, interconnected, and result in sustainable transformation. The model has an assessment, awareness, and optimization component to it. The lenses of the BMIA model are: Cultural Themes Glocalization Group Dynamics Process Engineering Time Orientation Communication

Business Applicability The BMIA framework is in the top tier of business oriented cross-cultural models of all those compared, as it focuses on both awareness and business optimization. It is comprehensive yet easy to implement and understand in its basic iteration. Added layers and continuums under each lens make it more advanced, and adaptable, than other crosscultural models. It can be applied at the lowest echelon of a company through the most strategic roles, based on the customization of the assessment model and the training curriculum. It has applicability to every departmental function and every industry.

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Organizational Culture Model

The Denison Model Background Daniel R. Denison is Professor of Organization and Management at IMD Business School in Lausanne, Switzerland and the developer of the Denison Model. The Denison Model is focused on organizational culture change and provides a guide for organizational change through two frameworks: The Organizational Culture Model and the Leadership Development Model. The model is heavily tied to individual character assessments. The Denison model of organizational culture is widely known and used in academic research on organizational culture.

Business Applicability The model is easily understood yet comprehensive when it comes to organizational culture change. It is both an academic and businessfocused model. It has proved effective in addressing company culture attributes and informing organization design, but it has no national culture component and, as such, its utility and specific usefulness in addressing multi-national cross-cultural issues is limited.

A Critical Analysis of Mainstream Assessment Models in a Cross-Cultural Context White Paper

Personality/Self-Assessment Models

The Barrett Seven Levels of Consciousness Model Background Richard Barrett conceived the Seven Levels of Consciousness model in 1997; the model describes the evolutionary development of human consciousness. It applies to all individuals and human group structures. The model is an extension and adaptation of Maslows Hierarchy of Human Needs. The model covers both the internal dimensions of consciousness - the inner journey into selfknowledge and meaning, and the external dimensions of consciousness - the gradual expansion of sense of identity.

Business Applicability It is a self-assessment and leadership model rather than an organizational one. It can perhaps be utilized in a cross-cultural context, but the model was not developed to enhance cross-cultural skills and has very limited usability in a cross-cultural context.

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Facet5 Five Factor Model Description Facet5 uses the five-factor model of personality, which is a way of describing the fundamental building blocks of personality. The five-factor model is based in psychological research and used to give a comprehensive description of personality and behavior. It is based on a paper by WT Normans in 1963 that described how almost all of the different personality factors identified by personality.

Business Applicability This model is excellent for understanding personal differences but it has no cross-cultural background or component it is an Anglo-centric model for understanding personality traits and preferences.

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Myers Briggs Type Indicator (MBTI) Description MBTI is probably the most widely used personality model in the world. The MBTI assessment is a psychometric questionnaire designed to measure psychological preferences and how it influences decisionmaking. The model was developed by Isabel Briggs Myers in the 1960s and is based on Carl Jungs theoretical concepts of preferences. The 16 MBIT types are typically referred to by an abbreviation of four letters, for example: ESTJ: extraversion (E), sensing (S), thinking (T), judgment (J) INFP: introversion (I), intuition (N), feeling (F), perception (P)

Business Applicability The MBTI was the most ground-breaking work on personality models, but it has many inconsistencies and very limited usability in a cross-cultural context.

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Summary of Models MODEL HOFSTEDES CULTURAL DIMENSIONS CONTEXT DESCRIPTION BUSINESS APPLICABILITY

CROSS-CULTURAL MODELS Anthropological Seminal crossMedium cultural model developed in the 1980s. GLOBE Anthropological Expanded Medium Hofstedes model in the 1990s. LEWIS MODEL Business Model mostly High applicable to cross-cultural communication. TROMPENAARS Business Very advanced High model, which also makes it somewhat complex. BMIA Business Most recent Very High model that incorporates components from the others while taking it to the next step. ORGANIZATIONAL CULTURE MODELS DENISON Business The most Very High comprehensive and businessfocused organizational culture model. PERSONALITY/SELF-ASSESSMENT MODELS BARRETT Anthropological Self-assessment Low /Business and leadership model based on Maslows Hierarchy of Needs. FACET5 Business Self-awareness Medium model based on personality and behavior. MBTI Anthropological Personality type Low /Business awareness model.

