After a long day of consecutive marathon meetings in Brazil, Catherine Bromilow, a lead partner at Big Four audit firm PricewaterhouseCoopers, was invited to join the company’s directors for coffee. Needing to catch a flight, Bromilow was unsure if she had enough time, fearing an informal discussion could last as long as an hour or more. She decided to stay, but she was caught off-guard when she was presented with a thimble of espresso. The directors gulped down the espresso in 30 seconds and headed for the door of the conference room. Now, whenever Bromilow is in Brazil, she knows she always has time for coffee.
With increasing frequency, directors are crossing borders to serve on boards and facing a host of cultural differences. Boardrooms in other countries are forcing American directors to learn more than whether they are presenting their business cards appropriately. While the desire to provide effective oversight and advice tends to be universal, the road there often depends on the region of the world. Conversely, directors in the United States are finding board colleagues from different cultures may not be entirely familiar with American ways in the boardroom, either.
Alignment vs. Consensus
Bromilow’s coffee-break experience demonstrates how such an ordinary practice can differ from region to region. But there are also cultural differences in the way that directors communicate, build consensus, and socialize in and out of the boardroom.
One of the most striking differences in boardrooms is how boards reach consensus, settle disagreements, and how “lively” the discussion can get. For example, those who have been in boardrooms in the United Kingdom say that if there is no arguing going on, something is wrong. In contrast, the decibel level rarely gets high in Asian boardrooms. Stephen Mader, vice chairman and managing director of board services at executive recruitment firm Korn/Ferry International, likens boardroom interaction in countries such as Japan and China to that of a jury. “With enormous patience, the Japanese and Chinese work toward consensus without heated debate,” he adds. “Consensus can take a long time; they can drive at it without losing their minds,” Mader says. Directors tend to work together with a considerable amount of patience and want all members to agree on a given strategy.
“You’ll never land in Munich and beat your suitcase to the baggage claim. In Rome, your bag might get there two days later.” —Stephen Mader, Korn/Ferry
In the United States, where debate is prized, discussion and consensus building resemble the U.K. model: opposing points of view are welcome and discussions can become heated. Often, arriving at a consensus can take much time, effort, and patience, qualities some experts believe Americans lack. Mader says American boardrooms tend to follow a process that often begins as an alignment and results in a majority consensus.
Americans are also adept at not taking disagreements personally. An adversary during one argument may be an ally in another. “An American director can be in the minority about how to best optimize strategy,” says Mader. “However, given that the majority wholeheartedly believes differently, you are more likely to support the less preferable strategy, and will strive to make it work, regardless of whether that would have been your first choice. That’s American consensus.”
Regulatory regimes can also affect the culture of the boardroom. For example, the passage of Sarbanes-Oxley in the United States has led to a regimented, process-oriented mindset in many boardrooms. Due to the litigious climate in the United States, American boards typically are more careful to dot I’s and cross T’s, and that tactical awareness has only been heightened during the financial crisis. Boards outside of the United States are generally more freewheeling in conversation and in their approach to the agenda.
George L. Davis, a consultant at Egon Zehnder International, sees the international arena as less restricted. “Americans usually find the lack of government regulation a breath of fresh air,” he says. “There’s more room for strategic debates that might not occur in a heavily regulated American boardroom setting.”
The way a boardroom is structured reflects how business operates in different countries. According to Bromilow, who has worked extensively in South America, directors are culled from a small percentage of the population. “In Brazil or Venezuela, you can have a much narrower group of people in the boardroom,” she says. “In some cases, relationships are there before you get on a board. Board members went to school together or are related,” she says. “In fact, that relationship might be a predeterminant for getting onto a board.” She adds that even public companies in these countries tend to be owned by one or more families.
“You have the added dynamic of family members on the board, even if they do not wield economic control,” she says. “Family members can add a really interesting dynamic in the boardroom. You’re very conscious of who is and who is not family, and in many instances, family members do not always think or vote alike.”
One reality that doesn’t vary from region to region is how much of the real work of the board gets done outside the boardroom. “There are meetings outside of meetings during social events. During coffee, lunch, or dinner, real work gets done,” says Bromilow.
There are also stark contrasts in the way board meetings are conducted. “In the U.S. culture, it almost seems like you’re supposed to say something, regardless of whether or not you have something to say,” says Bromilow. “In Japan, by comparison, their culture focuses more on appearances and not ‘looking bad’ in front of everyone else.” The result is that directors tend to remain quiet until they have an important point to make.
In Germany, Mader says the conduct of meetings tends to be more structured, as compared to Italy. Mader likens the differences between doing business in Germany and Italy to waiting for your luggage at the airport baggage claim area: “You’ll never land in Munich and beat your suitcase to the baggage claim. In Rome, your bag might get there two days later.”
Entertaining is perceived differently on an international spectrum. After a laborious day of meetings, don’t expect to be offered a drink in Dubai. “If you didn’t know, you’d be surprised to find at the end of the day that you can’t get a drink in most parts of the Middle East,” says Edward S. Knight, who as general counsel at Nasdaq OMX Group travels extensively. “Expect kosher offerings in Israel and a vegetarian menu in India.”
Ernst & Young CEO Jim Turley advises anyone embarking on business abroad to do his or her homework. Turley’s assistant routinely compiles notes on customs for every country he will visit. “In six or seven pages, you get a summary of the do’s and don’ts of that particular country,” he says. “As important as the proverbial business card exchange in Japan, or what hand gestures not to make while in Brazil, understanding the little nuances can make all the difference.” Just learning a few phrases in the local language, for example, can be a sign of respect and well worth the effort.