“Informed decision making comes from a long tradition of guessing and then blaming others for inadequate results.” ~Scott Adams
Globalization creates a need to know how managers in different parts of the world make decisions: Business leaders, globally, have a distinctive prevailing decision style that reflects differences in cultural values and the relative needs for achievement, affiliation, power, and information. The decision making process and value systems influence the overall approach of decision makers from various cultures.
The relative level of utilitarianism versus moral idealism in any society affects its overall approach to problems. Generally speaking, utilitarianism strongly guides behavior in the Western world. In fact, research has shown that U.S. executives are more influenced by a short-term, cost-benefit approach to decision making than their Asian counterparts. U.S. managers are considerably more utilitarian than leaders from China, who approach problems from a standpoint of moral idealism; they consider the problems, alternatives, and solutions from a long-term, societal perspective rather than an individual perspective.
Another important variable in companies’ overall approach to decision making is that of autocratic versus participative leadership. In other words, who has the authority to make what kinds of decisions? A country’s orientation whether it is individualistic or collectivist influences the level at which decisions are made. In many countries with hierarchical cultures: Germany, Turkey, and India, among others, the authorization for action has to be passed upward through echelons of management before final decisions can be made. Most employees in these countries simply expect the autocrat, the boss, to do most of the decision making and would not be comfortable otherwise.
Even in China, which is a highly collectivist society, employees expect autocratic leadership because their value system presupposes the manager to be automatically, ‘the most wise’. In comparison, in the Scandinavian countries, decision making authority is decentralized and built on consensus.
Americans talk a lot about the advisability of participative leadership, but in practice they are probably around the middle between autocratic and participative management styles. A country’s culture affects how fast or slow decisions tend to be made. The pace at which decisions are made can be very disconcerting for outsiders. North Americans and Europeans pride themselves on being decisive; managers in the Middle East, with a different sense of temporal urgency, associate the importance of the matter at hand with the length of time needed to make a decision. For example, a hasty American would insult a Middle East customer by pushing for a quick decision; it would reflect a low regard for the relationship and the deal.
Under the European model, decision making is typically done in groups reaching consensus, rather than by single manager commands.
According to Andrew Kakabadse, Cranfield University Professor and his colleagues; they identified
Four basic European styles:
Consensus (Finland, Sweden),
Managing from a distance (France),
Working towards a common goal (Germany, Austria), and
Leading from the front (UK, Ireland, Spain).
Executives from Finland and Sweden use consensus to manage their workforce.
In England, decision making is slower than in the U. S., therefore it is unwise to rush the English into making a decision. In Germany, personal relationships are not needed to do business.
The Germans are more interested in your academic credentials and the amount of time your company has been in business. Germans display great deference to people in authority, so it is imperative that they understand your level relative to their own. Following the established protocol is critical to building and maintaining business relationships. Germany is heavily regulated and extremely bureaucratic. Decision making is held at the top of the company. Final decisions are translated into rigorous, comprehensive action steps that you can expect will be carried out to the letter. Avoid confrontational behavior or high-pressure tactics. It can be counter productive. Once a decision is made, it will not be changed.
In the article “Comparing the Decision Styles of American, Japanese and Chinese Business Leaders” by Maris G. Martinsons writes:
A survey of Japanese and Chinese managers found that they perceived Western (particularly American) thinking to differ vastly from their own way of thinking.
They characterized Western thinking as; objective, analytic, cerebral, and impersonal, as opposed to a self-perception of; subjective, synthetic, emotional, and personal thinking.
The Western distinction between the rational and the irrational may also contrasted with the Japanese concept of ‘omoi’, which bridges the two. In this study; American, Japanese, and
Chinese business leaders were each found to have a distinctive national style of decision making.
The American decision style reflects a comparatively higher need for achievement. Business leaders in the U.S. tend to make decisions that either respond to challenges or create opportunities for their efforts to be recognized and praised by others.
More generally, American managers have a tendency to ‘analyze’ situations and/or ‘conceptualize’ potential solutions. This mindset encourages a structured and formalized decision making process.
In contrast, the Japanese and Chinese decision styles reflect comparatively high needs for affiliation and personal power, respectively. Japanese business leaders tend to favor decision making outcomes that preserve already established relationships or help to cultivate new ones.
Meanwhile, the strong Japanese need for affiliation also limits management’s ability to change the social structure of a business network in response to a competitive challenge. The ability to maintain and exercise power was found to be a key factor for Chinese business leaders. In a China-U.S. joint venture, their desire to maintain a high degree of control could become a source of conflict.
American managers will likely try to change the organizational power structure in order to improve business performance. Enduring differences in decision making tendencies continue to hinder the global transfer of management knowledge. Business leaders who prefer to make decisions in different ways are unlikely to accept a universal set of management principles or ‘best’ practices. International business people must thus be able to accommodate different decision making styles in order to be successful.
