Avoid Culture Shock When Rewarding International Employees

Few stories better illustrate the importance of cultural understanding in creating employee recognition programs than the one business school associate professor Karen Walch likes to share with her students. It’s a tale of good intentions gone awry involving a U.S. technology firm in Hong Kong and a little red envelope that destroyed morale.

   In 2000, shortly after going public, the company decided to reward its Singapore employees by giving everyone a hong bao—a slim, red envelope containing money that is given to mark a happy occasion, in this case Chinese New Year. The plan was to give each employee a nominal amount that was the equivalent of 4 Singapore dollars. The firm’s executives thought it was a culturally meaningful gesture—and it was, but not in the way they had intended. The number four connotes death in many Asian cultures. The employees were mortified.

The firm’s executives thought it was a culturally meaningful gesture—and it was, but not in the way they had intended. The number four connotes death in many Asian cultures. The employees were mortified.

“They couldn’t figure out why management would do that,” says Walch, who teaches at the Thunderbird School of Global Management in Glendale, Arizona. She heard the story from a former student who worked at the company. “Morale was destroyed, employees started coming in late, they became disengaged.”

Things got worse when the management team—two were American and one was British—tried to remedy the situation by reissuing the packets with SG$8. The employees read that as “double death,” she says. Morale never rallied. Eventually, the dot-com bubble burst and the company folded.

While no one blames the ominous number for the firm’s demise, Walch says that you can’t underestimate the importance of people’s belief systems. The snafu could have been avoided if the managers had simply consulted with local employees beforehand. When properly executed, such employee recognition programs and rewards can go a long way in inspiring employees, especially during difficult economic times, says Tom McMullen, vice president and U.S. reward practice leader at Hay Group, a global management consulting firm in Philadelphia.

According to a recent study by the Society for Human Resource Management and the employee engagement consulting firm Globoforce, 80 percent of 745 organizations surveyed have some kind of recognition program. “Anytime there’s a dip in the economy, like after 9/11,” McMullen says, “we see a spike of interest in nonfinancial recognition programs.”

But developing an effective program can be a challenge for any company, especially for multinational employers that must take into consideration a diversity of cultural values. According to the study, 84 percent of respondents identified “managing multiple cultures” in the workplace as a significant challenge.

That’s what Gary Beckstrand, vice president of research and assessment services for O.C. Tanner, discovered when he and a team of consultants conducted focus groups in Australia, Brazil, China, France, Germany, India, Japan, Mexico and the United Kingdom.

The Salt Lake City-based rewards and recognition firm wanted to learn which type of recognition drives employee engagement in different cultures.

“We had the quantitative info but didn’t understand the nuances or the whys,” Beckstrand says, referring to a 2008 study conducted for the firm then called Towers Perrin, which showed that recognition correlates to high employee engagement across cultures. “We found a lot of clients are not real familiar with cultural issues when it comes to the programs they’re rolling out and communicating, and we wanted to help them ensure success.”

O.C. Tanner made some interesting discoveries. In India, it learned that great importance is placed on awards and certificates that brandish a company’s logo. “It was important in every country, but especially there,” Beckstrand says. “There are so many workers in India that anything they can do to stand out is helpful.”

While certificates are appreciated in most cultures, in India they must detail the employees’ accomplishment so they understand exactly why they are being recognized, he says. “It can’t say ‘gold award.’ They want to know what they accomplished. In North America certificates are more general. In India you want make sure it’s detailed because that certificate will go into their file and if they were to interview at a new job, they will take it to the interview.”

Beckstrand and his team also discovered that using native languages for rewards is critical, especially in Asia where fluency in English is expected. “There is a pride factor that employees know English,” says Christina Chau, manager of research services at O.C. Tanner. “They wouldn’t complain or ask for help if they didn’t understand something because they don’t want to admit that to their managers. So they just won’t use the materials. We need to help our clients understand the importance of translation. People accept things easier in their own language.”

The team also learned that clocks or watches, popular gifts in the U.S. for employees celebrating a workplace anniversary, are taboo in Asian countries because timepieces are reminders of mortality. In France, O.C. Tanner learned that workers tend to scoff at effusive gratitude and view thank you notes with skepticism.

“They say that American employers give recognition too often,” Chau says. “They don’t appreciate thank you cards with smiley faces. Or when we send an email that always say thanks at the end. It’s not sincere if it’s given for every little thing.”

In India, where wages are low, household items that most Westerners take for granted, like toasters and microwaves, are coveted. But Chau says that, “in the U.K. no one wanted a toaster.”

Globoforce, the consulting firm based in Southborough, Massachusetts, and Dublin, Ireland, believes strongly in the local touch when it comes to global recognition programs. Employees’ desire for culturally familiar rewards is the driving force behind the Exchange Global Rewards program, Globoforce’s online catalog of merchandise, services, entertainment and charity options. Employees of client companies can pick rewards from a variety of local vendors and establishments.

“The rewards must be 100 percent street level local,” says Derek Irvine, Globoforce’s vice president, client strategy and consulting. “Our motto is: ‘Think global, thank local.’ It’s so easy to say but the challenge is in the execution. Here’s where many companies make a mistake. They think recognition comes in a box and can be shipped anywhere. But it’s a personal moment that will vary vastly whether we are in Singapore or Sydney or San Francisco.”

In China, treats from high-end bakeries that can be shared with loved ones are in great demand, as are air filters to help with the high pollution levels, Irvine says. In India, where a gift certificate from a Western retailer would do little to satisfy a woman’s fashion needs, vouchers from local clothing stores are much preferred.

Globoforce works with local reward providers and solicits feedback from employees in the area to determine the most valued items, a departure from the “headquarters knows best” approach that companies have traditionally taken.

“Culture is the new strategic advantage and companies are seeing that,” Irvine says.

“They ask us how employee recognition can build a culture that unifies all the employees around a golden thread vision. We tell them that rewards must be directly linked to the values of the organization. Then you start to create this ripple effect of reinforcing your company’s culture around the world.”

But achieving such cultural understanding requires practice and thoughtfulness, says Walch, the Thunderbird professor who trains executives to think and behave globally.

“Most of the time we are unconscious of how deep our cultural preferences are,” she says. “It comes down to the brain. We’ve been acculturated in what we value. But our brains are very elastic, and we can be reprogrammed with some reflection.”

She says she believes companies are finally beginning to see the value in embracing and understanding cultural differences. “People used to think you could read a book on a plane and learn how to bow properly or when to shake hands,” she says. “It goes beyond that. It’s neurological. It’s about training yourself to think differently. It takes mindfulness to perform in these multicultural settings.”

Workforce Management Online, August 2011 — Register Now!