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Conclusion

Our work with clients in the field, ranging from Fortune 500 to mid-sized companies across a variety of industries, has shown that a holistic approach to organization design is required to achieve and sustain optimum performance. As globalization of companies from all regions of the world has increased through a variety of expansion models (i.e., acquisition, joint venture, greenfield development, alliance), the importance of understanding and incorporating cross-cultural dimensions into the operating model and organization design has become imperative. While there are pros and cons to every model of analysis, a thoughtful comparison points to the use of the Universal Consensus Business Model of Intercultural Analysis [BMIA ] as one of the most likely to yield advantageous business results for our M&A and organization transformation clients.

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Author

David Sult Practice Leader, Global Transformation Services Seattle, WA david.sult@aonhewitt.com

Contributors Khalid Ali Washington, DC khalid.ali1@aonhewitt.com Edward Stanoch Warsaw, Poland edward.stanoch@aonhewitt.com Audrey Widjaja Shanghai, China audrey.widjaja@aonhewitt.com Elias Dib Dubai, UAE elias.dib@aonhewitt.com Karla Barrato So Paulo, Brazil karla.baratto@aonhewitt.com Jaidev Murti Gurgaon, India jaidev.murti@aonhewitt.com

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Press Release

Aon Hewitt Partners With Leading Cross-Cultural Firm to Provide Advisory Services for Global M&A Clients Jan 24, 2013 LINCOLNSHIRE, Ill., January 24, 2013 Aon Hewitt, the global human resource solutions business of Aon plc (NYSE: AON), today announced it is collaborating with Universal Consensus LLC, a leading cross-cultural management consultant and training firm, to enhance Aon Hewitts cross-cultural advisory, integration and business optimization services for its global mergers and acquisitions (M&A) clients. Headquartered in San Diego, Universal Consensus offers cross-cultural assessments, advisory services, and training to hundreds of large organizations around the world. Its proprietary framework, the BMIA (Business Model of Intercultural Analysis), evaluates companies challenges and growth opportunities of doing business across cultures, both internationally and domestically. Armed with this data, Universal Consensus experts develop customized solutions including assessments, strategic advising, training, executive coaching and other programs to help companies improve how they integrate across cultures during a merger, acquisition or joint venture. Culture is one of the big obstacles hindering deal success and is a driving force behind many other immediate causes of deal failure, including delayed integration or implementation. Some of the largest companies in the world pull out or scale back in foreign target markets simply because they failed to understand the impact of national cultures on the very factors they relied upon to drive profitability, said David Sult, senior vice president of Merger and Acquisitions Solutions at Aon Hewitt. Our partnership with Universal Consensus complements our existing cultural capabilities, expands our global footprint and brings us additional levels of insight, capabilities and tools to help companies understand and manage the cross-cultural issues that impact the success of their M&A transactions. More and more companies realize the importance of evaluating and controlling the impact of national cultures coming together during the M&A process, said Denise Pirrotti Hummel, CEO of Universal Consensus. Failing to appropriately identify, analyze and manage cultural differences can create significant problems for organization and can often lead to the success or failure of a transaction. Our partnership with Aon Hewitt enables us to combine our talent and expertise to help companies find the most effective way to bring together diverse national workforces and cultures. Aons M&A Solutions (AMAS) practice provides comprehensive services through the entire M&A lifecycle including due diligence, integration planning and implementation. For the past four years, AMAS has provided world-class thought leadership and experience on more than 3,700 diligence assignments. The practices expert team is comprised of over 300 dedicated M&A professionals worldwide, including management consultants, attorneys, actuaries, human capital specialists, brokers, underwriters, claims adjusters and investment bankers.

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About Aon Hewitt

Aon Hewitt is the global leader in human resource consulting and outsourcing solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com.

Copyright Aon Hewitt 2013

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