In the article “Cultural Differences in Decision Styles” by Brittany Goss writes:
Different cultures utilize different decision styles. There are many different ways in which individuals come to a decision, but there are also differences in decision styles between cultures. Companies, managerial systems and governments make decisions differently in different cultures. It is important to understand and respect these cultural differences in decision styles in order to foster positive cross-cultural communication.
U.S. culture operates on debate and discussion between opposing parties that leads to democratic decision making. Americans also tend to utilize a hierarchy, whereby someone in a management position can occasionally overrule the vote or make a decision without consulting a team.
Japanese citizens will often make a decision by consensus rather than majority. This means that everybody in a group has to agree on an idea before the group takes action. Japanese style decision making focuses on understanding multiple alternatives rather than a single ‘right’ answer.
Chinese managers tend to be more hierarchical in their decision making processes. They tend not to ask employees for their ideas, but to make the decisions themselves.
The power distance between employer and employee is significantly larger in China than it is in either American or Japanese managerial systems. The Chinese typically seek to maintain social order through a harmony-within-hierarchy arrangement.
In the Middle East, as a region, it is important to bear two things in mind. First, the Middle East is not a homogenous region. The area is not solely populated by Arabs but also Kurds, Turks, Iranians and more. In addition, it not only inhabited by Muslims. There are many manifestations of Islam across the region that lives alongside Christianity, Judaism and Zoroastrianism. In the Middle East, Arab managers have long traditions of consultative decision making, supported by the Koran and the sayings of Mohamed. However, such consultation occurs more on a person-to-person basis than in group meetings, and thus diffuses potential opposition. While business in the Middle East tends to be transacted in a highly personalized manner, the final decisions are made by the top leaders, although there is a level of consultation with others called ‘shura’. It’s important not to only concentrate on building relationships with decision makers, but also those that advise them. Relationship driven cultures usually have the following traits:
Collectivist: ‘We’ takes precedence over the ‘I’. This group mentality means the interests, opinions, and decisions of the group carry much more weight than that of the individual.
Family: Family or tribe takes central focus in daily life. In such cultures very tight relationships are built with a small group of people whereas in more individual cultures people tend to have loose relationships with many people.
Hierarchy: The Boss takes sole control, and the staff will expect explicit orders and guidance. Meetings will be where decisions are implemented, rather than discussed. Very formal relationships exist with the boss.
Honor/Shame/Face: Emphasis on maintaining face, i.e. upholding the family/tribal honor. As a result there are usually very complex rules of engagement and communication styles. A simple example; instead of getting a ‘no’ you may get ‘I will try’, ‘Let’s do our best’ or ‘God willing’.
In the article “Influence of Chinese Culture on Decision Making Styles & Processes” by Natalie Smith writes: China is home to many skilled businessmen and politicians. To the uninitiated, Chinese decision making can seem mysterious, or even, for some Westerners who rely on scientific thinking, erroneous.
However, decision making in China has logic of its own, and this logic is based on several factors. These factors include the Chinese preference for ‘inductive reasoning’, and to look at the big picture when making decisions. Inductive reasoning starts with general observations and uses these observations to form a conclusion.
On the other hand, Western thinking is based on ‘deductive reasoning’, in which a hypothesis or idea is proposed and then evidence is gathered and a decision is made based off the evidence. Neither way is correct or incorrect; the two styles of reasoning are just different.
Then there is ‘guanxi’, which is based-on the Confucian principle of caring for family and close friends. Under the principle of guanxi, there is no black and white answer based on the context of the situation. The Chinese are very oriented toward the long-term, and persevering and considering the long-term implications of a decision are very important.
Confucianism still influences Chinese decision making in many ways, and it considers the welfare of society as a whole, rather than the happiness or needs of individual people or families.
According to ‘Rowe & Boulgarides’; the process of decision making depends on many factors, including; ‘the context in which a decision is made, the decision maker’s way of perceiving and understanding cues, and what the decision maker values or judges as important’.
Two significant influences on decision making are values and cognitive perception. Both affect how a decision maker interprets and responds to particular stimuli and conditions.
However there is a dilemma; with all of these cultural differences in decision-making styles, how are people going to work together?
It is important to build knowledge and respect for cultural differences when working across cultures. Managers and teams can learn from the decision making styles of other cultures, enabling them to try new approaches.
None of the decision styles are the ‘right’ way to make a decision; they are only different. Styles can be combined for a variety of purposes in different situations, fostering flexibility and cross-cultural understanding.
The existence of different decision making approaches is widely acknowledged, but remains poorly understood.
As global interactions increase, there is a growing need to know how managers make decisions in different parts of the world.
‘Rowe & Boulgarides’ assert that:
“Knowing an individual’s decision style pattern, we can predict how he or she will react to various situations.”